IDEAS home Printed from https://ideas.repec.org/p/iab/iabdpa/201205.html
   My bibliography  Save this paper

Wage bargaining in Germany : the role of works councils and opening clauses

Author

Listed:
  • Ellguth, Peter

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Gerner, Hans-Dieter

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Stegmaier, Jens

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"German employment relations are characterized by a distinct dual system: First, working conditions and wages are determined by industry level collective bargaining agreements. Second, on the establishment level the works council is responsible for employer-employee negotiations. But since the mid-1980s more and more areas of regulation were transferred from the industry to the establishment level using so called opening-clauses. Our analysis relies on rich German establishment data and reveals new insights in the institutional machinery of wage bargaining: While the existence of such clauses is related to higher wages (11 %), their application results in wages cuts of roughly the same size. Regarding works councils our results suggest that they are able to prevent negative wage effects of opening clauses on average." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Ellguth, Peter & Gerner, Hans-Dieter & Stegmaier, Jens, 2012. "Wage bargaining in Germany : the role of works councils and opening clauses," IAB-Discussion Paper 201205, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201205
    as

    Download full text from publisher

    File URL: https://doku.iab.de/discussionpapers/2012/dp0512.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Addison, John T. & Teixeira, Paulino & Zwick, Thomas, 2006. "Works Councils and the Anatomy of Wages," IZA Discussion Papers 2474, Institute of Labor Economics (IZA).
    2. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, June.
    3. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2009. "Works Councils and Separations: Voice, Monopoly, and Insurance Effects," Working Papers 075, Bavarian Graduate Program in Economics (BGPE).
    4. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-694, October.
    5. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers 16, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
    8. John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2006. "Works Councils in the Production Process," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(2), pages 251-283.
    9. John Addison & Stanley Siebert & Joachim Wagner & Xiangdong Wei, 2000. "Worker Participation and Firm Performance: Evidence from Germany and Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(1), pages 7-48, March.
    10. Jens Mohrenweiser & Paul Marginson & Uschi Backes-Gellner, 2012. "What triggers the establishment of a works council?," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 33(2), pages 295-316, May.
    11. Ellguth, Peter & Kohaut, Susanne, 2011. "Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2010," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 64(5), pages 242-247.
    12. Kraft Kornelius & Lang Julia, 2008. "The Causes and Consequences of Adopting a Works Council," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 512-532, October.
    13. Fitzenberger, Bernd & Franz, Wolfgang, 1999. "Der Flächentarifvertrag: Eine kritische Würdigung aus ökonomischer Sicht," ZEW Discussion Papers 99-57, ZEW - Leibniz Centre for European Economic Research.
    14. Kohaut, Susanne & Ellguth, Peter, 2010. "Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2009," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 63(4), pages 204-209.
    15. Gabriele Fischer & Florian Janik & Dana Müller & Alexandra Schmucker, 2009. "European Data Watch: The IAB Establishment Panel - Things Users Should Know," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(1), pages 133-148.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valeria Cirillo & Matteo Sostero & Federico Tamagni, 2019. "Firm-level pay agreements and within-firm wage inequalities: Evidence across Europe," LEM Papers Series 2019/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. 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.
    3. John S. Heywood & Uwe Jirjahn, 2014. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 521-552, September.
    4. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2018. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," American Economic Review, American Economic Association, vol. 108(2), pages 393-418, February.
    5. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    6. Deeke, Axel & Baas, Meike, 2012. "Berufliche Statusmobilität von Arbeitslosen nach beruflicher Weiterbildung : ein empirischer Beitrag zur Evaluation der Förderung beruflicher Weiterbildung," IAB-Discussion Paper 201211, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Fuest, Clemens & Peichl, Andreas & Siegloch, Sebastian, 2015. "Do Higher Corporate Taxes Reduce Wages?," IZA Discussion Papers 9606, Institute of Labor Economics (IZA).
    8. Peichl, Andreas & Fuest, Clemens & Siegloch, Sebastian, 2013. "Wage Incidence of Local Corporate Taxation - Micro Evidence from Germany," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79916, Verein für Socialpolitik / German Economic Association.
    9. Kopel, Michael & Petrakis, Emmanuel & Ressi, Anna, 2019. "Endogenous scope of firm-union bargaining with vertical pay comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 39-52.
    10. Eckehard Rosenbaum, 2015. "Zero growth and structural change in a post Keynesian growth model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 37(4), pages 623-647, May.
    11. Jelle Visser, 2016. "What happened to collective bargaining during the great recession?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-35, December.
    12. Uwe Jirjahn, 2012. "Industrielle Beziehungen und Innovationserfolg," Research Papers in Economics 2012-02, University of Trier, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oberfichtner, Michael, 2013. "Works council introductions: Do they reflect workers' voice?," Discussion Papers 83, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    2. Uwe Jirjahn & Steffen Mueller, 2014. "Non-union worker representation, foreign owners, and the performance of establishments," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 140-163, January.
    3. Genz, Sabrina & Bellmann, Lutz & Matthes, Britta, 2018. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies?," IZA Discussion Papers 11616, Institute of Labor Economics (IZA).
    4. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series 0057, University of Zurich, Department of Business Administration (IBW).
    5. Beckmann, Michael & Kräkel, Matthias, 2012. "Internal rent seeking, works councils, and optimal establishment size," European Economic Review, Elsevier, vol. 56(4), pages 711-726.
    6. Rafael Gralla & Kornelius Kraft, 2018. "Separating Introduction Effects from Selectivity Effects:Â The Differences in Employment Patterns of Codetermined Firms," LABOUR, CEIS, vol. 32(1), pages 93-111, March.
    7. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2009. "Works Councils and Separations: Voice, Monopoly, and Insurance Effects," IZA Discussion Papers 4126, Institute of Labor Economics (IZA).
    8. Christian Grund & Andreas Schmitt, 2013. "Works councils, wages and job satisfaction," Applied Economics, Taylor & Francis Journals, vol. 45(3), pages 299-310, January.
    9. Genz Sabrina & Bellmann Lutz & Matthes Britta, 2019. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies? : First Evidence from the IAB-Establishment Panel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 523-564, June.
    10. Steffen Mueller, 2012. "Works Councils and Establishment Productivity," ILR Review, Cornell University, ILR School, vol. 65(4), pages 880-898, October.
    11. Laszlo Goerke & Sabrina Jeworrek, 2021. "Paid vacation use: The role of works councils," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(3), pages 473-503, August.
    12. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    13. Genz Sabrina & Bellmann Lutz & Matthes Britta, 2019. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies? : First Evidence from the IAB-Establishment Panel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 523-564, June.
    14. Goerke, Laszlo & Pannenberg, Markus, 2011. "Trade union membership and dismissals," Labour Economics, Elsevier, vol. 18(6), pages 810-821.
    15. Grund, Christian & Schmitt, Andreas, 2013. "Works Councils, Quits and Dismissals in Germany," IZA Discussion Papers 7361, Institute of Labor Economics (IZA).
    16. Steffen Mueller & Jens Stegmaier, 2017. "The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 372-395, June.
    17. John T. Addison & Alex Bryson & Paulino Teixeira & André Pahnke & Lutz Bellmann, 2013. "The Extent of Collective Bargaining and Workplace Representation: Transitions between States and their Determinants. A Comparative Analysis of Germany and Great Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(2), pages 182-209, May.
    18. Olaf Hübler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, September.
    19. 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.
    20. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, June.

    More about this item

    Keywords

    Bundesrepublik Deutschland ; Betriebsrat ; IAB-Betriebspanel ; Lohnfindung ; Öffnungsklausel ; Tarifverhandlungen ; Tarifvertrag ; 2005-2007;
    All these keywords.

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iab:iabdpa:201205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IAB, Geschäftsbereich Wissenschaftliche Fachinformation und Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/iabbbde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.