Actors and institutions in Germany

In the post-war years, in response to the country’s Nazi past, the legislator gave the public authorities a rather limited role in industrial relations. The 1949 TVG guarantees trade unions, employer organisations and single employers autonomy in collective bargaining. In the case of a juridical dispute, the labour courts decide on the right of an organisation to conclude a collective agreement and on the validity of a collective agreement. The social partners may ask the labour minister to extend an agreement.

The Minimum Wage Act (Mindestlohngesetz, MiLoG) introduced the statutory minimum wage, which came into effect at the beginning of 2015. MiLoG also sets out that the labour minister appoints the chair of the Minimum Wage Commission from among peak-level social partner organisations. The Minimum Wage Commission recommends the level of the statutory minimum wage to the labour minister and the federal government takes the final decision on the statutory minimum wage adjustments. In 2022, the federal government suspended this procedure for the first time since its introduction in 2015 and set the statutory minimum wage at €12 per hour without any such recommendation from the Minimum Wage Commission.

The labour inspectorates in the 16 federal states (Länder) monitor occupational health and safety, while the Customs Service – a unit of the Federal Ministry of Finance – monitors compliance with the statutory minimum wage (MiLoG), the Posted Workers Act (Arbeitnehmerentsendegesetz, ArbEntG), the Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz) and the Act Against Undeclared Work (Schwarzarbeitsbekämpfungsgesetz).

The concept of organisational representativeness is not covered in the German system. The alternative concept used in Germany is collective bargaining capacity (Tariffähigkeit). This concept has its basis in the GG (freedom of coalition) and the TVG and is governed by the rulings of the Federal Labour Court. Trade unions and employer organisations have the right to engage in collective bargaining if collective bargaining is designated as a statutory task (Article 2 of the TVG). Based on a ruling by the Federal Labour Court, the main indicators of collective bargaining capacity are organisational independence (of the opposite party and third parties), internal democracy and the organisational capacity (soziale Mächtigkeit) both to get the opposite party to join the bargaining table (for example through strikes) and to enforce the implementation of collective bargaining outcomes.

About trade union representation

All employees in Germany have the right to join a trade union. However, some groups of employees are excluded from trade union representation for the following reasons.

• The collective bargaining partners determine the highest wage level they want to cover in collective bargaining. Employees earning more than the threshold of the agreed wage scale (Ni Angestellte) are not covered by the collective agreements.

• Self-employed workers are not covered by labour law and trade unions do not represent them in collective bargaining. However, self-employed workers can still be trade union members. The United Services Trade Union (Vereinte Dienstleistungsgewerkschaft, ver.di) organises and consults self-employed workers, particularly those working in the media and in the transport sector. The metalworkers’ union IG Metall has started organising digital platform workers.

• Trade unions may represent the interests of civil servants and judges before public authorities, but they cannot engage in collective bargaining on their behalf.

• Trade unions may not represent the interests of workers covered by Catholic Church law. This also holds for workers under Protestant Church law, although some church worker organisations have opted to be represented by ver.di in collective bargaining.

OECD figures indicate a slow decrease in union density and a tendency towards organisational fragmentation. Membership of the three-trade union peak-level organisations is slowly declining. Public service worker unions and occupational unions organised around sectoral professions have slightly increased their membership in recent years.

Trade union membership and density, 2010–2019

About employer representation

Section 9 of the GG (guaranteeing freedom of association) also applies to employer organisations. Like trade unions, employer organisations have the right to engage in collective bargaining if assigned representative functions by their members and if tasked with collective bargaining according to their statutes (section 2 of the TVG). There are no further statutory regulations defining criteria for representativeness or any statutory requirement for an association.

Employer organisations have been affected by a decline in membership. Density figures cannot be provided because employer organisations release figures for the number of organisational members, but not for the numbers of establishments or employees covered.

In response to a challenging decline in membership, the vast majority of employer organisations offer membership without the binding obligation to apply collective agreements. The Federal Labour Court decided that employer organisations are allowed to do this given that members not applying collective agreements does not influence the organisations on issues regulated by collective bargaining. Craft guilds engaged in collective bargaining are prohibited from providing non-binding memberships.

Employer organisation membership and density, 2012–2019

Notes: * Percentage of employees working in an establishment that is member of any employer organisation that is involved in collective bargaining. n.a., not applicable.

Main employer organisations

Main employer organisations and confederations, 2019

Statutory tripartite bodies are rare in the German system. In the case of the extension of a sectoral collective agreement, labour ministers cooperate with a sectoral bipartite wage committee. Article 5 of the TVG stipulates that the Federal Labour Ministry – in cooperation with a wage committee set up by three representatives of the trade union and three representatives on the employer side – may declare a sectoral agreement generally binding. Since 2009, ArbEntG has contained a similar regulation with regards to extension mechanisms.

In 2014, MiLoG put in place a permanent Minimum Wage Commission, which decides on future minimum wage increases every two years. The commission is composed of three trade union representatives, three employer representatives and two academic experts. A chairperson is appointed by the social partners but needs approval by the Federal Labour Minister. Individual members are appointed every five years.

Main bipartite bodies

Under BetrVG, in establishments with five workers or more, all workers (except for the executive staff) are entitled to take part in elections for works councils or to become members of the works council. They do not have to be a trade union member to do so. While the works council enjoys co-determination rights and consultation and information rights as regards social and health and safety issues, these rights do not extend to issues that are part of collective agreements (unless the agreement specifically allows the works council to deal with such topics).

Works councils are the main form of employee representation at establishment level. As the latest data from the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB) (that is, the IAB Establishment Panel (IAB-Betriebspanel)) show, 39% of employees in the private sector in western Germany were represented by a works council in 2021(compared with 42% in 2018 and 40% in 2017). In eastern Germany, 34% of employees were represented by a works council in 2021(compared with 35% in 2018 and 33% in 2017). Coverage varies strongly by establishment size. In 2021, only 5% of establishments with up to 50 workers had worker representation, compared with 81% of establishments with more than 500 workers. The situation has remained stable at both ends of the scale and the situation in small establishments has not improved, even though a reform of BetrVG in 2003 aimed to put worker representation in place. Over the past decade, works council coverage has decreased for medium-sized establishments (with between 51 and 500 employees): only 49% of medium-sized companies had a works council in 2021, compared with over 60% in the early 2000s (the percentages do not vary between eastern and western Germany).

Regulation, composition and competencies of the bodies