Austria: Financial scandals plunges union federation into crisis

Unions must end class collaboration and defend interests of working class

The Austrian Trade Union Federation (ÖGB), and with it all the different industrial unions organised under its umbrella, is in its deepest crisis since foundation, in 1945. Everyday new facts about the luxurious life that some trade union top officials lead are published, as well as new revelations about how they sold out the whole union movement.

If you think you have heard everything about corruption and scandalous behaviour of some trade union leaders, be sure this will top it. At the moment, only some information is available, but these are the hard facts. The ÖGB owns ‘Bawag’, the fourth biggest bank in Austria, as well as other companies, including shares in the Austrian Casinos. The Bawag bank was involved in highly risky speculation in the Caribbean that lost around one billion euros. Last October, it also gave 400 million euros to Refco, a New York futures broker company, hours before it was disclosed that Refco’s Chief Executive, Phillip Bennett, hid 430 million dollars worth of bad debts. Bennett is now facing trial in New York on fraud charges. Bawag has agreed to give at least an extra 675 million dollars to those who lost money in Refco’s collapse.

The speculation was a financial disaster. The then ÖGB-chairman Fritz Verzetnitsch decided secretly to give towards the ÖGB strike fund as a security for the Bank. This became public and Verzetnitsch had to resign. Day by day, more information surfaced. The ÖGB took over the debts of the bank to rescue it and today the ÖGB has debts of two billion euros minimum, and possibly more. The bank will be sold.

The Austrian government promised to “rescue” the bank. But, in return for this the ÖGB had to sell its 20% stake in the Austrian National Bank, for nearly nothing, to the state. It had to open the books and give information about how much is in the strike fund (although, after all this, it might be empty) to a representative of the Austrian National Bank (whose promise not to give this information to the government cannot be believed). For the next years, the ÖGB also has to give reports about its finances to the government.

ÖGB Leadership: ‘Business as usual’

The ÖGB leadership pretends to be the victims in all this. But only a handful of its bureaucrats responsible were replaced due to the scandals. The rest are still in office They promised a “reform process”. But every step they take makes clear that what they want is ‘business as usual’. When the scandals first became public, through the mass media (not the trade union media), the ÖGB leaders decided to hold an early congress in June, this year.

Then the ÖGB leaders elected a new chairman, Hundstorfer, who used to be chair of the council workers’ union, at the same time as he was chair of the Vienna City Council. The ÖGB leaders also cancelled the early congress and will now hold a slightly earlier congress in January 2007.

During this scandal, a lot of information about the privileges of the trade union and bank leaders became public. The former chairman lives in a luxury penthouse, paying very low rent, as does the former bank chief, who is responsible for the Caribbean disaster. He bought a flat from the bank for a price far below its value. When he left the bank (after the financial disaster) he got 6.76 million euro compensation.

The union leadership have now decided on a ‘maximum income’ for trade unionists. It will be 140% of the income of a MP, which is about 11.060 euros a month. To give a comparison: around 90% of working people in Austria earn less then 3,500 euros, before taxes, per month.

In the aftermath of the financial crisis, there will be regional meetings and members can participate in a forum on the ÖGB website, as well as in an opinion poll run by the union paper. But the union leadership obviously does not plan to make any fundamental changes.

Anger amongst workers and union members

Loss of membership is nothing new for the Austrian trade union movement. Before the scandal, thousands of union members left the union, every year. This was because of the approach of the union leaders. Since the 1970s, the number of strikes in Austria fell dramatically. In the 1990s, there were a years with no strikes. The main philosophy of the union federation was summed up in the phrase, ‘social partnership’. There was hardly any resistance to the privatisations of the 1980s that destroyed tens of thousands of jobs. And, in the 1990s, the unions actively participated in designing the cuts packages.

It was not until 2003 that pressure from below got so strong that the union leaders had to mobilise and call a strike against government pension “reforms”. For one day, one million workers went on strike – the biggest industrial action since 1945. Then the union leadership stopped the movement. The reform was passed with only minor changes. At the same time, the union leadership made sure that a new clause was added to their personal union employment contracts to ensure the union will pay them an extra pension to compensate for their personal losses through the government’s pension “reform”.

When the latest banking scandal became public, many trade union members returned their union cards in disgust. There are no proper figures concerning the drop in union membership. The leadership does not want to publish them. Working people are upset about what the union leaders did, about how union money is used, and about the union leaders´ privileges. But they also understand the need for a union. In opinion polls, up to 80% are in favour of strong unions.

However, as of yet, there is no organised opposition to express union members´ anger. The so-called official ‘opposition’ in the unions – those unionists that do not belong to the FSG, the social democratic majority faction, but to other factions – do hardly anything. Socialist Left Party (CWI) members were the first to hold a public protest against the union leaders, outside an ÖGB national leadership meeting.

Some middle layer union functionaries started a website called “zeichen setzen” (which means “make an imprint” or “leave a visible sign”) where people can petition for demands, such as for a maximum wage for trade union leaders. Until now, about 6,000 people signed it. But those that run the site do not offer anything more to broaden the protest, to give people the chance to do more then signing an online-petition.

The main mood among trade unionists is one of anger, frustration and helplessness. Often those with the resources to do something, like well- known shop stewards, union leaders, and Green and communist party trade unionists, do not offer any real alternative.

Divorced twins

The ÖGB is traditionally strongly linked to the social democracy (SPÖ). With the process of ‘bourgeoisification’ of the SPÖ, these links were weakened.

In 2000, attempts to form a national government between the SPÖ, and the main pro-capitalist party, the ÖVP (Austrian People´s Party), was not finalised because the trade union representative in the negotiation team did not agree to the coalition pact.

Now the SPÖ is trying to further weaken its links with the unions. This autumn, a general election will be held. Since the union finances scandal became known, the SPÖ has fallen in opinion polls and is now behind the ÖVP, which dominates the current government. The SPÖ Chairman, Gusenbauer, is using the opportunity to loosen the unions’ links to and influence on the SPÖ, but also wanting to rescue some votes, decided in the future that no leading trade unionist should be on the SPÖ-list for elections to parliament. This goes, hand in hand, with demands of other organisations, like the Greens, who say there must be a clash of interests if union leaders are MPs.

We do not think this is correct. The working class needs its representatives to stand in elections and to use parliament to fight for its interests. The question is not whether or not trade unionist should be MPs, but on what party list should workers’ representatives stand? All established parties are working against the interests of the working class and, therefore, also against the trade union movement. Trade unionists should not stand on any of these party lists. The unions should stand their own candidates, on a ‘union list’, or as part of a new formation that could develop into a new workers’ party. Because there is no mass workers’ party at the moment, the far-right Freedom Party (FPÖ) can gain from the crisis. They are the only established party that presents a (crude) form of ‘anti-capitalism’ and are seen by some as responding to the mood of many people. Of course, this is a false anti-capitalism to mislead workers. In fact, the Freedom Party (FPÖ) demands more privatisation and more neo-liberalism. But due to the lack of a real alternative the Freedom Party (FPÖ) can partly fill the existing political vacuum.

New attacks ahead – union needed!

It is not clear which parties will be in government after the next general elections. Everything is possible – from a grand SPÖ-ÖVP coalition, to an ÖVP-Green coalition, or, less likely, an SPÖ-Green coalition. But one thing is for sure: every future government that operates from a capitalist standpoint will be forced to attack the living standards of the Austrian working class. Particularly targeted will be the health service and the unemployed. Therefore a strong union is needed. But at the moment we have a union leadership that depends on the government. The government gave a financial grant to help financially rescue the ÖGB. In return, they got the union leadership to promise to give more information about the ÖGB’s internal financial situation. How will a union leadership that expressed thanks to the government for saving their jobs and privileges act in the future?

The ÖGB leaders always saw themselves as playing a role as part of the state and not only as representing a workers’ organisation. The latest developments mean this ‘state union’ side of the ÖGB character can be strengthened, leaving open the direction the union federation will develop towards.

It is significant that the government wanted to “rescue” the ÖGB in the recent union crisis. A weakened union federation that can be controlled more easily is favoured by the government. This could lead to splits in the ÖGB and new formations that create smaller, but more combative, union movements.

What is necessary?

From the beginning of the recent union crisis, the Socialist Left Party (SLP – the CWI affiliate in Austria) made clear that fundamental changes are needed. This means changes in structure but also changes of politics. The trade union has to stop its policy of class collaboration and really defend the needs and interests of the working class.

Socialist Left Party defended the trade union movement against the attacks of the government and the right wingers. On the May 1st demonstrations, the SLP was the only organisation really taking up the ÖGB crisis. We completely sold out of copies of our paper with the headline, “To defend the ÖGB means to change it”. Socialist Left Party calls for an early ÖGB congress, before the general election, to decide on a list of demands against any new government and for a plan of action to make sure that these demands are won. We demand new and democratic structures where the membership is involved in decision-making, where functionaries can be directly elected and recalled any time. We demand a worker’s wage for officials and that the results of negotiations with the government or the bosses have to be agreed on by the membership.

The deepest crisis of the ÖGB is also a chance for the labour movement in Austria. The possibility for rank and file union members to get involved is now greater and the chance for socialists to reach out to them is growing. A fighting and democratic union is necessary. The headline of our latest paper sums it up, “We need really new unions”.

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July 2006