University of Bremen

Jochen Tholen
Labour Relations in East Germany
Theses to be presented to the Conference “Trade unions and the state in post-socialist countries”, Moscow, April 14 – 16, 2005

Part I: The transfer of the system of Industral Relations from West to East Germany 1990

This transfer was imbedded in the implementation of West Germany´s legal and economic system in the former German Democratic Republic after the breakdown of the East German regime and the opening of the Berlin Wall on November 9, 1889.

The aim of the industrial transformation was, that the application of West German standards and institutions to East Germany (the new „laender“/states) should quickly and efficiently bring living conditions comparable with those in the West, to the East.

A clear unification scenario and the rapid equalisation of living conditions were intended to stem the massive flow of migration from East to West around the end of 1989 and the beginning of 1990.

With the onset of Economic and Monetary Union on the 1st of July 1990 in East Germany, three months before the official political re-unification, the labour and economic laws of the Federal Republic came into force in East Germany. An entirely different system of IR was transferred to East German companies, which at that time were organized as all state-owned companies in the command economy in the East Bloc.

Part II: The system of Industrial Relations in West Germany before 1990 and now in West and East Germany

1.The social actors

In Germany there is existing a union unity. The basic principles of unionism are the lack of political links and the principle „one facotry- one union“. The trade unions are mainly organised according to the principle of a single industrial union. At the workplace, especially in large concerns, the union structure is based on representatives, who are voted in by trade union members at the workplace.

The „Deutscher Gewerkschaftsbund (DGB)“ is the roof. The main power lis concentrated on the 8 affiliated (industry/branch) unions. In the end of 2003 the number of members was 7, 363 Mio. The union density was about 25 percent allover Germany - but in East Germany the density was about 11 percent.

On the employers side there is a dual structure:

First the employers´ associations („Bundesvereinigung der Deutschen Arbeitgeberverbaende – BDA“ with the respective branch organisations), which are the social partners of the unions to negotiate the collective bargaining.

In East Germany nine out of ten companies in the metalworking industry – representing three quarter of the workforce – no longer belong to an employers´ association – so the system of collective bargaining on regional/branch level in East Germany leaves out 75 % of the East German workforce in industry and services (excluding public administration).

Second the industry´s federations („Bundesvereinigung der Deutschen Industrie – BDI“, also with the respective branch organisations), which are acting as lobby organisations.

2.Collective Bargaining

In Germany there is a consitutionally guaranteed freedom of collective bargaining („Tarifautonomie“), which gives the actors (unions and employers´associations) an enormous power and influence on the supra-company´s level as well as on internal company working conditions and wages.

In Germany regional based, branch-related collective agreements („Flaechentarifvertraege“) are dominating. But this still dominating pattern is going to be eroded by 2 trends:

  • More and more the number of company-focussed agreements is growing,
  • Even the „Flaechentarifvertraege“ are allowing more and more exceptions for single companies to consider their own conditions.

In 2001 the collective agreements in West Germany were comprising 63,1 percent of the total workforce, in East Germany 44,4 percent (IAB 2003).

3.Industrial Relations at the workplace

There is existing a dualism of interest representation (unions and works councils). In the companies the Works Council („Betriebsrat“) is representing the workforce according to the law („Betriebsverfassungsgesetz“/Works constitution act). The Works Councils have far-reaching rights of co-determination in the spheres of work conditions including working time, health and safety, layoffs etc. Furthermore they have the right to be informed about the economic condition of the company, the investments etc. by the management. According to the German system of the two tier board of public companies (advisory board and executive board), in such companies with more than 2000 employees the employees´ representatives get the half of the seats of the advisory board, the other half is coming from the owners´side.

Distribution of Works Councils (BR) 2003 in Percent

Basis: Private companies with more than 4 employees

Shares in PercentEmployess/companyTotal

5-5051-100101-199200-500501 onwards

Companies with BR / West Germany
7 47 68 82 91 / 11
Employees with BR / 11 47 68 83 94 / 48
Companies with BR /

East Germany

7 42 68 75 79 / 11
Employees with BR / 12 42 70 74 82 / 39

Source: IAB 2003

48 Percent of the workforce in West German comapnies and 39 percent in East German companies are covered by Works councils. There is a huge difference between small, medium-sized and large companies. The bigger the company, the higher is the degree of works council´s dissemination.

To summarise the specific structures and characteristic features of the German system of industrial relations, there are five main points:

Duality: two different structures of collective bargaining autonomy and co-determination;

Intermediacy: social institutions and programmes for pragmatic negotiations between capital and labour;

Legalisation: close network of mainly procedural regulations and legal restrictions on industrial conflicts and industrial action;

Centralisation: the organisations representing capital and labour have reciprocally encouraged the concentration and centralisation of their associations;

Representation: organs of collective worker representation, especially those of the employees, have a representative character.

This system ensures that the workplace itself is not normally an area of conflict, but to a large extent carries on production undisturbed.

It is a well-known fact that the most important institutions of this system are the trade unions, the works constitution and with its essential expression, the works council, as well as co-determination at company level.

Overall then, these institutions operate in a fully developed network of industrial labour and social regulations, which together characterise the German system of industrial relations.

Comparing the German system of IR with the systems in the UK and in three other transformation societies (if you would like to call East Germany as a tranformation society) in CEE, you will come to the following diagram:

Diagram of the Labour Relations in the UK, Poland, Czech Republic, Slovak Republic and Germany

UK / Poland / Czech R. / Germany / Slovak R.
Form of conflict regulation / Conflict model / Tripartite / Tripartite / Co-operation /
Consensus
Model / Tripartite
Degree of codifi-
Cation / Bargaining
Process / Partial Codifica
tion / Partial
Codifica
Tion / Codifica
Tion / Partial
Codifica
Tion
Organization.
Form of the
Unions / Heterogenity
of the unions / Pluralistic
Diversity of the unions / Unity
Union/Fragmented / Unity union
Industrial union / Unity union/
highly fragmented
Union Density / 29 / 15 / 30 / 25 / 40
Relations between the union and the plant employeeepresenta
Tives / Monistic
Single structure / Monistic
Single
Structure, but starting with WorksCouncils / Monistic/
Dualism:
- union bodies in plants
-facultative works councils / Dualism
Dual structure
- Works council
-Unions / Monistic/
Dualism:
- union bodies in plants
-facultative works councils
Management / capitalism models / Anglo-American
Model,
Share-holder-value capitalism / Transition/
Direction rather unclear / Transition/
Direction rather unclear / Rhine-alpine
Capitalism,
Co-management / Transition/
Direction rather unclear
Direct
Collective
Bargaing
Covering / 36 / 40 / 25 – 30 / 63 (West)
44 (East) / 48

Source: Carley 2002; Eberwein, Tholen, Schuster 2002; Tholen et al 2003

Part III: The special conditions of East German Industrial Relations - Theses[1]

  • The quick transfer and the wide acceptance of plant-level co-determination can be viewed as one of the (few) success stories of the German unification process.
  • Despite this formal success there are a number of special features peculiar to the East German version of co-determination: The relatively distant, pragmatic relationship of the East German works councils to the unions; the unions are seen by there members as advisory and service institution; the average worker feels little connection to union objectives.
  • There is a discrepancy between the service needs and the available resources of the unions; partly coming from decreasing membership, partly coming form the decentralisation of collective bargaining, which means an increase in the providison of usual services per company.
  • The works councils in East Gemany receive little support from the workforce. Feedback from the works councils to the workforce is similarly poor. Due to massive reductions in workforce numbers, the collapse of many companies and continuing mass unemployment, there is a widespread attitue of „Let us wait and see“ in many companies. Employees seek to maintain a low profile; a typical phenomenen in crisis situations that is also common in West German companies, although perhaps in a less marked form.
  • Since the days of the GDR and the privatisation agency („Treuhandanstalt“), personality-related corporate cultures have lost their cohesiveness in those areas/companies which have survived privatisation. Accordingly, many works councils have lost their special access to mangement provided co-determination – an access which enabled natural interaction for the commonly defined good of the company.
  • The chances of revitalizing co-determination in these companies depend largely on the economic developments.
  • Referring to possible influences of East German IR on West German IR: Co-determination and development in bargaining autonomy are interdependent. If a weakening of the unions and employers´ associations and of their collectively bargained agreements leads to a weakening of co-determination at company´s level – as you can see this in East Germany -, it is natural that these processes will be transferable to the West German situation. Nevertheless, a direct transfer to West Germany is made more difficult by the special conditions which accompanied the setting up of East German industry and by the restrictions created by its contiuing weakness.

References

Carley, Mark (2002): Industrial relations in the EU Member States and candidate countries, in: European Foundation for the Improvement of Living and Working Conditions, Luxembourg 2002

Eberwein, Wilhelm; Tholen, Jochen; Schuster, Joachim (2002): The Europeanisation of Industrial Relations: National and European Processes in Germany, UK, Italy and France, Ashgate Publ., Aldershot/UK

IAB (2003): Institut für Arbeitsmarkt- und Berufsforschung der Bundesagentur für Arbeit, Betriebspanel 2003, Nuremberg, Germany

Schmidt, Rudi (2003): The Rebuilding of Industiral Relations in Eastern Germany, in: Mueller-Jentsch; Weitbrecht (Eds): The Changing Contours of German Industrial Relations, Rainer Hampp Publ., Muenchen, Mering , Germany, 81-102

Tholen, Jochen/ Czíria, Ludovit/ Hemmer, Eike/ Mansfeldová, Zdenka/ Sharman, Ewa (2003): New Trends in Poland, Czech and Slowak Republic IAW-Working Paper 3/2003, University of Bremen, ISSN 1610-9325, Germany

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[1] Following Schmidt 2003, 98-99