2023-07-20 20:12:45
The breakthrough was a long time coming, but last week the time had come: “Agreement after a 123-day strike,” announced IG Metall. Initially, the wind turbine manufacturer Vestas strictly opposed the introduction of collective agreements. But under pressure from the union, he finally agreed to the conclusion of several agreements on wages and working conditions for his staff in Germany. “A lot can be achieved with solidarity, strength and perseverance – hopefully soon in many other companies in the wind industry that still have some catching up to do in terms of collective agreements,” said IG Metall district boss Daniel Friedrich, classifying this experience.
On a macroeconomic scale, however, such collective bargaining successes now seem to be the exception rather than the rule. Because the proportion of companies and employees who are bound by collective agreements fell again last year, as a new analysis by the Institute for Labor Market and Occupational Research (IAB) shows. According to this, 41 percent of all employees were still working in companies with a collective agreement, compared with 60 percent at the turn of the millennium. From 2017 to 2022 alone, the share fell by 7 percentage points.
In addition, a further 10 percent of employees work in companies that (like Vestas now) have a company collective agreement – i.e. no industry-wide agreement; that is even 2 percentage points more than in 2017. However, it does little to change the overall downward trend. At the turn of the millennium, a good two-thirds of employees were still working under the terms of a branch or company collective agreement, most recently 51 percent. At the same time, the proportion of companies with a collective agreement, measured against all companies, shrank from 43 to just 25 percent during this period.
Heil wants to force more companies to sign collective agreements
In the political debate and by trade unions, this decline in collective bargaining coverage is often described with the term “collective bargaining evasion”. This suggests that more and more employers are actively opting out of existing collective agreements in order to worsen working conditions for their employees. Against this background, Minister of Labor Hubertus Heil (SPD) is currently planning a package of laws that would oblige more companies to be bound by collective bargaining agreements that other employers have concluded with unions without their mandate.
Hagen Lesch, collective bargaining researcher at the employer-related Institute of German Business (IW), thinks little of the “collective bargaining narrative”. “One of the main factors seems to be the structural change in the economy,” he explains. Accordingly, the declining collective bargaining coverage has less to do with the fact that companies are actively turning away from collective agreements. But newly emerging companies, especially in the digital world, are less likely to turn to collective agreements than they used to be – probably because employees are less likely to organize themselves in unions today. The number of members under the umbrella of the German Trade Union Confederation (DGB) has fallen from almost 8 million to 5.6 million since the turn of the millennium.
Lesch bases his analysis on an IW study that examined the motives companies use to justify their commitment to a collective agreement. One of the most frequently mentioned motives was “tradition” – companies have a collective agreement because they have always had one. In contrast, only 4 percent cited “pressure from the organized workforce” as a reason for being bound by a collective agreement.
Declining motivation for advocacy
The new IAB study, which is based on a survey of 15,000 companies, does not provide any concrete insights into the causes of the declining collective bargaining coverage. However, it shows a second trend – and this at least indirectly confirms the thesis of a declining motivation of employees to participate in collective representation of interests: The survey showed that the proportion of companies with a works council fell from 16 percent in 2002 to just 11 percent. It is also true for works councils that they are most common in large companies. The proportion of employees who are represented by works councils was 39 percent.
However, there is a big difference to enforcing collective agreements when it comes to setting up a works council: In this case, the employees have a hard legal claim on their side – employers who resist the formation of a works council are even punishable. Nevertheless, the spread of works councils is falling at a similar pace as that of collective agreements. Lesch points to another connection: empirical evidence suggests that the establishment of a works council is often the first step on the way to being bound by a collective agreement.
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