Germany is a country close to the writer’s heart for personal and professional reasons. It is gratifying to read that the German grand coalition government has finally introduced the minimum wage in which as the centre-left Social Democrat Katja Mast said “labor has gotten its dignity back with a fair payment of 8.50 euros, whether in the east or west and with no industry exceptions.” This is also a useful example of how change can be enacted from the ballot box.
Some background to recent German history even if some of it is not directly relevant to Singapore. The cost of German reunification and the advent of European monetary union in 2000 had saddled Germany with high costs. Surprising it may seem now but Germany was called the “Sick man of Europe” until the middle of the last decade. To regain its competitiveness, Germany enacted a series of unpopular labour market reforms (known as the Hartz Reforms). Among many initiatives, the reforms introduced contract work, temporary job assignments and work agencies. Large swathes of the German workforce were consigned to stagnant wages and uncertain employment. Many required state income supplements. The Social Democrats whose political courage was not in doubt for enacting the reforms, paid a heavy price at the election paving the way to the chancellorship of Angela Merkel.
Germany regained its competitiveness and its trade surplus per capita beat China hands down. However the average German worker did not see much of the benefits as the Christian Democrat coalition continued with the reforms. Once admired for its egalitarianism, the rich-middle-poor divide had widened dramatically. In the 2013 elections, the Merkel-led governing coalition’s junior partners failed to regain seats at the election, leading to a grand coalition between the two dominant parties: the pro-business, center-right Christian Democrats and the pro-labour, center-left Social Democrat. As part of the compact, the grand coalition began to roll back parts of the Hartz Reforms of which the minimum wage grabs the headlines although other parts are just as important such as limits on contract and temporary work in favour of permanent employment. The voters had decided at the ballot box and the politicians have to respond.
It is interesting that Germany, facing its own poor demographics and high business costs, did not follow the easy route of foreign workers to regain competitiveness.
It is interesting that Germany, facing its own poor demographics and high business costs, did not follow the easy route of foreign workers to regain competitiveness. In contrast, faced with economic uncertainties in 2007, the Singapore government flooded the economy with immigrants and foreign workers. Never mind the moral implications of what is in essence a parasitic policy that took away skilled workers from our poorer neighbours. Our superbly remunerated government seems to have panicked but the effect of the crisis in the western hemisphere proved to be rather mild for Singapore. It was, after all, called the Great Recession not the New Great Depression. But yet the Singapore government persisted with this policy long after the need had passed. Addiction to easy solution seems to be a perennial affliction and it is an expensive socio-economic drug.
The lesson from Germany is the importance of the partnership between labour and business to deliver the goods of economic growth to society. Germany had always been known for “co-determination”, a partnership in which the workers’ council of German companies is represented at the supervisory board. The Social Democrats, themselves, is a lesson that holding onto the nostalgic past is a sure way to irrelevance and policies have to change with the times to appeal to voters.
Singaporeans should take note. Only a government without checks on their power and without fear of the electorate can afford their grand self-delusion that only they know best. No change can be expected without fear of electoral defeat. A government is only as good as its last good policy. There should be no lingering gratitude for past achievements.
Chris K (formerly Armchair Anarchist)