Political Expediency?

Posted by Viktoria Michaelis on March 29, 2012 in News & Opinion |

It’s probably not a piece of news which has travelled the world, but in Germany the bankruptcy of the Schlecker chain of stores has been in the news a great deal. Well known as a company which pays its employees considerably less than they are worth, who sends spies out to check on everyone including the delivery drivers, who force the prices paid to manufacturers down to the bare minimum, Schlecker has been a part of the toiletries scene in Germany for many decades. That, however,  is likely to change now as, despite all their efforts to save money at the expense of others, the company is being forced to change, to downsize, to fit in to a new, smaller model.

This downsizing means the closure of about two thousand shops and the loss of eleven thousand workers. On their website, Schlecker tries to make the whole as positive for the company as possible, by not mentioning how many people are going to be out of a job, just that the number of stores closing has been reduced slightly, but it is the human side which has been concentrated upon in the media.

Bankruptcy, for Schlecker, means not offering anything by way of a bridge between work and unemployment for its workers. This, in Germany, is not the way things are usually handled. People being let go from a bankrupt firm are placed into a welfare or social holding company for several months, where they continue to receive their wages, and where they can be trained for new jobs.

For Schlecker this transition phase would cost about seventy million Euro and the only way this can be financed is with the support of others. Here the individual Länder (such as Lower Saxony) have been called upon to guarantee the sum, which will only have to be paid out if the specially appointed manager bringing Schlecker through the bankruptcy procedures and, hopefully, back to a healthy balance, fails.

Today, through the political power of the small but, sadly, influential FDP (Liberal coalition partner with the CDU) three of the Länder turned the plans down. The finance package for these eleven thousand people, therefore, will not come about and, as promised well in advance by Schlecker, if it doesn’t happen the notices of termination will go out tomorrow.

To justify their lack of financial support, the leader of the FDP has publicly stated that the Länder are not there – or the country – to support the failings of individual companies who make mistakes in the market place. It is Dr Philipp Rösler’s opinion that government should not interfere with such matters, should not make itself responsible for the transition, the new training, the new employment of German citizens facing mass unemployment through the bankruptcy of their employer.

Which immediately raises a few questions based on past experiences.

It isn’t all that long ago that the government offered the Adam Opel concern, part of General Motors, millions to stop factories being closed in Germany. Only last year, at the start of the banks financial crisis in Germany, the government set up a fund, which many banks used, to cover potential losses by the banks caused through their own financial mistakes. The government is also a major mover in the financial support package for Greece, and other countries, following their major investment and spending mistakes.

The only reason this support package for Schlecker employees has failed is through the lack of support by the FDP. What makes the banks, with their billions of reserve funds and massive profits each and every year, any different to the future of eleven thousand Schlecker employees who are threatened with unemployment? The same goes for Adam Opel, where a foreign concern, General Motors, is being financed to preserve jobs.

It seems to me that some politicians – and the FDP is quickly getting a reputation as a political party without the slightest interest in the individual – need to sit down and re-think their position. No politician can support one company, or group of companies, with the argument that individual jobs must be saved and then, a few months later, say that it is not the job of government to support companies and save individual jobs. The FDP has already seen the results of their flip-flop attitude, with a massive loss of position in recent elections. That will probably happen again during the next election phase, and rightly so.

Meanwhile, eleven thousand people hit the unemployment queue with no transitional support whatsoever.

Love & Kisses, Viki.

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1 Comment

  • Chris says:

    By far the most failures of firms in Germany as probably elsewhere, concern smaller companies than either Opel or Schlecker. In these cases there is no question of “a welfare or social holding company” and the ex-employees have to rely on the employment exchange. It is always a difficult question, whether the state should act in a special way when major companies fail. It is probably a question of deciding which action will bring the most votes, if an election is imminent.

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