Unions oppose OECD collective bargaining proposals

In December 1999, the OECD presented its latest report on the situation of the German economy. Overall, the economy is assessed positively, especially with regard to the long-term viability of the federal government's budget, but the greatest obstacle to increased employment, growth and the attainment of environmental aims is considered to be a lack of labour market flexibility. According to the OECD, one step towards further flexibility would be to replace sectoral collective agreements with plant-level agreements. This demand met with strong resistance from the DGB trade union confederation.

On 8 December 1999, the Organisation for Economic Co-operation and Development (OECD) presented its new "Economic Survey for Germany". While the government of Prime Minister Gerhard Schröder expressed satisfaction with the Paris-based organisation's overall positive assessment of its economic policies and its austerity budget in particular, trade unions opposed the OECD's proposals concerning collective bargaining.

The OECD emphasises the necessity for greater flexibility within the German labour market, in order to achieve increased employment, growth and environmental aims. It believes that recent regulations introduced by the federal government concerning self-employment and protection against dismissal prevent further flexibility. In this context, it notes a shift from branch-level wage agreements towards more decentralised wage bargaining, which is especially notable in the eastern part of Germany (DE9902196F). There, an increasing number of enterprises have left employers' associations and are no longer bound by branch-level agreements. At the same time, non-observance of branch-level wage agreements is growing, with companies concluding agreements at company level. The OECD points out that these agreements, which in many cases are concluded with works councils and not with trade unions, might not be in line with legal provisions (DE9908214F). However, instead of strengthening the powers of the social partners and extending wage agreements to non-contracting parties as the government is considering, the OECD proposes (as it had already done in its 1998 survey) that the government should extend the influence of works councils and thereby support plant-level agreements.

The intention of this suggestion has been strongly criticised by unions, with the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) describing it in a press release as a frontal attack on the German collective bargaining system. Heinz Putzhammer, a member of the DGB board, stated that although the co-determination rights of works councils need to be expanded, it is important that trade unions and works councils fulfil separate duties. Works agreements are highly problematic because employers might put works councils and employees under pressure by hinting at potential job losses. This might "extort" agreements on unfavourable working conditions. Under the existing regulations, it is already difficult for works councils to ensure observance of collective agreements. Mr Putzhammer added the criticism that the OECD seems to ignore the fact that branch-level wage agreements lay down only minimum wages, while actual pay is fixed at plant level - "the OECD report is characterised by a concept of neo-liberalism," he stated, and this is why "the German labour market is held to be inflexible."