Wednesday is May Day — or Labor Day — when much of Europe takes a holiday, and the left takes to the streets. This year's big demonstrations promise to stir up deep ideological passions, about everything from immigration to Third World debt to free speech. In Paris, opponents of surprise presidential runner-up Jean-Marie Le Pen plan to confront the far-right nationalist as he leads his annual march in honor of Joan of Arc. Meanwhile, Londoners are braced for a rematch, complete with footballs, between globalization foes and the police who penned them in at Oxford Circus last year. Well, what about labor? It's the reason for the holiday, after all — and for Europe, it also remains a vexing economic dilemma. The U.S. recovery from its 2001 economic stall and the Sept. 11 shock showed that Europe still has to take its lead from America's high-productivity economy. And despite much progress in recent years, too many Europeans still aren't working. Businesses and the European Central Bank continue to prescribe flexibility — making it easier to fire and cheaper to hire. As France's embrace of the 35-hour workweek shows, however, Europeans aren't always eager to put growth first. Security, quality of life and, yes, political power matter, too. Here Time looks at two countries where labor is pushing back.
I T A L Y
The (lack of an) Italian Job
Francesco Bruno has given up hope of ever finding a permanent job. The best the 30-year-old university graduate says he can expect is a call back from Alitalia for another short-term contract as a flight attendant. "I see myself as a permanent temporary worker," says Bruno, who asked that his real name not be used for fear of jeopardizing his standing with the airline.
With Europe's ongoing push to create a job market with U.S.-style flexibility, such employment uncertainty is becoming common. Eurostat reports that the number of workers on short-term contracts rose 14% between 1996 and 2001. In Italy, where a job-for-life is still considered a national birthright, this economic reality is viewed with trepidation. And as a bitter nationwide labor showdown enters its third month, workers like Bruno have become the conflict's poster children — for both sides.
Pushing for legislation to loosen the labor market, Prime Minister Silvio Berlusconi says Italy can't compete — and good new jobs will never be created for people like Bruno — if companies feel they can never fire workers. The unions staunchly oppose the reforms, which they say will only drag the rest of the workforce toward Bruno's "precarious" status.
At the center of the debate is Berlusconi's plan to phase out Article 18 of the Italian Workers' Statute, which forces companies to rehire unjustly fired workers rather than simply pay out monetary damages. Though it generates only a sprinkling of cases each year, Article 18 has become an all-or-nothing battle cry for both camps, which see it as the symbol of Italy's famously airtight job protections. Antonio D'Amato, head of Confindustria, Italy's leading employers' association, says unions are waging an "ideological campaign" rather than facing real negotiations. "We have never asked for the freedom to fire, but instead the freedom to hire," he says.
So far at least, labor has been racking up all the points on the political scorecard. On April 16, the three largest unions led the first full-day general strike in Italy since 1982, bringing much of the country's industrial, commercial and transportation sectors to a halt. That followed a March rally that drew more than a million protesters to Rome to decry the threat to Article 18. Bruno — who has also worked in a pizzeria and as a handyman — is one of the millions of laborers not protected by Article 18. "It doesn't change anything for me," he says. "I'm already fireable." Still, Bruno says he supports the union's position. In fact, more than two-thirds of Italian workers are not covered by Article 18 — which also does not apply to companies with fewer than 15 employees — but the statute has a comfortable majority of popular support.
Still, in the midst of the debate there was an ugly reminder that these issues go beyond competing numbers. On March 19, Marco Biagi, a labor-market reformer and government consultant, was assassinated outside his home in Bologna. A group calling itself the Red Brigades — the name of the leftist extremists who were notorious in the 1970s and '80s for terrorist attacks — took responsibility for the killing. While there have been few leads in the Biagi case, his image and ideas have been touted by the government and industry leaders — noting that the economist had written that Italy had "Europe's worst labor market." Union leaders counter that in the days before his death, Biagi had encouraged the government to avoid a fight over Article 18.
Berlusconi, who is on the defensive domestically for the first time since last spring's election, has called for negotiations to resume after May 1. But union leaders say that Article 18 must be taken off the table before they will sit down. The Prime Minister, who had hinted at compromise in March before taking the hard line, may be cornered by his own business supporters. "Confindustria supported the center-right during the election," top union boss Sergio Cofferati noted last month in an interview with Time, "and now they're demanding the payback."
Ultimately though, the debate over Italy's workforce will have to move beyond Article 18. Italian labor economist Francesca Utili says the country's support of tight job protections are in part a result of uncommonly meager unemployment benefits: "Once you enter the market there is pressure to keep your position because there's nothing on the other side."
Still, while the labor movement continues to command high public support, changes in the workplace are already well under way. Barbara Cavuto, who works in one of Italy's relatively few temporary employment agencies, says business has tripled since her company opened in 1998, a year after such operations were legalized. Older people who come in looking for work tend to resent the arrangement. "Most young people accept it though," she says. "They're much more elastic." The unions, largely led by older members, are eventually going to have to battle for the hearts and minds of this elastic youth
JEFF ISRAELY
G E R M A N Y
The end of Dialogue
To many, Germany is an oasis of labor peace. Between 1990 and 1998, the country lost just 13 working days per 1,000 workers annually because of strikes. In the U.K. the figure was 32, while France lost 87 days and Spain 344. Unions like the powerful IG Metall, which represents workers in manufacturing industries from cars to electronics, agreed to modest wage packages in hopes of creating more jobs. But IG Metall signaled last week that peace has its limits. Germany's largest industrial union took a strike vote in two regions of the country, and companies began gearing up for a walkout. "The employers destroyed the last chance of a peaceful solution of the wage conflict," said Klaus Zwickel, the group's feisty chairman. "They have forced IG Metall into industrial action."
Assuming the strike vote passes — at least 75% of the membership is required — work stoppages could begin as soon as May 6 in the southwestern state of Baden-Württemberg, home to carmakers DaimlerChrysler and Porsche, and also in Berlin and the surrounding state of Brandenburg, where many new businesses have been started in the former East Germany. The last strike by IG Metall was in 1995 and affected only workers in prosperous Bavaria for three weeks. What's so unusual about this year's negotiations is that the two sides were remarkably close when talks broke down. Employers had offered a 3.3% pay rise over 15 months; the union demanded 4% for this year. Putting heat on the metalworkers, the chemical workers' union two weeks ago agreed to a 3.3% increase. The companies, said Martin Kannegiesser, the employers' association president, have gone "to the limit of what was possible."
A walkout now would represent a major embarrassment to the government of Chancellor Gerhard Schröder, which had promised to cut unemployment dramatically and faces re-election in September. Zwickel, the IG Metall leader who favors three-piece suits over worker's overalls, argues that big pay raises are good for the domestic economy by increasing consumer spending. But economists worry that a strike now could wreck the country's halting recovery from last year's recession. "IG Metall is out of control," declared the newspaper Frankfurter Allgemeine. "It refuses to concern itself with the finances of factories, with their competitiveness, with Germany as a location for doing business, with the unemployed looking for jobs or even with those who are about to become jobless." IG Metall's power lies in its ability to negotiate a one-size-fits-all labor contract for the entire country. The current talks in Baden-Württemburg will eventually lead to a pilot contract, which will then be applied to employees in other regions covered by metalworkers' contracts. The average metalworker already earns about $2,500 a month, works a 35-hour week and has six weeks of annual vacation. But economists say the union's bargaining strength is leading to its long-term weakness as well. "IG Metall has established Germany as a high-wage, high-quality production center," said Michael Fichter, executive director of the Center for Labor Relations at the Free University of Berlin. "It is less able to deal with the segment of the market that doesn't fit that. The fact that companies are transferring jobs to other countries is an omen." Though membership soared after German reunification in 1990, IG Metall's long-term trend is downward. Between 1991 and 1997, the union lost a million members and is now down to about 2.7 million. Harmen Lehment, an economist at the Kiel Institute for World Economics, found that the metalworking industry shed 300,000 jobs in the two years after the 1995 strike — a result, he believes, of the 4% wage hike that was agreed on. He estimates that for every 1% of increased wages, the economy will lose 1% employment as companies invest in high-tech machinery or transfer jobs to Eastern Europe. "The rank-and-file not only are not concerned about unemployment," he says, "but also it seems they are not worried about their own jobs." To maintain employment, he notes, wage settlements would have to be less than the growth in GDP, which was .6% last year.
Another worry for IG Metall is the number of companies that are leaving the employers' association, known as Gesamtmetall. By withdrawing, companies can negotiate their own wage deals on a plant-by-plant basis. Fewer than half of the factories in eastern Germany are under the national wage contracts. "It's a concern for us," says Klaus Mehrens, head of IG Metall in the western state of Hesse. The union represents both professional and manual workers at covered businesses, although membership for white-collar employees is only about 50% compared with 75% for blue-collar workers. IG Metall is trying to expand its ranks by branching out into service industries, "but I can't say we've been very successful," Mehrens concedes. Even if there is relative labor peace, the specter of lost jobs is the biggest concern in the German economy. A strike should make workers even more nervous about their future. And Gerhard Schröder nervous about his.
CHARLES P. WALLACE
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