Views: German Labor Retreats in DT Strike

A powerful customer-service union loses its fight against Deutsche Telekom with concessions on salaries and working hours

Germany's largest customer-service union lost a dramatic showdown with Deutsche Telekom on Wednesday, after a month-and-a-half-long strike intended to shore up the union's clout in the fast-changing field of telecommunications. About 50,000 employees at Deutsche Telekom will have to accept a longer work week -- 38 hours, instead of 34 -- and the salaries of 30,000 of them will be shaved about 6.5 percent over the next three and a half years.

The deal is significant because Telekom used to be a government monopoly, and the union Ver.di expected support from Germany's Social Democrats. The German government still owns about a third of Deutsche Telekom, but during the strike Social Democratic leaders released only a bland statement saying the two sides should work things out for themselves.

The deal will create a new, lower-cost subsidiary called T-Services to deal with customer inquiries and repairs. Telekom has agreed to guarantee all 50,000 jobs in T-Services until 2012, but it stands to save an estimated €500 million to €900 million -- up to $1.2 billion -- through 2010. Ver.di managed to win a reduction in the pay cut and an extension in the job-guarantee period, but observers see an overall loss: "If Ver.di was going to pull off anything in the telecommunications sector, then they had to try at Deutsche Telekom," a University of Konstanz professor and service-sector expert named Berndt Keller told the International Herald Tribune. "On the whole, Telekom got more than the union."

German papers on Thursday are reacting to Ver.di's setback along predictable political lines.

The Financial Times Deutschland writes:

"Telekom's boss, Rene Obermann, ended the crippling soft line of his predecessors and took up a confrontational struggle for power with the union Ver.di. He has now won this struggle, beyond any doubt."

"The union, once a great power under Telekom when it was still an arm of the government -- a labor power that no one could or wanted to cross -- now has to come to terms with the fact that its historic weeks-long strike was nothing but a passable rearguard action. The foreseeable has come to pass: Not even Ver.di can deny the overwhelming power of competition which Telekom has to contend with."

The center-right Frankfurter Allgemeine Zeitung writes:

"Ver.di couldn't win with its strike against Deutsche Telekom -- and not only because the corporation has more legal leverage and could have pushed through its plans without the union's agreement. The grandiosely failed attempt to protect certain vested interests simply contradicts the demands of managerial economics and the laws of the market."

"This first labor battle for Telekom since it was privatized marks a change -- the long peace with the union is over ... For both sides it was the start of a painful adjustment to reality, not the end."

The left-wing daily Die Tageszeitung argues:

"Until now, Telekom technicians with some experience in their field earned an average salary in Germany. Those days are over. Now the whole branch (of telecommunications) can expect another turn of the downward wage spiral -- because it would be incredible if Telekom's competitors somehow failed to think of maximizing their profits by minimizing the salaries of their employees."

"What's happened in the telecommunications branch goes to show what happens when collective bargaining agreements are lacking and are replaced (within an industry) by a snarl of in-house salary agreements. Employees and unions grow too weak to keep corporations from redefining the idea of 'competition': The battle no longer goes only to the manufacturer of the best product, but to the firm that can most successfully rip off its own workers."