October 27, 2017 / 3:08 PM / a year ago

Job cuts could boost populists, German minister tells Siemens

BERLIN (Reuters) - Germany’s economics minister urged Siemens AG (SIEGn.DE) on Friday to rethink planned job cuts and said job losses, particularly in economically weaker areas of the former East Germany, could spur an increase in right-wing populism.

FILE PHOTO: German Minister for Economic Affairs and Energy, Brigitte Zypries speaks during an interview with Reuters in Berlin, Germany June 16, 2017. REUTERS/Stefanie Loos

Siemens may cut thousands of jobs as part of plans to overhaul its power and gas business, which is struggling with lower worldwide demand for large electricity generating turbines, a person familiar with the plans told Reuters last week. Up to 11 work sites could be shut down.

The minister, Brigitte Zypries, told Siemens CEO Joe Kaeser in a letter published by Bild newspaper that job losses in the former Communist east could have negative consequences.

“It is particularly critical when locations in structurally weak regions - for instance in eastern Germany - are up for discussion,” she told the Siemens executive. “It can fuel discontentment and doubts and could have political fallout as we saw in the parliamentary election.”

The government has no legal authority to prevent private companies from carrying out layoffs, but it has other ways to pressure firms including through corporate policies and reviews of export licenses.

In the case of Siemens, Berlin is currently examining how two Siemens gas turbines sold for use in Russia turned up in Crimea, a region subject to EU sanctions on energy technology.

Siemens spokesman Philipp Encz declined to comment on the letter. He said while several proposals were under discussion with labour, no decisions had been made on any job cuts or possible plant closures.

Siemens management met with labour bosses on Thursday to discuss its power turbine business but union IG Metall said no new information was provided.

Juergen Kerner, a senior IG Metall official and a member of the Siemens’ supervisory board, said reports that the company could close up to 11 of 23 facilities in the power turbine division had spooked workers and hundreds had already staged protests at sites in Erfurt, Goerlitz, Leipzig and Erlangen.

“Management is worried about margins, not people, and we can’t accept that,” Kerner told the Sueddeutsche Zeitung newspaper. “But we’re ready for a longer fight.”

Kerner denied that labour had leaked news about the possible job cuts and plant closures, saying that not even the most senior union officials on the board had known the details that had been reported in the media.

The anti-immigrant Alternative for Germany (AfD) stormed into parliament with nearly 13 percent of vote on Sept. 24, the first far-right party to move into the Bundestag, or lower house of parliament, in over half a century.

Siemens management reportedly plans to submit a restructuring plan to the company’s supervisory board on Nov. 8, the day before the group is due to publish quarterly financial results.

Reporting by Andrea Shalal, additional reporting by Victoria Bryan; Editing by Matthew Mpoke Bigg

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