labor law

Squeezing Smaller Unions

  • Why it matters

    Why it matters

    Germany’s collective bargaining law was drafted in order that labor disturbances which have plagued industry since 2010 can be avoided.

  • Facts

    Facts

    • The German Federal Constitutional Court ruled on Tuesday that the collective bargaining law passed two years ago is compliant with the country’s constitution.
    • The court called on lawmakers to bolster the rights of smaller trade unions by the end of 2018.
    • According to statistics published by the OECD, Germany’s trade union density, meaning the percentage of union members relative to all employees in the country, stood at 18.1 percent in 2013, more than 7 percent less than in 1999.
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Members of German Train Drivers’ Union GDL stage a rally of protest in Berlin’s Potsdamer Platz
"We're on strike" says the banner belonging to the GDL rail drivers' union. Source: Reuters

Germany has had its own summers of hell for train travel, thanks to strikes held by the competing labor unions within the country’s rail provider that left gaggles of travelers stranded for hours at a go.

So Tuesday’s ruling by the Federal Constitutional Court was a relief for some, as it confirmed an earlier law to rein in the power of smaller trade unions.

Several trade unions can represent different groups of workers in a single company in Germany. At railway firm Deutsche Bahn, there is one union for train drivers and another for ticket checkers and catering staff, for example. At Lufthansa, Germany’s flagship airline, one labor union represents cockpit staff while another covers crew.

But a law was introduced in 2015 to smooth over disputes such as the clash between competing trade unions at railway operator Deutsche Bahn which threatened to paralyze the country in 2014-2015. Then there was the drawn-out strike by pilots’ union Cockpit the past three years, which all but brought Lufthansa’s operations to a standstill, underlining the need for a reform of collective bargaining.

Tuesday’s ruling confirmed that when a firm has competing collective wage agreements, only that between the trade union with the largest membership and employer applies. For example, it would rule for the larger union if competing unions seek different wage agreements, such as at Deutsche Bahn, when the train drivers’ union (GDL) and the train and transport union (EVG) both fought to represent the transporter’s employees.

The decision could affect investors in companies with multiple unions. Labor representation in Germany differs to the US in several ways and union membership is higher and less controversial than in the US. German unions often represent whole industries and typically, unions and company management work together to set wages in rounds of collective bargaining – few German workers’ wages are not the result of such agreements.

The law was originally passed to improve industrial efficiency but has been criticized for curtailing the power of smaller unions. The idea had been to encourage unions to work together to decide how big their respective pieces of the pie should be before negotiations take place.

For now, the ruling represents a shrewd yet practical solution to this kind of problem: might is right. In such cases, the law stipulates that the union with the most members has the sole legal right to bargain with the given company. A notary determines which union holds a majority. The smaller unions, however, retain the right to adopt the wage agreement for its own members word-for-word.

Lokführerstreik
Specialist unions still have plenty of fight. Source: DPA

The court called on lawmakers to bolster the rights of smaller trade unions by the end of 2018. The judges said they should create structures to generate a fair balance between the interests of all employees at a company, though critics said the ruling didn’t go far enough to protect smaller interest groups.

Labor attorney Gregor Thüsing criticized the court’s ruling, and told Handelsblatt that saying while it ensured union representation, this was not necessarily solidarity-based representation.

But the labor minister Ms. Nahles and German Confederation of Trade Union (BGD) representatives welcomed the ruling. It is a step closer to preventing factional interests and fracturing the workforce, according to Michael Vassiliadis, head of the IG BCE, an umbrella organization representing employees in the mining, chemistry and energy sectors.

Others were angered at what they said was a threat to their collective bargaining rights. The law represents a “glaring democratic deficit,” said Klaus Dauderstädt, head of dbb, an umbrella organization which represents Germany’s public servants. He plans to file a case with the European Court of Human Rights.

Such smaller unions, including the train drivers’ GDL, the pilots’ union Cockpit, the flight attendants’ organization UFO and the physicians’ union Marburger Bund saw the law as potentially attacking their constitutional freedom to strike and to form coalitions – the right of employees to organize and to fight for their interests. The law doesn’t threaten their right to strike though the government has speculated that labor courts will likely rule that wage strikes called for by minority unions are excessive or even unrealistic.

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The judges also stipulated that the employment security and pensions fought for by smaller unions should not be abandoned in the event that a majority competing union takes over. Nicoley Baublies, head of the flight attendants’ organization UFO, welcomed this stipulation: “The law is more or less dead, but the zombie keeps thrashing.”

Whether a union is majority or not is determined by representation in a given operation, not at the entire company. While UFO might not be the biggest union at Lufthansa, “in the flight cabin, UFO is the biggest union,” said Mr. Baublies.

Mr. Baublies was pleased that the judges emphasized small unions’ rights to strike. UFO will now look to woo new members by getting them to switch unions. This is exactly what many critics have feared: that the law will pit unions against unions. At root, the law seeks to address problems in industrial relations caused by a federal labor court’s 2010 ruling that overturned the long-held “one company, one union” principle.

According to statistics published by the OECD, Germany’s trade union density, meaning the percentage of union members relative to all employees in the country, stood at 18.1 percent in 2013, more than 7 percent less than in 1999. As a comparison, trade union density in the US was 10.8 percent in 2013. It remains to be seen whether the new collective bargaining law will reinforce or overturn this trend.

For now, the jury is still out on the implications the ruling will have on smaller unions in particular. Ilja Schulz, president of the pilots’ union Cockpit, thinks the ruling might bolster his members’ right to strike. GDL head Claus Weselsky believes the ruling ultimately helps his union.

 

Jens Koenen writes about the airline industry for Handelsblatt. Frank Specht covers labor issues for Handelsblatt. To contact the authors: koenen@handelsblatt.com, specht@handelsblat.com

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