Demanding a capital stake in a troubled company may seem like an odd thing to do at the height of the worst recession since the second world war, but for German workers it is fast becoming a powerful rallying cry. The idea of Mitarbeiterbeteiligung – employee participation in either the capital or the profits of their company – is catching on among trade unions and politicians. The move shows that amid the ravages of a brutal downturn, labor representatives, who have traditionally prioritized wage negotiations, are prepared to explore unfamiliar territory.

“Companies are saying to workers: ‘You must put up with this or that.’ Well, we’re saying, ‘OK, maybe we’ll go along with that, but only if we get something in return’ – from employment guarantees right up to a stake in the company,” says Berthold Huber, head of IG Metall, Germany’s biggest trade union.

Compared with other European countries, German employees have until now shown little enthusiasm for taking a stake in companies. A report published this year by the European Federation of Employee Share Ownership found only 1.7 per cent of the equity of large German companies was held by their workers, compared with a European average of 2.6 per cent and 4.5 per cent in France.

Yet the economic downturn is increasing the popularity of the idea in Germany. Businesses suffering from falling demand and a shortage of liquidity have been under pressure to cut their personnel costs. In this context, employees have little choice but to agree to concessions. However, they are starting to demand assurances that they will be rewarded after the crisis is over and the company returns to profitability.

Politicians also see the advantages of these arrangements and legislation was passed earlier this year to promote employee co-ownership. “Since the crisis began, the idea of giving workers a [capital] stake has become more attractive,” Olaf Scholz, labor minister said in Westdeutsche Allgemeine Zeitung. “Until now, workers have held too few of the shares in their companies.”

Leading the way is the cars sector whose weakened condition is forcing management and workers to embrace new ideas.

Daimler last month set up a working group to examine whether an employee profit bonus should be converted into a capital stake in the company to help reduce costs.

The talks follow the announcement of a €2bn (£1.8bn) cost savings programme that will cut the hours and pay of 60,000 workers by 8.75 per cent this year in exchange for job guarantees.

“We are the only shareholders who have a long-term interest in the company, in contrast to those [shareholders] who only want to make a quick profit,” Erich Klemm, head of Daimler’s works council, told a trade union conference.

Opel’s works council has mooted a similar plan in the battle to help rescue the troubled European arm of General Motors. In its bid for Opel, Magna, the Canadian auto parts maker appeared to take this message to heart – promising workers 10 per cent of the new company.

Meanwhile, workers may be given a stake in Schaeffler, the indebted car parts and industrial conglomerate, as part of an unprecedented deal with labor representatives to preserve jobs and cut €250m in costs.

Small and medium-sized companies are also beginning to recognise the benefits of the scheme, says Heinrich Beyer, director of the Arbeitsgemeinschaft Partnerschaft in der Wirtschaft (AGP), a sort of lobby group for companies with employee ownership arrangements.

“Workers have nothing to lose. With a profit share or capital stake they at least have a stake in the future,” he says. That’s the way many companies are thinking at the moment – and the unions too.”

However, IG Metall, which has 2.3m members in the German engineering sector, also retains considerable skepticism about the ability of employee ownership to help companies and their workers. “Opel will not be saved by just giving workers a stake – [the rescue package] will be of a far greater dimension”, Jörg Köther, a union spokesman, warns. “Employees who take a stake in their company . . . not only have to worry about [losing] their job but also bear an additional financial risk.”

Critics say trade unions have been unwilling to see their power diluted by employees becoming protocapitalists – German workers already influence big corporate decisions through their representation on supervisory boards.

Little surprise, then, that a study by the Institute for Employment Research (IAB) found that in 2005 only about 10 per cent of German companies had profit-sharing schemes, while a paltry 2 per cent enabled workers to put capital into the business.

These figures, taken at a time when the economy was stronger, corporate profits were soaring but wages stagnating – revealed a bleak picture of a German workforce that was failing to enjoy the fruits of its labor.

When Chancellor Angela Merkel’s coalition government came to power in 2005, ministers promised to do something about this. The government finally agreed a batch of new employee incentives last year (see box).

Goldbeck, a mid-sized inter-national commercial construction group based in Bielefeld, western Germany, is a model for how these incentives could work.

The family-owned business allows workers to purchase a “silent” capital stake up to the value of €1,055 each year.

The annual interest pay-out on this capital varies according to the profitability of the company but has averaged 12 per cent since the scheme was founded 25 years ago.

Although workers are not purchasing a say in how the company is run, they are motivated to work harder and there is better communication between staff and management, explains Thomas Domeyer, a Goldbeck financial officer.

“Employees have the feeling that they are partners in the firm and that at least a small piece of the company belongs to them,” he says. “As long as the company has good results, it’s very lucrative for them.”

However, Mr Domeyer acknowledges that the investment is not risk-free: “If the company became insolvent the money would be gone.

New German legislation designed to encourage employee co-ownership came into force on April 1. The tax-free limit on employee stake purchases was raised from €135 (£118) to €360 and a program of state top-up contributions was expanded.

An alternative model, backed by the Social Democratic party, gives employees the option of buying a stake in a so-called “Germany-fund”. The risk to workers is thereby reduced because the fund manages shares in several companies.

Companies hoping to take advantage of the improved tax breaks must also tread carefully because the legislation prohibits the simple substitution of a pay increase with a capital stake. Any capital participation must be in addition to agreed pay deals. However, Olaf Scholz, labor minister, said this week that exceptions to this rule might be necessary because of the economic crisis.

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A pandemic of green shoots, a world infested by signs of hope of recovery, and a big market rally. The FTSE All-World index has risen by 31 per cent since its March low. The VIX index – a gauge of market fear – has more than halved from its year-end high, although it still remains well above pre-crisis levels. Best of all, the interbank lending market is creaking open. The so-called Libor-OIS spread – the premium over expected central bank interest rates that commercial banks charge each other for three-month money – is down to 80 basis points, a quarter of its crisis peak, although still more than treble what Alan Greenspan, for what his opinion is still worth, believes is “normal”.

Investors no longer talk about Great Depression II. Instead, the world merely faces Great Recession I. Immunised by pessimism-beating cheap money and higher government spending, confidence has returned. The risk of a swine flu pandemic? A run on face masks, not on markets. Chrysler’s bankruptcy? At last! For now, there is no such thing as bad news; the optimism is self-fulfilling.

Economic apocalypse deferred, gold prices have dropped. Even a 56 per cent rise in UK company failures left the London stock market unmoved on Friday. For the first time in almost 20 years there is also more invested in low-yielding US money market funds than in equities. Johnny-come-lately investors could take the market higher still.

Yet this is largely a trading call. Cheap credit and government largesse are palliatives that at some point will be withdrawn. The financial system is not fixed, merely stabilised. Housing markets have not yet touched bottom. Unemployment is rising, as are taxes. Even China can’t save the world by itself, and the chance of an emerging markets crisis, given the withdrawal of cross-border lending, remains high.

More immediately, government bond yields are rising, as are corporate bond spreads. The best of the rally has already passed.

The Nation welcomes responses from community activists around the world about your efforts to fight foreclosure and protect the most vulnerable from economic disaster. Use the e-form at the bottom of this page to tell your story. We’ll publish as many of your responses as possible in our ongoing “Tell The Nation” series.

—

To: All poor Americans and their communities in resistance
The privatization of land–a public resource for all that has now become a false commodity–was the original sin, the original cause of this financial crisis. With the privatization of land comes the dispossession of people from their land which was held in common by communities. With the privatization of land comes the privatization of everything else, because once land can be bought and sold, almost anything else can eventually be bought and sold.

As the poor of South Africa, we know this because we live it. Colonialism and apartheid dispossessed us of our land and gave it to whites to be bought and sold for profit. When apartheid as a systematic racial instrument ended in 1994, we did not get our land back. Some blacks are now able to own land as long as they have the money to do so. But as the poor living in council homes, renting flats or living in the shacks, we became even more vulnerable to the property market.

It is chilling to hear many people today speak with nostalgia about how it was better during apartheid–as if it was not apartheid that stole their land in the first place. But, in an obscure way, it makes sense. Back then in the cities there was less competition for land and housing. Because many of us were kept in the bantustans by a combination of force and economic compulsion (such as subsidized rural factories), the informal settlements in the cities were smaller and land less scarce.

But in the new South Africa (what some call post-apartheid South Africa and others call neoliberal South Africa), the elite have decided it is every man–or woman or multinational company–for him or herself. And thus, the poor end up fighting with the rich as well as with themselves. The elite use their wealth and their connections to all South African political parties in the pursuit of profit. There is very little regulation of this, and where there is regulation, corrupt and authoritarian government officials get around it in a heartbeat. People say that we have the best constitution in the world–but what kind of constitution enshrines the pursuit of profit above anything else? They claim it was written for us. That may be. But it obviously was not written by us–the poor.

So, the recent realization that there is a financial crisis in the US (we think the crisis has been there a long time, but was hidden by economists) reminds us of where we ourselves stand. While our neoliberal government has touted growth and low inflation figures as proof of the health of our country, 40 percent unemployment has remained. While Mandela and Mbeki were in power and the economy grew, poor South Africans had their homes stolen right from under them. For our entire lives, we have been living in a depression, and at the center of this crisis is land and housing.

As the poor, we gave the African National Congress government five years to at least make some inroads towards redistribution. But instead, the land and housing crisis has gotten worse, inequality greater, and we are more vulnerable than ever.

So, in 1999, 2000 and 2001, farms, townships, ghettos and shack settlements all across South Africa erupted against evictions, water cutoffs, electricity cutoffs and the like. We have been fighting for small things and small issues, but our communities are also fighting two larger battles.

The first is embodied in the declaration we make to the outside world: We may be poor but we are not stupid! We may be poor, but we can still think! Nothing for us without us! Talk to us, not about us! We are fighting for democracy. The right to be heard and the right to be in control of our own communities and our own society. This means that government officials and political parties should stop telling us what we want. We know what we want. This means that NGOs and development “experts” should stop workshopping us on “world-renowned” solutions at the expense of our own homegrown knowledge. This means we refuse to be a “stakeholder” and have our voices managed and diminished by those who count.

In the 2004 national elections and again in this year’s elections, we have declared, “No Land! No House! No Vote!” This is not because we are against democracy but because we are against voting for elites and for politicians who promise us the whole world every five years and, when they get elected, steal the little we have for themselves. Elections are a chance for those in power to consolidate it. We believe this is not only a problem of corruption, but also a structural problem that gives individuals and political parties the authority to make decisions for us. We reject that and we reject voting for it.

Second, while our actions may seem like a demand for welfare couched in a demand for houses, social grants and water, they are actually a demand to end the commodification of things that cannot be commodified: land, labour and money. We take action to get land and houses and also to prevent banks from stealing our land and houses. When a family gets evicted and has nowhere else to go, we put them back inside. (In Gugulethu last year we put 146 out of 150 families back in their homes).

When government cuts off our electricity, we put it back on. In 2001, we were able to get the City of Cape Town to declare a two-month moratorium on evictions. We break the government’s law in order not to break our own (moral) laws. We oppose the authorities because we never gave them the authority to steal, buy and sell our land in the first place.

Combined these are battles for a new emancipatory structure where we are not stakeholders but people; where land is for everyone and where resources are shared rather than fought over.

This anti-eviction movement you are waging has the potential to help build a new kind of liberative politics outside of the political parties. We have found that these politics must be about the issues (including land and housing). It must not be about personalisation of the struggle. No politician or political party can or will fight the struggle for you. As a hero of your past once stated: power concedes nothing without a demand. Being in the struggle for over nine years, we have learned the following:

•Beware of all those in power–even those who seem like they are on your side.

•Beware of money, especially NGO money, which seeks to pacify and prevent direct action.

•Beware of media, even alternative media written by the middle class on behalf of the poor. Create your own media.

•Beware of leaders, even your own. No one can lead without you. Leaders are like forks and knives. They are the tools of the community and exist to be led by the communities.

When you build your “Take Back Our Land! Take Back Our Houses!” movement, build from below. Build democratically. Build alternative and autonomous ways of living within your community while fighting for what is yours. Build your own school of thought.

Make sure poor communities control their own movements because, as we say, no one can lead without us. Make sure you break the government’s laws when necessary, but never break your own laws which you set for yourselves.

Most important of all, do not forget you have much to teach us as well. We all have much to learn from one another.

Amandla Ngawethu! Power to the Poor People!

The Western Cape Anti-Eviction Campaign
South Africa

So with that in mind why don’t we ask:

1. What good is being Doctor Doom if don’t have plans for world domination and robotic doppelgängers?
2. What is going are going to do with all unfinished and abandon real estate not just in the city centers but in all the rings around them as well?  Let’s face it, a sprawling two story building of steel and glass just isn’t as defendable is a castle or or leper colony.  Or as sexy really.

Later, i saw Geithner’s testimony. He wants to give yet more money to banks “to restore trust and the flow of lending”.  He came up with a vague plan for a bad bank with public and private money to absorb toxic assets. Same faulty approach of last year’s TARP program. I mean GoldmanSachs Paulson and Wall Street Geithner differ in the fact that at least the latter wants private capital to chip in in the mess it created. But hell, it’s still money with no strings attached, and it doesn’t put a value on these assets (think McMansions in the Nevada desert: how much are they worth now?).

Only nationalization of banks and socialization of credit will get us out of the slump, while undermining the power of those who got us into this mess. Eurobankers stay incredibly arrogant, viz. ackermann in germany or mazzotta in italy. These greedy dumbsters will hoard all the public money they receive and keep lending at penalty rates. Damn it, let’s make élites cough up this cash for social spending. The $10 trillion which, one way or the other, are being thrown at the parallel banking system and stimulus plan amount to more than $1.400 that could be given to every human on the planet. And most of these folks would spend this money instead of hoarding it.

Also no progressive policy is sustainable without restrictions on capital movements. The era of financial globalization ended in misery and indignity. Let’s make sure it doesn’t happen again. A minimal social plank for the left in europe and elsewhere could be:

- basic income and living wage
- socialization of credit
- taxation of wealth
- controls on capital movements and fixed exchange rates
- deficit spending on environment, culture, education, community empowerment financed by money creation

Let’s unite on March 28 and April 1st against financial capitalism. Let’s do a joint Mayday to make’em pay.

(Send your Love to those Greedy Dumb Bastards on Valentine’s Day, our comment, GR)

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trillions to the unemployed, not bankers