Labor Relations

Energy Executive says Germany's Model for Including Workers in Corporate Decisions Works

Uwe-Tigges- bigge 2r
Uwe Tigges, chief of HR at energy company RWE, says workers' councils help companies.
  • Why it matters

    Why it matters

    Why the German model of worker participation in decision-making is also proving itself in current economic crises.

  • Facts


    • German co-determination took root in coal and steel industries.
    • German law opened seats on big company boards to workers in 1976.
    • In the United States, workers have little role in management
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The energy industry is in the grip of a severe crisis. Electricity prices on the wholesale market are falling dramatically and providers are writing off billions of euros for their power plants. Industry research shows that the energy market crisis is now eating into municipal utilities and regional providers too.

The crisis demands action to get stricken electrical providers running well again. Reorganization, rigorous cost discipline, and, unfortunately, job cuts are becoming more routine in the energy industry. But how should companies carry out these necessary and far-reaching changes? Certainly not with a sledgehammer from above. Workers should also play a big role.

The Works Council Constitution Act is the Magna Carta of German co-determination – or the right of workers to participate in management, both through work councils and on supervisory boards of companies.

Naturally, some details of worker participation can be criticized. Some think work councils are too large and too inflexible. “Many decisions are delayed because compromises must be laboriously negotiated,” said the Cologne Institute for Economic Research.

Others would say that the time and effort spent through worker participation is time well spent, since it helps achieve stable decisions supported by consensus.

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