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Flexible collective bargaining agreements: Still a moderating effect on works council behaviour?

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  • Tobias Brändle
Abstract
We analyse the interaction between different labour market institutions in Germany, namely, industry‐level bargaining and firm‐level codetermination by works councils. In particular, we are interested in the moderating effect of flexibility measures on the link between the existence works councils and collective agreements on wages and productivity. In presence of institutional changes, the question is whether works councils in covered plants still generate rather than redistribute rents, given recent decentralisation processes in the German system of industrial relations. We augment a theoretical model to provide hypotheses, which are then tested using empirical analysis of representative German plant level data. We find that the existence of flexibility provisions in collective bargaining agreements does not alter the effect of works council on firms' wages. We find, however, that with flexibility provisions works council presence is associated with higher productivity levels than without such provisions. These findings, however, depend on the level of collective bargaining: they can only be observed in plants covered by industry‐level contracts, but do not hold in plants covered by firm‐level contracts.

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  • Tobias Brändle, 2017. "Flexible collective bargaining agreements: Still a moderating effect on works council behaviour?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(8), pages 1137-1153, December.
    • Handle: RePEc:wly:mgtdec:v:38:y:2017:i:8:p:1137-1153
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    Cited by:

    1. Tobias Brändle & Laszlo Goerke, 2018. "The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 445-478, November.
    2. John T. Addison & Arnd Kölling & Paulino Teixeira, 2014. "Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany. A Case of (Almost) Plus Ça Change?," GEMF Working Papers 2014-15, GEMF, Faculty of Economics, University of Coimbra.
    3. Mohrenweiser, Jens & Pfeifer, Christian, 2024. "Organisational justice, employee representation, and firm performance," GLO Discussion Paper Series 1499, Global Labor Organization (GLO).
    4. Steffen Mueller & Georg Neuschaeffer, 2021. "Worker Participation in Decision‐making, Worker Sorting, and Firm Performance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(4), pages 436-478, October.
    5. Steffen Müller & Jens Stegmaier, 2020. "Why is there resistance to works councils in Germany? An economic perspective," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 41(3), pages 540-561, August.
    6. Brändle, Tobias & Goerke, Laszlo, 2018. "The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?," IZA Discussion Papers 11518, Institute of Labor Economics (IZA).
    7. Clément Brébion, 2022. "The wage impact of being a works council representative in Germany: A case of strategic discrimination?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 418-455, October.
    8. Uwe Jirjahn, 2014. "Works Councils and Collective Bargaining in Germany: A Simple but Crucial Theoretical Extension," Research Papers in Economics 2014-13, University of Trier, Department of Economics.

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    More about this item

    JEL classification:

    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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