German pacts for employment and competitiveness Concessionary bargaining as a reaction to globalisation and European integration?

Abstract

This contribution deals with company-level pacts for employment and competitiveness (PECs) under the German collective bargaining system. Due to the introduction of collectively agreed opening clauses and the associated decentralisation of the collective bargaining system, the social partners at the company level now have greater opportunities to negotiate company-specific adjustments in the areas of compensation and working conditions. Currently, in return for – generally fixed-term – employer guarantees concerning location and job preservation, PECs have been negotiated in about one in four companies with a works council. The new ‘pacts’ increase internal flexibility in the firm by extending the leeway for a flexible adjustment of working time, work organisation and remuneration. A survey of works councils, conducted by the WSI, provides understanding of the economic and institutional factors which influence the spread and composition of these concessionary agreements. Alongside a commitment to social partnership on the management side, the presence of a sectoral collective agreement is an important prerequisite for ensuring, first of all, that the employer agrees to employment guarantees in exchange for the employee concessions and, secondly, that these management pledges are actually observed in practice.