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.
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Sections of the Research Unit
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The researchers analyse the wage policy from a national and international perspective. It includes the development of wages and labour costs. A special topic is the question of price competitiveness. This is covered by comparing unit labour costs, productivity and hourly labour costs in an international perspective.
The impact of disrupted production on producer prices in Germany
Manuel Fritsch / Christoph Schröder
From 2020 to 2021 the producer prices of manufactured goods in Germany increased by 6 per cent. However, price hikes accelerated during 2021, a development which has continued into 2022.
The Legitimacy of Free Collective Bargaining in Germany
Helena Bach / Hagen Lesch / Sandra Vogel
Since the signing of the Stinnes-Legien Agreement in 1918, the collective bargaining autonomy of Germany’s employers’ associations and trade unions has been the subject of continual political debate and at times its legitimacy even called into question.
Minimum Wage Adjustment and a Living Wage in Germany
Hagen Lesch / Helena Schneider / Christoph Schröder
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.
Hagen Lesch / Helena Schneider / Christoph Schröder IW
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.
Achieving Flexibility Within Collective Bargaining in the Metal and Electrical Industry
Helena Schneider
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.
An International Comparison of Unit Labour Costs: A Heavy Burden on German Industry
Christoph Schröder
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.
German manufacturing industry has high unit labor costs by international standards. In 2018 they were 15 per cent higher than in the 27 countries in our comparison.
Conflict resolution through conciliation and mediation
Hagen Lesch / Christian Kestermann
In the second half of 2019, collective bargaining was conducted in only five of the 19 sectors included in the German Economic Institut‘s wage monitoring system: In the chemical industry, construction, cleaning services, aviation and hospitals.
As digitalisation of the economy and society as a whole progresses, fears have been expressed that this rapid and sometimes disruptive technological change might prevent works councils from adequately representing employees and their concerns to management.
Helena Schneider / Oliver Stettes / Sandra Vogel IW
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