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German Mittelstand balks at job guarantees

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German Mittelstand balks at job guarantees
The Mittelstand makes cool stuff like tunnel drills. Photo: DPA
15:36 CET+01:00
Small and medium-sized companies, the backbone of the German economy known as the Mittelstand, reacted coolly on Tuesday to a proposal by blue-chip firms to guarantee jobs next year despite a biting recession.

Some of Germany's biggest companies offered this week to abstain from mass job cuts in 2009 as a contribution to a government stimulus and recovery package expected to be agreed early next year. But smaller firms, which employ about 70 percent of German workers, said they were sceptical about such pledges in a volatile economic environment.

"Paying lip service won't help anyone," the president of the German Association for Small and Medium-sized Businesses, Mario Ohoven, told the Münchner Merkur newspaper.

The head of the Association of Family-Owned Businesses, Patrick Adenauer, agreed that he could not rule out redundancies.

"I think it is very problematic to offer job guarantees in such turbulent economic times," Adenauer told the Bild newspaper.

He said the best way to offer job security was "if customers assure demand and buy our goods and services."

Labour Minister Olaf Scholz welcomed the promise by corporations on the Frankfurt stock exchange's Dax 30 index, which was reportedly initiated by Siemens chief executive Peter Löscher.

"It is a good but also a necessary message to send if major companies avoid layoffs," he told the daily Hamburger Abendblatt. "I hope several other companies make the same announcement. In these difficult times we must all stick together."

Smaller firms are bearing the brunt of the German recession, facing shrinking demand and an ongoing credit crunch. Critics say the major corporations' idea is little more than a publicity stunt because the vast majority are already bound by agreements with unions barring mass redundancies.

German Chancellor Angela Merkel, who is facing pressure at home and abroad to do more to shore up Europe's biggest economy, is to bring her left-right coalition government together for a meeting on January 5 to assess the crisis.

She is expected to unveil a second stimulus package early next year as a follow-up to a €31-billion ($40-billion) package approved by parliament this month.

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