The Amazon Grinch and Germany’s Unhappy Elves

Foreign Policy Magazine explains that when an American online retailer brings its start-up style to unionized Central Europe, workers go on strike.

LEIPZIG, Germany — A week before Christmas, Amazon’s logistics center in Leipzig is bustling. Trucks trace a line to and from the loading docks at the American online retailing giant’s vast complex, which helps supply Germany and beyond. Inside, workers stack and ready holiday packages for shipment. It’s the busiest time of year for the world’s second biggest e-commerce company.

But outside the logistics center’s steel mesh gates, the scene is less festive. Around 500 Amazon employees are packed in a heated tent, sitting on beer benches and passing around home-baked cookies while Europop plays from a stereo mounted on a stage.

Some read the newspaper; others play board games. They’re all members of Amazon’s labor union, Verdi, and they’re on strike. Plastering the tent are signs and banners carrying messages like “Dear Jeff Bezos, don’t invest in drones, invest in people” and “We aren’t robots!”

Ralf Christan, 54, started working at Amazon’s Leipzig logistics center three years ago. It took more than two years, a series of temporary contracts, and intense wrangling with his manager to get the job security of an unlimited contract. It’s part of Amazon’s practice of stringing along workers, he says, and it breaks down morale. 

“It’s legal according to our laws, but I think a company doesn’t need two years to see if a worker is the right fit or not,” he said. “They don’t value us.”

For many here, the rise of Amazon Germany is a classic tale of David vs. Goliath: an American behemoth shirking the country’s century-old labor protections to cut costs and increase productivity while pushing low-paid, low-skilled workers to the brink of exhaustion. The specter of U.S.-branded capitalism confronting a deep-seated culture of workers’ rights is raising ire across German society. Amazon has become the primary target.

In a bid to throw a wrench into the clockwork of Amazon’s supply chain, Verdi staged another walkout at six of the company’s nine logistics centers in Germany during the holiday season, the busiest time of year for Amazon. Some of the sites are holding out through Christmas Eve. In response, Amazon brought on more seasonal workers and powered through the strikes saying there was “no impact on fulfilling customers’ delivery promises.”

“It’s a machine that’s well-oiled and running and cannot be stopped,” said Gerrit Heinemann, a retail expert and professor at the University of Applied Sciences in Mönchengladbach in western Germany. “A machine doesn’t need labor laws.”

Wages are at the heart of the Amazon-Verdi standoff. Amazon maintains that it’s a logistics company and pays its workers at the upper end of that sector’s scale, with a starting rate of a little over 10 euros an hour. Verdi insists its members should receive salaries according to higher retail industry rates, and is pushing for a collective bargaining agreement. The Seattle-based retailer rejects that demand. The company says it respects the right to strike, but encourages employees to resolve complaints directly rather than through unions.

“We foster a culture of open discussion and our management teams encourage open communication at eye level — if there’s a problem, we find a solution together,” Anette Nachbar, a senior public relations manager at Amazon Germany, said in an emailed statement. “The vast majority of our workers see Amazon as a fair and responsible employer.”

The German government has remained quiet on the dispute, because it has to: German law requires that wages be negotiated autonomously, without government interference or influence. But Verdi has launched full-steam ahead. The union filed a lawsuit last week against a regional court’s decision to allow Amazon workers in two cities to work on the Sunday before Christmas. Working on Sunday is only permitted in exceptional cases, according to German labor laws; Verdi says this is not one of them.

The corporate culture problem

The union’s Amazon members started staging strikes in May 2013, and the latest stoppage is the largest yet. But the dispute is about more than wages and contracts. In addition to a collective wage agreement, Verdi workers are demanding, simply put, more respect for German working culture.

“If I have a company and go to another country, I have to adapt to the circumstances there,” said Thomas Schneider, Verdi’s trade representative for the Leipzig region. “Otherwise you have anarchy, you have the free market, pure capitalism. In Germany we have a social market economy.”

Employees at Amazon’s Leipzig site complain that their breaks are cut short by security protocols for clocking in and out of the workplace (there have been similar complaints in the United States), that their Christmas bonuses are meager (400 euros) and that they are not receiving the vacation bonus (on top of 29 paid vacation days) that they are entitled to. The physical labor and acute time pressure, they say, entitle them to receive those benefits. And some politicians agree.

“Amazon has received many millions in support on a federal and state level, and that while largely avoiding taxes in Germany,” said Janine Wissler, a member of the leftist Die Linke party in Hessen, in a statement referring toAmazon’s controversial tax arrangements in Luxembourg. “That makes it even more reprehensible that the company continues to undermine regular wage standards.”

As the strikes continue, so do calls for Amazon to change its tune. A 2013documentary on Germany’s national public broadcaster shined a harsh light on Amazon’s practice of hiring thousands of temporary workers from abroad under what the filmmakers called dubious conditions. Many of the workers were put up in shoddy motels, monitored and harassed by a brutal private security firm, and forced to work weeks at a time without a day off, according to the report.

The film sent shockwaves around the country, with angry posts on Amazon Germany’s Facebook page calling the company’s strategy “nauseating” and “inhumane.” “Amazon in a Shitstorm,” read a headline in the national dailySüddeutsche Zeitung.

A critique in the Frankfurter Allgemeine Zeitung not long after lamented: “The retailer is turning our lives upside down, undeterred — it’s building a monopoly that’s going in the direction of same-day delivery.”

And a recent study conducted for the Hamburg-based consulting firm Faktenkontor shows that 20 percent of Germans polled believe Amazon’s poor reputation is reason enough to boycott the site next year.

Yet Amazon Germany says it has fostered a positive work environment, pointing out that the majority of employees chose not to go on strike. Meanwhile, the company has motored ahead. With up to 10,000 seasonal workers during the holidays as well as 28 logistics centers across Europe, it’s made good on its delivery promises despite the strikes.

“A German company would be much more influenced by the strikers’ perseverance, and they’d be more likely to give in because they worry about the damage to their image,” said Hagen Lesch, a labor expert at the Cologne Institute for Economic Research. “American companies seem to have a different understanding.”

Efficiency über alles

Despite widespread criticism of the company’s practices, Amazon is hugely successful in Europe’s largest economy, precisely because it is so fiercely efficient.

Amazon racked up some 7.8 billion euros in sales in Germany last year, a 20 percent increase from the previous year and growing. The German market is now the company’s second biggest after the United States — and that in a country that is still heavily cash-based and where consumer spending is notoriously sluggish.

“Amazon is one of the very few online retailers that customers trust,” said Heinemann. “They have managed to do that by keeping promises — delivery times, easy returns.” As that trust grows, and as the demand for instant online retail expands in Germany, the calls for Amazon to improve labor standards contradict what customers actually want, say analysts.

“You can’t say ‘I would like to have the package on Tuesday morning if I ordered it on Sunday but there should be really decent working conditions and people should get lots of breaks,’” said Alexander Spermann, director of labor policy at the Institute for the Study of Labor in Bonn. “That just doesn’t work.”

Amazon is adapting to Germany, too. It has given way to its employees on some key issues, like works councils — in-house bodies that represent employee interests alongside unions — that have helped to negotiate wage increases from 7.76 euros an hour in 2010 to just above 10 euros an hour today.

But the uproar surrounding the company is less about abiding by the law than it is about Germany’s brand of social capitalism and its labor traditions.

But the uproar surrounding the company is less about abiding by the law than it is about Germany’s brand of social capitalism and its labor traditions. German heavyweights like Siemens and Volkswagen have built their success on a culture of representation and participation, where powerful works councils and unions play a role in shaping how a company grows and what it plans. In many industries, unions wield incredible clout: a strike by German train drivers in November nearly brought the country to a standstill. Walkouts at Lufthansa over retirement and pensions have wreaked havoc at major airports across Europe.

Anger still lingers over former Chancellor Gerhard Schröder’s decision, a decade ago, to enact a series of sweeping economic reforms that brought more flexibility to the labor market. That has made Germany decidedly less regulated and unionized than countries like France or Spain. Criticized initially as undermining the country’s welfare system, Schröder’s reforms are now widely credited with shielding the German economy from the throes of the Eurozone debt crisis.

Schröder’s government made it easier for companies to hire temporary workers. It’s now a practice that some German employers take advantage of: low-cost food retailers like Netto and Kaufland have been accused of paying their temp workers lower than stipulated. And German employers are actually not legally required to sign a collective wage agreement or allow a works council, either, though most do because it remains an element of corporate culture.

“At Opel or Volkswagen or elsewhere, companies can’t make a single decision without the unions’ and works councils’ involvement,” said Volker Rieble, a professor for labor and civil law at Ludwig Maximilian University in Munich. “For someone with a liberal capitalist mindset, that’s unreasonable because there’s not much left of the company’s freedom.”

The Poland pivot

Verdi, meanwhile, has vowed to continue work stoppages until the union reaches a wage agreement with Amazon. But there is a growing sense of unease as Amazon quickly builds up logistics operations in neighboring Poland, where wages are much lower (just 3 euros an hour, according to Poland’s largest union, Solidarnosc) and labor laws even more pliable.

As if on cue, members of Solidarnosc showed up at the strike in Leipzig last Wednesday, representing the voices of Poland’s Amazon workers and promising to support their German colleagues.

“A few years ago people were desperate to work because it’s a problem to find a job. Now people are starting to think differently,” said Anna Wegner from Solidarnosc’s office near Poznan, just over 100 miles from the German border, where Amazon has opened a logistics center. “People start to think it’s not good to close a German center because in one, two years they’re going to close centers in Poland and go, for example, to Ukraine.”

Amazon says there are no plans to close any of the existing logistics centers in Europe. “The new centers, including those opened in Poland, support Amazon’s continuing growth in Europe,” said the company’s statement. “They help make sure that Amazon customers in Europe can enjoy the same fast and reliable service that they are already used to today.”

The workers themselves have made a clear appeal to Amazon customers: don’t boycott. That would negatively impact their jobs. And strike as they may, they’re fighting for better conditions, not new jobs.

Back at the Leizpig strike camp, they summoned the spirit of Christmas evil to show media and passersby who is truly stealing the holiday cheer. A worker donning a Grinch costume climbed onstage to raucous cheers and the sound of shrill whistles.

“Amazon says ‘those evil Verdi people, they want to ruin Christmas for the kids, like the Grinch,’” said union representative Thomas Schneider. “Well we’re not the Grinches — the Grinches are in there!”

On the other side of the fence, a lone Christmas tree twinkled through the large glass lobby doors, as more trucks idled by. Two Amazon employees appeared briefly in the window, but quickly vanished again. More orders to fill.

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