Do consensual labor markets have a future in Germany?

by on August 6, 2013 at 1:33 am in Current Affairs, Economics, Uncategorized | Permalink

The practice seems to be on a decline, according to this recent piece in The Economist:.  For instance:

…the unions are continuing to lose members, as the older industries where they are entrenched trim jobs. Newer companies, especially in areas such as e-commerce, security firms and fitness studios, are “almost entirely without collective representation”, says Martin Behrens at the Hans Böckler Stiftung, a union-linked think-tank.

Workers at any German company with five or more employees can demand the creation of a works council. But in 2011 only 12.5% of all companies had one, down from 13.4% the year before. Only 659 German firms had supervisory boards with worker representatives in 2011, compared with 708 in 2007. Ironically, as America’s carmaking union seeks to bring Germany’s labour-market model into Volkswagen’s factory in Tennessee (see article), its future seems increasingly in doubt back home.

Here is a recent NYT piece on how Amazon’s labor practices clash with German union traditions.

jean-louis salvignol August 6, 2013 at 2:34 am

“The rose is without ‘why’; it blooms simply because it blooms”. Angelus Silesius.
The perfect social model is like roses, it only lasts in the innocence of naivety. We live with roses, we don’t handle roses.

prior_approval August 6, 2013 at 3:09 am

‘its future seems increasingly in doubt back home.’

Nope – the Betriebsrat remains a deeply engrained part of the German system. And that part is not the same as union representation, which makes attempting to explain the differences hard. I work at a company with a Betriebsrat, but there is no union involved in any way – and essentially never will be. As companies consolidate, so do their works councils – I believe (from news reporting, as Porsche was a regional company) that when VW acquired Porsche, the Porsche works council no longer had an independent existence – which would be one example of shrinkage. Works councils exist at multiple levels, I believe – which also makes those numbers difficult to quantify. When Mercedes opens a new factory, such as in Rastatt, there is also a new plant Betriebsrat – but that does not change the fact that Mercedes has a Betriebsrat. And when a company closes plants (GM comes to mind), they lose those plant Betriebsräte.

Legally, there is no way for a company to lose its Betriebsrat – but as noted below (German language only), there are ongoing attempts to dissolve Betriebsäte through activities which tend to be at the very outer edge of legality, even in the eyes of organizations that represent employers.

Here is a bit of recent information concerning what is occurring with Burger King (please note that generally, German companies do not have a problem with a Betriebsrat – but foreigners most certainly do) -

‘Burger King bekämpft seine Betriebsräte

Nichts ist mehr, wie es einmal war, seit Burger King im Mai 91 seiner Filialen an eine Holding aus Stade verkauft hat. Der Tarifvertrag sollte aufgehoben werden, gegen zwölf Betriebsräte laufen Kündigungsverfahren. Selbst der Arbeitgeberverband ist empört.’ http://www.sueddeutsche.de/wirtschaft/fast-food-kette-burger-king-bekaempft-seine-betriebsraete-1.1735055

‘Burger King Fights It Works Council Members – Nothing is what it used to be, since Burger King sold 91 of its branches to a holding company from Stade in May. The (blanket) wage contract is to be terminated, and twelve worker council members are being in the process of being eliminated. Even the Employer Association is disgusted.’

Slimeballs are going to be slimeballs – and Burger King is not backing up their franchisee in this case, as they realize that if this story becomes too large, their sales will suffer. Just ask Walmart about its attempt to forbid its German employee for having relationships outside of the workplace.

However, I can see that even bother writing in response to something concerning German labor in the Economist is a waste of time –

‘German manufacturers, their workers and unions, with a little help from the government, engineered a compromise that put employees on short time and trimmed their holiday entitlements but saved their jobs. ‘

That ‘compromise’ has its beginning during the reign of Kaiser Wilhem – http://de.wikipedia.org/wiki/Kurzarbeit

Not to mention that the Economist also seems unable to easily distinguish between the consensus of a Tarifvertrag and the legal existence of a Betriebsrat. For example, Karstadt’s Betriebsrat is not going away because Karstadt is no longer a party to a Tarifvertrag. Which makes the gliding slide between ‘union’ and ‘Mitbestimmung’ inaccurate, even as that last paragraph from the Economist is repeated here, creating a nice opinion which appears factual. In other words, as the U.S. lacks even the legal framework for a Betriebsrat, there is no way that any American workers will be able to enjoy what is generally considered the pillar of the German system of Mitbestimmung.

mulp August 6, 2013 at 1:16 pm

Well, Germans individually are just too supportive of the welfare state while being individually unwilling to support those who won’t make the effort to be economically self supporting. Thus they object to the US corporate model of depending on welfare to support their workers in order to increase profits. That means workers need to be represented in the corporate management to pursue the individual values of Germans which is individuals work to support themselves whenever possible, which means wages must be paid sufficient to provide the income Germans consider the minimum acceptable before welfare kicks in.

In the US, it is clear the big employers of low wage workers build their workforce assuming their workers are supported by welfare. McD’s analysis of a worker budget is clearly modeled on the worker getting welfare.
http://www.theatlantic.com/business/archive/2013/07/mcdonalds-literally-cannot-imagine-how-its-workers-would-survive-on-the-minimum-wage/277845/

Subsidized housing, subsidized health care, subsidized fuel, subsidized food,…

dan1111 August 8, 2013 at 4:00 am

Who are these people that work hard, do a good job, and yet perpetually make minimum wage? In fact, opportunities for career advancement abound even in the no-skill, minimum wage world. McDonalds in particular is known for this. Entry-level employees can advance to become manager and even own franchises.

Andreas Moser August 6, 2013 at 3:16 am

The worker representatives on supervisory boards are a statutory requirement. It has nothing to do with union representation or even whether the employees want it.
The statutory requirement applies only to corporations (Aktiengesellschaft), not to limited liability companies (GmbH) or other companies. Thus, if two companies merge, you’ll have one supervisory board less.
Also, the statutory requirement kicks in only once you have 2,000 employees. With modern technology, you can produce a lot of output with fewer than 2,000 people. Thus many companies will remain below that threshold.
There is a lower threshold of 1,000 employees in the coal and steel industry, but I guess I don’t need to point out that this is not exactly a growing industry.

jon livesey August 6, 2013 at 4:50 pm

“Workers at any German company with five or more employees can demand the creation of a works council.”

As a guy who has spent most of his working life in start-ups in Silicon Valley, this sentence just gave me the giggles. The idea that a “works council” could add any value to my life just baffles me.

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