Germany: Bargaining system may be fragmenting
In recent years, the emergence of occupational and sectional trade unions has started to challenge Germany's traditional bargaining model of a single union in each workplace and a single collective agreement for each industry. We review the latest developments and ask if a serious disintegration of collective representation may be ahead.
On this page:
Collective bargaining law
Challenges for trade unions
Union mergers add to strains
Employer role
White-collar unionism
Civil servants
Religious differences
Occupational unions
Aviation
Doctors
Train drivers
Conclusions and outlook
Key points
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The classic post-war model of German collective bargaining is based on the idea of "one plant, one trade union", with a single, industry-level collective agreement. This model has never entirely corresponded with the facts. Multiple unions have often co-existed in the same industry with varying degrees of amicability. The model of industry-level collective bargaining and plant-level co-determination through works councils has not been as consistent and pervasive as sometimes believed by outside observers. According to recent research by the Institut für Arbeitsmarkt- und Berufsforschung (IAB), a research institute of the Federal Employment Agency, in the west German regions (Länder) only 37% of the workforce (and just 8% of workplaces) are covered by an industry-level agreement and have a works council. A quarter of the workforce in west Germany has neither collective bargaining coverage nor any form of workplace representation.
The idea of trade union representation through a single confederation, in which unions avoid competition by being confined to well-defined industries, has also not corresponded fully to industrial and organisational realities. Unions within the major central organisation, the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB), have had to resolve conflicts about which union has competence for which industry: one of the DGB's roles is to arbitrate on these issues.
However, the DGB is not the only union confederation and has co-existed with other union centres with different organisational perspectives. Examples, looked at more detail below, include: white-collar unionism, which ignores industry boundaries; religion-based unionism; and, most topically, sectional unions representing particular occupations, such as doctors, train drivers, and cabin and cockpit staff.
Collective bargaining law
The law plays a somewhat contradictory role in terms of union "proliferation". Because of the constitutional right to free association, any grouping can in theory establish itself as a trade union and look for recognition and bargaining rights. Whether a union can be recognised depends on its meeting certain criteria set by the courts, such as size, independence from the employer and a capacity to engage in industrial action.
The Collective Agreements Act 1949 states that a collective agreement applies directly to members of a signatory organisation: this can be a single employer, an employers' association or a trade union. In practice, employers apply collectively agreed terms to non-union members. The "peace obligation", which requires signatories to refrain from industrial action during the lifetime of an agreement, means that efforts to renegotiate an agreement via industrial action will, in most cases, be in breach of the law, and employers can seek - and have obtained - injunctions forbidding industrial action. As a rule, breakaways from an existing agreement tend to follow the renegotiation of an old agreement - partly because of the greater legal scope, but also because the terms of new agreements often trigger a fresh episode of disgruntlement on the part of sectional groupings.
If a situation arises in which two competing collective agreements embrace the same sector, the outcome is determined by the application of principles developed by the Federal Labour Court. In essence, the courts apply the axiom of "collective bargaining unity", in which only one collective agreement can regulate an individual employment relationship. In effect, this means one collective agreement per workplace - in principle creating scope for tension with the constitutional right to organise and negotiate separately.
This unity axiom is in turn guided by the principle that the agreement that should apply is that which is "most proximate" - in terms of its scope (geographical, occupational or individual) - to the employment relationship in question. For example, a company-level agreement will take precedence over an industry agreement. If these criteria do not yield a clear ruling, the agreement that covers the largest number of employees in a workplace will take precedence.
However, case law remains unclear on many critical issues, in particular on the lawfulness of industrial action in such cases - as evidenced by contradictory rulings in several labour courts during 2007. For example, some courts ruled that a recent strike by train drivers (see below) was unlawful, because any agreement that it would lead to could not be applied, and therefore the strike lacked a legitimate object.
In practice, this situation has meant it has been possible for a small union to compete with a large industry union by concluding a workplace agreement, which will then take precedence. On the other hand, the legal preference for bargaining unity has meant that trying to establish a separate agreement at industry level, possibly for an occupational group, is fraught with legal risk and would undoubtedly destroy the prospects of cooperation between unions on other issues of potential common interest. As a consequence, this has been a rarely used tactic, and has mostly been linked with deeper institutional competition. Separate unions have tended to compete for individual members but conduct single-table or parallel negotiations, in which the final outcome has been a single agreement.
In March 2007, the Federal Labour Court was expected to revisit the issue of competing collective agreements, with the expectation that this would lead to a new landmark ruling. However, the plaintiff in the case withdrew the application before the court sat.
Challenges for trade unions
German trade unions have been confronted with two main difficulties in this field. The first is that of managing conflicts of interest between the sometimes disparate groups within unions, and preventing these leading to a breakaway of sectional interests. The second is managing conflicts between existing organisations. Collective bargaining structures, and the law on bargaining, have made it necessary for unions to develop mechanisms to allow differences to be bridged or resolved both internally and externally. In the latter case, either single-table or parallel bargaining structures have been developed, many of which have been stable for many years but - as the examples below illustrate - have come under pressure in the recent past.
There are two distinct but related challenges that have arisen, especially for the DGB unions. The first is competition for membership, but where the competing organisation does not seek - and by law would not be able to conclude - a separate collective agreement. The second is active competition to conclude separate collective agreements.
In a number of recent cases, following a period of pay moderation and, in some cases, "concession bargaining", sectional organisations with a degree of economic power or perceived distinct interests have sought to break out of established structures. In some cases, this has entailed a rejection of established cooperative arrangements with other unions; in others it meant the setting up of new unions in competition with the main incumbent.
Union mergers add to strains
To some degree, the internal strains in German unions used to be mitigated through a broad correspondence between the boundaries of trade unions and those of industries. In the early 1990s, there were 16 trade unions affiliated to the DGB. By 2001, a series of mergers had brought about a drastic cut in the number of trade unions. Major mergers occurred in the chemicals and primary sector, where the chemicals workers' union, the miners' union and the leatherworkers' union merged to form IG BCE in 1997. In the late 1990s, the IG Metall metalworkers’ union absorbed the textiles and clothing union (GTB) and in 2000 the wood and plastics union (GHK). In 2001, the largest - and politically most significant - merger took place when five unions merged to form the united service workers’ union ver.di. Ver.di's constituent unions embraced a wide range of activities, including postal services, banking, retail, printing, the paper industry and - represented by the largest single constituent union, ÖTV - public services and transport.
By December 2006, the number of DGB-affiliated trade unions had fallen to eight, with some 70% of all members concentrated in the two largest unions, IG Metall and ver.di. However, issues related to sectional and occupational interests have not been confined to large unions such as ver.di, but have also affected specialist industry unions. The most recent example, in which train drivers have pursued a separate collective agreement, has occurred within the railway union TRANSNET.
Employer role
Employer actions and responses also play a role. If individual employers see their interests as best served through industry-level bargaining, with a single agreement covering the bulk of non-executive employees, they will be inclined to support the institutional bases of this agreement. This could take the form of helping to accommodate the pay demands of more highly skilled workers - or the outcome of supply and demand for such workers - either by allowing for much greater upward flexibility on pay and grading or by unilaterally paying substantially above the agreed minimum rate (Tariflohn) for selected groups. Both approaches lead to broadly the same effect for highly skilled workers: a widening of pay differentials vis-à-vis less skilled workers, without calling into question the fundamentals of single-union/single-agreement bargaining. Both processes have been evident in the metalworking industry, where there has been little evidence of sectional fragmentation.
Below, we look at some of the major instances of division in workers' collective representation, and briefly review some of the major driving forces.
The main types of separate representation have been built around: employee status; legal status; religion; and sectional differences, often based on perceived inequities.
White-collar unionism
One of the most enduring divisions in the German union movement was that between unions affiliated to the DGB and to the white-collar Deutsche Angestellten-Gewerkschaft (DAG). The DAG was established in 1949, and represented a continuation of the politics of separate representation for salaried staff that had existed prior to the destruction of German unions in 1933.
In contrast to the DGB unions, the DAG represented white-collar staff across all sectors of the economy, and was successful in the 1950s in achieving separate administration of social insurance for white-collar employees. The DAG also negotiated separately in pay rounds in the industries in which it had members. However, the principle that there could be only one pay agreement for each sector meant that, in practice, there was only one negotiated outcome, albeit nominally after two sets of parallel (and often adjoining) talks.
There were conflicts between the DAG and DGB unions in situations where the DAG was able to gain recognition at company level and conclude an agreement that displaced an industry agreement. This led to a long-running problem at IBM Deutschland GmbH during the 1990s, where DAG signed a company agreement with management. This situation was resolved only in the broader context of the creation of the new services union ver.di in 2001, in which the DAG was one of the partners, effectively ending the long-running division. A complex arrangement was set in train to resolve outstanding demarcation issues, as the DAG had members in a wide range of industries covered by other DGB unions. At IBM, for example, IG Metall and ver.di agreed a new single-table arrangement.
Civil servants
Established civil servants (Beamte) in Germany do not have bargaining rights, and the main civil servants union, the Deutscher Beamtenbund (dbb), cannot negotiate for this group. However, the dbb has opened itself to an assortment of small trade unions representing a range of occupations that do engage in bargaining. These unions are affiliated to a subsection within the dbb, known as the dbb-Tarifunion. They are often organisations that have distinctive professional profiles and a degree of status-consciousness. However, as with the former DAG, for the most part negotiations involving dbb and DGB affiliates are formally separate but lead to a single agreement, and there is cooperation between the dbb and DGB on a range of issues.
Religious differences
The Christian Trade Union Confederation (Christlicher Gewerkschaftsbund Deutschlands, CGB) has some 300,000 members and competes with DGB unions across the industrial spectrum, often concluding agreements with firms and employers' associations that provide for lower pay rates than DGB agreements, with examples in metalworking and temporary agency employment. DGB unions see the CGB as a threat to its organisational integrity that has been used by employers’ organisations to drive through concessions. As a consequence, the CGB has found itself the object of numerous legal challenges about its viability and independence, most notably by IG Metall, with a mixed record of success.
Occupational unions
The main area of challenge to established DGB unions in the recent past has been the emergence of demands by some occupational groups for separate bargaining rights, or special treatment under existing agreements.
Aviation
There are three separate unions in the aviation sector, in addition to ver.di, which inherited representation at airports and the state-owned Lufthansa from the public sector union ÖTV. On occasions these unions have competed directly with DGB unions, but there has also been cooperation in areas of common interest.
The Cockpit union represents some 8,200 pilots and flight engineers. It is a recognised trade union, and has concluded agreements with several airlines, most recently with Air Berlin, which also signed its first agreement for cabin and ground staff with ver.di in August 2007.
Some air-traffic controllers are represented by the Gewerkschaft der Flugsicherung, which has negotiated independently since 2003, and before that had a single-table arrangement with the DAG.
The most serious competition for ver.di in terms of cabin crew is from the Independent Flight Attendants Union (Unabhängige Flugbegleiter Organisation, ufo), which claims a membership of 10,000 cabin staff working in a number of airlines and states that it organises more than 50% of cabin crew at Lufthansa. It was formed in 1992 following dissatisfaction with representation through larger organisations. It won recognition from Lufthansa AG and Condor Flugdienst GmbH in 2002, and also has agreements with Augsburg Airways, Condor-Berlin, Contact Air, Eurowings, Germanwings and Lufthansa Cityline. There is ongoing competition with ver.di, which has sought to establish its own agreement with Lufthansa.
There is also a separate organisation for ground crew, Vereinigung Boden, established in 2001. In its founding principles it refers expressly to the "worsening of conditions occasioned by the consensus policies" of large unions, in this case ver.di, against whose lay members it competes in works council elections.
Doctors
One of the most recent challenges to unitary bargaining has taken place in the health sector, where many doctors have been represented by the Marburg Federation (Marburger Bund) since its establishment in 1947. The federation is a recognised trade union, with some 110,000 members. It had a single-table arrangement with the DAG from 1950, and subsequently with ver.di. In 2005, the federation announced that it would no longer participate in this cooperative arrangement, following the conclusion of a national agreement by ver.di covering the entire public service that included a longer working week, more performance-based pay and cuts in annual bonuses. The Marburg Federation decided to seek a separate agreement, specifically for doctors, with the aim of a 30% pay rise. This led to a year of protracted conflict with employers, including industrial action, and with ver.di, resulting in the creation of a new separate bargaining structure for doctors.
In June 2006, the Marburg Federation concluded a package of agreements for doctors in hospitals operated by regional governments, which employ around 22,000 doctors. In August 2006, the federation concluded a pay agreement for the 70,000 doctors employed by local government-run hospitals, of which 50,000 are federation members. The agreement will apply to all doctors, even if they are a member of another trade union.
Train drivers
The German Locomotive Drivers Union (Gewerkschaft der Lokomotivführer, GdL), with some 35,000 members, claims to be the oldest trade union in Germany and represents the majority of train drivers both on the German Federal Railways (Deutsche Bahn) and in private rail operators. The other major unions in the rail sector are the DGB-affiliated TRANSNET (with some 270,000 members) and GDBA (with 65,000 members), which represents railway workers who are established civil servants.
Since the summer of 2007, GdL has been engaged in a dispute with Deutsche Bahn over its demand for a separate agreement for drivers, which would see their pay, and that of guards, rise by up to 30%. In July 2007, the other unions in the sector settled for a 4.5% increase over 19 months from 1 January 2008, and a one-off payment of €600 for the period July to December 2007. This was rejected by the GdL, which embarked on a series of strikes. These were declared unlawful by a number of courts in mid-July, following an injunction granted to Deutsche Bahn.
The GdL then set about regularising its action by ballot, and in early August reported a 95.8% majority vote for a strike. In a further judgment, issued by the Nuremberg Labour Court, strike action was declared illegal in the period until the end of September, on the unprecedented grounds that it could cause excessive economic damage. A period of negotiation followed, with the appointment of two mediators (both former senior conservative politicians).
Under a provisional agreement, the GdL will negotiate separately on train drivers' pay, with the intention of incorporating this into the larger Deutsche Bahn collective agreement, which would be signed by all three unions.
Conclusions and outlook
The high-profile, and still unresolved, events on the railways over the summer of 2007 illustrate a number of the key and contradictory aspects of bargaining fragmentation in Germany. On the one hand, they exemplify the dissatisfaction of a number of occupational groups with the constrained pay policies of much larger union organisations which, in order to produce an agreement encompassing as many employees as possible, are often obliged to apply the "convoy principle" and settle at a rate that includes the least economically powerful units. On the other hand, social, legal and organisational exigencies also work powerfully towards holding groups within a single bargaining structure, as is likely to happen at Deutsche Bahn.
This article is based on material submitted
by Pete Burgess, European Employment Review correspondent for Germany.
European Employment Review 405 (EER 405)
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