From the first of january 2015, German workers benefit from a minimum wage, which is set at 8,50€.
Wages are negotiated by social partners through « collective bargaining » in Germany. There are two kinds of collective agreements in Germany : those negotiated between trade unions and employers association (called « Tarifverträge ») one one hand, and agreements between employers and work councils (called « Betriebsvereinbarungen ») on the other hand.
Even if collective bargaining is still primarily conducted at industry level between employers’ organisations and individual trade unions, companies have more and more flexibility to negotiate. Indeed, employers’ rarely or never join employers’ organisations. Collective agreements are generally territorially limited. (1) However, collective bargaining generally sets pay and working conditions in Germany, and 59% of all German employees are covered by collective agreements.(2)
The foundation of worker’s associations was created in the 19th century, mainly as a result of the revolution in 1848. Indeed, with the transition from craft production to industrial production, workers, and particularly women and children, were exploited. But when the revolution failed, all workers organisations were banned again.(3)
In april 1949, the Act on Collective Agreements (Tarifvertragsgesetz – TVG) came into force in West Germany. Even if there were a few changes and amendments since then, it is still the legal basis for collective agreements. Until the reunion of Germany, when « TGV » started to be applicable in the entire Federal Republic of Germany, even the smallest aspects of working conditions were regulated by the government in the socialist state. Relations between the works council and the employer (in the frame of « Betriebsvereinbarungen ») are regulated by the Works Constitutions Act of 2001, which comes from the one of 1952..(4)
Regarding these informations, let’s see how collective bargaining is made in Germany, and how the market economy affects it.
Modality of german collective bargaining : Who, When, What… ?
- The purpose of the collective bargaining.
German collective agreements regulate a wide range of issues, such as shiftwork payments or pay structures, working time, training. Until now, there was no national minimum wage.
Agreements covering pay usually last for one, two years and sometimes more. Agreements concerning other issues can last for a longer period (around five years or more). However, when one side wishes to change the agreement, it can be renegotiated before it expires.
- Insufficience of german interprofessional national agreement
Collective bargaining at industry level between individual trade unions and employers’ organisations is the central arena for setting pay and conditions in Germany. Agreements between trade unions and specific companies are rare.
It has often been seen as one of the strenghs of the German system. Even if there still can be conflicts on pay and conditions at industry level, works council and individual employers can develop more cooperative relations. (5)
In Germany, there is no interprofessional national agreements. Indeed, employee representatives are able to negotiate collective agreements which are directly considered as a legal norm (§ 1 I Tarifvertragsgesetz). As explained earlier, there are two kinds of collective agreements in Germany : « Tarifverträge » and « Betriebvereinbarung ». « Tarifverträge » organize the content, training, the end of the working contract, norms concerning firm management and internal organisation. « Betriebsverinbarungen » are about individual working conditions. Collective conventions are signed by trade unions and an employer (or an employer organisation). Establishment agreements are signed by Works council and the employer.
The ascendancy of market economy on collective bargaining stricking
- The observation of « favourability principle »
A favourability principle (« Günstigskeitsprinzip » (§ 4 III TGV) stipulates that negotiation should not be less favourable that the superior norm. But this is more and more questionned. (6)
Unless the convention authorizes it through an « Offnüngsklausel » or if it is more favourable, it is impossible to agree at a company level, on working conditions already determined by a collective convention. Nevertheless, there are some exceptions, such as wages. In order to allow more flexibility on the working market, the legislative framework can sometimes be « modified ». (7)
- The adaptation of measures to the geographical and social context
Industry agreements tend to be negotiated at a regional level. Thus, there can be slight differences between regions, but generally not on the main elements of the agreements. For example, the minimum wage remained almost the same across all regions, unless in the former East Germany, where pay and working conditions are often inferior to those elsewhere.
Works councils are not legally able to negotiate collective agreements, but they can reach agreements on issues which are not covered by them. These collective agreements give more and more flexibility to local negotiators. That is authorized through « opening clauses ».(8)