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«German Collective Bargaining in a European Perspective Continuous Erosion or Re-Stabilisation of MultiEmployer Agreements? Reinhard Bispinck, Heiner ...»

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In contrast, most German trade unions have been highly sceptical about collective bargaining decentralisation and originally opposed the introduction of opening clauses that allowed the undermining of agreed sectoral standards. A somewhat different attitude was adopted by the chemical workers union (IG BCE), which took the view from an early stage that a process of “controlled decentralisation” via opening clauses could help stabilise the entire bargaining system (Förster 2008). In metalworking the acceptance of derogations at company level by IG Metall was initially a more defensive reaction aimed at safeguarding jobs or preventing a relocation of operations. For its part, the ‘Pforzheim Accord’ was also a response to the political threat of even more drastic changes to the legal basis of German collective bargaining. Given the seeming irreversibility of decentralisation, IG Metall has now shifted to a new strategy which aims to build organisational strength through a more assertive bargaining policy at company level, using the scope for union monitoring and control of the trade-offs associated with agreed derogation (Wetzel 2007).

As research has shown, there are great differences in how the trend towards collective bargaining decentralisation is perceived by the actors at company level (Nienhüser and Hoßfeld 2010). The large majority of managers take a rather positive view, as, from their standpoint, decentralisation strengthens the position of both management and work councils, takes better account of the situation of the business, and weakens the power of the union at workplace level. In contrast, the majority of works councillors have a much more sceptical attitude. According to results of the WSI Works Council Survey, since the late 1990s there has been a stable majority of works council members who see bargaining decentralisation as ‘ambiguous’ or ‘generally problematic’, while only 11-18% welcome this trend. Decentralisation is seen by a large majority of employee representatives as a process which mainly strengthens the bargaining power of the employers’ side. According to the most recent survey, conducted in 2010, 37% of works councillors see decentralisation as ‘ambiguous’ while 50% view it as generally problematic. Only 11% welcome this trend (Bispinck and Schulten 2010).

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2.2 The erosion of bargaining power Weakening structural power The profound changes in the German bargaining system have gone along with a shift in the balance of power in favour of employers since the mid 1990s. The single most important factor was the persistently high level of unemployment which was reinforced in the economic turmoil in the aftermath of 1990 and the end of the short-lived unification boom in western Germany. Unemployment had already been on a steady increase in western Germany since the mid 1970s. From a post-war low of 0.7% in 1970 the official unemployment rate had climbed to more than 7% in the late 1980s.

In the now unified economy it quickly jumped to more than 10% in the mid 1990s and peaked at 13% in 2005. There are marked regional disparities with an unemployment level in December 2009 of 12.7% in eastern Germany compared to 7% in the western part of Germany.

This weakening of their marketplace bargaining power (Silver 2003) made employees increasingly sensitive to employers' pressure in particular in combination with threats of withdrawal of investments, relocation or off-shoring. A representative survey (Ipsos 2004) found in 2004 that more than a third of German workers were afraid of losing their jobs because companies might shift activities to low-wage countries.

Moreover, three out of four workers would have been prepared to accept a wage freeze for two years in order to keep their jobs.

Next to unemployment it is the casualisation of the work force in the form of agency work, fixed term contracts and marginal part-time jobs which negatively affects structural power of workers. Since the 1990s Germany has seen a tendency towards the development of ‘non-standard’ forms of employment which gained momentum in the early 2000s (Dribbusch and Schulten 2008). If we look at the statistical development of waged employment (only employees between 15 and 64 years of age, excluding those in education or apprenticeships) in the decade between 1998 and 2008 we see a rise of 5.7% to 30.1 million employees (destatis 2009). The number of employees who worked in some form of ‘atypical’ employment – defined as all those in a partWSI-Diskussionspapier 171 Seite 11 time job with less than 21 hours a week, those with a so-called ‘mini-job’ 2, employees with fixed term contracts and temporary agency workers (destatis 2009, 5) – grew in the same period by 46.2% to 7.7 million. Marginal part-time employment in the form of ‘mini-jobs’ even grew by 71.5%, making it the fastest growing form of employment.

These jobs are particularly widespread in private service industries such as retail where they account for about a quarter of all jobs. In industrial cleaning almost half of employees are ‘mini-jobbers’ (Kalina and Voss-Dahm 2005).

Between 1998 and 2008 the number of employees with fixed term contracts grew by 44% - again without counting those in training or apprenticeship (destatis 2009). In 2009 almost half of all new recruits (47%) only received a fixed term contract compared to 32% in 2001 (IAB 2010).





Temporary agency work has seen a boom since it became almost completely deregulated in 2002. By 2008 some 610,000 employees were agency workers. Although agency workers represent a comparably small group in comparison to some other European countries, two thirds of all agency workers are found in manufacturing (Eichhorst et al. 2010). Particularly large shares of agency workers are found in some establishments in the metal working industry. Other forms of casual employment are hidden within self employment. Between 1991 and 2004 the number of selfemployed people, including unpaid family workers, increased by 20% to then 4.2 million (Deutsche Bundesbank 2005). Casualisation supports the fragmentation of the work force. It has a strong potential to undermine workplace bargaining power by creating ‘core’ and ‘periphery’ workforces. Unions and work place representatives face new challenges in building solidarity and union organizing.

Decline in union membership

Unemployment and casualisation have gone along with a loss of associational power of workers; the most prominent aspect being the decline in union membership. The erosion of union membership had already begun in the mid 1980s but it was the sharp down-turn in the mid 1990s which really shook the DGB-affiliates. In 1991 DGB membership jumped from about 8 million in the former Federal Republic to nearly 12

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million in unified Germany following the integration of members of the former eastern German trade unions. However, optimistic expectations on the side of some DGBaffiliates who hoped to expand their power base were quickly disappointed. Following the collapse of much of the former GDR economy and the end of the short-lived unification boom in western Germany the DGB-affiliates faced a severe decline. In 2000 the pre-unification membership level was reached, albeit now for the whole of Germany. In 2009 the combined membership of all DGB-affiliates was down to 6.3 million.

This decline affected all DGB-affiliates - although to differing degrees. The major reasons were the various restructuring and privatization processes which led to massive job cuts in union strongholds in manufacturing and the public service. To this was added the problems DGB affiliates had to organise workers in the expanding private service sectors and difficulties in appealing to non-standard workers and younger employees (Dribbusch 2003; Ebbinghaus et al. 2008; Vandaele and Leschke 2010).

Those DGB affiliates with the least problems in recent years are the German Police Union (GdP) and the German Union of Education (GEW), which both focus on groups of comparatively secure public sector employees and civil servants.

In contrast to the DGB, the second largest German union confederation, the German Civil Service Association (beamtenbund und tarifunion (!), dbb), which predominantly organises public civil servants, had a positive membership development. The dbb grew from 1.1 million members in 1991 to 1.3 million in 2009.

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36.0 34.7 33.9 33.9 35.0 33.3 33.1 32.4 31.8 31.2 30.4 29.2 30.0 27.8 27.0 25.9 25.3 24.6 25.0 23.7 23.5 23.0 22.2 21.6 20.7 20.1 19.6 19.3 20.0 15.0 10.0 5.0 0.0 Source: ICTWSS database, AIAS-Institute, University of Amsterdam (1985-2007); WSI (estimates for 2008 and 2009) Note: For details of the ICTWSS database see: http://www.uva-aias.net/208; up to 1990 western Germany, since 1991 Germany. 2008 + 2009 estimates by WSI.

Behind these aggregates we find huge disparities. Whereas in a few sectors such as the steel industry and car manufacturing (and some occupational niches) union presence is strong it is very patchy in the chemical industry, in the construction industry and in the service sector. With regard to bargaining strength this translates into a difficult position for DGB-affiliates in large parts of the economy. In the craft trades, in most of the private service industries and in public administration unions have only limited capabilities to successfully enforce their demands by way of industrial action.

3. German collective bargainingin a European comparative perspective

In order to understand the reasons for the ongoing erosion of German collective bargaining, it seems to be useful to discuss the German development in a European comparative perspective. This led to the everlasting debate within comparative industrial relations on whether industrial relations systems tend to converge as the result of secular trends within modern capitalism, or whether there will be a continuous diversity of national systems, as changes take place within a specific national framework and follow the logic of path dependency. In the 1990s there was a strong belief that due to the changes of power relations associated with the notion of globalisation, colWSI-Diskussionspapier 171 Seite 14 lective bargaining in Europe would follow the example of the UK with a strong trend towards decentralisation and a declining bargaining coverage (Baglioni and Crouch 1991, Ferner and Hyman 1992). Later such assumptions were identified as ‘exaggerated’ (Ferner and Hyman 1998: xi) and the emphasis shifted more towards the relative stability of national bargaining systems (Traxler et.al. 2001, Schulten 2005).

Comparing collective bargaining in Germany with the development in other European countries, it became clear at a first glance that the erosion and decline of bargaining institutions is not an inevitable process. On the contrary, the development in Germany seems to be rather exceptional as most other western European countries were able to continue with a high bargaining coverage and relatively stable bargaining institutions. In the following we will therefore focus on the political and institutional factors which allow such a high degree of stability, before we ask what Germany might learn from its European neighbours in order to re-stabilise its bargaining system.

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Collective bargaining coverage

Within Europe the coverage of collective agreements shows great differences ranging from nearly 100% in Austria to less than 20% in the Baltic States (Figure 7). In most of the ‘old’ EU member states from northern, western and southern Europe the bargaining coverage varies between 70% and 95%. In contrast to that most countries in central and eastern Europe have a bargaining coverage of below 50% with the exception of Slovenia and Romania.

With somewhat above 60% the bargaining coverage in Germany is in the European middle. Considering only the old EU member states, however, Germany has one of the lowest levels of bargaining coverage which is under matched only by Luxembourg and the UK. While German bargaining coverage has shown a continuous decline during the past two decades, in most of the other old EU member states it has remained relatively stable (European Commission 2009: 74). Only the UK was faced by an even stronger decline as the bargaining coverage decreased from about 70% at the beginning of the 1980s towards around 35% in 2006.

WSI-Diskussionspapier 171 Seite 15

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At a first glance it became obvious that in many countries there is a strong correlation between bargaining coverage and union density. This holds true for the Scandinavian countries with both a relatively high union density and a high bargaining coverage, as well as for most of the Central and Eastern European countries in which both levels are rather low. There is also a close correlation of union density and bargaining coverage in the UK.

In all European countries the bargaining coverage is at least somewhat higher than the union density which means that also non-union members are covered by collective agreements. In some countries, however, the differences between both values are rather high. The most striking discrepancy exists in France where the union density is only 9% while more than 95% of all employees are covered by collective agreements. A rather high bargaining coverage with a comparatively low union density can also be found in Spain, Portugal and the Netherlands. Finally, even in Germany the bargaining coverage is three times higher than the union density.

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86.8 82.8 75.4 74.7 35.4 35.3 34.5 33.9 22.8 20.2

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A correlation also seems to exist between the bargaining coverage and the density of employers’ associations, which is in all countries above the level of union density with the exception of the Scandinavian countries (Figure 10). As a rule in most countries a higher level of employers’ association density leads to higher bargaining coverage. In Germany the bargaining coverage also corresponds exactly with the employers’ organisational scope. There are, however, a couple of countries where the bargaining coverage is even significantly higher than the density of employers’ associations, which is an indication for further political and institutional factors which support the bargaining system.

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