Company-level bargaining gains importance

New figures on the development of German collective bargaining structures up to 1997 provide evidence of the increasing importance of company-level bargaining.

In Germany, collective bargaining is relatively centralised and takes place mainly in form of regional industry-level bargaining, but is - in certain industries - also quite frequent at national or company level. Trade unions may conclude collective contracts with employers' associations (association- or industry-level agreements, Verbandstarifverträge), or individual employers (company agreements, Firmentarifverträge). There are three main types of collective contracts: pay agreements, general agreements on pay grades and framework agreements on employment conditions. In addition, hybrid forms and agreements concerning special issues exist. The decisions about the issues, duration and level of negotiation are left to the social partners. Collective agreements are binding for all members of the negotiating parties. During the agreed period a peace obligation is imposed on the parties. Each year, around 8,000 new collective agreements are concluded.

Trends in bargaining structure, 1989-97

Information on collective bargaining and its structure are published annually by the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Sozialordnung). As regards bargaining structures, and especially the distinction between industry-level agreements and company agreements, remarkable trends can be observed for the period since 1989.

• Western Germany: Between 1989 and 1994, the ratio of newly registered company agreements to all collective agreements was quite stable at around 40%. Since 1994, the percentage of company agreements has been at 44%-45%. However, as regards all collective agreements in force, the proportion of company agreements has steadily increased from 25% in 1989 to 33% in 1997.
• Eastern Germany: There is no clear trend for the period 1990 to 1997 as regards the development of the ratio of newly registered industry-level agreements to company agreements. In 1990, 64% of all newly registered collective agreements were company agreements. This figure decreased to 41% in 1997. As regards all collective agreements in force, the proportion of company agreements has steadily decreased from 64% in 1990 to 46% in 1997.
• In all the years between 1990 to 1997, there were relatively more company agreements in force in eastern Germany than in western Germany.
• The number of collective agreements has increased in all years between 1990 and 1997, in eastern as well as in western Germany.

More detailed figures are given in Table 1 below.

Sources: Bundesministerium für Arbeit und Sozialordnung; Bundesarbeitsblatt .

Increasing numbers of companies conclude agreements

An indicator of the insidious decentralisation of collective bargaining may be the increase of the total number of companies which conduct company-level collective bargaining, and thus are not very likely to be members of an employers' association. As Table 2 below indicates, the total number of such companies has more than doubled since 1989, from more that 2,000 companies to roughly 5,000. The most prominent among the companies conducting single-employer collective bargaining include IBM, Deutsche Telekom, Teldec, Volkswagen and Lufthansa.

Sources: Bundesministerium für Arbeit und Sozialordnung; Bundesarbeitsblatt .

However, the importance of company-level collective bargaining in Germany should not be overestimated. For western Germany, a recent empirical study found that in 1995 only 8.2% of establishments and 10.9% of employees were covered by company agreements, whereas 53.4% of establishments and 72.2% of employees were covered by industry-wide collective agreements (DE9712140F). As regards company bargaining coverage in eastern Germany, there are no figures available. However, since the organisational density of employers' associations is relatively very low in eastern Germany (DE9708128F), company bargaining may be relatively more important.

Commentary

The above data show two interesting trends:

1. an increase in the total number of collective agreements; and
2. an increase in the total number of companies which conclude company agreements.

Although one may be highly tempted to regard these trends as further evidence for the hypotheses of (a) the increasing (over)regulation of German industrial relations and (b) the decentralisation of the German collective bargaining structures with the locus of bargaining shifting from the regional to the enterprise level, one should also consider two sets of problems associated with these interpretations.

First, although the total number of formal collective agreements regulating the employment relationship has increased, there is no information either on the depth and the impact of this type of regulation or about the evolution of this depth and impact.

Second, except for the prominent examples of companies like IBM and Volkswagen, hardly anything is known about the characteristics of the companies which are parties to company agreements. Even less is known about the causes of the increase in company bargaining. For example, it seems plausible that new bargaining issues - eg partial retirement or continued payment of remuneration in the event of sickness - has led to an increase in the number of company-level agreements. The same effect may have been caused by company restructuring and "deconglomeration" - eg in the form of spin-offs where units are separated as independent companies and taken out of the industry's bargaining system. Another interesting issue is the behaviour of newly founded enterprises, which are said to be less inclined to join the traditional employers' associations, and might therefore be candidates for company-level bargaining.

Interpretation of the above data is highly speculative and analysis of company agreements rather anecdotal. Systematic research on company-level collective bargaining in Germany is badly needed. (Stefan Zagelmeyer, IW)