Assessing employee representation and collective bargaining coverage

To coincide with the May Day celebrations, the social partners gave their assessment of the inner workings of the German collective bargaining system. Employers in the metal and electrical industry highlighted that the decline in collective bargaining coverage has been stopped. Latest data from the Institute for Employment Research show that around 32% of establishments with about 52% of employees were directly covered by a sectoral collective agreement in 2009.

The Institute for Employment Research (Institut für Arbeitsmarktforschung, IAB) of the Federal Employment Agency (Bundesagentur für Arbeit, BA) hosts the IAB Establishment Panel (IAB-Betriebspanel), from which it derived the latest data on collective bargaining coverage and employee representation. The panel is a representative survey of about 16,000 establishments.

Collective bargaining coverage

As shown in Table 1, 36% of western German establishments and 19% of eastern German establishments were covered by a sectoral collective agreement in 2009. However, this coverage varies greatly according to company size. For example, 75% of western German and 60% of eastern German establishments employing 500 or more staff were covered by a sectoral collective agreement in 2009. On the other hand, the same held true for only 30% of western German and 16% of eastern German establishments with one to nine employees.

Table 1: Collective bargaining coverage in establishments, by sector, 2009 (%)
 

Sectoral collective agreements

Company-level agreement

No collective agreement (oriented towards a collective agreement)

Western Germany Eastern Germany Western Germany Eastern Germany Western Germany Eastern Germany
Agriculture

41

9

1

2

57 (38)

89 (30)

Mining, energy, water supply and waste disposal

60

27

6

11

34 (46)

61 (38)

Manufacturing

38

15

3

5

59 (49)

80 (43)

Construction

61

38

3

3

36 (45)

59 (52)

Commerce

34

14

3

4

63 (44)

82 (38)

Transport and communication

25

14

4

4

71 (40)

81 (47)

Information and communication

10

12

3

3

87 (34)

85 (20)

Finance and insurance

39

26

3

1

58 (39)

73 (33)

Hotels, restaurants and other services

34

13

1

1

64 (28)

85 (36)

Healthcare and education

40

19

7

7

53 (56)

74 (55)

Business, scientific and other freelance activities

18

14

2

3

80 (33)

82 (30)

Non-profit organisations

39

22

9

10

52 (39)

68 (37)

Public administration and social security

80

88

16

7

4 (41)

6 (30)

Total

36

19

3

4

61 (41)

77 (40)

Source: IAB Establishment Panel, 2009

Looking at the employee collective bargaining coverage, about 56% and 38% of the employees in western and eastern Germany respectively worked in an establishment covered by a sectoral collective agreement in 2009 (Table 2). In addition, another 9% and 13% of the employees in western and eastern Germany respectively were covered by a company-level agreement in the same year.

As shown in Table 2, the sectoral collective bargaining coverage in the financial and insurance sector is above average, at 85% in western Germany and 59% in eastern Germany. Conversely, it is lowest in the information and communication sector, at 23% and 14% in western and eastern Germany respectively.

Overall, these latest data indicate that about 32% of establishments with approximately 52% of employees were directly covered by a sectoral collective agreement in 2009. Another quarter of establishments base their individual employment contracts on a sectoral collective agreement. As a result, a further 19% of employees were indirectly affected by collectively agreed standards.

Table 2: Collective bargaining coverage among employees, by sector, 2009 (%)
 

Sectoral collective agreements

Company-level agreement

No collective agreement (oriented towards a collective agreement)

  Western Germany Eastern Germany Western Germany Eastern Germany Western Germany Eastern Germany
Agriculture

59

10

2

5

40 (40)

84 (46)

Mining, energy, water supply and waste disposal

74

47

14

23

12 (66)

31 (45)

Manufacturing

58

25

10

15

33 (60)

61 (48)

Construction

75

51

3

5

22 (54)

44 (61)

Commerce

48

24

6

8

47 (57)

68 (51)

Transport and communication

39

29

20

20

41 (45)

51 (59)

Information and communication

23

14

8

29

69 (32)

57 (25)

Finance and insurance

85

59

3

5

12 (42)

36 (50)

Hotels, restaurants and other services

48

26

4

7

49 (39)

68 (50)

Healthcare and education

55

36

12

19

33 (67)

45 (54)

Business, scientific and other freelance activities

43

47

8

8

49 (39)

45 (37)

Non-profit organisations

54

32

12

18

34 (67)

50 (48)

Public administration and social security

88

82

10

15

2 (69)

3 (67)

Total

56

38

9

13

36 (52)

49 (49)

Source: IAB Establishment Panel, 2009

Long-term trends

Turning to the long-term developments, the trend points to a decline in sectoral collective bargaining coverage for employees, which between 1996 and 2009 decreased by 14 percentage points in western Germany and 18 percentage points in eastern Germany.

The IAB data also shed light on the development of employee representation – that is, the proportion of establishments with a works council and the share of employees working in such establishments. As shown in Table 3, the proportion of establishments with a works council has been hovering around the 10% mark in Germany in recent years. However, the share of employees working in such establishments has been slowly declining for some time. Overall, 45% of employees in western Germany and 38% of their eastern German colleagues worked in establishments with a works council in 2009.

Table 3: Development of works councils between 2000 and 2009 (%)*
 

Proportion of establishments with a works council

Proportion of employees working in establishments with a works council

  Western Germany Eastern Germany Western Germany Eastern Germany
2000

12

12

50

41

2001

12

12

50

41

2002

11

11

50

42

2003

11

11

48

40

2004

10

9

47

40

2005

11

10

47

40

2006

10

10

46

39

2007

10

10

46

39

2008

10

9

45

37

2009

10

10

45

38

Note: *Establishments in private sector with five or more employees (excluding those in agriculture and non-profit sectors).

Source: IAB Establishment Panel, 2009

Position of social partners

On the occasion of the May Day celebrations, social partners such as the Employers’ Association for the Metal and Electrical Industry (Arbeitgeberverbände der Metall- und Elektroindustrie, Gesamtmetall) and the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) used the opportunity to assess the inner workings of the collective bargaining system and address future issues and challenges.

On 1 May 2010, the President of Gesamtmetall, Martin Kannegiesser, stated in a press interview (in German) that fewer people were willing to commit themselves to organisations or involve themselves in their work. He also pointed to the decline in collective bargaining coverage within the last 10 years. However, in his opinion, this trend has been stopped in the metalworking and electrical industry. While a common framework has proved to have great advantages, the collective bargaining system has also become more flexible. Establishments and companies are now taking advantage of this flexibility.

Regarding minimum wages, Mr Kannegiesser stated that the issue continued to be a difficult one. Minimum wages were aimed at employees with the lowest wages and in jobs which were most at risk. The introduction of minimum wages could thus result in the loss of jobs. On the other hand, such wages could also help to keep those companies which were covered by a collective agreement competitive. This would work when the lowest negotiated wage level was declared generally binding on the whole sector. Mr Kannegiesser considered that this trend would increase in importance in the future, but should be managed by the social partners.

On the same occasion, DGB underlined in a statement (in German) that trade unions and works councils had contributed greatly to the avoidance of a steep rise in unemployment during the financial and economic crisis. They had fought for short-time working, collective agreements on employment security and state aid. Concerning future developments, DGB called for help for those suffering hardship as a result of the current global crisis through no fault of their own. Support was also needed to safeguard jobs and stabilise companies. In view of the current crisis, DGB and its member unions called for new, sustainable forms of economic activity, including greater co-determination rights for employees in factories and offices. DGB added that it would continue to fight for decent work, secure employment and good collective agreements.

Reference

Ellguth, P. and Kohaut, S., Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2009, WSI-Mitteilungen, Vol. 63, No. 4, 2010.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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