German unions warn of industrial collapse if there is an energy embargo on Russia

Leading German unions have warned that the short-term imposition of an embargo on energy supplies from Russia would not only risk closures and layoffs in Germany, but also the “collapse” of industrial production chains in Europe.

In a joint statement, the German industrial unions IG Metall, IG BCE and IG BAU, have called on the Government to take short-term measures, including liquidity support and avoiding an energy embargo on Russia, in addition to introducing changes in the medium and long term. in energy policy to cushion the burden on particularly energy-intensive sectors and thus secure employment.

In this way, the unions have warned of the social and economic consequences of imposing an embargo on Russian energy imports and have called on Berlin to avoid a short-term supply interruption.

Likewise, they have raised the need to introduce in the short term measures to support the liquidity of the companies most affected by the high energy costs to prevent bankruptcies, as well as temporarily reducing VAT on gas and electricity and the possibility of resorting to to part-time work if energy costs force production cuts.

“The explosion of energy prices, but above all a possible gas embargo, would hit energy-intensive industry, the mother of the industrial network, hard,” said Michael Vassiliadis, president of IG BCE.

“The consequences would not only be part-time work and job losses, but also the rapid collapse of industrial production chains in Europe, with consequences throughout the world. It must be the aim of all of us to avoid that.” , has warned.

Roadmap

Last week, the German government presented its roadmap to ensure the country’s energy security and reduce its dependence on energy sources from Russia with the aim of reducing Russian coal consumption to zero this autumn and being almost independent of the Russian crude by the end of 2022, when it hopes to cut its dependence on Russian gas to 30% to achieve independence in 2024.

However, given the risk of a possible cut in the Russian gas supply as a result of Berlin’s refusal to comply with the German Minister of Economy, Robert Habeck, he confirmed this Wednesday in a public statement the activation of the “early warning” level, the first of the three phases of the German Government’s emergency plan to guarantee the country’s energy supply.

“The global supply of all German gas consumers is currently guaranteed. There is enough gas on the markets (…) However, from now on, all gas consumers, from businesses to households, must also reduce their consumption as much as possible,” warned the minister.

According to a second planned alert level, the relief measures would continue to depend on the initiative of the market players, while in the third phase, in case the crisis worsened and the market participants were not able to handle the situation by themselves, the German government could declare an energy emergency.

In this situation, according to the plan, the State would intervene in the market, transforming the Federal Networks Agency into the “federal load distributor”, for which it would be responsible for determining, in coordination with the operators, the distribution of gas, emphasizing that the households, social enterprises or hospitals enjoy the status of protected consumers.

This is the first time that Germany has declared an early warning level under its emergency plan. In this sense, the German Ministry of Economy has recalled that Italy declared the early warning phase on February 26 and Latvia, on March 9.