The Case of Capital and Labor in Germany

The forces of capital and labor are much more integrated and institutionalized in the governmental process than in the United States. The three major employers' organizations have considerable influence in agenda-setting and design of government measures in the economic and tax field. The organizational structures of entrepreneurial association remained generally constant over the past decades (Wörndl, 334). Their favorite means of interest representation include exerting pressure on legislature and administration.


German Coal Workers

Before World War II, unions had been splintered into single trade unions. After war, they chose to unite under umbrella organizations, partially as a protection against the possibility of future union break-ups through government, which the nazis had executed successfully. The new constitution explicitly supported the formation of labor groups. From the beginning, unions regarded the fight for the 'democratization of labor' as a key to prevent future tyrannies from rising, and they gained important victories in their struggle for influence in management decisions. A growing membership base ensured a strong bargaining positions for unions. As a result, negotiations between capital and labor cover more ground in Germany.than in the United States. Negotiations usually include social plans in case of plant shut downs, agreements for protection against industrial rationalization, etc. Union membership rose from the 1960s, but began to decrease since the early 1980s.

Compared to other countries, the collective bargaining process for wages is accompanied by relatively few strikes in Germany. The low strike rate can be attributed to existing conflict resolution mechanisms. Before a union can implement a strike, regulations call for a neutral mediator to try to work out a compromise in the stalled negotiations between union and employer representatives. If this mediation fails, the strike must be agreed upon in a general strike vote by 75% of all involved union members.

Corporatist Formation of Consensus

The institutionalization of interests constitutes major factor in decision-making process in Germany. Special interests have gained influence on the legislative process in several ways: they can present ideas to ministries, and representatives of interest groups make up one third of the parliament. On the other hand, the government imposes responsibility on them, which leads opposing groups to maintain dialogue about the issues they are concerned with, such as concerted actions. This form of discussion between capital, labor, and government was started in 1967 -- the first time when Germany was struck with economic crisis since the end of World War II.

Through their integration into the political process, interest groups have become a stabilizing factor in the German system. The symbiotic relationship between federal authorities and established interest groups has been named corporatism.

Arbitration and Mediation of Conflicts between Capital and Labor

Few disputes are settled at the plant level. Most labor-related conflicts are taken to the industrial relations courts. Industrial relations courts were created in 1927 as a branch of the judiciary. The Industrial Relations Court Act of 1953 gave independence to the industrial relations courts from the rest of the judiciary administration. Today, it is responsible for settlement of most conflicts related to the working world, ranging from private suits about job contracts to cases about collective bargaining agreements, and codetermination issues.

Codetermination is one example of how unions could achieve influence over management issues in the German economy. Through their influence on parliament, they were able to encourage the passing of several bills that secured integration of workers' and union interest in the structure of corporations.

Capital and Labor -- The Case of Germany -- Codetermination -- A Closer Look: Codetermination