In 2014, a small group of Volkswagen managers from Wolfsburg flew to Chattanooga, Tennessee, where a VW plant churns out sedans. They were eager to export a German-style works council to the factory, in the belief that this would make processes flow better. They had spent three long years preparing for this moment.
No thanks, said Tennessee. The state governor, US senators, the US president and Washington lobbyists chimed in. Even the workers were alarmed. New to the concept, they worried that any sign of labor activism would endanger their jobs in the long run. In the end, the workers themselves voted against the council. The German managers flew back home, confused and disappointed.
Those Volkswagen executives weren’t acting out of the kindness of their hearts. Germans have long argued that close integration between labor and management works best. Works councils improve productivity and “keep peace within the company,” according to Stephen Silvia, of the School of International Service at American University in Washington, DC.
Works councils are part of Germany’s structured relationship between labor and management. There are two ways workers can contribute to decisions about what their companies do. One is through works councils, of the sort that the VW honchos wanted to bring to Tennessee. These are small committees of elected staff members that have to be consulted for some decisions by bosses. The other way is through supervisory boards, which sit above management boards and contain non-executive directors and labor representatives. (For more on this board system, read this.) They, too, have to sign off on major decisions at companies.
As to the works councils, these are restricted to individual companies and elected by employees. They talk about health and safety, training, and staffing. Any company with more than five workers can set one up; larger companies are obliged to. Volkswagen, a company of 642,292 employees, has several works councils at numerous levels.
When it comes to talking about labor representation, Americans and Germans think so differently that they can barely understand each other, according to Thomas Greven, a labor professor from Berlin’s Free University. “That makes it very difficult to work on international projects,” he told Handelsblatt Global; for example, as America’s Amazon expands in Germany.
The German model is distinctive, as the Chattanooga confusion shows. The works-council system is separate from, but overlaps with, trade-union culture. And unions work very differently in Germany. In the US, they are seen as special-interest groups, focusing only on their members’ needs. That’s because, legally, only members benefit from any agreements made on wages – workers who choose not to join a union, don’t benefit. In Germany, by contrast, unions are viewed as social institutions, because wage agreements they haggle out apply to entire sectors, not just to specific companies or even to union members.
Unions in Germany are organized by industry and focus on negotiating wage agreements. That’s usually a harmonious process as they tend to bear in mind the state of the economy. The exceptions are specialist unions, such as those representing train drivers or pilots. More powerful and more feisty, they have recently organized extensive rail and airline strikes.
These labor laws date back to World War II. After the partition of Germany, many companies were seen as morally bankrupt after supporting the Nazis. Allied leaders such as General Lucius Clay of the US supported unions cautiously and permitted unions to organize in the US zone in 1946. Works councils were also allowed, so long as they didn’t have former Nazis and members were chosen democratically.
The structures they created served Germany well for decades: Germany has fewer strike days than France, and other European countries, though more than the US. When Germans do strike, they can be (what did you expect?) stubborn. This summer, Ryanair faced strikes by pilots in Germany, the Netherlands, Belgium, Ireland and Sweden. But while pilots compromised in the other countries, those in Germany couldn’t even agree on a mediator. Such dustups are unusual in Germany, however.
Still, critics say labor representation gums up corporate life, slowing companies’ ability to change. While in the United States, the customer is king, according to one German HR manager, in Germany “employees are princes.”
As in other countries, fewer workers in Germany are joining unions. Because members and non-members benefit alike from wage deals, younger workers often don’t see the point of signing up. Germany’s economic success may also be eroding membership: high levels of employment and satisfaction suggest people are just happier at work.
Trade unions 2.0
But business models are changing fast and the old union structures don’t fit the new kinds of jobs. While German consumers discover Uber, Deliveroo, Flixbus and the like, workers are pushing back. Taxi drivers got together to restrict Uber’s operations and expansion. A new union formed to represent couriers delivering food through cities by bike.
The Free Workers Union, or FAU, says it’s for everyone traditional unions aren’t interested in, from freelancers to pensioners. Also dubbed “the delivery union,” FAU made headlines last summer after demanding Foodora, a German startup, and Deliveroo, of the UK, pay for the repairs of the bicycles couriers use. Following demonstrations, the companies agreed to a per-kilometer model for bike repairs.
That woke Germany’s more traditional unions to show interest in FAU, organizer Georgia Palmer told Handelsblatt Global. But the budding union has other problems. Its members, mostly couriers, are often students from abroad who only stay in Germany for a short time, so that membership turnover is high.
Germany’s labor organizations are thus gradually changing, but not as fast as business, driven by ever-evolving technology. VW, for one, changed its tack. The carmaker sued an automotive union in Chattanooga in 2016, to keep it from representing workers at the car plant.
Allison Williams is deputy editor of Handelsblatt Global. To contact the author: firstname.lastname@example.org