Orientation towards collective bargaining agreements and the role of works councils in remuneration

Abstract

"Since the mid-1990s, collective bargaining coverage in Germany is on the decline. In the same period, the number of firms with orientation toward sectoral agreements is growing. In the debate about the erosion of the German system of industrial relations formal coverage by a collective agreement and orientation toward one are often taken to be roughly the same and the shares of those establishments are simply added up. However, what orientation toward a sectoral collective agreement means for company working conditions is an open question. As available studies have shown, the existence of a works council influences the level of wages in a company, depending on whether the company is bound by a collective agreement or not. We broaden the view to companies that are oriented toward a sectoral collective agreement. For our OLS wage estimates we use a data set that links company and individual information at the personal level (LIAB). The different institutional settings in their combination with the existence of a works council are taken into account with corresponding interaction terms. As it turns out, the adjusted wage level in orienting companies is clearly below the level in companies bound by a sectoral agreement. Orientation toward such an agreement is therefore no substitute for a formal commitment. However, if a works council exists the wages are significantly higher, but considerable lower than in companies with a sectoral collective agreement." (Author's abstract, IAB-Doku) ((en))

Cite article

Ellguth, P. & Kohaut, S. (2020): Orientierung an einem Branchentarifvertrag und die Rolle des Betriebsrats bei der Entlohnung. In: Industrielle Beziehungen, Vol. 27, No. 4, p. 371-388.