The competence field Tariff Policy and Industrial Relations researches workplace co-determination, the wage-setting process and income policy.
Industrial relations in Germany are characterised by a dual system of representation. While employees are involved in decision-making in their company, wage agreements are concluded for the sector as a whole. The principle of free collective bargaining charges the representatives of employees and employers with the task of establishing general conditions. The aim is to distribute market incomes in such a way as to secure social cohesion and acceptance of the free market economy on the one hand, while preserving incentives, on the other. At the establishment level, Germany’s democratic works constitution is based on the principle of codetermination by works councils and workers’ representatives on supervisory boards. As representatives of the workforce, works councils are endowed with a statutory role in determining working conditions.
- European Industrial Relations Observatory (EIRO)
- European Working Conditions Observatory (EWCO)
- European Restructuring Monitor (ERM)
Germany’s Minimum Wage Act accords a Minimum Wage Commission the task of deciding on a biennial adjustment to the minimum wage. While including an overall assessment, their decision is to be oriented on the development of collective wages.
In many countries, a paradigm shift in minimum wage policy is discussed, or it has been implemented already. Instead of protecting employees from exploitation as a lower safety line, the minimum wage is intended to provide an adequate standard of living - if possible without government intervention.
Companies which are bound by sector-level collective agreements in the metal and electrical industry yet are keen to invest or to protect jobs in times of economic difficulty can negotiate supplementary agreements allowing them to deviate temporarily from the provisions of the sectoral agreements.
Since 2018 An international comparison reveals the high level of unit labour costs in German manufacturing. In 2020, German unit labour costs were 22 per cent higher than the average in the 27 comparator countries, and 18 per cent above the mean in the rest of the Eurozone.
There are currently loud calls for an increase in the minimum wage to 12 euros to ensure that it adequately covers the cost of living. However, the net income of a single person working full-time at the present minimum wage is already very close to the at-risk-of-poverty threshold.