Eurofound defines industrial democracy as a participatory and democratic process which encompasses the participation rights of employers and employees in the governance of employment relationships, either directly or indirectly, via trade unions, works councils, shop stewards or other forms of employee representation at any level (shop floor, establishment, company, sectoral, regional and cross-industry). 
Background and status
The Eurofound definition is embedded in a pluralistic perspective and was developed in consultation with its tripartite stakeholders (employers, trade unions, governments). Eurofound’s definition covers both workplace democracy and autonomous collective bargaining at different levels of industrial relations.
The concept of industrial democracy has a long history, with Webb and Webb at the end of the nineteenth century describing it as a democratic process within trade unions, as well as an autonomous collective bargaining process. In the mid-twentieth century, Clegg noted that ‘collective bargaining is the means to industrial democracy’. 
Many contemporary researchers define industrial democracy as a mode of governance of the employment relationship, which is mainly located at the micro-level (for example, at shop-floor, establishment or company levels) in forms such as co-determination, works councils or shop stewards.
Industrial relations index
Eurofound has developed a composite indicator to measure how countries perform across four dimensions: industrial democracy, industrial competitiveness, social justice, and quality of work and employment. This index also monitors industrial relations systems as a whole across the EU, encompassing cross-country comparisons, benchmarking and advocacy for action.
Being able to map, measure and analyse industrial democracy and the other three dimensions provides evidence on how to contribute most effectively to a better collective and individual governance of work and employment. The industrial relations index is intended to enable stakeholders in Member States to assess the functioning of industrial relations within their country and to compare it with others. 
- Eurofound: Industrial relations index
Industrial democracy is a key mechanism supporting the integration of the economic and social dimension of the EU, as laid out in the European Pillar of Social Rights. Industrial democracy, which in the recent past was often considered an unwieldy concept, has come to be seen as essential following the financial crisis and Great Recession, and more recently due to the impacts of COVID-19.  The extent to which industrial democracy operates at all levels within fair and competitive industrial relations systems may determine whether EU workers and employers are able to embrace the enormous challenges facing them.
Related dictionary terms
Co-determination ; collective bargaining ; consultation in the enterprise ; coordination of collective bargaining ; management prerogative ; participation ; right of collective bargaining ; social dialogue.