Works councils, collective bargaining and apprenticeship training

We investigate the effects of works councils on apprenticeship training. The German law attributes works councils substantial information and co-determination rights on training-related issues. Thus, works councils may also have an impact on the cost-benefit relation of workplace training. Using detailed firm-level data containing information on the costs and benefits of apprenticeship training in Germany, we apply econometric matching methods to identify works council effects. We find that firms with works councils make a significantly higher net investment in apprenticeship training compared to firms without such an institution. However, we also find that the fraction of workers still employed with the same firm five years after training is significantly higher in the presence of works councils, enabling firms to recoup training investments over a longer time horizon. All works council effects, however, are much more pronounced for firms covered by collective bargaining agreements.