German System of Employment Relations - Research Paper Example

Reading Header: GERMAN SYSTEM OF EMPLOYMENT RELATIONS Your institution: Your name: Course name: Course instructor: March 29, 2010 Historical background Industrial relations in Germany is generally lagging behind when compared with those of Great Britain and USA and this analogy holds true for all corporations of different sizes and classes. Furthermore, a good number of the German existing investigations and studies are aimed at huge multilateral firms where worker representation organizational structures are compulsory by law (Kotthoff & Reindl, 1990). Hence the main purpose of this paper is to evaluate the system of employment relations in Germany and the main issues to be discussed involve changes that have already taken place within the German system of employment relations since 1989. This paper would also discuss the historical and the contemporary background to the German system of employment relations, the role of the state in the German system of employment relations, the role of collective bargaining, the role of works council, the role of national, industry, and enterprise bargaining in the German system of employment relations. This paper would outline the role of unions and those of employers in the German system of employment relations. it would also discuss the future direction of the German system of employment relations. Employment relations in medium-sized and small organizations remain almost unexplored in Germany according to expert studies. This is because industrial laws of Germany only require corporations with only more than six workers to deal with forms of employee representation hence little attention is given to micro firms since there are no dedicated studies for this category of firms. Contemporary background The federal republic of Germany system of industrial relations presents an interesting contrast to both Japanese and American systems. The main features of the German industrial system are the presence of formal structures used for employee representation in the decision making processes of the management, presence of industry-wide collective bargaining and industrial unions system and also the presence of a close integration of formal training and education with firm practices of human resource management. Few German institution scholars have emphasized the culture centrality as compared to others like those from Japan, when characterizing industrial relations in Germany. Instead, they have focused their attention on organizational structures and legal frameworks that have been created in aftermath of the world wars 1 and 2. Collective representation Collective representation in German enterprises is regulated by the German industrial law and particularly the “Betriebsverfassungsgesetz” and entails assignment of all tasks that relate to employee participation and representation to works councils referred to as “Betriebsrate”. While enterprises with less than twenty but more than five workers are permitted to elect a works chief “Betriebsobmann” to act as an employee representative. The larger firms are allowed to introduce works councils made up of several members. The “Betriebsverfassungsgesetz” normally don’t involve possibility of a works chief or a works council which is law protected for firms with employees less than five. Works councils In large enterprises, works councils are common but not in Small and Medium Enterprises, and it is indicated by investigations by Hilbert 19-90, p. 178, that two thirds of the SMEs do not have a works council. When these category is differentiated into small, entailing those with employees between 3 and 50 and medium sized firms being those with between 51 and 500 workers, hence extreme results were reported even more, revealing that less than 9% of the small firms have established councils of works while in the case of medium-sized organizations, this only amounts to 70%. Therefore Wassermann believes that the small firms share with regards to the council of works has plummeted more and more in the recent past and could be less than 3% for firms with less than 19 workers in the year 1999 ( Wassermann, 1992 ). His investigations also outline the causes of the unpopularity of the council of works and suggest that they include the possibility of exclusion of firms with less than six workers from the “Betriebsverfassungsgesetz.” Another reason could be that the enterprises where workers have had poor past experience with previous councils of works for whichever reasons could not show interest in setting up new works councils and also that in the enterprises where workers are enjoying good working conditions and are also allowed to exert a degree of influence on the corporate decisions hence there could be no incentives of introduction of bodies of representation which are formal and expensive. Another reason could be the lack of candidates who are interested for this function of employee representation hence may affect setting up of works councils by enterprises. Lastly, the firms with deplorable state of affairs may not set up a council of works, like should employer exerts some pressure on the workers but they lack professional guidance and help from outside hence the trade union might be prone to fail (Jurgens & Krzywdzinski, 2006). Representation of employees in companies without regular council of works may take two forms, one of them being either through establishment of an internal body of representation i.e. an internal council of works or through shadow participation according to Hilbert, 1990, p. 180ff. Employers/ entrepreneurs of corporations with internal bodies of employee representation, in contrast with firms having regular works councils, tend to have conflicting ideas with trade unions. This internal works council introduction is aimed to disrupt the trade unions influence while at same time allowing workers a degree of management influence, but the support of trade unions within such cases is usually very minimal (Hilbert & Sperling, 1990). Shadow participation This is the prevailing participation form in small enterprises where there is normally a common agreement between both employees and the entrepreneur that the works council introduction is not reasonable due to size of the firm. But the social cohesion that is strong makes it possible for employers and employees to meet to discuss their problems whenever necessary. A Monday roundtable is an innovation that has been introduced in such organizations normally regarded as “Montagsrunde” which entails a regular meeting/briefing at the began of the week for both staff and employer. There are three points that have to be noted for this shadow participation and include the evolution of interdependent ness because of the social and spatial closeness hence this build the basis for innovations that could be vital for firm survival (Backes-Gellner et al, 2000). Also this participation form may grant greater influence ion the company management for employees than how formalized councils of works could perform. Secondly is that operational shadow participation could make traditional bodies of representation to be superfluous, hence as a result it could be more cumbersome to begin initiatives for the works council foundation. This kind of participation hence erodes the basis for the creation of the formalized employee representation and participation in the small and medium sized enterprises. On the other hand, shadow participation has factual, social and limitations of time with social limitations coming about due to the fact that only qualified individuals are able to participate. The limit limitation aspect entail the decline of the employee influence degree as the corporation expands, while the factual level limitation, is observed that issues that relate to innovation and production are more likely to be analyzed and discussed than for instance those that relate conditions of work. Industrial and health safety issues The utilization of safety and medical personnel in firms is subject to regulations that law stipulates on the industrial security known as “Arbeitssicherheitsgesetz, ASig”. This regulation delegates the decision on minimum time physicians have to be available for industries to workers co-operatives commonly denoted as “Berufsgenossenschaften”. Hence the requirements on minimum number differ from industry to another, like in the textile for instance, there is need for 150 workers for the physician’s mandatory presence to be made. There exist estimates that medical services are only made available in corporations having employees in excess of fifty, and this lowest level for health issues and industrial security are normally designated to a safety officer denoted as “ Sicherheitsbeauftragter” who is from the employees’ body, while companies with workers less than twenty usually have no a safety officer. Collective bargaining Bargaining and wage negotiations is constituted in the “Betriebsverfassungsgesetz” and the exceptions in this law for small corporations indicate that small and medium size firms either have bargaining procedures of their own or apply the collective agreements although they have no obligation to perform so (Wever, 1995). There is almost no particular data that is available about bargaining in SMEs since this is considered as part of the general participation of employees practice. This, according to Wassermann interview, assumes that collective bargaining is the only exception in small corporations and those relations of employee-employer are more of an individual nature. Corporations applying collective bargaining general policies on voluntary basis normally belong to sectors with high demand for the personnel who are qualified, while in other cases, with individual settlements of wages, the firms might not even be members of the association of employers. These agreements normally are of poorer/lower quality for the workers should comparison be made with the collective agreement in general. Employer associations Entrepreneurs/employers could be members of the association of employers that are in existence in all economic sectors, and these associations provide assistance through advice in management and labor issues while at same time participate in bargaining of wages. There exists empirical evidence that corporations that are members of these employer associations also encounter more disagreements and conflicts with trade unions and also may possess regular works councils to a lesser extent. Future prospects There exist discussions to amend industrial law of Germany and these amendments are aiming at increasing the share of the council of works in small organizations and particularly through simplification of the electoral procedures. Another vital trend is the growth of the number of the house tariff agreements known as “Haustarifvertrage” and these special settlements of wages exist for corporations which have their roots in large multilateral corporations that were once split into minute entities of businesses. Gallner-Backes et al. (2000) carried out an investigation into the problems and prospects for recruiting qualified workers for the small and medium enterprises and the set of questions asked included the participation possibilities of employees through asking of employers whether the regular meetings with employees ever took place, whether rewards existed for the improvements proposed by the workers and also whether workers were given chance to participate in making decisions. The report that involved 736 companies which participated in this investigation by the Mittelstandsforschung provided the empirical results that included 20% of the firms with zero to five workers having no regular meetings offers with workers and same is true for 10% of both firms with 4 to 10 and also with 111 to 20 workers. In bigger size categories the share is less than 9% and also though counting of the entrepreneurs with plans to set up workers regular meetings, it is expected from these empirical 8 to 12 companies would hold these meetings with their workers in the near future (Wassermann, 1992). The investigation also reveal that less than 3% of the corporations with 1 to nine workers have councils of workers and this is also true for 15% of the small firms i.e. those containing 11 to 50 workers, 59% of the medium companies i.e. containing 51 to 250 workers and 91% of the huge multinationals corporations, this reveal that this figures from Hilbert, 1990 still are valid. The investigation also concluded that rewarding of workers for the improvement suggested is not yet popular among the small organizations, while 70% of the firms with 1 to four workers, 69% of the corporations with 4 to 10 and 74% of those 11 to 20 workers pay no compensation for the ideas that deal with suggested improvements. Also in contrast, one thirds of the corporations having employees in excess of 260 workers are providing a reward scheme. Also the report interestingly, staff participation in making decisions do not depend on the size of the corporation and about half of the entrepreneurs with varying size categories provide rights of participation for their workers. Employment working conditions Fringe and wages benefits Fringe and wages benefits increase with corporation sizes and this holds true for employees including the salaried workers for both women and men. Wages also increase over time at rapid speed in huge companies than smaller and medium firms and the main reason for this wages differentials are varied and could include effects of labor market and varied consumer goods prices in the urban and rural areas playing roles, also including the higher share of the highly paid workers positions in huge organizations. The differentials in wages never result from varied levels of minimum wages in collective agreements but it’s a result of application of these agreements in the company and poor controls. Also employers having less than four employees i.e. micro-enterprises are normally excluded from these tariff-binding agreements hence allow them to pay workers wages that are less than minimum levels set in settlement of wages. The extra charge amount on minimum tariffs is thus considered as a measure for the efficiency of collective representation of employees in the corporation though there exist no empirical data in support of this. Fringe benefits and voluntary corporate pensions like wages are also lower in small companies and also less common, hence collective agreements would always grant workers a minimum of four to seven holiday weeks annually, although there is no exact data is available on holiday usage. It is estimated that in small companies actual consumption of holiday is below the standards of collective agreements. Duration of work time and work position time slots on weekly basis vary between small and large corporations with part-time jobs seeming to dominate other employment forms in the small sectors and particularly among the women with empirical that about 61% of women work in corporations having workers less than 51, while 71% have part time jobs with work load of two to 15 hours weekly (McDonald et al, 2008). Due to changing in the programs of production, constraints in capacity, and less strategic planning possibilities, high demands on workers flexibility in small companies are placed. In small companies, deviations are common, from the regular week, five-day working and particularly in the mechanical engineering and food sectors, with the food sector accounting for only 7% of the total employment, but for 10% overtime in total. Mechanical engineering sector is responsible for about 14% of all the jobs with 17% of the overtime in total. Employee usage Its is also varied in small firms with dismissals of workers normally taking a harder form in small companies as workers are more often dismissed/fired, hence contrasting with large multilateral companies where reduction of workers is more commonly performed through early retirement or can also be avoided through job transfers from a department to another Bibliography Anastasakos V., (2004), Labor aspects of internationalization: multinational corporations and employment relations in the U.S and Germany, Temple University. Bamber, GJ, Lansbury, RD & Wailes, N (Eds) (2004), International and comparative employment relations: Globalization and the developed market economies, 4th Ed. Allen & Unwin, Crows Nest. Backes-Gellner et al, (2000), Wettbewerbsfaktor Fachkrafte- Rekruierungschancen und – problem von kleineren und mittleren Untemehmen (Skilled employees as competitive factor), Gabler Edition Wissenschaft: Schriften zur Mittelschandandsforschung, Institut fur Mittelstandsforschung, Bonn. Domeyer, V/ Funder, M., (1991), Kooperation als Strategic (Co-operation as strategy)- Eine empirische Studie zu Grundungsprozessen, Organizationsformen, Bestandsbedingungen von Kleinbetrieben, Study on behalf of the Department of Labor, Health and Social Affairs of the State of Nrdrhein-Westfalen. Hilbert, J/ Sperling, H. J., (1990), Die kleine Fabrik (The small factory) - Beschaftigung, Technik und Arbeitsbeziehungen, Schriftenreihe Industrialle Beziehungen Bd, 2, Munchen. Jurgens U & Krzywdzinski, (2006). Changing work and employment relations in German industries - breaking away from the German model: discussion papers// Wissenschaftszentrum Berlin fur Sozialforschung (WZB), Abteilung: Wissen, Produktionssysteme und Arbeit, Forschungsschwerpunkt: Organisationen und Wissen. WZB Kotthoff, H/ Reindl, J., (1990), Die soziale Weltkleiner Betriebe (The social world of small firms) - Wirtschaften, Areiten und Leben im mittelstaindischen Industriebetried, Gottingen. Wassermann, W., (1992), Arbeiten im Kleinbetrieb (working in a small firm) - interessensvertretung im dutschen Alltag, on behalf of the Hans-Bockler- Stiftung, Koln. Wever K. S., (1995), Negotiating competitiveness: employment relations and organizational innovation in Germany and the United States, Harvard Business Press: ISBN0875845541, 9780875845548. McDonald F. et al (2008), Cross-border transfer of employment relations in German multinationals: the relationship between industry internationalization and the strength and nature of country-of-origin effects: Issue 5; Issue 8 of Working paper series: University of Bradford School of Management Read More