Siemens promises workers jobs for life

Siemens’ German workers have struck a deal that will see their jobs secured indefinitely, in an arresting move that highlights how the financial crisis has triggered a fresh consensus between labour and management in corporate Germany.

The engineering group said it had sealed an agreement with its works council and the IG Metall workers’ union that includes a pledge not to make any forced redundancies among its 128,000 German workforce.

The move is unusual even in Germany, known for its cosy relationships between workforce and management.

Hagen Lesch, trade union expert at Cologne Institute for Economic Research, said: “I have never heard of anything similar”.

However, he added: “I don’t think this is economically sensible. How is Siemens going to block the unions from high wage demands if it doesn’t have the threat of job cuts?”

Other industrial groups such as carmakers also have job guarantees at their main plants, but even the longest – at Daimler’s Sindelfingen plant – is limited to 10 years.

Siemens’ agreement builds on Germany’s non-confrontational strategy during last year’s economic crisis, when the country’s industrial companies avoided job cuts with a slew of flexibility measures.

Dieter Scheitor, IG Metall’s representative for Europe’s largest engineering group, called the agreement an “important signal” for the workforce and for corporate Germany.

“The good relationship between management and workforce has survived the acid test of the financial crisis. Both sides have shown a great amount of flexibility,” he said.

Like other industrial companies in Germany, Siemens last year held on to its domestic workforce in spite of the sharp recession . It relied instead on a scheme of state-sponsored shorter working hours and on other flexible measures, that have been built up during the boom years.

Peter Löscher, Siemens chief executive, said the deal underlined the company’s responsibility as an employer. “This is a clear and long-term commitment to Germany.”

Germany’s unions have seized on the economy’s recovery to end a decade of wage restraint. IG Metall this week launched warning strikes to support its demand for a 6 per cent pay rise for 85,000 steel workers.

However, there is a loophole in the agreement. Siemens said it could be terminated by either side from summer 2013. But the stakes for such a move by Siemens are high as it would face damaging industrial action.

The deal also grants the works council information rights if Siemens sells parts of its business, effectively giving the workers a say in the selection of a bidder.

Siemens and a few other industrial companies have in the past few years started to consult their works councils during sales processes, but IG Metall said this marked the first time that such an information right had been enshrined in a labour agreement