Home  |  Search  |  Events
 Conferencing | My Home Page | FAQ

School of Business

University of Alberta

Printer friendly page


Yonatan Reshef
School of Business

University of Alberta
Edmonton, Alberta


  1. The German Empire
  2. The Weimar Republic
  3. The Third Reich
  4. The German Federal Republic
  5. The Impact of Unification
  6. The Schroeder Era: 1998-2005
    1. Alliance for jobs
    2. The changing nature of collective bargaining
    3. Works Constitution Act Reform
    4. Coverage of collective agreements and works councils

7. 2005: The new coalition government

I. Pre-1914: The German Empire

IR were autocratic and paternalistic. The owner was a monarch who knew all his workers and had an oversight over all aspects of production and marketing.

Otto von Bismarck (1815-1898) - Driven by a strong sense of power, Bismarck entered politics in 1847. As a delegate to Prussia's first diet, he emerged as one of the most rigid conservatives; at the outbreak of the Revolution of 1848 he rushed to Berlin, urging King Frederick William IV to suppress the uprising. His advice was ignored, but his loyalty was rewarded by his appointment in 1851 as Prussia's representative to the German Confederation, a league of the 39 German states. At the federal diet in Frankfurt, his main concern was to undermine Austria's supremacy and demonstrate Prussia's equality. In 1859 he became ambassador to Russia, and in 1862 he was posted to France.

1871 - The foundation of the German Empire. In 1871 the German Empire, which included south Germany, superseded the North German Confederation, and the king of Prussia became the German emperor. Bismarck became the first chancellor of Germany.

1875 - Social Democratic Party (SDP) is created.

1878-1890 - Bismarck's Anti-Socialist Laws. The Laws lasted for more than 10 years. They made all union activity illegal and outlaw the SDP. Bismarck wanted to ease the pain, so he also introduced rudimentary program of social insurance (national accident and health) and welfare (old-age pension) benefits (stick & carrot policy). In 1890, Bismarck was dismissed and retired from politics.

Dominant unions of the time
The Social Democrat (Free) unions (ADGB);  The unions' main concern was not the preparation of a violent socialist revolution or fundamental socio-economic reforms, but a gradual improvement of very meager wages and poor working conditions.

Hirsch-Duncker unions. These unions were founded in 1868 in Germany by two liberals -- Max Hirsch and Franz Duncker -- who advocated "the harmony of class interests," and pushed their trade unions to serve the educational and mutual aid interests of the members. The HD unions focused on self-help activities and favor peaceful resolution of industrial disputes through conciliation and arbitration; members signed declarations of non-support for SDP. Consequently, the HD unions survived Bismarck's anti-socialist laws, but declined in importance after 1890.

It should be noted, that most trade union activists emerged from the period of illegality during the 1870s and '80s as staunch supporters of SDP, accepting the party's Erfurt Program of October 1891 which defined the German Empire as a class state whose ultimate replacement by a socialist commonwealth was the principal task of the party, to which trade unionism was subordinated.  In other words, the politicization of the German Trade Unions occurred more than a hundred years ago.

1885 - BDI, the Federation of German Industries, is created by the conservative industrialists from the big Ruhr combines. Nowadays, it comprises the business associations of the entire industrial sector. In 1994, it consisted of 35 business associations with provincial subdivisions and some 350 specialized industrial sub-units. The main function of the BDI is the representation of the economic interests of the members.


II. 1914-1930: The Weimar Republic

28 June - 28 July 1914 - A Serb nationalist killed the heir to the throne of the Austro-Hungarian Empire. The Austro-Hungarian government handed over its ultimatum to Serbia. The ultimatum included 10 demands, most of which had to do with the suppression, with Austrian help, of anti-Austrian propaganda in Serbia. The Serbs agreed to 8 of the demands. World War I broke on July 28, 1914.

Trade unionists and generals were confronting recalcitrant industrialists who were not prepared to make concessions or conclude compromises for the sake of military victory. This is the time when the working class was beginning to pressure the industrialists to be given more important place in society.

Unions began to press their case for greater participation.

Negotiations through tripartite committees rather than compulsion seemed to be a more promising way of securing the cooperation of both workers and unions.

Importantly, as early as the second half of the war, workers' committees had been formed in number industries which tried to represent the interests of the workforce vis-à-vis the management. Also, the so-called Revolutionary Shop Stewards' Committees had sprung up in a number of places. At the same time, the 1917 Russian revolution was influencing radicals in Germany.

With the threat of a "revolution from below" increasing, employers realized that it would be wiser to draw unions into politics, because they seemed to be the only organizations which still had an influence over the workers in the factories.

October 22, 1918 Stinnes-Legien Agreement (compare to the Swedish "Basic Agreement" of 1938). Carl Legien was the ADGB leader and Hugo Stinnes was a prominent industrialist. The employers recognized the right of association for all workers and promised to stop supporting "yellow" unions (company unions).

Workers committees were to be formed in firms with more than 50 employees, and there would be an arbitration system for the settlement of disputes.

November 1918 - The Weimar Republic was created. The Weimar constitution did recognize the idea of factory councils.

February 1920 - the Works Councils Act This law required companies to have an elected committee which was to act as the voice of employee interests. Paragraph 70 of the Act provided for one or two of the work councilors to sit on the company's Supervisory Board.

1918-1924 - ZAG (Central Labor Committee) institutionalized the union-employer cooperation. Work community became the accepted antidote to the notion of class struggle.


III. 1930-1945: The Third Reich

20 July, 1932 - The Social Democratic government of Prussia was deposed by the Reich government. A year later Hitler became the Chancellor of Germany. Historians generally agree that, even if major employers were not directly and openly involved in the events that led to Hitler's coming to power, they contributed indirectly to the destruction of the Weimar Republic by refusing to support it and link up with those political forces that could have been rallied in the Republic's defense.

May 2, 1933 - Unions are banned.

January 20, 1934 - The Works Councils Act is annulled.


IV. The German Federal Republic

February 1947 - The CDU (Christian Democratic Union, one of the conservative political parties in West Germany) approved the Ahlen Program, that said, among other things:

Capitalist striving for profit and power can no longer constitute the essence and objective of this social and economic renewal; it will have to be the well-being of our nation. By adopting a cooperative economic order, the German people shall obtain an economic and social constitution which is commensurate with the rights and dignity of man, serves the spiritual and material reconstruction of our nation and secures peace at home and abroad.

1947-1951 - Deconcentration the heavy industries.

December 1946 - The Dinkelbach Agreement is presented to the union leadership. Heinrich Dinkelbach was an industrialist who supported the British deconcentration plan. He was open to cooperation with unions.

1947 - The unions want parity codetermination but the employers would not tolerate it.

1949 - DGB (the German Federation of Trade Unions) is formed.

1949 - the Collective Bargaining Act guarantees free collective bargaining. Only unions can negotiate collective agreement on behalf of workers.

1949/50 - BDA, the Confederation of German Employers' Association, is created. It represents German employers in the field of social policy and industrial relations to the government, the public and international organizations.   Unlike the BDI, it extends far beyond manufacturing industry, covering almost all private-sector employers' associations.  In 1995, the BDA consisted of 46 national industry associations and 15 regional associations.

In the early 1950s, Chancellor Konrad Adenauer successfully pushed for the following compromise:

1951 Codetermination Act in the mining and steel industries in companies with more than 1,000 employees. This is true parity codetermination that provides for a Labor Director.  Employee representatives have a veto over the appointment of the labor director who acts as a de facto representative of the employees and their interests on the management board. In 1998, only about 30 companies in the west and fewer than 20 in the east were covered by this Act.

1952 Works Constitution Act Nonparity codetermination in all public companies with more than 500 employees in industries other than mining and steel. No provision for Labor Directors.

1966 - The Grand Coalition SDP/CSU/CDU (the CSU -- Christian Socialist Union -- is another conservative political party)

1967-1977 - Konzertierte Aktion, Concerted Action, became an essential part of the German government efforts to maintain economic stability. The Action was intended to achieve relative stability of prices and of income distribution, including some sort of voluntary wage restraint, and steady economic growth.

1969-1982 - SDP is in power.

1982-1998 - The CDU with Chancellor Kohl are in power.

1969-1971 - A wave of strikes

1972 Works Constitution Act - Legislates works councils in any firm with more than 5 employees. The employees have to ask for a works council in order to get one.  Where works councils exist, prior to the execution of any operational change, management is obliged to attempt to come to an agreement with the Works Council on the Reconciliation of Interests and Social plan.

1976 Codetermination Act - Parity codetermination in all public companies with more than 2,000 employees. The Law covers all industries outside the mining, steel and iron industries. It provides for a Labor Director. In 1998, about 750 companies were covered by this Act.


V. The Impact of Unification

November 9, 1989 - the Berlin Wall is brought down.

October 3, 1990 - the former German Democratic Republic (DDR) becomes part of the  Federal Republic of Germany (BRD).

Unemployment grows from 6.9% in 1990, to 12.6% in 1997

Since 1989, the eastern German economy has lost about 2.5 million jobs in manufacturing, 800,000 in agriculture, and 700,000 in public administration; only the private service sector has grown (by 500,000 jobs).

November 1995 - BÜndes fÜr Arbeit, Alliance for Jobs, is proposed by the unions. They offer to abandon their traditional demand for productivity-based wage increases in exchange for increased employment and training opportunities.

May 22, 1997 - the Federal Government, trade and employers' association, and trade unions agree on an Employment Alliance entitled The Joint Imitative for more Jobs in Eastern Germany (see more on Alliance for Jobs)

  • In collective bargaining, the bargaining partners will provide for special regulations regarding small and medium-sized enterprises, employment pacts, the taking-on of vocational trainees, the creation of part-time jobs, and long-term policies such as profit-sharing plans in order to stabilize labour costs.
  • The social partners will increasingly make use of more flexible working time arrangements, such as working time accounts. In addition, they will support the integration of long-term unemployed people and of new and re-entrants into the labour market, through special regulations.
  • The agreement requires that collective bargaining policy, especially wage bargaining, pay due regard to employment, and to the particular economic and commercial circumstances of the individual firm.  This will be achieved by the reform of the existing industry-level collective bargaining system.
  • Additionally, under that agreement, the bargaining partners have agreed to establish practicable and effective "hardship clauses."   Hardship clauses were included for the first time in a 1993 collective agreement between employers' associations and IG Metall trade union.  The agreement was signed for the east German metalworking industry.  Under certain conditions, this allows companies to pay their employees below the minimum wage set by the collective agreement for a limited period of time.

Number of Applications for a Case of Hardship
in the East German Metal Industry

Cases of hardship

1993 1994 1995 1996 Total
1. Failed cases of hardship 27 10 20 0 57
2. Refused cases of hardship 19 3 4 0 26
3. Agreed cases of hardship 24 12 44 18 98
Total 70 25 68 18 181

Note: From 1993 - 1995 all cases are covered; for 1996 only a limited number of cases are covered.

Source : Hickel and Kurtzke 1997

October 1997 - a wave of trade union mergers. The number of DGB affiliates drops from 15 to 11 unions.

Membership of German DGB affiliated trade unions, 1991-6





Deutscher Gewerkschaftsbund (DGB) 11,800,413 9,006,755 - 24%
IG Metall 3,624,380 2,752,226 - 24%
Gewerkschaft Textil-Bekleidung (GTB) 348,095 200,075 - 43%
Gewerkschaft Holz und Kunststoff (GHK) 239,472 160,785 - 33%
IG Metall (after mergers)




Gewerkschaft Öffentlicher Dienst, Transport, Verkehr (ÖTV) 2,138,317 1,712,149 - 20%
IG Chemie-Papier-Keramik (IGCPK) 876,674 694,897 - 21%
IG Bergbau und Energie (IG BE) 506,640 364,331 - 28%
Gewerkschaft Leder 41,718 21,904 - 47%
IG Bergbau, Chemie, Energie (IG BCE) - 1,081,132 -
IG Bauen-Agrar-Umwelt* 911,761 693,866 - 24%
Deutsche Postgewerkschaft (DPG) 611,969 513,322 - 16%
Gewerkschaft Handel, Banken Versicherungen (HBV) 737,075 505,405 - 31%
Gewerkschaft der Eisenbahner Deutschlands (GdED) 527,478 383,942 - 27%
Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) 431,211 310,891 - 28%
Gewerkschaft Erziehung und Wissenschaft (GEW) 359,852 296,232 - 18%
Gewerkschaft der Polizei (GdP) 200,997 199,421 - 1%
IG Medien 244,774 197,309 - 19%

* Merger of IG Bau-Steine-Erden (IG BSE) and Gewerkschaft Gartenbau-, Land- und Forstwirtschaft (GGLF) at the beginning of 1996.

Source: DGB

1998 - The results of Germany's 1998 works council elections clearly indicate the high level of employee acceptance of works councillors as their representatives, and of the "works constitution" system as a whole. Despite losses, the DGB remained by far the most influential of the trade union confederations, with 62% of works councillors and 73% of works council chairs affiliated to its member unions. However, the results also confirm the trend away from union towards non-union representation within works councils.

Results of works council elections 1975-1998 (in %)

    1975 1984 1994 1998
Turn-out Blue-collar workers 82.6 82.6 78.8 64.6
White-collar workers 72.7 82.5 76.6 68.4
Union affiliation          
DGB* Works councillors 67.9 63.9 66.7 61.9
  Chairs 78.8 75.1 74.7 73.2
DAG** Works councillors 10.4 8.9 4.3 3.2
  Chairs 2.6 6.8 4.5 3.0
CGB*** Works councillors 2.6 0.8 1.6 0.5
  Chairs 0.0 0.1 0.2 0.4
ULA**** Works councillors - 0.3 0.0 0.1
  Chairs - 0.0 0.1 0.0
Other Works councillors 1.6 0.7 0.9 1.0
  Chairs 0.6 0.9 0.7 1.5
Non-union Works councillors 17.5 25.4 26.5 33.3
  Chairs 1.5 17.0 19.8 21.9

*DGB (Deutscher Gewerkschaftsbund) - Grman Trade Union Federation

**DAG (Deutsche Angestelltengewerkschaft) - German Union for Salaried Employees

***CGB (Christliche Gewerkschaftsbund) - Christian Federation of Trade Unions

****ULA (Union der leitenden Angestellten) - Confederation of Executives

Source: IW-Gewerkschaftsreport 3/98.


September 26, 1998 -- Gerhard Schroeder (SPD) is elected Chancellor of Germany.  He creates a coalition government with the Greens.

1999 - After an initial boost by German unification, aggregate trade union membership in Germany fell by almost 3.5 million between 1991 and 1998. Only one of the four main trade union organizations has been able to increase membership since 1991, while union density reached a record low of 32% in 1998.

Membership of German trade unions (millions), 1991-1998
1991 11.800 1.053 0.585 0.311 13.749
1992 11.016 1.095 0.578 0.315 13.005
1993 10.290 1.079 0.528 0.311 12.208
1994 9.768 1.089 0.521 0.306 11.685
1995 9.355 1.076 0.507 0.304 11.242
1996 8.973 1.102 0.501 0.303 10.878
1997 8.623 1.117 0.489 0.303 10.532
1998 8.311 1.184 0.480 0.303 10.278
  • DGB - the German Federation of Trade Unions (Deutscher Gewerkschaftsbund)
  • DBB - the German Federation of Career Public Servants (Deutscher Beamtenbund)
  • DAG - the German White-Collar Workers' Union (Deutsche Angestellten-Gewerkschaft)
  • CGB - the Christian Trade Union Federation of Germany (Christlicher Gewerkschaftsbund)

Trade union density, 1991-1998
Year Total union membership
No. of employees
Union density
1991 13.749 33.887 40.6
1992 13.005 33.320 39.0
1993 12.208 32.722 37.3
1994 11.685 32.301 36.2
1995 11.242 32.230 34.9
1996 10.878 32.188 33.8
1997 10.532 31.917 33.0
1998 10.278 31.878 32.2

During the 1990s, the trade union membership gains due to German unification have been almost completely eroded. This has not only been due to falling employment, but also reflects deeper problems for unions in adapting to the structural change in the economy, in particular the growing importance of services. While unions are quite strong among men, in manufacturing industry and in the public sector, they have problems in organizing women, white-collar employees, young workers, part-time workers and private service sector employees. In other words, the composition of union membership no longer mirrors the composition of the workforce in Germany.

The calculated union density of 32.2% in 1998 even understates unions' problems. This rate is inflated by including non-working members such as unemployed or retired persons in the numerator (union membership), but not in the denominator (total employment). If these members are excluded, just about one in four employees in Germany is now a union member. Since the structural change in the economy continues, union membership and density can be expected to fall further unless unions manage to become more attractive to the individualistic employees in the growing private service sector. (Claus Schnabel, IW Köln)

Read the source for the full discussion.

June 1999 - Chancellor Gerhard Schroeder and The British prime minister, Tony Blair, co-signed a document called Europe: The third way/Die Neue Mitte.

The following is taken as is from here.

First of all, the paper states that, following the abandonment of the world view represented by the dogmas of left and right, fundamental social democratic values remain - fairness and social justice, liberty and equality of opportunity, solidarity and responsibility to others. The paper goes on to emphasize the role of enterprise and of the markets, which need to be "complemented and improved by political action, not hampered by it". Drawing on the experience of the past, social democrats ought to change old approaches and traditional policy instruments in areas such as the concept of social justice, the role of the state, the balance between individualism and collectivism, and entrepreneurial spirit. The promotion of social justice, states the paper, has sometimes been confused with the imposition of equality of outcome, resulting in the neglect of the importance of rewarding effort and responsibility. Social democrats should also refrain from the idea that achieving social justice is necessarily associated with ever higher levels of public spending regardless of what this achieves or the impact of the taxes required to fund it on competitiveness, employment and living standards. Furthermore, the belief that the state should address damaging market failures has all too often led to a disproportionate expansion of the government's reach and of the bureaucracy that goes with it, distorting the balance between the individual and the collective. Values that are important to citizens, such as personal achievement and success, entrepreneurial spirit, individual responsibility and community spirit, have too often been subordinated to universal social safeguards.

The paper goes on to state that the politics of the New Centre (Germany) and Third Way (UK) are about addressing the concerns of people who live in and cope with societies undergoing rapid change - both winners and losers. In this newly emerging world, people want politicians who approach issues without ideological preconceptions and who, applying their values and principles, search for practical solutions to their problems through honest, well-constructed and pragmatic policies. Voters who in their daily lives have to display initiative and adaptability in the face of economic and social change expect the same from their governments and their politicians.

September 1999 -- Chancellor Gerhard Schroeder's Social Democratic Party (SPD) loses state elections in Saarland, Brandenburg, Saxony, Hesse, North Rhein Westphalia, and Thuringen. The SPD also loses two municipal elections in Dortmund, Cologne, and Berlin. (In June 1999, the SPD lost the EU Parliament elections.)

Take a look at a discussion on the deteriorating labor-government relationship since Schroeder's rise to power in September 1998.


Alliance for Jobs

In November '95, the giant German metalworkers' union IG Metall signaled a notable change of course with its call for an 'Alliance for Jobs.' The essence of this initiative is that:

  • In the 1997 bargaining round, IG Metall agreed to accept a wage increase no higher than the inflation rate;
  • In return for this moderation, employers accepted a binding commitment to create 110,000 new jobs a year for the next three years, with a tenth of these reserved for long-term unemployed;
  • The government abandoned plans to cut welfare benefits, and agree to fund additional apprenticeships;
  • In addition, the union allowed new recruits to be taken on at lower pay than existing employees -- a proposal which it had previously strongly resisted
  • The first initiative for a national "alliance for jobs" failed under the old Conservative/Liberal government in 1996. The new red-green coalition has made a second attempt, aiming to establish a new permanent tripartite institution at national level.
  • Trade unions and employers are responsible for an employment-oriented collective bargaining policy and organization of work, which fulfils the company's need for flexibility and the employees' wish for "time sovereignty;"
  • Companies are responsible for improving innovation and investment and increasing the number of training places, in order to guarantee every young person a vocational training place; and
  • The government is responsible for creating the framework conditions for sustainable growth and employment by reforming the tax system, decreasing social security contributions, modernizing public services and launching a new "innovation offensive" in training, research and sciences.
  • On 6 July of 1999, leading representatives of the federal government, trade unions and employers' associations met officially for the third round of top-level talks within the framework of the Alliance for Jobs, Training and Competitiveness (Bündnis für Arbeit, Ausbildung und Wettbewerbsfähigkeit). The meeting was chaired by the Federal Chancellor, Gerhard Schröder. The Alliance was established in December 1998 as a new permanent tripartite arrangement at national level, including various working groups on specific topics as well as regular top-level talks between the leading representatives of all three parties.
  • In their joint declaration, DGB and BDA agree on the goal of a "substantial and sustainable reduction of unemployment." Since there is "no panacea" for the creation of new employment, various initiatives are necessary including "structural reforms in the fields of collective bargaining, social and tax policy as well as new innovations and investments and an improvement of vocational and continued training". In order to create a "new political and social consensus" on these initiatives, DGB and BDA want "to give a new impetus to the Alliance for jobs".
  • Regarding collective bargaining policy, DGB and BDA have agreed on the following goals:

    1. a "collective bargaining policy which is reliable in the medium and long term", and which gives companies a stable basis for the planning of their business;
    2. "a differentiated and flexible working time policy and a different distribution of work", including
      • "an employment-creating reduction of overtime",
      • the use of working time "corridors" and annualized working time arrangements as well as yearly and/or life-long working time accounts,
      • the creation of more part-time work and the development of new models to make such work more attractive,
      • an improved utilization of partial retirement

    3. the improvement of company-related pension schemes;
    4. the priority use of "increases in productivity for employment promotion";
    5. the promotion of performance-related payments;
    6. a continuation of the reform of branch-level collective bargaining system, with an extension of "opening clauses" and collectively agreed "corridors" in order to allow more company-related rules.

Read more: I, II

Fighting Unemployment Using Collective Bargaining

Collective Bargaining Fund. In October 1999, the German metalworkers' union IG Metall and the Federal Ministry of Labour agreed in principle on a new concept for early retirement at the age of 60. Wanting to give older employees the opportunity for early retirement without loss of pension rights, IG Metall proposes the creation of a "collective bargaining fund" which would make additional contributions to the statutory pension scheme for workers who have taken early retirement. As the government has rejected making a direct financial contribution, the bargaining fund would be financed by employers and employees. Employers' associations, however, have already refused to participate in such a system.

Early and Partial Retirement. Furthermore, in 1996 the government replaced existing provisions on early retirement with a new partial retirement law (Altersteilzeitgesetz) which allows employees to work part-time (50% of normal hours) from the age of 55, while receiving at least 70% of their former income. In addition, various collective agreements were signed which further improved the payments to 80%-85% of their former income for employees taking partial retirement. The Federal Employment Service (Bundesanstalt für Arbeit) estimates that since the introduction of the new partial retirement law in 1996, around 100,000 employees have made use of the scheme. (Also here.)

Hardship Clauses. As stated above, under certain conditions, this allows companies (in former east Germany) with immense economic problems to pay their employees below the minimum wage set by the collective agreement for a limited period of time.

Works Constitution Act Reform - July 28, '01

In June 2001, the lower house of the German Bundestag approved a reform of the Works Constitution Act. Almost 30 years after the last major overhaul of the law on works councils, the government now aims to adjust numerous provisions to the changed business environment and in particular seeks to give works councils a say in areas such as training, employment security, protection of the environment and fighting xenophobia and racism at the workplace. Besides several provisions which seek to streamline the procedure for the election of works councils and increase their size, the new Act will also improve the representation of women. While trade unions mainly welcomed the new law, employers' associations highlighted major concerns.

The principal changes introduced under the new Act are (this section is based on, Addison, John T., Bellman, Lutz, Schnabel, Claus, and Wagner, Joachim. 2004. "The Reform of the German Works Constitution Act: A Critical Assessment." Industrial Relations, 43: 392-420):

  1. The character of the works councils becomes more diverse. For example, divisional works councils can be introduced for special product or business units, or joint works councils can be set up across several establishments.

  2. In establishments employing between 5 and 50 employees, the voting procedure for setting up a works council is simplified.  The new procedure has two stages: the nomination of candidates by an electoral board, followed 1 week later by another works meeting in which the works council is elected directly in a secret ballot of all employees present. In larger establishments with 51 to 100 employees, the two sides can decide voluntarily to use the new simplified procedures.

  3. The size of the works council is increased via a reduction in the employment thresholds used to determine the number of councilors.  

  4. Employers are now required to make provisions for a full-time works councilor in establishments with 200 or more employees instead of 300 employees as before.

  5. The influence of the works council in matters of employment production and the training of the workforce is strengthened. The works council may no initiate and codetermine vocational training measures with respect to employees whose qualifications are likely to be rendered obsolete. 

  6. The employer has to furnish the works council at his/her expense with access to modern information and communications equipment, such as the Internet and e-mail. Moreover, the works council is entitled to consult with internal and external experts and can delegate some of its tasks to working groups in establishments with more than 100 employees.

  7. An equality quota mandates that the gender that is in the minority at the establishment be represented on the works council at least in proportion to its employment share.

  8. The legislation grants codetermination rights to the works council on environmental protection issues and equips it with the means to combat racism in the workplace through an extension of its power to withhold consent in matters of the engagement and transfer of personnel.


VII. 2005
The New Coalition Government

Elections were held on 18 September, 2005. On November 11, 2005, the conservative CDU/CSU and the social democratic SPD reached a deal to form a new government in Germany. The coalition agreement includes an increase in the VAT rate from 16% to 19%, a range of austerity measures affecting the social security system - including raising the retirement age from 65 to 67 - and a relaxation of the statutory protection against dismissal.

On November 21, 2005, Angela Merkel, leader of the Christian Democrats (CDU), was sworn in as Germany's first woman chancellor.

Read more on the Coalition Government.

Decentralization of Collective Bargaining

In June 2005, Germany's Institute for Economic and Social Research (WSI) presented the first results of its fourth works and staff council survey, which - among other matters - explores the spread of 'on-top payments' and profit-sharing and the attitudes of works councils towards the decentralization of collective bargaining. Against the background of continuing discussions about the decentralization of collective bargaining after the general election in September 2005, the results confirm the findings from the previous survey in 2002 that a majority of members of works councils do not want a further decentralization of bargaining.

In the context of increasing decentralization of collective bargaining, the number of collectively agreed 'opening clauses' allowing deviation from sectoral collective agreements has increased. About 75% of establishments covered by collective bargaining make use of one or more opening clauses. By far the most important area of application is that of flexible working time arrangements, as reported by over two-thirds of all works councils in establishments with operational clauses of this kind.  Among establishments with operational opening clauses, 35% use them to extend working time. When it comes to pay issues, however, the collectively negotiated provisions at sectoral level enjoy clear priority (in particular in the area of collectively agreed basic pay), and deviations at company level based on opening clauses are still seen only in a small minority of cases. This overall picture has not much changed since the last survey in 2002.

Read the full discussion of the survey


Union Membership Continues to Decline

Since 1991, when trade union membership was boosted because of gains due to German unification, membership of DGB has been in continuous decline. The 2004 figures are a setback to hopes that this decline might slow down. According to the latest figures from the Confederation of German Trade Unions (DGB), the membership of its affiliated trade unions dropped by nearly 5% in 2004 to stand at 7.01 million. Not only has membership continued to decline but DGB also faces the problem of an ageing membership and particular difficulties addressing young workers and employees in sectors with a weak trade union presence. To tackle this situation, DGB and its affiliates have decided to intensify their organizing and recruitment efforts.

One reason for this decline is the loss of jobs in sectors where trade unions are well represented. Workforce reductions, outsourcing and privatization have negatively affected the unions' membership strongholds in the traditional industries and the public sector. Trade unions find it difficult to compensate for these losses by expanding into other sectors, especially in private sector services where the predominance of small businesses make it difficult to establish an organized workplace presence, e.g. by way of setting up a works council.

Here is the full record of the survey.


Coverage of Collective Agreements and Works Councils

In July 2005, the Institute for Employment Research (IAB) of the Federal Employment Agency published new data on bargaining coverage and the distribution of works councils, based on a representative sample of German establishments. It finds that 43% of establishments in western Germany and 23% of establishments in eastern Germany were covered by a collective agreement in 2004. These establishments covered 68% of employees in western Germany and about 53% in eastern Germany. In 2004, about 10% of establishments in both parts of Germany had a works council. These establishments represented 47% of employees in western Germany and 38% of employees in the east.

The data highlights two important pillars of the German industrial relations system - sectoral collective bargaining and works councils. The data show that the sectoral collective agreement remains the predominant type of collective agreement and that, even in eastern Germany, company-level collective agreements are to be found in only a relatively small minority of establishments. Bargaining coverage of employees remained in 2004 at a comparatively high level, although the picture looks different in eastern Germany. A similar picture is found by looking at the coverage rates of works councils. Here it is particularly the small establishments that are hardly touched by institutional employee representation. A remedy to this would be additional institutional support for the establishment of works councils, especially in small enterprises. Such a reform of the Works Constitution Act, however, is not currently on the political agenda.

Read the full record of the survey

Read More
A very good source on the evolution of codetermination


All rights reserved ©2000 University of Alberta
Contact Webmaster