The document summarizes key aspects of employment relations in Germany and Sweden. It discusses: 1) The historical development and key actors within the German system, including trade unions, employers, government, and the dual system of co-determination and collective bargaining. 2) Key aspects of the Swedish tripartite system including trade unions, employers' organizations, and the government's role. It also discusses the Laval case ruling. 3) The effects of globalization and Europeanization on both countries, including issues like decentralization of bargaining and increasing labor flexibility.

1. Andreea Nan | Kristina Stoiber
Anna Zillner | Wenjamin Button
Presentation 5: October 17th, 2016
Employment
Relations in
Germany and
Sweden

2. Our Aim
Discuss the historical development and major characteristics of German and
Swedish employment relations in the context of Globalisation and
Europeanisation processes.

3. Agenda
01
Germany
Historical Development
Key Actors within Employment Relations
The Dual System
Effects of Globalization
Effects of Europeanisation
Consequences

4. Agenda
02
Sweden
Key Actors within the tripartite system
Overall Timelime
Employment Relations Outcome
The Laval Case

5. Historical Development
Core features of German employment relations have their roots in the time
of the Weimar Republic.
German industrial relations system was not established until the
reconstruction of the country after the Second World War.
The Constitution of the Federal Republic of Germany guaranteed the right to
build associations for collective bargaining free from state interference.
German industrial relations can be considered a ‘late developer’:
Germany industrialization occurred comparatively late (1830–73)
Major key elements of the German model of employment relations did not
come into being before the mid-1950s.
1919
1945
1949

6. Historical Development
1950
1960
1970
The Economic Miracle involved high productivity, high
added value, high wage model based on highly skilled
workforce which lasted until 1970s.
Wirtschaftswunder
[Economic Miracle]

7. Key actors within the German system
of
Employment Relations
Trade Unions Employers Government
____________________________________
____________________________________

8. Trade Unions
11.8 million
6.2 million
__________________________________________________________________________
Fading appeal of unions within the public debate.
Increased mobility of capital and workers.
More flexible work organization.
Low level of perceived effectiveness of unions.
Changes in the composition of workforce
characteristics.
1991
2011
WHY?

9. Trade Unions
1990s
2000s
Union membership in Germany is now fairly concentrated in a small
number of organizations such as:
Ver.Di, IGMetall, GDL and Cockpit.
Unclear labor market flexibility, deregulations and structural changes in
economy led to a merger mania which has replaced the system of industrial
unionism with now 8 unions from the DGB.
Union membership in the past reflected a skilled, male, full-time workers in
manufacturing or public sector.
That leaves out a lot of other employees in atypical jobs, women, foreign workers,
younger employees, highly educated and qualified employees, private sector
under-represented!
Unions were forced to re-organize.

10. Employers
More than of all member companies have the ‘bargaining-free’ status.
membership status was introduced [OHNE TARIFBINDUNG]
Associations offer an opt-out clause to their membership.
Employer's Associations :
Represent firms by:
1990s:
2010:
social policy labor market interests collective bargainingemployment relations
OR
42%
OT

11. Government
Characterized by high degree of juridification but
After World War 2
Employee Relations
German unions were reconstructed as a uniform movement (Einheitsgewerkschaft) without separate
peak confederations.
State’s ability to interfere with issues of collective bargaining is limited by the German Constitution and the
famous concept of ‘bargaining autonomy’.
Government Interference is LIMITED.

12. Government
Constitution
The Government Role in Germany:
The Constitution: guarantees all individuals the right of freedom of association and that unions and
employers associates can engage in collective bargaining without any active state interference.
Unemployment
Insurance
System
Pension
System
Health
Insurance
Social
Care
Insurance

13. Important Government Passed Laws
Works Constitution Act Collective Agreement Act
Social Security ActCo-Determination Act

14. THEDUALSYSTEM

15. .CO‐DETERMINATION01

16. The Works
Constitution Act
Definition of Co-Determination:
Legal Basis of Co-Determination:
The Act Doesn't Apply to: Partially covers:
The Works Constitution Act: It gives work councils a set of rights. e.g. redundancies and
rostering.
Cooperation between management and workers in decision-making, especially by the
representation of workers on management boards.

17. Work Councils
vs. Unions
Work councils can’t or pursue
Work councils are expected to work with management in a spirit of mutual trust for the good
of the employees and of the establishment.
new members
monitor the implementation of collective agreements at the enterprise level
informally assist in industrial action
STRIKE COLLECTIVE BARGAINING.
Work councils are detached from the quantitative issues of pay and income distribution.
Unions provide WCs with important services such as information, training and a lot of
councilors are union members.
Unions depend on work councils to get:

18. Work Councils
Rights
WORK COUNCIL RIGHTS
Right to Information Right to initiate and negotiate
matters with genuine co­
determination between
employer and the WC
Right to Inspect Documents
Right to make recommendations
and give advice
Right to be consulted and object
Right to veto a decision
Weak Strong

19. Work Councils
Development
After negotiations the WC and employer might sign a work agreement and has a binding effect for all
employees.
No agreement? - The conciliation committee decides the solution.
TRICK: Work Councils are mandatory but employers are not obligated to imitate it, thus employees
have to initiate the start of the WC.
Only 1/4 of the eligible businesses have work councils.
Less than of the private sector workforce.
There has been a growing trend towards round tables or
staff spokespersons.
50%
Source: Ellguth & Kohaut (2013)

20. Channel
Germany is a two-tier country: supervisory
board and management board [Vorstand].
Two channels of co-determination:
through work councils
employee representatives on
supervisory board.

21. .COLLECTIVE BARGAINING02

22. Collective
Agreements
Unions and Employers’ associations engage in collective bargaining in order to regulate pay and other
working conditions. under the THE COLLECTIVE AGREEMENT ACT.
Pay Agreements [fix pay and periodic increases]
Umbrella agreements [regulate all other conditions of employment, over time, holidays,
working time]
Framework Agreements [specify payment systems]
3 Types of Collective Agreement

23. Collective
Agreements
THE COLLECTIVE AGREEMENTS: Industry wide and Regional.
Although multi-employer agreements are the most common
form of collective agreement, agreement also determine:
INDUSTRY WIDE
SINGLE EMPLOYER
Industry wide agreements have decreased to an extent that its decline is known as the
SMEs conclude their own agreements rather than follow the industry wide agreements.
the wages
hours
working conditions of a significant number of employees.
erosion of industrial relations.

24. Collective
Agreements
Second Threat
Why does it work?
Main change in
collective bargaining?
Acid escape from collective agreements.
Unions and WC keep quiet to save scarce
jobs in the high unemployment
environment.
Decentralization and Labor Market
Restructuring
Source: Ellguth & Kohaut (2013)

25. Summary
The most prominent feature of
Employment Relations in Germany is the
Dual System.
The dual system of employment relations
promotes long-term cooperation and
mutual trust.
The Dual System
Co-Determination
Collective
Bargaining

26. Globalisation
and
Europeanisation

27. Diversity
There’s more diversity in employment relations and the sizes of businesses.
Trend towards diversity happened due to:
Internal Factors
External Factors
Unification
Huge transfer of financial resource to eastern
states
Change in models of work and production
New management strategies
Europeanization [integration into EU]
Globalization

28. Current and Future Issues
01.The decentralization of collective bargaining.
Decentralization different forms:
organized (controlled) decentralization: deliberate delegation of bargaining tasks to the lower
level (first originated in the mid-1980s)
disorganized (wildcat) decentralization: involved either outright labour market deregulation or
the withdrawal of key collective actors and happened due to inability of Employers Associations
of maintaining members
__________________________________________________________________
"The difference between industry level bargaining and co-determination at
enterprise level has become blurred"

29. Current and Future Issues
02.Change in the Public Sector
The State makes a clear distinction between PUBLIC EMPLOYEES and CIVIL Servants.
Public Employees: Benefit of the same rights as private employees
Civil Servants : Cannot strike or bargain collectively.
We see a decentralization of bargaining as now, the state, the federal state and municipalities bargain
separately.
Strict stability criteria established for countries participating in the European
Monetary Union led to a decline in employment.
Privatization was not as strong as in other countries [UK]
__________________________________________________________________
{1990s
State: Germany's Largest Employer

30. Current and Future Issues
03.Introduction of statutory minimum wage
Until it was seen as unnecessary as collective bargaining coverage
was extensive, now though, it has changed since collective bargaining has declined.
The phenomenon of the was unknown in Germany before.
Now it has become an issue not only thru atypical and part-time workers
but also those with a lesser degree among full-time employees.
__________________________________________________________________
Mid- 2000s
Instated on: 1 January 2015
“working poor”

31. Current and Future Issues
__________________________________________________________________
04.Increase in Labour Flexibility
Schröder administration:
Reforms Included
Development:
Demand
series of labour market reforms were passed known
as HARTZ laws.
Secondary scheme adopted Hartz IV’
Other measures were adopted like raising the retirement age.
Since 1980s, flexibility was requested because:
an easing of the rules surrounding agency work
cuts in unemployment benefits for some recipients
increasing demands on the unemployed to seek new employment
changing condition of labour and product markets
new patterns of work organization
less of standardized mass production

32. Average Weekly Working time:
37.7 hours
Part-time increased to
26% of the total workforce

33. Current and Future Issues
__________________________________________________________________
05.Growth in Atypical Employment
Standard employment:
Atypical Employment
Consequences:
Conditions
Full-Time, continuing employment
Growth of dual labour markets (unionised vs. non-unionised)
Part-time
Self-employment
Fixed-term Contracts
Mini-Jobs
Lower pay
Less job security
Lower union coverage

34. Europeanisation
European Social Model:
European‐level Legislation Focuses:
Since the 1990s:
Second Phase of Europeanisation: Freedoms of the EU
combination of fundamental principles within the policy domains of the following rights:
to work, to social protection and to civilized standards in the workplace.
Free movement of GOODS, CAPITAL, SERVICES AND PEOPLE.
1. Implement basic social standards
2.Provide new institutions to accompany the ongoing transnationalisation.
European Level exchange of information on collective bargaining
Joint targets to be followed in national collective bargaining

35. Consequences
of
Globalisation and Europeanisation
German High Road Model
Growing Low-Wage Sector
Increase in Mini-Jobs Lack of Key Institutions
Increasing inequality
Decline in collective bargaining

36. 02

37. Key actors within
the
Tripartite Corporatist Sytem
Trade Unions Employers'
Organisations
Government
____________________________________
____________________________________

38. Tripartite System
1930
1945
1973
1990
Tripartite corporatist system / Basic Agreement in 1938.
Following World War 2 – strong economic growth.
Oil Crisis (1973-1979) – rising inflation, rising unemployment.
Economic crisis break with centralized wage bargaining .

39. Trade Unions
Established in
Union Density Reached peak
Ghent System
Drop to 73%
1898.
1993. 2007.
1934.

40. Trade Unions
Swedish trade unions face problems due to:
Decline in union density
Decline in public support
Weaker link to social democratic party
A European labor market which is based on individual legal rights rather
than on national collective agreements.

41. Employers'
Organisations
Coordinated by:
Industry
Orientation:
2001:
the Confederation of Swedish Enterprise.
developed from a negotiating organization to a lobbying organization
Export oriented and internationally
exposed.

42. Government
1930
1973
1982
Government would keep its distance – collective bargaining and
employment disputes left to trade unions and employers‘
organizations.
Oil Crisis (1973-1979)
Economic Growth Unemployment
Social Democratic Party back in power.

43. Employment
Relations
Outcome
1973:
Break with centralized
bargaining
Today: social partners
bargain independently
from government
influence

44. The Laval Case
Latvian Workers
posted near Stockholm
Swedish Building Workers
Union gave notice of industrial
action
Latvian company
suing for damages
European Court of Justice

45. FINAL RULING
Trade unions had violated the fundamental market
freedom of Laval to offer its services in Sweden.