The Death of Neo-Corporatism: Trade Union Pluralism in Germany

Abstract

In July 2017, the German Constitutional Court issued an important judgement concerning trade union freedom. To understand its significance, it is necessary to know its context. An atmosphere of fear and insecurity In 2002 and 2003, the German economy was in a difficult situation. Unemployment was high, economic growth was low and investments were quite scarce. The rating agencies declared that Germany could only keep its triple A–rating if ‘some rigidities’ in the labour market were corrected. The government started reforming industrial relations in order to reduce labour costs. Unlike the strategy followed in Ireland, Portugal, Spain and Greece some years later, the government adopted an indirect approach. First, temporary agency work was deregulated, making it possible to recruit temporary agency workers for an indefinite time. After the ‘reform’, this sector expanded from 150,000 to 700,000 persons. Many permanent employees could be – and often were – replaced by temporary agency workers. Their wages were one-third below the level of comparable ordinary workers. In 2003, the unemployment insurance system was also reformed. Before then, unemployment benefit (about 67 percent of the former salary) could be paid for between one and two years. If still unemployed at the end of this time, ‘unemployment aid’ (between 52 and 57 percent of the former salary) could be paid for an indefinite time. With the reform, unemployment aid was abolished. If the unemployed had not found a job after one year, they could only get social aid, which guaranteed a modest margin of subsistence. To qualify recipients had to sell all their assets (with some modest exceptions). These measures had an important influence on collective bargaining. When unions asked for wage increases, there was no power behind them because people were anxious. Real net wages decreased by 2.5 percent between 2002 and 2010. The system of collective bargaining as such remained untouched, but its real functioning was much weakened. Officially, the dominant trade unions of the Deutsche Gewerkschaftsbund (DGB, English: German Trade Union Federation) protested against these measures. But some insiders speculated that there was a deal between unions and the government; that in order to protect the system of collective agreements and ensure it remained legally unchanged – especially at sectoral level – the unions had to ‘collaborate’ in the field of temporary agency work. The new law had established the principle of equal pay and equal treatment for temporary and permanent workers, but unions and employers could deviate from this principle by collective agreement. The unions used this opening clause in the law and concluded collective agreements which maintained the former wage level of temporary agency workers – consistently one-third below the level of ordinary workers. Until now, the reasons for this are officially unknown. The trade union policy was unacceptable for some professional organisations. Trade unions of pilots, air controllers, flight attendants and hospital doctors were founded. These had existed as professional organisations and had authorised the large unions to conclude collective agreements for them. Now they withdrew this authorisation and started their own collective bargaining. As their members were specialists necessary for the enterprises they achieved rather good results, without making the concessions the large unions had made. The engine drivers’ union became active, too, and concluded strong agreements without reducing wages. One plant – one agreement Under German law, collective agreements only bind the members of the union and the employer or the employers´ association. If two unions exist in a plant this does not create a big problem: the members of union A are bound by the collective agreements concluded by union A, the members of union B are bound by the collective agreements concluded by union B. Since 1956 however, the labour courts had decided that in such cases only one collective agreement could be applied in an enterprise, referring to a so-called ‘principle of order’ (which has no legal basis). This meant that the agreement better adapted to the conditions of the plant prevailed. In practice, the plant level agreement always prevailed against any sectoral agreement. When the new professional unions first arrived they had some difficulty in having their right to strike recognised because a strike is only legal if it aims at a...