Corporate Pink Slips Turn Germans Red

Politicians are seeing red because companies continue to lay off masses of workers even while profits rise. Some seek new corporate regulations

The headlines have come in quick succession. BMW on Wednesday announced it was eliminating 8,100 jobs, 7,500 of them in Germany. Engineering giant Siemens announced on Tuesday it was slashing 3,800 workplaces worldwide. And Henkel, which makes an array of household products from cosmetics to detergents, announced Wednesday it is cutting 3,000 employees -- the largest such cuts in company history.

But that's not all. Every one of those companies will be posting sky-high profits for 2007. Some German firms, it would seem, are reaping billions while releasing thousands.

Germany's center-left Social Democrats have had enough, and have come up with some ideas to stop the slaughter. Rainer Wend, an economic policy expert for the party would like to "limit the amount of stock options that managers receive," he told the Berliner Zeitung. "We have to introduce incentives to stop short-term speculation," Wend said. He also announced his frustration with corporations' focus on the next shareholder meeting instead on their middle- or long-term positions. And he wants to limit the power of shareholders.

Fellow SPD party member and Labor Minister Olaf Scholz likewise blasted BMW, Siemens and Henkel on Thursday. Economic leaders in Germany, he said, have to do their part "by taking advantage of their full order books and taking responsibility by hiring qualified workers instead of cutting jobs -- despite healthy profits -- as one has heard these days from a number of large companies."

Chancellor Angela Merkel's Christian Democrats also jumped into the fray, with deputy floor leader Michael Meister saying that it's hard to understand why some companies cut skilled labor while others complain about a shortage of skilled workers. He also said that it is "not credible when high profits and job cuts are reported simultaneously."

The job cuts have not changed the overall trend of falling unemployment in Germany. This February, there are 630,000 fewer jobless than last year. But Berlin's disgruntlement over the recent job cuts continues a trend of German politicians pleading with large companies to take more social responsibility.

Just last December, Chancellor Merkel went after company managers who draw massive salaries. "When management failures are compensated with fantastic salaries, that undercuts the faith in social balance in our country," she said. Her comments came shortly after German President Horst Köhler also started a debate about the earnings of managers. Just prior to his comments, Porsche announced that CEO Wendelin Wiedeking would be earning €54 million in 2007.

Still, not everyone in Germany is concerned about the job cuts. Holger Schäfer, a labor expert at German Business Institute (IW), defends such a corporate strategy: "Even firms that have huge profits cannot afford to hold onto jobs that are no longer necessary," he told the Berliner Zeitung. "When big firms let personnel go, it's a normal sign of a healthy economy."

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