Germany: End of the Miracle

MOUNDS OF GARBAGE IN THE streets, stacks of undelivered mail, trains that did not run on time. This is Germany?

Yes, indeed. For 11 days, Germans got an unaccustomed taste of civic disorder, when garbage collectors, transport workers and other public employees walked off their jobs in the longest and most acrimonious strike since the end of World War II. Streets stank, planes didn't fly, traffic snarled. In the end the workers prevailed, forcing the government of Chancellor Helmut Kohl to surrender to a 5.4% pay raise. It was less than the unions wanted but more than Kohl felt Germany could afford.

He may be right. The decision to boost wages above the current inflation rate of 4.5% is almost certain to set off a new inflationary spiral, raise the federal deficit and slow the flagging economy. Even so, most Germans backed the strike because they were angry -- embittered by the swelling cost of unification, furious over rising taxes and indignant at being asked to bear too big a share of aid to the former communist countries in the East. And the anger will not soon subside. Other unions, in the metal, printing and construction trades, will ride the wave of discontent to demand similar increases to offset tax hikes linked to German unification. They probably will win pay raises too, despite the strenuous objections of industrial leaders who predict falling exports and vanishing jobs as a result.

It all marks the end of the most enduring business-labor armistice in Europe, a social contract that allowed Germany to achieve its postwar miracle of industrial prosperity. Perhaps that compact of mutual benefit can be restored eventually. Nevertheless, the size of the wage hikes resulting from the strike will damp the energy of Europe's economic powerhouse at the , critical moment when it is needed to pull the Continent together. Germany, the "Paymaster of Maastricht," whose Bundesbank anchors the European monetary system that will be unified under that treaty's ambitious integration plans, is certainly headed for deep debt, maybe even into recession.

The winners of the strike -- if it can be said to have winners -- were the 2.3 million members of the Public Services and Transport Workers' union, one of 16 giant labor combines that encompass most of western Germany's work force. The 5.4% wage hike they squeezed out of the government is, ironically, precisely the amount accepted by the union and rejected by the government when an arbitrator recommended it well before the strike began on April 27. The union's chief weapon was its shrewd, tough-talking president, Monika Wulf- Mathies, who brilliantly calibrated the walkouts to demonstrate the union's power without antagonizing the public. No more than 430,000 members stayed off the job at any one time, limiting the strike's damage to levels other citizens could tolerate. Business losses and public inconvenience were held to a minimum. The tactic worked. Popular outrage was aimed at Kohl, not the garbage collectors.