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Wed, Jul 14, 2004 - Page 12 News List

Law mandating more apprentices worries Germans

TRAINEES The German government wants to force companies to hire apprentices in a bid to restore the country's vocational training system


At a cavernous white factory complex near the Baltic Sea in Laage, Germany, where 414 people make gas generators used to inflate automobile airbags, the plant manager, Thomas Grupp, is in a bind.

Although sales at the plant, owned by TRW Airbag Systems, are on track to rise to 190 million euros this year, Grupp may be forced to cut costs and to delay hiring.

European auto sales are slumping and German carmakers are under price pressure, but these are not the reasons for the possible cuts. What is prompting Grupp's caution is a German government plan to force millions of companies to hire extra apprentices or -- in TRW's case -- pay a 50,000-euro annual fine.

"This is not the way to kickstart German business," said Grupp, whose company is a unit of TRW Automotive, of Livonia, Michigan. "What I need is more flexibility in hiring and firing -- not increased costs."

With German economic growth averaging just 0.3 percent a year since 2001, and unemployment in May at 10.5 percent, the Social Democrat-Green Party ruling coalition is poised to levy an unprecedented apprentice fee that businesses say would worsen the prolonged stagnation. Business protests have spurred a delay in imposing the fee, but the threat still looms large.

Most companies with 11 or more workers that do not employ 7 percent of their work force as apprentices would be forced to pay 3,500 euros a year for each missing apprentice, according to the Federal Institute for Vocational Research in Bonn, a government researcher. For big employers like the Stuttgart-based automaker DaimlerChrysler, the yearly levy could top 1 million euros.

Business groups and opposition conservative lawmakers are threatening lawsuits if Chancellor Gerhard Schroeder ever imposes the fines, which would be used to pay for two- to three-year apprenticeships for what the Bonn institute estimates are 35,000 to 100,000 teenagers without trainee jobs.

Proponents of the fee, including the Berlin-based Deutscher Gewerkschaftsbund, a lobbying organization with 10.3 million members from eight of Germany's biggest unions, contend the fees will force German businesses to shoulder greater responsibility and costs for training.

At its core, the law seeks to address the plight of Germany's vaunted vocational training system, which took shape under medieval craftsmen and today still relies on apprenticeships as the gateway to full-time employment. Even today, Germans seeking to work as bank clerks, restaurant cooks and bakers must first complete an apprenticeship.

But as the economy began to slow in 2000, businesses cut back. This year, they are offering only 1.6 million paid apprenticeships in the world's third-largest economy, down from 1.8 million in 2000, according to the Bonn vocational institute. That has left as many as 100,000 people between 17 and 25 without prospects.

"We don't have enough apprenticeships in Germany because Germany is in the midst of an employment crisis," said Gunter Walden, a vocational training expert at the Bonn institute who says the fee would probably lead to less hiring. "In many industries, jobs are being cut. In some, people are being trained for jobs that no longer exist."

Critics say the law will penalize employers at a time when the economy is only beginning to recover. Most employers will opt to pay the fine, Walden predicted, because 3,500 euros is less than the 10,000 to 16,000 euros it would cost to employ an apprentice.

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