Look North, Sarkozy

In gearing up to take France on a new economic course, French president Nicolas Sarkozy’s choices are not confined to Anglo-American neo-liberalism and the dying French model of social protection. There are other viable alternatives, one of which is the German model. Germany, after all, is now one of the fastest growing countries in the euro zone. So it must be doing something right.

That “something” is being competitive in world markets. German competitiveness did not just happen. It is the result of enormous corporate re-structuring over the past several years, which increased labor productivity, and of German trade unions’ willingness to accept modest wage increases. It took several years for trade union restraint to flower into robust competitiveness, but flower it did.

Even in the current period of growing optimism about the German economy, the nation’s trade unions are showing themselves to be moderate. IG Metall, Germany’s largest industrial union, which bargains for 3.4 million metal, electronics, and car workers, looks ready to accept an estimated 3.3% annual wage increase for 2007 and 2008 – a settlement generally considered to be “balanced and justifiable.”

Public sector unions also can affect a nation’s competitiveness in global markets, albeit indirectly. In recent years, they too have been co-operative in Germany, though there is some concern that next year’s big wage negotiations could be difficult.