Germany undermined the EU-salvation program

German government has undermined its own efforts to save the euro and the EU as a whole, after it negotiated a 6,3% rise in salaries of public-sector workers. Chancellor Angela Merkel’s team faced a risk of general strike of public workers, after their union, called Verdi, placed an ultimatum and requested a 6,5% rise in salaries. The syndicalists rejected a 3,3% offer from government and insisted on 6,5%. Finally the government accepted 6,3% making itself look funny on a stage of all-EU-wide spending cuts.

Germany is the main inspirer of so called “austerity” programs that are requested from deeply indebted EU countries like Greece, Spain, Portugal, Italy, Ireland (PIIGS) and so on. Even in France the fighting to re-elect President Nickolas Sarkosy had to implement some unpopular money-saving measures. In all these countries there are often strikes, and in Greece the situation is close to a revolution. All these governments are pressed by Germany to cut their spending, to fire public-workers, to close hospitals and schools, and generally – to reduce the budget deficit and public debt.
While making all this, Germany decides to avoid the strike by accepting all union’s requests.
Germany is not so stable and rich country, as it looks generally in media. Most people believe that Germany is the fortress of European stability and that Germany is to save the euro and the European Union as a whole. But in fact Germany still has a budget deficit and is deeply indebted. Germany is stable only compared to other – more unstable countries in EU. But it is still a deficit-country with a high (81% of GDP) public debt. So “austerity” strategy widely promoted by Angela Merkel is very suitable for Germany too. Surrendering to syndicates in this situation is a road to hell. Much other countries have already proved that. And continue proving…
Imagine the government of Spain that at the moment is facing a fierce strike against “austerity” and spending cuts. This government will have to persuade its own people to accept lower salaries, while Germany is increasing the salaries of its own same-type public workers. And the Spain has in fact lower public debt than Germany. It’s not generally low, but is lower than Germany’s one – 68%. So in some of the major public finances parameters Spain is better than Germany. But Spain has to cut salaries while Germany is increasing them. Do you think it will be easy for Spanish government to do this? In fact, Germany is undermining its own efforts to save the euro-zone.
The situation is even worse in other countries like Greece, where the people are already hating Germany and the Chancellor is called a “Fuhrer of the 4th Reich”… So Merkel is telling the Greeks to save money and become poorer, while making its own people richer… Even if Germany had no deficit and was under a money rain, it was better to avoid such decisions. It is better because of the cause of solidarity. It is a bad manner for rich to demonstrate their richness in years of crisis and much people becoming poorer. But generally, Germany is not even so rich. It has an enormous debt that can create real problems in near future. And it is still spending more than collecting with taxes.
So Germany avoided its own strike, but has made other strikes to become more fierce and radical.
But let’s look from other point of view. Will be soon more strikes, including in Germany too? The answer is “yes”. In periods of inflation the labor unions are more active, looking for a compensation of increasing prices. The current German project-strike was may be one of the first such-type protests. The EU politics lightly decided to print lots of money to save the indebted governments. So the inflation is inevitable. We already see it – with higher oil and food prices. So now it is absolutely normal for syndicates to ask for higher salaries. The result of all this is so called “inflationary-spiral”. The prices are up, the salaries are up, this pumps the prices again up, and this pumps the salaries up, and so on… So it was an easy decision just to print money and lend them to bankrupted governments. But it is not so easy to face the inflation consequences.
So the Germany case will not be the only one. Very soon the “austerity” strategy of Merkel will be confronted by  inflation-motivated protests asking for higher wages. And the double standards, and also the visible by all lack of solidarity in difficulties, will make the crisis very hard to manage.
Dobri

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