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Employment Relations in Germany and Sweden

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A description of the historical and current IR and HRM practices in Germany and Sweden within a corporatist system.

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Employment Relations in Germany and Sweden

  1. 1. Andreea Nan | Kristina Stoiber Anna Zillner | Wenjamin Button Presentation 5: October 17th, 2016 Employment Relations in Germany and Sweden
  2. 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. 3. Agenda 01 Germany Historical Development Key Actors within Employment Relations The Dual System Effects of Globalization Effects of Europeanisation Consequences
  4. 4. Agenda 02 Sweden Key Actors within the tripartite system Overall Timelime Employment Relations Outcome The Laval Case
  5. 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. 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. 7. Key actors within the German system of Employment Relations Trade Unions Employers Government ____________________________________ ____________________________________
  8. 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. 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. 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. 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. 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. 13. Important Government Passed Laws Works Constitution Act Collective Agreement Act Social Security ActCo-Determination Act
  16. 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. 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. 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. 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. 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.
  22. 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. 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. 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. 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. 26. Globalisation and Europeanisation
  27. 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. 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. 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. 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. 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. 32. Average Weekly Working time: 37.7 hours Part-time increased to 26% of the total workforce
  33. 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. 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. 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. 36. 02
  37. 37. Key actors within the Tripartite Corporatist Sytem Trade Unions Employers' Organisations Government ____________________________________ ____________________________________
  38. 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. 39. Trade Unions Established in Union Density Reached peak Ghent System Drop to 73% 1898. 1993. 2007. 1934.
  40. 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. 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. 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. 43. Employment Relations Outcome 1973: Break with centralized bargaining Today: social partners bargain independently from government influence
  44. 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. 45. FINAL RULING Trade unions had violated the fundamental market freedom of Laval to offer its services in Sweden.