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American Workers Get Some Help From an Enlightened German Law

LawAmerican Workers Get Some Help From an Enlightened German Law

In Seattle, in 1999, Lefts Old and New converged to mount what is arguably the most far-reaching protest against the corporate domination of the planet. The protests extended well beyond the young enragés’ sit-down strike in the city’s streets, which made it impossible for the first (and still the only) global conference of the World Trade Organization held in the U.S. to convene. The events also included a remarkable rally of roughly 10,000 union members from all corners of the globe that the AFL-CIO sponsored.

There, I distinctly recall, one young man who worked at a Ford factory in South Africa told the crowd that it was past time for global corporations to be held to some uniform standards when it came to treating their workers.

It was indeed past time, but that didn’t mean anything like that happened.

Fast-forward 22 years. In 2021, the German Social Democrats, then the minority partner in government with the Christian Democrats, pushed a new law through the Bundestag. Germany was home to all manner of corporations—Siemens, Volkswagen, Daimler, Bayer—that had factories and contractors strewn across the planet, and German unions feared such companies could undercut their members by offshoring work to low-wage climes, even as environmental and human rights organizations feared the low standards that such offshoring could enable. The new law, the Supply Chain Act, which took effect in 2023, was designed to allay such fears. It empowered a German federal agency (the Federal Office for Economic Affairs and Export Control, or BAFA) to monitor the foreign-located factories and supply chain operations of German businesses with at least 1,000 employees to see if those facilities were violating any of 11 stipulated human rights standards, including the use of child labor, the violation of worker health and safety standards, and the right to form trade unions.

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Should a company fail to meet those standards, the agency can subject it to a fine of up to 2 percent of its yearly revenues, and withhold any government contracts with the company.

Fast-forward to last week. On the eve of filing for a unionization election at the Mercedes factory in Vance, Alabama, the UAW filed a complaint against Mercedes-Benz Group AG with BAFA, based on the company’s having fired workers active in its unionization campaign, on requiring workers to attend anti-union propaganda meetings, and other particulars of the anti-union playbook that managers in the U.S. (though not in Germany) routinely draw upon to squelch workers’ efforts to have a voice at work.

The UAW has lodged similar complaints with our own labor-law enforcer, the National Labor Relations Board. In both German and U.S. law, it’s a violation to fire workers for their pro-union activities. In the U.S., however, the only penalty employers face if they’re found in violation is to rehire such workers, give them the back pay they missed, and post a notice saying they’d done the rehiring and back-paying. That falls somewhat short of having to cough up 2 percent of annual revenues (roughly 3 billion euros in this case) and being blocked from government contracts.

That said, the German supply chain law is still largely untested. The UAW’s filing is the first from an American union, and BAFA is only now getting its feet wet when it comes to monitoring alleged violations. How long such a process would take is at this point anyone’s guess.

Given the timing of the UAW’s filing, it may be best understood as a way to add pressure to Mercedes not to wage the kind of all-out war that the Southern factories of foreign-owned automakers have up to now conducted when their workers have sought to go union. Even though every one of those automakers are unionized in their home countries of Germany, Japan, and South Korea (and even though every Mercedes factory on the planet is unionized save those in the American South), all of those companies have sunk to the South’s anti-worker norms when their employees have tried to organize.

The non-union South has long provided American corporations with their own domestic equivalent of low-wage offshoring.

Now, however, it looks like such scorched-earth campaigns may no longer prevail. Later this month, the workers at Volkswagen’s factory in Chattanooga will vote for the third time on establishing a local of the UAW, and this time, they’re widely expected to win. Under the timetable set by Joe Biden’s NLRB, which crimped employers’ capacity to indefinitely delay union elections, the workers at Mercedes will likely get to vote in May or early June. At both factories, supermajorities of the workers have already signed UAW affiliation cards.

A host of factors are contributing to what may become a sea change in the political economy of the South. The stunningly successful strike that the newly militant UAW waged against General Motors, Ford, and Stellantis yielded record, and very well publicized, gains for workers there—as workers in lower-wage Southern factories are well aware. UAW President Shawn Fain followed up that victory with a pledge to do what the union has been unable to do for the past half-century: unionize the foreign-owned factories that had sprung up in the South. The union announced it was appropriating $40 million to the effort.

More generally, this campaign comes at a time when the favorability rating that Americans give to unions is at its highest level in 60 years, and when worker militance—among baristas, teachers, bakers, docents, and doctors, to cite just some of the varied occupations that have been striking and going union—is also reaching new heights. It may be that German-owned factories are more susceptible to union efforts than Japanese- and Korean-owned ones, given the greater power that German law has long accorded to its employees (including holding half the seats on corporate boards). Still, that power wasn’t sufficient to enable Chattanooga’s VW workers to prevail in their previous efforts to go union. That’s one reason why German unions pushed for the supply chain law that the UAW is now wielding against Mercedes’ Alabama managers.

That said, the UAW knows this law is still largely untested, and the timing of its BAFA filing makes clear it’s chiefly meant to be one constraining factor in what Mercedes’ Alabama managers do over the next several weeks. I’d be surprised if the union thinks this filing will make a decisive difference, but just like the pro-union slate of board candidates that union advocates advanced in the run-up to Starbucks’s annual shareholder meeting—which was one factor in Starbucks’s surprise decision to negotiate a national contract with its baristas—every bit of pressure helps.

The non-union South has long provided American corporations with their own domestic equivalent of low-wage offshoring, and foreign automakers also began setting up shop there half a century ago. As I noted in a Prospect article nine years ago, “Between 1980 and 2013, The Wall Street Journal has reported, the number of auto industry jobs in the Midwest fell by 33 percent, while those in the South increased by 52 percent.” Not surprisingly, when manufacturing went south, so did the wages of manufacturing workers—including in the North, given the downward pressure that low-wage factories in the former Confederacy and the current developing world exerted on American industry. In 2021, the Journal reported that a factory job that paid 83 percent more than a hotel or restaurant job in 2010 paid just 56 percent more in 2020. It added that the pay advantage of manufacturing over retail had slumped from 40 percent to 27 percent. This was not because wages in hotels, restaurants, and stores were rising.

The economic impact of unionizing the South, in other words, could almost be placed in the same category as reshoring work that had gone to China. If the UAW can begin that transformation—with a little help from laws that enforce decent standards of work on global corporations—that will be no small thing.

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