New data on bargaining coverage and works councils in 2007
In 2008, the Institute for Employment Research published new data on bargaining coverage and works councils based on a representative sample of German establishments. In 2007, 39% of establishments in western Germany and 24% in eastern Germany were covered by a collective agreement, revealing a decline in bargaining coverage in the west and a slight increase in the east. Overall, 10% of establishments had a works council, while 8% had other forms of employee representation.
In September 2008, the Institute for Employment Research (Institut für Arbeitsmarktforschung, IAB) of the Federal Employment Agency (Bundesagentur für Arbeit, BA) published new data on bargaining coverage and the distribution of works councils in a report entitled ‘Collective bargaining and employee representation at company level: Current results of the 2007 IAB establishment panel’. The data are based on the 2007 IAB establishment panel (IAB-Betriebspanel), which is a representative survey of 16,000 establishments. The survey includes establishments with more than five employees.
According to the IAB findings for 2007, 39% of all establishments in western Germany and 24% of all those in eastern Germany are covered by collective bargaining agreements (Table 1). These establishments covered 63% of employees in western Germany and about 54% of employees in eastern Germany. Compared with 2004, these figures represent a decline in bargaining coverage of five percentage points in western Germany (2004: 68%) and an increase of one percentage point in eastern Germany (2004: 53%) (DE0509205F). The IAB study notes that collective bargaining coverage of employees dropped by 13% in western Germany and by 15% in eastern Germany over the period 1996–2007. However, according to the 2007 data, this development might have come to an end in eastern Germany.
The predominant type of agreement is the sectoral collective agreement. Apart from some sectors of the economy in eastern Germany, company-level agreements do not play a major role. Moreover, the data reveal that the bargaining coverage rate is highest in the public sector and lowest in business services.
| Sectoral collective agreement | Company-level collective agreement | No collective agreement (out of those oriented towards a collective agreement) | ||||
|---|---|---|---|---|---|---|
| Sector | West | East | West | East | West | East |
| Agriculture | 40 | 8 | * | * | 60 (37) | 92 (38) |
| Mining and energy | 55 | 38 | 4 | 15 | 42 (56) | 47 (67) |
| Raw materials (capital goods) | 42 | 18 | 4 | 5 | 54 (51) | 77 (40) |
| Investment goods | 30 | 17 | 3 | 6 | 67 (55) | 78 (49) |
| Consumption goods | 46 | 24 | 3 | 3 | 51 (46) | 73 (47) |
| Construction | 61 | 38 | 1 | 4 | 38 (56) | 58 (59) |
| Commerce | 34 | 15 | 2 | 4 | 63 (44) | 81 (40) |
| Transport and communications | 34 | 15 | 4 | 6 | 62 (46) | 80 (42) |
| Finance | 42 | 32 | 4 | * | 54 (45) | 66 (27) |
| Business services | 13 | 14 | 1 | 4 | 85 (29) | 83 (28) |
| Other services | 36 | 16 | 3 | 5 | 61 (43) | 79 (44) |
| Non-profit sector | 40 | 20 | 8 | 9 | 52 (42) | 72 (33) |
| Public authorities and social insurance | 85 | 85 | 7 | 5 | 8 (79) | 11 (51) |
| Total | 36 | 20 | 3 | 4 | 62 (42) | 76 (41) |
Note: * No figures provided as the number of cases was too small.
Source: IAB-Betriebspanel 2007
Table 2 shows the 2007 bargaining coverage rate of employees working in establishments with more than five employees. According to the data, 56% of these employees in western Germany and 71% in eastern Germany are covered by sectoral collective agreements.
| Sectoral collective agreement | Company-level collective agreement | Employees not covered by collective agreement (out of those oriented towards a collective agreement) | ||||
|---|---|---|---|---|---|---|
| Sector | West | East | West | East | West | East |
| Agriculture | 56 | 15 | * | * | 43 (40) | 83 (49) |
| Mining and energy | 81 | 57 | 10 | 32 | 9 (56) | 11 (66) |
| Raw materials (capital goods) | 64 | 32 | 11 | 12 | 25 (65) | 56 (47) |
| Investment goods | 60 | 25 | 8 | 17 | 32 (67) | 59 (57) |
| Consumption goods | 51 | 29 | 10 | 17 | 40 (56) | 54 (49) |
| Construction | 75 | 48 | 2 | 8 | 23 (64) | 44 (63) |
| Commerce | 48 | 24 | 5 | 6 | 47 (57) | 69 (50) |
| Transport and communications | 45 | 33 | 11 | 17 | 44 (46) | 50 (44) |
| Finance | 86 | 73 | 4 | * | 10 (63) | 26 (52) |
| Business services | 37 | 45 | 6 | 7 | 57 (37) | 48 (32) |
| Other services | 53 | 36 | 8 | 17 | 39 (53) | 48 (53) |
| Non-profit sector | 49 | 32 | 12 | 15 | 39 (68) | 54 (56) |
| Public authorities and social insurance | 89 | 79 | 8 | 18 | 4 (91) | 3 (42) |
| Total | 56 | 41 | 7 | 13 | 37 (53) | 47 (49) |
Note: * No figures provided as the number of cases was too small.
Source: IAB-Betriebspanel 2007
The IAB survey also provides new information on the coverage rate of work councils and of other forms of employee representation (Table 3), such as round table negotiations. A works council can only be established in private sector establishments having at least five employees (DE0309201T). However, only 10% of establishments falling into this category have a works council. The coverage of works councils is strongly related to establishment size. Whereas only 6% of establishments in western Germany with between five and 50 employees have a works council, 90% of establishments with more than 500 employees have a works council. In eastern Germany the result is similar at 6% and 85% respectively. The IAB study notes that, while an overall decline in works council coverage has been recorded since 1995, the rate has generally remained robust compared with 2004. In 2007, other forms of employee representation existed in 9% of all establishments in western Germany and 4% of all establishments in eastern Germany. According to IAB, these forms of employee representation proved to be less stable than works councils.
| Sector | Establishments with works councils | Establishments with other forms of employee representation | Employees represented by works councils | Employees represented by other forms of employee representation |
|---|---|---|---|---|
| Mining and energy | 46 | 12 | 89 | 9 |
| Raw materials (capital goods) | 22 | 6 | 74 | 11 |
| Investment goods | 14 | 9 | 70 | 7 |
| Consumption goods | 14 | 5 | 50 | 8 |
| Construction | 3 | 6 | 18 | 9 |
| Commerce | 10 | 8 | 31 | 10 |
| Transport and communications | 18 | 8 | 46 | 8 |
| Finance | 41 | 3 | 80 | 7 |
| Business services | 9 | 8 | 32 | 9 |
| Other services | 7 | 10 | 35 | 17 |
| Total | 10 | 8 | 45 | 10 |
Note: Data relate to establishments with more than five employees only.
Source: IAB-Betriebspanel 2007
The data show that employees in the private services sector are much more likely to have no collective agreement coverage or works council compared with employees in manufacturing. This difference is less marked in eastern Germany due to the fact that in this part of Germany – even in manufacturing – a considerable number of employees are not covered by either a works council or a sectoral collective agreement.
Commentary
The data collated by the IAB establishment panel 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 only to be found in a relatively small minority of establishments. Bargaining coverage of employees has declined in western Germany, yet stabilised in eastern Germany. However, diverging developments have occurred in some sectors. Compared with 2004, total bargaining coverage of employees declined for example by nine percentage points in the non-profit sector in western Germany, whereas it increased by 11 percentage points in the public sector. The coverage of works councils has remained robust compared with 2004. The 2007 findings show that the works council remains by far the most prominent form of employee representation, although other forms of employee representation play a role.
Reference
Ellguth, P. and Kohaut, S., Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2007, WSI-Mitteilungen, Vol. 61, No. 9, 2008
Birgit Beese, Institute for Economic and Social Research (WSI)