Letter From Europe: General Strike in Luxemburg (1982)

The Letter From Europe column from the May 1982 issue of the Socialist Standard

On 5 April 80,000 workers in Luxemburg staged a one-day warning strike against government proposals aimed at preventing wages rising in 1982 as fast as the cost of living.

A few months ago such a general strike seemed inconceivable. Even the Trotskyists who put forward demands they con­sider unrealisable only in order to appear militant, were taken unawares. On a mass trade union demonstration held on 27 March they were distributing a leaflet headed “For a 24-hour General Strike”; little did they imagine that four days later most of the trade unions would accept this demand! Luxemburg’s last strike (apart from those by EEC civil servants) took place in the private sector in 1973 and in the public sector in 1949.

Luxemburg, with a population of about 370,000 (of whom 30 per cent are non-citizens), is in close economic union with Belgium, both countries having the same currency and trading as a single unit. Its major industry—steel—is owned by Arbed, a private company with international connections. The other main source of employment is government ser­vice, including the railways, Post Office and, in recent years, banking and a Good­year tyre factory. The rest of the work­force is employed in small and medium-sized enterprises. There are also some 5,000 EEC civil servants.

The one-day general strike was called to protest against the government’s pro­posal to end the automatic link between wages and the official “cost of living” which had been introduced in 1975. Under this arrangement each time the cost of living rose by 2.5 per cent, wages automatically rose by the same percentage. There is nothing particularly generous or extravagant about such an arrangement; as a matter of fact it is only a way of ensuring, in a period of rising prices, that the laws of the capitalist market are respected; that, in other words, sellers, in this case of labour power, continue to obtain a price more or less equal to the value of what they are selling. If wages do not rise as fast as the cost of living then in real terms-in terms of what wages will buy—they fall and workers are paid less than the value of their labour power.

Since trade unions exist to try to defend workers’ wages and conditions, it is only natural that the Luxemburg trade unions should have tried to resist the government’s openly proclaimed intention to reduce real wages. The government proposed to achieve this by abolishing the automatic indexisation of wages and limiting wage increases in 1982 in most cases to 5 per cent, while at the same time announcing that it expected prices to rise by at least twice this amount. 

This proposal was not motivated by malice, but was imposed on that government by the way that capitalism operates. Capitalism is a system that can never work in the interest of the wage and salary earning majority. Certainly, in its periods of expansion, workers can expect rising wages (even if this is offset by having to work more and more intensively) but such periods of expansion are only one side of the coin. Capitalism does not, and cannot, expand in a smooth and continuous way; its growth pattern is one of fits and starts, of alternating periods of expansion and contraction (booms and slumps). The other side of a period of expansion and rising wages is the period of contraction and falling wages which inevitably follows it.

The last period of expansion came to an end in 1975 when capitalism entered into its current world recession. Wages—real wages, that is, what they can buy—tend to fall in a slump because the increased unemployment turns labour market conditions more in favour of employers. Supply of labour power comes to exceed demand so, as always happens in such circumstances, its price (wages and salaries) tends to fall. Workers can, by trade union organisation and action, slow down this tendency but they can’t reverse or even halt it. Thus in Britain over the past few years trade unions have been forced to settle for single-figure “increases” even though prices have been rising in double-figures. In Germany too unions have had to settle for rises smaller than that expected in the cost of living.

Until now workers in Luxemburg, like those in Belgium, had been protected against such decreases in real wages by this automatic linking of wage increases to price increases. Indexisation should in theory work in both directions: if the cost of living falls then so should wages and by the same percentage. Before the present period of chronic currency in­flation began in all countries after the last world war, indexisation, then known as “the sliding scale”, was popular among employers because it meant that in a slump if prices fell then so automatically did wages. The sliding scale was unpopular with workers and their unions because, although they had no illusions about being able to maintain money wages at their old level in a period of falling prices, they felt with some justification that a less rigid system held out the hope of negotiating a fall in money wages less than that in the cost of living.

The new element nowadays is that, because of government inflation of the currency through the excessive issue of inconvertible paper money, prices no longer fall in periods of slump. On the contrary, they continue to rise. Hence the phenomenon of “stagflation” which so baffles capitalist economists. But, with indexisation, such currency inflation means that money wages go on rising in line with prices even in a slump or, more precisely, that real wages do not fall.

This is all very well while it lasts—but it can’t last because maintaining wages artificially high by such a mechanism goes against the logic of capitalism which requires that real wages fall in a slump as one of the ways of creating the con­ditions for the next period of expansion. In the end any government of capitalism has to take the only action open to it in the circumstances, namely, the abolition of the mechanism—the automatic indexisation of wages—which prevents real wages falling. The Belgian government had al­ready done this. Now it has been fol­lowed by the Luxemburg government.

As we have already said workers, through their trade unions, should resist such a blatant, frontal attack on their living standards. However they should have no illusions about being able to pre­vent real wages from falling in a slump. Under capitalism, even in times of expan­sion and boom, the cards are stacked in favour of the employers who are in the dominant bargaining position because they own the means of wealth production. In times of slump and contraction the employers’ hand is strengthened even further by the existence of an increased pool of unemployed. In these circumstances the most that unions can achieve is to slow down the fall in real wages, limiter les dégâts, to limit the damage, as the French say.

One thing however is clear: if workers sit back and do nothing they may well lose more than if they stand up and strike. In fact on such occasions—as in Britain in 1926—a general strike is often the only means of testing the situation, of finding out what the true bargaining strength of both sides is. In the case of Luxemburg it was undoubtedly because of the previous strike-free record of the workforce that the government felt so confident about going as far as it did, openly proposing measures to make living standards fall in 1982 by at least 5 per cent. EEC civil servants who were under similar pressure last year managed to come out relatively well in comparison in negotiating a fall of about the same amount but over five years.

Even if the strike of 5 April was not successful in terms of getting the govern­ment to make concessions—the govern­ment’s austerity measures were passed by Parliament the very day of the strike—this reaction by the workers will at least have shown governments that in the future they can no longer take the working class in Luxemburg for granted.

But all this is purely defensive, purely concerned with trying to slow down things getting worse. But things will get worse as this is what happens under capitalism in a slump. Later on, as the capital­ist economic cycle continues and the slump gives way to a new period of boom and expansion, there will be some improvements, some increases in real wages. But these improvements will be precarious and temporary and will be wiped out when the next slump comes round.

We put to workers in Luxemburg the same question we put to workers in Britain and elsewhere: is this merry-go-round, this running fast just to stay still, all you want out of life? Because this is all that capitalism has to offer you.

Adam Buick 

(Luxemburg)