Blog: Dave LeggettLabour: it’s a buyers’ market

Dave Leggett | 23 July 2004

The striking of a productivity deal by DaimlerChrysler with the IG Metall union signals tough times for labour unions in Germany and Europe generally. The term ‘global labour market’ is a little misleading as we’re not talking cans of beans here, but the availability of low-cost manufacturing solutions around the world makes it a buyers’ market for big multi-national employers in manufacturing industries. It’s the economic facts of life. Do a deal or lose jobs to other plants - in DC’s case that included one in South Africa. First Siemens, now DC.

It’s hard to see any alternative to the deals being done in relatively high-cost Europe. The big question is how far this process will go in the coming years. How far will workers in developed countries be prepared to work harder or sacrifice income in return for jobs? And how far will employers really want to go in rebalancing their global manufacturing footprints to achieve lower (or best) cost? One thing to bear in mind is that firms like to be close to their markets and customers for all sorts of reasons and that will constrain some of this production shift. It won’t be all one-way either.

But there’s a bandwagon rolling at the moment in Europe and Volkswagen is next on the list – the German Chancellor even mentioned Volkswagen negotiations in a statement praising the DC deal. It could be something nice for Wolfgang Bernhard to get his teeth stuck into, but all seems quiet on that front now.

GERMANY: Chancellor praises Mercedes cost-cut deal with workers


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