Political Stalemate Portends More Job Losses, Outsourcing In Germany - InformationWeek

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IT Leadership // IT Strategy
Commentary
9/20/2005
06:02 AM
Paul McDougall
Paul McDougall
Commentary
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Political Stalemate Portends More Job Losses, Outsourcing In Germany

While officials at Siemens Business Services say there's no link between the non-outcome of Sunday's national elections in Germany and the company's announcement Monday that it would slash 2,400 jobs, or 16% of its German workforce, there is at least a symbolic connection that's worrisome.

While officials at Siemens Business Services say there's no link between the non-outcome of Sunday's national elections in Germany and the company's announcement Monday that it would slash 2,400 jobs, or 16% of its German workforce, there is at least a symbolic connection that's worrisome.In refusing to give economic conservative and Christian Democrat leader Angela Merkel a clear mandate to govern, Germany's voters have rejected the kind of business friendly, pro-growth policies that the country needs to escape its years-long economic malaise. They also have rejected many of the initiatives that German businesses will require in place if they are to keep jobs in the country and not ship them off to India, China, or some other low-cost destination.

Now, Germany faces a potentially crippling political deadlock. Despite receiving fewer votes than Merkel, incumbent chancellor Gerhard Schroeder insists his Social Democrats won sufficient support to form a coalition government and thus far has refused to step down.

With both top candidates lacking a clear mandate to govern, many observers believe there will be little progress in dismantling the kind of anti-business policies, such as industrywide collective bargaining, that have led multinationals like IBM and Hewlett-Packard to cut back operations in Germany and homegrown companies like Siemens to move jobs abroad.

What Germany, and German voters, must understand is that business, especially IT-related business, is now portable. CEOs will move their workforces to countries that will give them the freedom to conduct operations as they see fit. Some may view that as a backward step for labor, but it's a fact of our globalized, 21st-century world.

Faced with political stagnation, Germany will continue to stumble along with one of the highest unemployment rates in the industrialized world. That doesn't sound too worker friendly, does it?

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