The Social Pact — American Style

May 26, 1937: At the entrance to the Ford factories, two trade union leaders were posing for the Detroit News photographer. They had come to distribute leaflets calling for “Unionism, not Fordism.” Approximately 40 of Ford’s internal militia, all big guys, descended upon them. In full view of the journalists, they threw the men to the ground, hitting them, attempting to destroy the photos — one of which, in spite of the massacre, made it to publication on the front page of the American newspapers. Three years later, Ford signed its first agreement with the UAW, an early representative of American workers in the automobile industry. In the land of the industrial dream, the first trade union negotiations often began in this way, involving fights with fists, guns and baseball bats. The American social pact was also built upon the aftermath of a world war and of clashes of unprecedented violence at home, sometimes responsible for dead bodies on the sidewalk. From the 1950s onward, it ensured the industry’s prosperity and that of its employees.

Today, that very same social pact is attempting to reunite the UAW and the directors of General Motors, Ford and Chrysler. After a 50-year battle to secure its workers’ benefits, the union has agreed to reconsider the latter, having been accused of being responsible for the loss of American manufacturers’ competitiveness from the 1990s onward and of the subsequent collapse of two of the aforementioned manufacturers within the last two years. Wages are now a third of what they were in 2005; however, employees have obtained industrial and employment guarantees, alongside a share in profits.

With more members retired than active, the UAW has lost a lot of its previous power, yet it alone remains the sole body capable of negotiating such agreements. Just like Henry Ford, many CEOs dream of a world without unions. But without such bodies, with whom would we negotiate the social pact necessary to reconstruct an industrial capability? Germany has succeeded in retaining a solid base in this sector, as a result of the institutionalization of the balance of relations between its employees and employers. And to achieve this, both sides need representatives that are powerful, disciplined and responsible.

Of course, this will not replace good products and a receptive market. However, an appeased social climate is a necessary prerequisite in times of difficulty, with sacrifices probable at the first shift in the markets. May France be duly inspired.