Financial Times

“Workers’ new flexibility spurs upturn in Europe” writes Marcus Walker from Dorfen, Germany in the Wall Street Journal of July 24, 2006, setting the scene for “keeping jobs at home”.

“After a long slump, strong exports and new flexibility in companies labour relations are laying the groundwork that could sustain economic recovery in Germany and some other parts of Europe. The reason is on display amid the stepped gables of this medieval town, where a pump and valve company has just done something rare for Germany in the past five years; It opened a new Factory,” writes Walker who goes on to state, “Only last year, HAWE Hydraulics was a part of the trend that was taking jobs from high-cost Germany and moving them to countries with lower labour costs. The midsize, family –owned company opened a factory in 2005 in Bangalore, India, saying the cost savings were too big to spurn. ‘We can’t afford to be romantic about locations,’ said Chief Executive Karl Haesgen, grandson of a company founder”.

He goes on to say, “But now HAWE has decided to invest at home again. To avoid losing more jobs, HAWE’s workers hammered out new labour arrangements with Mr. Haeusgen that includes Saturday shifts, flexible work hours, and profit-sharing in place of fixed bonuses. The changes made it possible for Mr. Haeusgen to justify building his factory in Germany” and “Longer, less regular hours for no extra pay didn’t come easily to a workforce used to a 35 hour, five day week.

The backlash led chief negotiator Joself Olasz to step down as chairman of the council that represents workers at the company. Critics accused him of getting too cozy with company management. ‘We saved jobs,’ Mr. Olasz responds”.

“The Euro region is poised to post its strongest economic growth since the technology boom of 2000. The 2.2% expansion projected for this year would be the largest improvement in the growth rate among the world’s big, developed economies. Amid signs that U.S, growth is losing steam, it is a timely revival that could help prevent a global slowdown. Rising employment in Germany is expected to drive stronger domestic demand, adding momentum to an export-driven recovery that was draining, not adding, jobs. Germany is Europe’s largest economy and in recent years has been one of its most stagnant. But the nation has led in developing a robust export industry and in the corporate restructuring that has finally begun to create jobs.”

He sums up with the following quotes worthy of attention of Sri Lankan business leaders: “Europe’s economic slump has given companies new muscle in their negotiations with workers.

The governments in Europe have been slow to overhaul worker friendly labour laws for fear of incurring voters’ wrath” and “German industry has gone furthest in overhauling work practices within strict labour laws and union accords common across Europe.

Companies now are pressing their employees to work longer, more flexible hours and to forgo pay increases, using the threat of moving jobs abroad as bargaining leverage. While pinching employees, the changes have made operating in Germany more attractive, stimulating local investment and helping the country hold on to more jobs.”

In Sri Lanka our ‘Rathu Sahodarayas’ are warning that the trade unions in the four essential services –the Port, the Railway, Petroleum and Electricity will form an alliance to strengthen their bargaining power using their combined clout to defeat the strong arm tactics of the rulers, and also that workers should resort to the alternatives used by their counterparts in countries considered as model democracies.

How much time, effort, resources and focused attention to communications, worker education and labour relations bridge building have the leaders of government, business, chambers and employer organizations committed to in the recent years? How much effort at sector level (rather than company level) has gone in to Corporate Restructuring and overhauling work practices within strict labour laws and union accords? How much of focus has been given to profit sharing and ESOP’s and variable productivity and profitability driven pay and bonus schemes for critical sectors of the economy?

Too little is the obvious answer, leaving aside some noteworthy individual company achievements and “nothing” as far as taking the debate on issues, best practices and what is happening in the global village public is concerned and the longer term impact of continuing with present practices on the nation and its people, especially awareness building involving family members, and civil society as partners in the education and altitudinal change management processes.

It is now time for change management initiatives led by the private sector- without waiting for labour reforms other wise “it will be like waiting for Godot” dreaming for political masters to lead the way with reforms. Take a cue from Germany and Europe and build this into the way forward strategy.