"The Plant They Couldn't Close"

While we in the U.S. are mourning the loss of hundreds of thousands of jobs in our beloved auto industry, European car makers are holding on to their workers, despite a serious decline in sales. In a recent New York Times article, Europe Feels the Strain of Protecting Workers and Plants by Nelson D. Schwartz, a union representative for G.M.’s Opel unit in Europe made this comparison:

“In the U.S., you get money to close down factories,” said Klaus Franz. “In Europe, you get money to keep them open and safeguard jobs.”

Franz is referring to the fact that U.S. companies have been handed billions of dollars in bailouts from Congress to stay afloat, but are still cutting jobs and closing down factories. The approach in Europe has been radically different: Because they would be forced to pay large government-mandated severance packages and suffer enormous public outcry, G.M. Opel plants in European countries like Germany, Belgium and France are refusing to shut down, even though their sales have decreased as sharply as in the U.S.


But there is a big risk to the European approach. It is believed that European car production in general is more than 25% over-capacity. Analysts warn that the European economy can’t hold on forever and that continuing at this rate -- with no increase in demand -- will lead to another crisis down the road. Some say that the Europeans are putting off the inevitable and should pay the price now.

This story demonstrates probably the most important cultural difference between U.S. and European public policy. In the U.S., welfare benefits primarily support our neediest – the poor, disabled, children and elderly. Being “on welfare” is a source of shame in the U.S. But as we discussed in class, Europeans see no problem at all in receiving welfare benefits. To them, it is the government’s duty to take care of its citizens. When Europeans cannot find work or are laid off, they do not feel responsible; they blame the government for not better protecting them. The auto industry example is just one that indicates the cultural divide between the American and European approaches to the protection of workers.

In Introduction to Comparative Government, Michael Curtis says that the “extent and cost of welfare systems depend on a number of factors” including the “changing labor market” (p. 37). Based on the above example, I wonder if the global recession is going to eventually force European governments to scale back on the benefits they have traditionally provided. In other words, will the economic crisis cause a cultural shift in European public policy regarding its workers – and what will the reaction of those workers be? Will they sacrifice jobs to save industry as we have?

~ Nancy