Germany is the Locomotive of Europe, but economic insecurity and inequality are the coaches that it pulls

Should we aspire to imitate the German model? Why, of course! Just look at the figures for unemployment: over 10% in France, 25% in Spain; even in the U.S. it’s at 8%. By contrast, in Germany it’s 6.5%, the lowest rate seen there since reunification some 20 years ago. What then could be the secret recipe that enabled Germany to keep its rate of unemployment between 7% and 8% at the same time that its GDP was in free-fall? Keep in mind that in 2008 and 2009 when the rate of growth was positive 1% and negative 4.7% respectively, the rate of unemployment only went from 7.1% to 8%, in spite of a loss of almost 6% of GDP! What should we expect if the rest of Europe follows in the footsteps of Germany, which holds itself up as the paragon because of the competitiveness of its companies and the flexibility of its workforce?
In fact, the big drop in unemployment in Germany—from 11.5% in spring 2005 to 5.5% at the end of 2011—is entirely the result of an intensive deregulation of the labor market which has encouraged the creation of temporary jobs and jobs at wages that are well below normal. Flexibility of the workforce came at the price of these “mini jobs” which have swollen by 14% between 2005 and 2011 and now involve 4.5 million workers, whose pay ranges between half and two-thirds of the average. This unprecedented growth in temporary and low-wage positions was a blessing for employers, who quickly increased their hiring to the point where jobs of this kind were growing three times faster than traditional ones. In fact, the latest numbers from the OCED show that employment at low or very low wages describes 20% of the German workforce compared to 13% for Greece and 8% for Italy. Naturally, in a corner of the labor market where wages don’t exceed 400 Euros per month (about 520 U.S. dollars) employers are not motivated to hire people on a permanent basis. As a result, one worker out of five makes only 400 Euros per month and permanent positions are more and more sliced up into one or more of these “mini jobs”. All of which is happening in a country where the very concept of the minimum wage has been banished from the dictionaries as well as from the laws.
What is more, we would be quite mistaken if we were to think that the creation of this new class of worker—in fact this new sub-class—came about by chance. In fact, it was precisely the result of a project carefully thought out and planned, starting around the turn of the 21st century, by the Chancellor at that time, Gerhard Schroder. It wasn’t just that the association of German employers was against the establishment of a minimum wage, saying that it would cause unemployment and increase the cost of labor; it was also that their position had the support of the framework of German law and the support of the overwhelming majority of the political parties, who were not really inclined to take pity on these underpaid workers who had gained nothing from the spectacular economic recovery that followed on reunification and had instead seen their wages slashed during these last ten years. Thus the German miracle is really nothing but a mirage—if not a nightmare—for a significant part of the German workforce, in fact, for almost 5 million of them! Let’s not forget the declaration of Schroder before the World Economic Forum in 2005 when he boasted, load and clear, of having “created the best sectors in Europe in terms of low wages”.
Beyond the economic insecurity which afflicts more and more Germans, this mass of “mini-jobs” has negative effects as well on the countries of the periphery of Europe. These miserable wages that are handed out—which put some German workers in the same role as their counterparts in Southeast Asia—pump up the export sector of the country while at the same time choking off consumer spending and, consequently, imports. This undeniable German competitiveness —built at the detriment of a large portion of the workforce—is also an open sore for the European countries in economic crisis. It is easy to see that they would not be able to export into a Germany when there are so many Germans who cannot afford to buy what Spain, Italy, or Portugal can produce. In this way, the German economic strategy represents one of the major faults in the structure of the European Union because it imposes a widespread and invasive tendency toward deflation. The only way that the businesses of the countries of the periphery can compete is by suppressing the wages of their workers, hoping thereby to compete in export markets with goods made in Germany and to sell more domestically-made goods to consumers in their own country. How can German politicians and CEO’s have the nerve to disparage the economies of the periphery when the totality of Germany’s economic growth has been and continues to be the result of the appetite for consumption of these countries and their willingness to go into debt?
It is therefore urgent to increase the wages paid for these German mini-jobs in order to facilitate and to encourage a fair transfer of wealth and income within the European Union. The inequalities that affect a country as important as Germany, where 28% of the total economic activity of the EU takes place, cannot fail to have a negative impact on the entire zone. Not to mention the disturbing increase in inequality within Germany itself caused by a redistribution of wealth from the poor—who cannot avoid spending all their wages just to survive—to the rich who have the opportunity to build up their savings. Is it not time to take a critical look toward this dynamic German competitiveness which has been so much admired but which most resembles a machine for creating injustice and inequality?