'Raise low wages'

DW: Germany finalyl has a new government, a grand coalition of Christian Democrats and Social Democrats. As a union activist, are you happy?

Detlef Wetzel: In principle it doesn't matter to us. What's important to us are the issues the grand coalition puts on its agenda. What does the new government want to tackle? And I think there are at least some points which are very interesting for us and where we think that the movement is in the right direction.

Do you find the issues you wanted to see in the program?

Yes, some of them. We are pleased that the issue of misuse of subcontracted labor is tackled and that the binding nature of wage agreements will be increased. And I'm pleased about the full pension at 63 for workers who have contributed 45 years to the pension fund. We also like the improvements to the disability pension. So there are some positive aspects. Obviously there are also some things we don't like. We would have liked to have seen more investment in education. And more investment in infrastructure. And perhaps a bit more mobility in society. But I think altogether there are some good points, and we're hopeful that the government will deal with these issues with determination.

You've mentioned a bundle of social measures which will cost money - quite a lot of money. Business representatives are up in arms and say this represents a step backwards and that reform in Germany has come to a standstill. How do you respond to that?

Honestly, that is utter nonsense. The government is trying to reduce the distortions which arose on the labor market over the last few years: subcontracted work, service contracts, short-term contracts, the abuse of labor market instruments. And as far as pensions are concerned, I can just say that people have to know that their working life will be rewarded. I'm amazed at how it's specifically the conservatives who are prepared to ignore the working life of the older generation. Someone who paid for years - all his life - into the pension fund really must be allowed to receive the full pension at 63.

The argument is always that we cannot afford it. Can Germany afford it?

If one of the richest countries in the world cannot afford to spend some money on its pensioners, if the richest country cannot afford to reduce the abuse of contracted labor and service contracts and if it cannot afford to limit low wages, than I really don't know. In Germany we have the basic problem that in the last ten years the increase in prosperity has been very unequally distributed. It is about time that we turned back towards the employees again.

Some people say this is the only way that Germany can remain competitive or even become competitive.

But that is a false conclusion. If you look at the export industries - engineering, electrical goods, chemicals - then you see that they are the ones which pay the highest wages and that the argument is a case of special pleading. It's the industries which only face German competitors in the domestic market which pay the low wages, while the export-orientated industries which face competition pay high wages. Basically it is the other way round: people abroad buy German products not because they are the cheapest but because they are the best. German cars are not the cheapest but they are the best. That is Germany's model for success, to make better products - not cheaper.

A nationwide minimum wage is to be introduced. Why is that necessary?

I've just explained that. Approximately a quarter of all employees work in the low-pay sector. And in this area of employment, pay is spiraling downward. It's not as if the 8.50-euro minimum wage permits one to live like a king. The minimum wage ensures that the downward spiral and the wage dumping ends at 8.50 euros. We as union activists have to make sure that wages grow above 8.50 euros. Once we have the minimum wage of 8.50 euros, people will see that you can't afford luxury on that.

Service contracts mean that there are first class and second class employees. Could you please explain that?

Maybe even third class. We are not against service contracts when the roof is leaking and a roofer is called. We criticize service contracts when they are used to replace well-paid jobs with low-paid jobs.

But the employers say we cannot afford that. They need to have a certain flexibility and they cannot deal with all these high costs. How do you respond?

I respond that this is quite simply wrong. The German car industry is the most successful industry in the world. And they are not so successful because they produce the cheapest cars but because they produce the best cars. The car industry makes exorbitant profits. The machine tool industry makes exorbitant profits. And Germany can afford to pay its workers proper wages because our model for success is not to export cheap products but to export good products. And so the German industry can pay the same wages for the same work [to service contract workers as it pays to its own staff]. But it doesn't want to because it wants to make even bigger profits. And that's what IG Metall [the engineering workers' union] is fighting against.

But the German car industry sells most of its cars outside of Germany. Why shouldn't the German car industry, or let's say Volkswagen, produce in China to save labor costs?

That happens already. And we as a union don't mind that the industry follows the markets. That is a perfectly normal development. There are still enough jobs left in Germany in terms of production plants and in terms of research and development for all these processes. For us that does not go against the grain. We just oppose it when they outsource just to save costs. You don't relocate to China to save costs. We criticize the outsourcing when it happens in Germany in the form of service contracts. They're not outsourcing to China or Eastern Europe, but to another company which works on the same site and does the same work and but pays its employees 40 to 50 percent less. That is what we criticize.

Detlef Wetzel was born 1952 in Siegen, trained as a toolmaker, and went on to study social work. He's a member of the Social Democrats, but was a staunch opponent of the Agenda 2010 social reforms introduced by Social Democrat government of Gerhard Schröder. In November, he became chairman of the engineering workers' union, IG Metall, which is the world's largest trade union.