Employee Relations in Germany - Essay Example

?Employee Relations in Germany Introduction This paper would elaborate on the manner in which employee relations in Germany have undergone a change, over the last twenty years. For this purpose, it (paper) would carry out an analysis of the roles being played by key actors, as well as the role played by them (key actors) in bringing about this change. The paper would also specifically focus on the some relevant changes that have taken place in the recent past. Employee relations – An introduction When compared with the corresponding scenario of several other zones of the Globe, it is being seen that, in Germany, the law strictly controls employee relations. Here, a reference needs to be made to the several condemnation laws that have been in vogue in the zone (Germany), since 1945. As a direct consequence of all those laws, lot of importance is now given to the aspect of industrial democracy and harmony. But subsequent to the reuniting of East and West Germany, several major economic and other issues have manifested. In Germany, for companies with manpower numbering over two thousand, it is legally mandatory that, apart from management board, they have also a supervisory board. (1) Since the initial half of the 1990s, the employers in Germany started to get disillusioned with the country’s model related to employee relations. As a matter of fact, the region (German) adhered to this model for a very long time. It was being strongly opined by many that, the duration for which the model has been in vogue was too lengthy and hence, it can no longer be relevant to the modern scenario. It is high time that the German Model is modified and reformed, in accordance with the corresponding standards of the present millennium. The conventional model of employee relations was characterized by stringent legislations safeguarding interests of the employees. In fact, it can be stated that most of these legislations were excessively focused on labor welfare, even to the extent of ignoring the basic monetary needs of the employers. As a direct result of that, the companies were hindered from operating in the highly competitive markets of the modern era. (2) There is no denying of the fact that the traditional German model of employee relations made sure that the employees had a good work environment where, their careers thrived. The model has ensured that the employees were provided with right training programs, not to mention the aspect of aptly motivating the manpower. Also, it has to be stated that it (German Model) enabled the employees to have access to key information pertaining to their respective workplaces, courtesy the related laws and stipulations. (3) Roles played by the key actors At this point, it would be worthwhile in having a brief look at the roles played by the key actors, in terms of employee relations. The following are the four categories to which these key actors pertain to: state, managements, employees and worker unions & councils. It is not at all an exaggeration in maintaining that, the state played an extremely crucial role, with regard to the conventional German Model. By bringing out rules and laws that were aimed at the well-being of employees, the state made sure that they (employees) are assured of an amicable environment. Also, the state ensured that the managements meticulously adhere to all the corresponding laws, lest the workers’ interests are ignored. All these laws governed issues of utmost relevance to workers, such as working hours, bonuses, leaves and compensations, among many others. (2) & (3) Here, it needs to be stated that the role played by the managements is also noteworthy. The company managements scrupulously abided by all the norms and regulations pertaining to welfare of employees, and thus making sure that the workforce has literally no reason for complaint. The managements shared information with their respective employees, and this in turn enhanced the motivation level of the personnel. They were more than happy that due importance was being given to them, and hence, they were prepared to run the extra mile for ensuring further growth and prosperity for their employers. (2) & (3) Lastly, the focus needs to shift on to the worker unions and various councils. It can be said that these entities, in a way, assisted the state to make sure that managements do follow all the relevant stipulations. In cases where there was a risk of the workers getting victimized by the actions of the managements, the unions and councils were prompt in coming to their rescue. The rights of the workers that have been guaranteed by the German Law were upheld. (2) & (3) At this juncture, it would be worthwhile in going into an elaboration on the vital aspects of collective bargaining and work councils. This would be of great significance in aptly comprehending the role played by two of the aforementioned key actors: employers and trade unions. In fact, this denotes as being the most prominent characteristic of the German industrial relations, and which is a direct outcome of the dual system representation. To elaborate further, the responsibility of collective bargaining was vested with only the employers and trade unions. As per the Collective Agreement Law of 1949, it is only the unions that have the right to enter into collective agreements, on behalf of the employees. Since the time this Act came into existence (in 1949), the accepted format has been that, on the level of industry, collective bargaining started taking place solely amongst employers and trade unions. (12) When the aspect of representing the employees at the level of company is concerned, the Works Constitution Act of 1952 laid down the related stipulations. According to this law, all companies whose workforce numbers minimum of five were enabled to form a work council, for taking care of interests of the workers (at company level). The employees had the right of being included in the council, even if they were not the part of any trade union. Also, none of the employees were deprived of the right to exercise their franchise. The work councils had several privileges pertaining to information & consultation and co-determination. However, they were not having the right of bargaining on matters that are encompassed under purview of collective agreements. For instance, the work councils were not entitled to arrive at key decisions about whether or not to go on a strike. (12) The workers had no personal right to launch a strike, and only those strikes that are authorized by trade unions were recognized by the law. Here, it needs to be understood that, only those strikes coming under purview of collective bargaining were recognized as being lawful. Even the unions were not holding the right to call for strikes that have political implications. One of the primary objectives of the above-mentioned collective agreements is to make sure that trade unions leave no stone unturned in maintaining peace in the industry. (12) Owing to the contents discussed in the preceding few paragraphs, the German Model is worth emulating, from the viewpoint of worker welfare. Also, because of all the pertaining laws, the employees were able to discharge their duties in a cordial environment where, growth of both the employers and employees was but inevitable. Recent changes in Germany employee relations At this juncture, it has to be specifically mentioned that, subsequent to the unification (of East Germany and West Germany), the importance of the conventional employee relations model got drastically reduced. Slowly but surely, the employers stopped following this model, which they opined was not conducive to their commercial interests. The services of many competent workers were abruptly terminated, just because of their relatively higher ages. It was not just that. Even the younger persons had a very tough time, because of inadequate employment opportunities. Despite all that, the older workers still chose to continue being part of the unions with the hope that, their rights can be safeguarded by them (Unions). (4) Owing to several economic changes in the markets of Germany, since the beginning of the current millennium, there were mergers amongst several unions of the region (Germany). Another consequence of the unification and the economic changes is that, the bargaining model of Germany started to lose its strength, and this was seen in both the west and the east of the zone (Germany). Also, the format of pension in Germany became a prerogative of the employers, and the unions were no longer in a position to exercise their influence over this aspect. (4) The vital issue of “collective agreements” started losing its importance, owing to several reasons, with not the least amongst them being the disinclination of employers to be part of employee organizations. Several clauses that were hitherto unheard of started getting included in collective agreements. As a matter of fact, the trend over the preceding two decades showed that, it has become extremely tough for successfully finalizing collective agreements. Even the position of the state on arriving at decisions about matters such as working conditions and minimum wages, to name a few, is being challenged by many sections. (12) According to the survey that was carried out by a leading agency, in the duration 1998-2007, bargaining coverage displayed a decline of nine percent, in the eastern part of the zone (Germany). Similarly, when the western part is taken into account, the drop was by thirteen percent. (12) A study revealed that, the density of trade unions dropped to 22% in the year 2005, when the corresponding figure of the year 2000 stood at 25%. The chief reason for that is attributable to the fact that, comparatively less number of people got employed in companies, over which the unions have great control. Trade unions have stronghold over companies coming under public sector and manufacturing units, among others. Since the beginning of the year 2001, several prominent trade unions related to engine drivers of trains, pilots and doctors began to refrain from joining the DGB-unions, for the purpose of bargaining. (12) From the point mentioned in the preceding paragraph, it can be concluded that the unions in Germany started to lose their hitherto position of power, and which in fact is an irrefutable fact. Likewise, it is but logical in arguing that, simultaneously, the managements began displaying a rise in the power wielded by them. It has also been observed that, the unification brought about a decline in the relevance of some of the features enumerated in the German employee relations model. There is no doubt in stating that, now the German model is undergoing a gradual positive transformation, and not any drastic change. (5) In spite of the points enumerated above, several sections of the German population are still strongly opining that all the reforms that are currently taking place are in no way drastic. They are just aimed at improving the present model, and not at discarding it altogether. As a matter of fact, this opinion is not without a solid basis, for all the changes, till date, were fully in adherence to the basic principles of the German model. In fact, it is also being stated that this evolution of the German model would eventually evolve into a one that successfully addresses the interests of all the actors involved. (6) Another positive change in the realm of employee relations, and which furthered both the social and economic growth of the region (Germany), is that there have been several partnerships between work councils, banking corporations and labor institutions. On account of this, the companies, along with providing improved formats of training programs to the workforce, were also enabled to expand their operations. In addition, several policies were introduced to make sure that the requirements of employees, managers and investors are effectively addressed. Another recent trend is that, there has been a revision of the wage system that ensured enhanced earnings for the workers. (7) At this point, it needs to be highlighted that, contrary to what is opined by many, the German model of employee relations is not being reformed fully as per the one (employee relations model) seen in the United Kingdom. It is just that some positive facets of the UK model are being incorporated into the German pattern (of mode), as a part of the several reformative measures. As a matter of fact, a careful note of all the recent corresponding changes in Germany strongly suggests this: all the reforms are propelled by the chief objective of enabling the German model to evolve into a system that supports utmost levels of flexibility. In fact, they (reforms) are steadily making sure that there is even more worker involvement in matters that are of relevance to the aspect of sound employee relations. (8) Factors responsible for the changes in German employee relations Perhaps, the most striking of all the factors that has brought about a change in the German employee relations is globalization. In fact, the further rise in the bargaining power of the employees, seen in Germany, is directly attributable to globalization. The same holds good even aspects of flexible working hours and transformation in job responsibilities is taken into consideration. Globalization has increased the competition in the markets, and owing to that, it was indispensable that all the above-mentioned changes are brought about in the sphere of employee relations. (9) Because of globalization, the countries have become more reliant on other regions, not to mention the surge in the avenue of information technology, which is more or less synonymous with globalization. As a direct result of that, it has become imperative for all the employers of numerous countries that they initiated changes in their model of employee relations, and which are in total conformity with the related global standards. (9) Another equally pivotal factor is the transformation in which the HR department of various companies functions. Here, it has to be stated that this transformation can also be treated as being one of the consequences of rapid globalization. The HR department of the contemporary era is focusing more than ever on the key aspects of apt employee training, enabling a good work environment and promptly responding to rapidly changing market trends, among many others. The modern-day organizations are rating employee relations as a long-term goal, and not a short-term one. The HR wing of the present day scenario is making sure that the employees not just adhere to the company policies, but also go on to be fully committed to the interests of the company. (9) The contents discussed in the preceding paragraph are obviously applicable even to Germany. It has been mentioned earlier in this write-up that, all the current reforms seen in employee relations in Germany are such that, they are in total accordance with the interests of both managements and also the workers. This is nothing but another way of presenting the points that have been elaborated in the last paragraph – the HR departments taking care of the welfare of companies as well as the personnel. (9) One more pivotal factor responsible for change in the model of employee relations in Germany is the rapidly increasing significance of consistent honing of skills. Because of heightened competition, which is prominent feature of the markets of the current millennium, employees are necessitated more than ever in continuously developing their skills. It is but obvious that, for enabling that, changes are made to the traditional employee relations model, and this is what has been taking place in Germany, over the past few years. In fact, at this juncture, it has to be mentioned that this crucial aspect of employee training directly falls under purview of the HR department, an elaboration of which has been made earlier in the paper. (10) Another key factor, which is specific to Germany, is that there was a need for enhancing the influence of employees, with regard to more participation. And as a direct response to this need, decentralization of collective bargaining started taking place. Now, this can be seen not just at the zonal or the industry levels, but also at company levels. This led to work councils handling more responsibilities, more so in relation to corresponding scenario of the past. (10) Over the last twenty years, the significance of decentralization has been consistently rising, in relation to collective bargaining. New clauses started getting included in collective agreements, owing to which they (collective agreements) started to take place at the sector level. In fact, a survey of the year 2005 throws light on the fact that, about three-fourth of all companies with a workforce numbering twenty and over utilized the above new clauses. (12) Presence of employees pertaining to diverse cultural and ethnic backgrounds is also a key factor that has contributed towards reforms of the traditional model (of employee relations). Now, in many developed regions of the Globe, employees of varied social and regional backgrounds are being seen, with the zone of Germany being no exception to it. In light of that, it became very much essential that the model is transformed in such a manner that, it takes into account the preferences of everyone. Here, it needs to be conveyed that, even all that has directly resulted from globalization. (11) It is in no way an exaggeration in maintaining that, globalization is the most paramount of all the factors, and that all the others (factors) focused upon in this section are the varied consequences of it (globalization). Conclusion This paper can be concluded with the comments that, the Germany model of employee relations is undergoing a positive change. There is no doubt that, in the near future, the model would evolve into a pattern where, neither the workers nor the companies would feel that they are being deprived in any aspect. The topic of this paper is an exhaustive one and it is just not possible to be covering all its points in a brief write-up such as this one. Yet, a sincere attempt has been made to encompass the most salient of all the related aspects. 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