However, it was German unification, which triggered the evolution of German capitalism. East Germany was since the early s an avant-garde of later developments in the rest of Germany. Moreover it affected the shape of the industrial relations by forcing organized labour onto permanent defensive and by making concession bargaining a central experience for works councils and unions in East Germany.
Graphic 1: Employees covered by collective agreements in Germany. Two examples of typical participants' positions in this debate for further information see Brinkmann :. Today the East is a kind of 'mine dog' of the West.
Moreover the number of East German union members has shrunk to less than a half of the level of and strike tendency is lower than in other European countries or the US. Of course, at the back of his mind there was the direct connection between a comparatively powerless, unemployed workforce and the advantage of the East towards the West starting a downward spiral in wage levels and working conditions.
Years before the Agendareforms cf. Thus the East German transformation became the central catalyst for re-commodification in Germany on the whole. This lost strike deeply shook the self-confidence of the union and thus undermined the traditional power-structure of the industrial relations system in the East and West. As an effect, statements as the following by the later Jenoptik-CEO von Witzleben have become a normality:. There are still many foreign investors who suppose a mixture of bad investment conditions in East Germany: a combination of high wages and infra- structural weaknesses.
The companies pushed rationalization programs, generating new and larger groups of peripheral workforces. This reform altered the architecture of German welfare state and labour protection in a number of ways Bruff First, unemployment benefits were cut and workfare measures introduced. Second, employment protection was reduced and, third, the labour market was deregulated to improve flexibility. The privatization of public companies like telecommunication, postal service and the railway system created huge markets where work regulations and the density of collective bargaining agreements sharply dropped.
This led into greater competition and to an often radical policy of cost-cutting. Particularly here new areas of low-wage jobs were created Streeck To adapt the company to the growing volatility of the sales markets, they focused more and more - promoted by government deregulation - on the use of external elements of flexibility in employment, such as fixed terms, works contracts and temporary agency work. It no longer serves the short-term staff replacement or the cushioning of order fluctuations, but has become a strategic and long-term tool for the stabilization of high returns regarding the temporary work: Holst et al Internationally Germany held a leading position OECD before the changes described above took place.
However, even the existing collective bargaining agreements are undermined by a rising proportion of flexible deviations Haipeter This configuration has changed dramatically. These changes have been fostered by the growing disorganization of the employer associations. Due to the decentralization of the collective bargaining system and the decline in the collective bargaining coverage, wage dispersion especially in the lower third of the society has increased Lehndorff Since , the number of low-wage workers increased by 2.
Almost half of all atypical workers received an hourly wage near the low-wage threshold Statistisches Bundesamt b. In , 4. In the crisis, the ratio fell by 0. The strong performance of the German economy and the German labour market during the crisis has some hard material and institutional explanations.
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Through the East German transformation and the reforms of the Welfare state, the deregulation of the labour market and the weakening of collective bargaining German wages have been relatively and absolutely decreased compared to its OECD-competitors ILO 3. When the global economy finally got going again properly at least with regards to the demand for German export goods , German companies had been perfectly prepared for this situation. They could meet the growing demand by raising production capacities rapidely and had reduced labour costs through crises agreements with the trade unions this is analyzed below.
Thus, the German economy was in effect strengthened through the crisis and had become more competitive in volatile world markets. The strategic options for action by the trade unions can best be described based on the change of the individual and collective power resources of workers cf. Silver , Brinkmann et al. Power resources, briefly introduced in the following, are not independent variables, successively following each other, but mutually connected: structural power is determined by the position of certain groups in the labor market and in the production process.
High unemployment, industrial change, new technologies and globalisation have sustainably weakened the power resources of many employment groups inside production as well as on the labour market. Organizational power represents membership strength and moreover reflects the ability of workers and trade unions to act in certain logics of collective action in order to be able to modify the control of capital over the application of the means of production.
The third power source of labour and trade unions is institutional power. The specific feature of institutional power arises from the fact that institutions function as substitutes for those social compromises agreed upon in the past. This way, structural and organisational power is incorporated into societal institutions Filgstein Thus through this institutionalization of power the preference of collective action of trade unions are pre-formed.
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Once achieved, institutional power is of stable long-term character and will not be immobilized by volatile political economy cycles. Its reliability may seduce trade unions to rely on established institutional powers in the past, when primary powers structural and organizational power are decreasing. That is to maintain pretence of stability, while its very foundations are already shaking. To put it another way: In the long term institutional power cannot work without the substantiation of structural and organizational power.
Trade unions are integrated into different levels of the political system as well as into the governance of capitalism. Institutional integration is broadly differentiated into three forms:. The field of action for trade unions is guaranteed by the autonomy of free collective bargaining, but it also limits the scope of trade union policy with regards to conflicts about payment and working conditions.
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Thus cross-cutting issues, as for example the configuration of the welfare state that have an immediate impact on class relations are partially withdrawn from range of the unions. These are delegated to the political system. As an institution it is a response to the social question. But the welfare state does not suspend the class antagonism; to the contrary, it assumes its existence and avoids it at the same time cf. Castel It operates as an asymmetric class compromise and partially integration of the workforce Oertzen The Union for Metal, Engineering and Electronics IG Metall organized the longest strike in post-war history days with an innovative permanent informational involvement of the strikers and their families Kittner With They resisted large parts of the public opinion as well as the interventions of the government.
Universal sick pay was later institutionalized through law. The councils are electorally legitimized by the total workforce and are institutionally separated from the unions. Workplace conflicts that often lead to strike actions in other countries are hereby negotiated in an institutional form at the company level.
Moreover the restrictive right to strike in Germany does not provide for political and general strikes. The unions only are allowed to call a strike but their boards by a majority were usually not known as strike-prone. The concept of centralized industry-wide multi-employer agreements has a strong pacifying affect, not least because the costs of strikes are very high for the trade unions Dribbusch , This means that German trade unions traditionally combine politics of productivity coalitions market with social integration society.
This has been the case for most of postwar history. In the German economy already turned into the first slight post-war recession. Subsequently the trade unions had to face new serious problems. The previous concept was based on the representation of the interests of the labour force in normal employment. The core of this model was preserved, however changing its character successively, as we will see later. Their members were broadly de-commodified, i.
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The trade unions were first of all sceptical about the concerted action. They were not only concerned about free collective bargaining, but about relative wage levels, too. Besides, they did not achieve their original goal to take far-reaching part in economic-political decisions. Free collective bargaining was not undermined in the end, but the distribution of wealth deteriorated. The national wage share and real wages declined to the lowest level since WWII Abelshauser The employees in return gained social status and political influence to push through a massive expansion of the social welfare state and a significant improvement of the co-determination rights Schroeder , Abelshauser Trade union leaders tried to quickly contain this movement, which was partly a rebellion against them, too, and in the next few years, they took a turnaround by focussing on massive pay rises instead of practising neocorporatist social partnership too ostentatiously cf.
Scharpf f; Schroeder 36f. The trade unions were an integral part of this modernization strategy by focusing the interests of the core workers, while the peripheral workforce often got excluded. The increase of the peripheral workforce was perceived, but nevertheless the traditional model of action remained. This is why in divided labor markets, it is difficult to organize them. Until the mids, the unions succeeded, in spite of the crises, to achieve immense wage increases for skilled workers through their model.
In the post-war era Germany has been a country with modest degree of unionization. In the end the increasing weakness of the unions led to a loss of institutional power. The result was the restructuring of the welfare state, cutting down the institutional power resources, thus reducing the institutional integration of the unions.
With regards to the welfare state especially the Agenda reforms meant the weakening of institutional power resources of the trade unions Urban b : Thus, the cuts of the duration of unemployment benefits, the weakening of employment protection, the liberalization in the regulatory levels, the limited participation of the Federal Employment Agency and the amendment of the Temporary Employment Act. The amendment of the Workplace Labour Relations Act made it easier to establish works councils, but in sum the reforms amounted to a reduction of industrial citizenship rights.
But these were fights in the institutional-political and not in the basic structural and organizational fields. The unions, traditionally committed to the export model Germany, renounced corporate disputes or even strikes in support of these goals. This crisis corporatism is much more informal and more fragile than the previous integration of trade unions in economic management. But by its success has also led to reintegration of trade unions in the institutional and state system. The overall social results were some individual protests, but no social conflicts after the economic crisis in Germany.
While the former neo-corporatism still was a product of union strength, the crisis corporatism is a product of a double weakness: of the elites and of the labour unions.
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The example of the temporary employment may again illustrate this well. A constant presence of temporary workers in the work process has a disciplining effect on the formal hedged permanent staff Holst et al. By then, the high pressure on the external labour market, resulting from high unemployment and re-commodification of labour force, is brought into the operation. In , 4. In the crisis, the ratio fell by 0. The strong performance of the German economy and the German labour market during the crisis has some hard material and institutional explanations.
Through the East German transformation and the reforms of the Welfare state, the deregulation of the labour market and the weakening of collective bargaining German wages have been relatively and absolutely decreased compared to its OECD-competitors ILO 3. When the global economy finally got going again properly at least with regards to the demand for German export goods , German companies had been perfectly prepared for this situation.
They could meet the growing demand by raising production capacities rapidely and had reduced labour costs through crises agreements with the trade unions this is analyzed below.
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