German Sick-Pay Law Sparks Protest at Daimler-Benz and Ford, Audi Bargains with Workers

10/03/96

Last week the German Government, under Helmut Kohl's leadership, passed a new law that lowered the minimum amount companies must pay workers on sick leave. Formerly, German companies had been required to pay sick workers their full salary, but the new law allows them to pay only 80% of a sick worker's pay. The law took effect Tuesday, and has touched off protests across Germany.

Kohl championed the new law as part of his austerity plan, which aims to prepare the country financially for the European currency union. The law will supposedly cut German wage costs by $7.88 billion. Companies have claimed that the costs make them uncompetitive in world markets.

The law has infuriated unions across the country. They argue that companies that have announced their intention to implement the law have violated existing labor contracts that specify 100% sick pay benefits. The unions argue that the new measures would cost an average worker who was sick for one month over $300 a month and leave the employee with additional costs to pay for healthcare.

Kohl has attempted to stay out of the conflict, except to say the new law should be implemented in a way that does not break existing wage agreements. He has not yet commented on whether companies that have implemented the new policy have broken their agreements with workers.

German vehicle maker Daimler-Benz--parent company to the extremely profitable Mercedes-Benz luxury car operations--has been the focus of much of the worker protest against the new law, as it was the first big German company to announce that it would cut its sick-leave policy to match the new lower standards. Helmut Lenze, chairman of the Daimler works council at Mercedes' plant in Stuttgart criticized Daimler's unilateral implementation of the new law, which he indicated violated workers' current contract with the company. He said Daimler was applying the "personnel policies of Rambo."

More than 100,000 Daimler workers at more than 50 group sites protested Daimler's attempt to shift the sick-pay burden onto workers' backs. That total included 10,000 Mercedes-Benz workers demonstrating outside a Mercedes plant in the Stuttgart area.

"Sick pay is no luxury. We are not swimming in money like the top managers," Helmut Lenze told the rally. "We promise the Daimler board that this is only the beginning." Lenze confirmed that workers would work neither overtime nor weekend shifts until Daimler backed down.

Workers also protested at other plants. Reuters reported that 21,000 workers at Ford's German unit mounted protests on Tuesday, in an attempt to find out what decision the company would take on the new law. Wilfried Kuckelkorn, the chairman of Ford's works council, said about 12,000 workers protested at Ford headquarters in Cologne. 9,000 other workers attended protests planned for factories in Berlin, Saarlouis, Wuelfrath, Merkenich and Dueren.

Some carmakers did not follow Daimler-Benz's lead in cutting benefits, and were spared protests. Audi, for instance announced on Tuesday that it reached an agreement with its works council about how sick pay would be handled. Audi said they agreed to pay 100 percent of their wages while out sick, but that workers will have to make up 20 percent of the time lost. Audi will work out the details of the plan in further discussions with workers.

Still other German carmakers were reported to have announced that they would make no changes to their existing contracts with workers. Reportedly, Volkswagen, Porsche and BMW will all continue to pay 100 percent of their workers' sick pay benefits.

Paul Dever -- The Auto Channel