Company motives for participating in collective bargaining
Sandra Vogel, German Economic Institute (IW)
Hagen Lesch, German Economic Institute (IW)
Helena Schneider, German Economic Institute (IW)
Autonomous collective bargaining is a central feature of German industrial relations and of the social market economy. As the collective bargaining coverage has been decreasing over decades, the organising capability of German employer organisations and unions is called into question as well as their ability to regulate pay and working conditions for a majority of the workforce. Without a sufficient collective bargaining coverage, social partners cannot hope to regulate working conditions in Germany independently, but have to face stronger governmental interference. Though much research is devoted to union development, less is known on employer organisations and companies.
Against the background of a declining collective bargaining coverage and a lack in micro-level information on companies’ individual motives, the paper analyses companies’ reasons for participating in sector- or firm-level collective bargaining or refraining from such. The paper uses data derived from a qualitative company survey conducted by the German Economic Institute (IW). The survey was run in autumn 2017 in the metal and electrical industry. With over four million employees, it is one of Germany’s biggest sectors that represents over 10 per cent of Germany’s total workforce and generates around 15 per cent of the national gross value added. Though the final sample only includes metal companies, the survey results nonetheless can be used for further cause analysis concerning the declining bargaining coverage.
In comparison to other available (panel) data sources, such as the IAB-Establishment Panel or the SOEP panel, the IW-survey was devoted to metal companies’ motives in regards to their collective bargaining participation. It also looks into companies’ satisfaction with a given arrangement (sector- or firm-level agreement or no agreement) and needed changes for more companies to join collective bargaining. The authors designed questionnaires fitting each of the three company groups. This approach allowed to ask for the different groups‘ views on the merits and disadvantages of the sectoral metal agreement applicable in autumn 2017. In order to reach as many metal companies as possible, metal employer organisations contacted their own company members (those bound by the sectoral agreement as well as those holding a membership without being bound by the sectoral agreement) and invited them to participate in an online-survey. In addition, a random sample of companies not bound by a metal agreement was selected from the Markus-database and computer assisted telephone interviews were conducted. The final sample consists of 1.533 companies from the sector.
The survey results show that the peace obligation and lower transactions costs are still important reasons for companies to participate in collective bargaining. Nonetheless, the results also point to areas of dissatisfaction. For example, surveyed metal companies bound by the sectoral agreement are dissatisfied with the height of collectively agreed earnings (especially for low-wage work), working time volume and flexibility. Companies not bound by the agreement also resist (sectoral) collective bargaining for these reasons. Whilst dissatisfaction with these arrangements might not immediately lead to exits from collective bargaining, they can nonetheless become virulent when other factors come into play, such as shrinking turnovers or external shocks.
Given these results, state interventions to strengthen the collective bargaining autonomy have to be assessed critically, as social partners have not yet exhausted all possibilities to stabilise the collective bargaining system from within. More appealing pay and working time clauses for companies could prove a fine starting point to redeem higher collective bargaining coverage and ensure the German collective bargaining autonomy.