Posts Tagged ‘Factory Councils’

C.A.R. Crosland on German Co-Determination and Worker’s Representation

June 30, 2016

On Tuesday I put up a piece from an Austrian government pamphlet explaining the system of Mitbestimmung, or Co-Determination, that operates in Austria and Germany, in which the workers’ interests in factories and enterprises are represented through a system of workers’ councils. C.A.R. Crosland also discusses this system in his book The Conservative Enemy: A Programme of Radical Reform for the 1960s (London: Jonathan Cape 1962). This is interesting, although Crosland believed it was inferior to negotiations carried out by free trade unions. Crosland wrote

In Germany, unlike Britain or the United States, we find a strong Left-wing pressure for direct participation in management; and this has found expression in the Mitbestimmung (‘co-determination’) experiment.

Under Mitbestimmung proper, which operates only in the coal and steel industries, the workers in each enterprise and the Trade Unions nominate between them half the members of the Supervisory Board (a part-time body which appoints the full-time Board of Management, and scrutinises and approves all major policy decisions). These worker-representatives not only participate fully (in theory) in the work of the Supervisory Board, but have the further right to nominate one members, the ‘Works Director’ (whose functions correspond roughly to those of a Personnel Director in a large British firm), to the full-time Board of Management.

Outside coal and steel, the workers in all firms of over a certain size nominate one-third of the Supervisory Board. They also elect a Works Council, which has certain co-management fights in personnel matters (wage-payments, hours, conditions of work, dismissals, etc.); and the Works Council and management are equally represented on a joint Economic Committee, which exists mainly for the transmission of information from management to workers.

This amounts to a very elaborate legal framework. But there are, of course, reasons external to industry for this constitutional approach: the German propensity to define and codify everything in legal terms, a tradition of legally-constituted Works Councils dating from early Weimar days, and above all, a powerful political motive. the German Left retains bitter memories of Krupp and Thyssen, and of the use of economic power for political ends. it was, at the end of Hitler’s war, determined to lever itself into a strategic position inside the actual governing councils of German industry, where it could ensure that industrial profits were never again used to finance a totalitarian political party.

In assessing the results of co-determination, we must notice first an incidental benefit: a marked humanisation of German management attitudes. Before the war, not only were German employers often feudal in outlook, but ‘personnel management’ in the Anglo-America sense was scarcely known. Today, the psychological effect of legal co-determination, and the practical effect of having worker-appointed Works Directors in two major industries, has been at once to liberalise employers’ attitudes and to direct attention to the importance of enlightened personnel policies.

How much actual power does co-determination give the German worker? The Works Councils have undoubtedly advanced his interests and increased his influence on all matters affecting working conditions in the plant. But, to be sure, they do nothing which goes beyond what shop-stewards or branch secretaries do in Britain in the course of their normal day-to-day negotiation with the management; and their power to influence management is certainly less than that of the unions in Britain or America.

At the level of higher management, representation in the Supervisory Board again gives the German unions a greater influence than they previously enjoyed over the personnel policies of the firm; but again, this is not as great as that wielded by British or American unions through collective bargaining from outside the managerial structure.

Moreover, with few exceptions, the workers’ delegates confine themselves to representing the workers’ interests in the traditional ‘collective bargaining’ field; that is, there is little participation in general management. This explains why many of the difficulties conventionally associated with workers’ management – the danger of divided loyalties, the difficulty of finding worker-representatives with experience of large-scale management, the apathy of the ordinary worker to the wider aspects of management – have not arise in an acute form. The worker co-managers have largely restricted themselves to the personnel field which they thoroughly understand; and within this field they have avoided split loyalties by accepting a first loyalty to the interests of the employees.

One should therefore see the German experiment less as an approach to workers’ management in the strict sense (for there is little participation in general decision-making) than as an attempt to gain additional bargaining representation for the workers – that is, to supplement the external bargaining strength of the unions with a Trojan horse of legal representation within the managerial structure. See in this light, co-determination was a sound policy for the post-war years. The bargaining position of the unions was weak; the mood of the workers was far from militant; and the continuous influx of refugees from the East meant a permanent buyer’s market for labour. Under these circumstances, it was a shrewd move to redress the balance by calling in the law and gaining formal representation inside the firm. This has without doubt increased the power of the unions at all levels; and it has done so more rapidly, and to a greater extent, than would have been possible under any alternative policy.

Yet this power is till less than that exercised by unions in other countries without attendant complications of co-determination. The German experience therefore does not invalidate the attitude of the British unions. Indeed, it may well be that as the autonomous power of the German unions increase, their interest in Mitbestimmung will diminish. (pp.220-222).

I can’t say that I don’t find this assessment disappointing. Nevertheless, the Austrians believed that their system had contributed to social peace, and the Germans talk about the realisation of the ideal of the ‘constitutional factory’. Meanwhile, successive British governments have done their best to destroy and marginalise the trade unions on this side of the North Sea. I think we do need a much stronger trade unions movement, allied with workers’ representation inside the factory through something like factory councils, or direct election to the management boards.

Aganbegyan on Perestroika and Workers’ Control

June 29, 2016

Earlier this week I put up a translation of an Austrian governmental pamphlet from the 1980s on the system of factory councils and workers’ representation in industry. Over the in Soviet Union, Mikhail Gorbachev, the last Soviet Communist president, advocated a system of workers’ control and the transformation of state enterprises into co-operatives, in order to reform and invigorate the moribund Soviet economy and political system. It was also intended as part of a wider series of measures, like free speech and elections, which were to transform the USSR into a Socialist democracy. I’ve posted up pieces from Gorbachev himself in his book, Perestroika, about the new thinking, and from Ken Livingstone, who was deeply impressed with this aspect of the Soviet experiment. Gorbachev’s chief economist, Abel Aganbegyan, also discusses the importance of industrial democracy in his The Challenge: Economics of Perestroika (London: CenturyHutchinson 1988).

Aganbegyan states that the importance of co-operatives in the Soviet economy was recognised by Lenin, and that Gorbachev was returning to this earlier Soviet ideal. He wrote:

The development of cooperatives and self-employment is not a departure from Socialist principles of economic management. In Soviet conditions a cooperative is a socialist form of economic management, foreseen by Lenin in one of his last articles “On Co-operatives”. As is well known, Lenin’s last articles were dictated by him. He was extremely ill and sensed his imminent death; these articles are rightly seen as his last will. It is symbolic that among the various questions to which Lenin wished to draw society’s attention, was the question of cooperatives as an important form of socialist economic management. Lenin fully understood that a socialist society could not be developed solely on enthusiasm and on the application of administrative measures. He wrote about the need to employ the principles of material self-interest, self-financing, financial accountability (Khozraschet) and material responsibility. The cooperative form of economic management is indeed a form which ensures greater material incentive in work, more responsibility and the ability to pay one’s way. At the same time it is a democratic form since it is voluntary. Lenin attached fundamental importance to the voluntary nature of the cooperative. Cooperatives are self-managing organisations, where the collective itself decides everything and things are not fixed from above by an official. Thus the potential advantages of cooperatives within our society are far from exhausted. And we know from economic history, no economic form will disappear if it contains within it potential for self-development. The development of self-employment has also to be approached as a way of strengthening the material interest of individuals in creative labour.

The aim of socialist development in the final analysis lies in meeting the needs of all members of society more fully. Cooperatives and self-employment contribute to this end and therefore reinforce our socialist principles. They completely correspond to Gorbachev’s slogan for prestroika, ‘Give us more socialism!’ (p. 30).

The Cooperatives and Democratisation

Aganbegyan also makes it very clear in the book that the creation of the co-operatives was part of the wider process of democratising the USSR.

Democratisation of the whole of our society including the development of glasnost is an important aspect of perestroika. As it applies to the economy, debate is proceeding on an increased role in workers’ collectives in the resolution of economic questions, and in the transition to self-management. In the Law on Socialist Enterprises, workers’ collectives have been granted extensive rights in framing the plan of economic development for their enterprise, deciding on the way incentives should be offered, on work conditions and salaries, and the social development of their collective.

Of particular significance is the right of workers’ collectives choose their economic leaders, at brigade, enterprise and association level. Earlier, under the administrative system, directives on the conduct of the plan, even the smallest details, were handed down from above. Now, with full economic independence and self-accounting, the welfare of the collective depends above all on work organisation and levels of productivity. Its leader, as head of the working collective, must take the lead in striving for higher efficiency and productivity. (P. 31).

The Workers’ Democracy in Action

Aganbegyan also describes the new system of industrial democracy at work, and how it was introduced by a number of firms, so that managers had to compete for their positions. As a result of this, 8 per cent of the most inefficient were weeded out.

In the new system of economic management the rights of working collectives have been greatly expanded by the Law on Social Enterprises passed in June 1987. The working collective now determines the development policy of the enterprise. It also establishes the plan of development for its enterprise, including the plan for the five-year period. Plans set by the collective are final and are not subject to the approval of any higher authorities. The collective determines the way the enterprise uses the self-accounting income which it has earned. it scrutinises particularly the way the enterprise’s funds are used in the technological research and development fund, the social development fund and the financial incentives fund.

The working collective carries out its f8unctions both directly at meetings of the whole working collective and through democratically elected Councils to represent its interests. The decision to broaden the rights of the working collective was not taken dogmatically, but on the basis of generalisation of the experience accumulated at individual enterprises in the Soviet Union. At the Kaluga Turbine Factory, fore example, a council of brigade leaders, representing the working collective’s interests, has been operating effectively for many years. The fact is that here collective labour brigades were genuinely organised. Each brigade elects its brigade leader, so that the brigade leaders’ council is a democratically elected body. The factory has major productive and social results to its credit and, moreover, the long-term development policy of the enterprise is in the main the responsibility of the brigade leaders’ council.

For the first time working collectives are being given extensive rights such as the right to elect the manager. This affects the election of managers of all ranks: the brigade elects the brigadier, the workers and section foremen the section head, the working collective of the factory elects the director of the factory, and the whole working collective of the association elects the General Director. These elections are planned as a creative process. They must be preceded by public competition for managerial posts, with a preliminary selection made by, say, the working collective council. Each candidate then meets with the workers in the sections, departments and enterprises, attends meetings and meets with representatives of public organisations. Each candidate for the post of manager draws up a programme of actions and presents it to the working collective. Secret elections then take place with votes cast for a specific person, whose particulars and potential are known, and for a definite development programme for the enterprise.

The idea of appointing managers by election has already been taken up by many working collectives. Even before the official acceptance of the Law on Enterprises these elections were being organised independently in many places. Interesting events occurred for example at the Riga Car Factory. This factory produces the RAF microbuses which gained popularity in their day, but had eventually ceased to meet the increasingly sophisticated demands as needs changed and technology developed. The factory was in a deep crisis and stopped fulfilling the plan. A new leader was needed. Under the aegis of the newspaper Komsomolskaya Pravda a nationwide competition was held for the post of director of the factory. A total of four thousand applications was received from all corners of the country and a commission was specially created composed of car construction specialists (from the Ministry of Car Industry), from the factory and from local bodies. About thirty candidates were shortlisted. They studied the factory and made their proposals for it. One the basis of a detailed examination of these more concrete data the list of candidates was further reduced to eight. They came to the factory, familiarized themselves with the work, stated their views on how to improve the situation and finally the working collective in a secret ballot selected its factory director. This turned out to be V.L. Bossert, an energetic young manager, 35 years of age, who up to then was working as the manager of the Omsk Factory, a major producer of gear-boxes for the Moskvich car. The collective supported the candidacy of this new director and gave its views on his programme for the full reconstruction of the factory and the design of a new model of microbus which would be on a par with world standards. Having elected the director, the collective began to work intensively and soon fulfilled the plan. The number of claims for replacement of defective goods was reduced. The financial situation of the enterprise improved, people started to receive prizes and work motivation grew. Parallel to this, work continues on designing a new car and reconstructing the factory.

This experience has proved to be successful and it has caught on. Based on the RAF factory’s example, tens and even hundreds of other enterprises have organised elections for directors. Success is assured wherever this is carried out not as a mere formality, but where competition is guaranteed, where time is given and conditions are created for the preparation of imaginative programmes of development of the working collective, and where people really feel they are participating in the advancement of their enterprise at management level. In discussing the question of appointment of leaders by election, we have studied attentively the experience of other socialist countries, Bulgaria and Hungary. In Hungary in particular, the democratic mechanism has been very effective. In re-election for the post of direct 8% of former directors were voted out, but 92% had their competence at management confirmed by the collective. IN this way the quality of managers has been improved.(Pp. 197-9).

Unfortunately, this experiment was abandoned. The cooperatives throughout the eastern bloc were transformed into bog-standard capitalist enterprises through the voucher system. Yeltsin recklessly privatised everything he could lay his hands on, with the result that the Russian economy went into meltdown. And the end result of this has been the rise of Putin and the oligarchs. It is a great pity, as if this experiment had succeeded, Russia could have been the first and greatest genuinely democratic, socialist country, and undoubtedly the benefits this gave its working people would have been taken up and copied around the world.

Factory Councils and Workers’ Co-Determination in Austria: Part

June 28, 2016

Co-Determination Austra Cover

I’ve just finished translating a pamphlet I got thirty years ago from the Austrian embassy on the system of factory councils and co-determination there. Like Germany, Austria has a system where much of the work of the trade unions in individual factories is performed by factory councils, rather than shop stewards. The number of members in a council vary according to the size of the factory, and most members of these councils, as a rule, tend to be members of the trade union. These call meetings of the factory staff, and negotiate with the management about pay and conditions, as well as changes to working practices, closures and the like. There’s also a system of Youth Trust Councils, for employees, who are too young to vote for the factory councils. In joint-stock companies, the factory councils may, I think, also nominate some of the members of the supervisory councils, which may appoint up to a third of the members of the board of directors. As with Britain before Maggie started trashing such arrangements, there was also a mediator in the State Economic Commission, which would step in to make an award if no agreement could be reached between the employers and the factory council and trade unions. There was also parity commission, which was the Austrian counterpart to the British Wages and Prices Commission in the 1970s.

This is not an official translation, and I’m sure I’ve made any number of real howlers. It’s also nearly thirty years old, so please don’t take it as a guide to present Austrian employment legislation. I wanted to translate it, as a way of showing one of the forms workers’ control/ management representation has taken, and which could be a model for better industrial relations over here.

Co-Determination in the Workplace

The Constitutional Law on Work

(Vienna: Federal Press Service 1983)

“In the Interest of the Employee and of the Factory…”

The Austrian parliament unanimously passed the Constitutional Law on Work on 14th December 1973, which came into power on 1st July 1974. it is one of the significant sociopolitical laws of the Second Republic, as Austria has been since 1945. With this legislation the regulation of the collective rights of the workers, which were valid up to then, were thoroughly standardised, their present scope broadened and their basic principles improved as well as their details. The law has already been in force for several years. Up to now, the experience has led to further improvements reaching their goal, especially with the recent effort to put in motion reforms of the representation of employees.

Austria can thank the good cooperation of the employees’ and employers’ representatives for social peace and prosperity. Conflict is settled at the official table. It hardly ever comes to strikes.

One of the most important of this good collaboration’s assumptions is a worker’s right, whose principles are respected by both sides. The employment right has a considerable tradition, it was further continually developed and finally adjusted in a comprehensive manner to the challenge of our day with the passage of the new Constitutional Law on Work.

The factory constitution is regulated in the second part of the Constitutional Law on Work. It means to express here in a programmatic statement, that the declared goal of the factory constitution is to bring about an equalization of the interests of the employees and the factory. This is the guiding principle for the whole law. The legislator expresses with that, that there exists a natural opposition between the interests of the staff and those of the plant owners. Its execution should however, follow the regulated paths. The new regulations encountered offer the right instrument for that.

The Constitutional Law on Work is the first part of an entire codification of Austrian employment rights. It contains the decision on collective employment rights, as well as the employees’ organisations and their relationship to the employer. The second part of the codification will include individual employment rights, as well as perhaps the decisions about working hours, holidays, days off, protection of service, and the employment of women and children. It has been realised in sections. Up to now the regulations about leave were in force, further regulations, e.g., about the termination of employment contracts and compensation security will follow. The whole codification should combine the rights of the employee in a single work of legislation.

The negotiations about the Constitutional Law on Work has extended over more than a decade. It especially came to vehement arguments in the last, decisive phase between the employers’ organisations and the unions. The control of factory co-determination and employee co-operation repeatedly stood in the foreground, as it dealt here with very recent innovations opposed to the earlier legal position. Finally it succeeded in arriving at a compromise, which all those taking part could agree. The agreement reached amends to the passed legislation, that the Constitutional Law on Work finds in practice, not just according to the letter, but also in its spirit, according to application.

Collective Rights at Work

The Constitutional Law on Work is in force for all Austrian employees with the exception of officials in public service and employees in agriculture and forestry. The collective employment rights in force in the Constitutional Law on Work cover five great areas of rights above all.

* Agreements between employees and employers above factory level.
* Employees’ organisation in the factory and their rights.
* The role of the unions in the workplace – as far as these have been mainly regulated by law.
* Agreements between employers and employees at workplace level.
* The employees’ right to co-determination in the enterprise’s organs.
* Co-determination in social concerns.

Agreement above Factory Level

Agreements between the organisations of the employees and employers are concluded n the form of so-called collective agreements. Such collective agreements can only be agreed according to the determination of the law between the parties capable of collective agreement. The employers’ side as well as the side of the employees automatically possess the constituted legal representation of their interests (with compulsory membership) for the capability for collective agreements. On the side of the employers this is dealt with by the Chamber of Industrial Economy (Chambers of Trade); on the employees’ side, the chambers for workers and employees.

At the same time those organisations are awarded the capacity for collective agreements by the authorities on the basis of legal prescriptions, resting on voluntary membership and which, among many other things, the number of their members and the extent of their activity have decisive economic significance.

In practice no collective agreements are decided by the chamber for workers and employees on the employees’ side. This function falls to the Austrian Federation of Trade Unions and its 15 unions, which possess the capacity for collective agreements for all groups of employees. On the side of the employers collective agreements are as a rule decided by the Chambers of Industrial Economy and their sub-divisions, but there are also professional associations, which were awarded the capacity for collective agreements and which themselves make use of the possibilities resulting from this.

The Chambers of Industrial Economy

The Chamber of Industrial Economy are the corporate bodies of the public right, and represent the interests of industrial economy. All enterprises of industrial economy must belong to it on the basis of legal decisions and accordingly have to render a large membership fee.

There is a federal Chamber of Industrial Economy for the whole federal area, and a chamber of industrial economy for the land in question, in each of the federal lands of Austria. As well as the Federal Chamber of Industrial Economy, the chambers in the lands are also arranged in sections: industry, business, trade, foreign commerce, finance and commerce.

The functionaries of the chambers are elected by the members of the chamber in secret ballots, in which there an indirect electoral system from the smallest specialised groups at the level of the lands to the top of the federal chamber. The elections are made according to lists, which are as a rule arranged by the industrialists’ organisations of the political parties. The overwhelming majority in almost all organs of the chambers of commerce in all the federal lands is placed by that list, which is connected to the Austrian People’s Party.

The Trade Union Federation

The Austrian Federation of Trade Unions is an organisation of employees resting on voluntary membership. It is divided into 15 specialist trade unions, which are basically organised on the principle of the individual group. This principle has only penetrated, , when apart from the trade union for the workers in private industry there is also its own union for the staff. As a rule through this only two trade unions are represented in a workplace (one for the workers and one for the staff).

The Austrian Trade Union Federation is relatively centrally organised. As well as financial sovereignty, legal personality falls exclusively to the central institution. The individual trade unions are nevertheless responsible for the policy of collective agreements. The trade union federation has a comparatively high density of organisation. Out of 2.8 million employees, 1.7 million are members of trade unions. In many workplaces there is a hundred per cent organisation. Apart from the Austrian federation of trade unions any greater such unions, only similar to trade unions, exist neither in private industry or public service.

Within the Austrian Federation of Trade Unions itself there are, however, political groupings (factions), in which the trade unions members may meet the individual political parties. The organs of the Trade Union Federation and the trade unions are largely constituted on the basis of the political strength of the particular parties within the trade union membership. Accordingly the top functionaries of the Austrian trade union federation and almost all the trade unions come from the Austrian Socialist Party.

Collective Agreements

Laying down the area of validity of a collective agreement is basically the duty of the free agreement of the agreeing parties, which are concluded for ‘branches’, in which only one particular enterprise is active as employer, there are also general collective agreements, which comprise almost the entire Austrian economy.

The collective agreements are basically valid for all employers and employees, which belong to the bodies capable of collective agreements, which have concluded an agreement. On that point the collective agreement is also valid for those employees, which do not belong to the employees’ voluntary organisations, but are employed by an employer, who belong to the concluding employers’ organisation. As the collective agreements on the employers’ side as a rule are concluded by the interested parties’ legal representatives (with compulsory membership) and almost all the professional groups are covered, it is almost not possible for an enterprise to operate in a space free of collective agreements.

The present content of the collective agreement is naturally regulation of salaries. Austrian collective agreements respectively contain for everyone the minimum wage of their underlying employees’ group. This minimum wage can be changed through agreements at the level of the workplace or between the particular employee and the employer – though solely in the favour of the employee. Apart from that, in many cases agreements are concluded between the parties capable of collective agreements, that the wage paid to the individual employee at the time of the conclusion of the collective agreement – independent of its relationship to the minimum wage in the collective agreement – are raise by a certain percentage. These agreements in Austria are called wage rises, established by collective agreement. Regulations about the permissible system of performance wages and the method of their execution are often contained in the collective agreements.

Apart from regulations for wages, the collective agreements as a rule also contain decisions on the type of work and welfare rights. So most certain working conditions, regulations about working hours, free time, are concluded through collective agreements. Where these matters are also regulated legally (which today is almost the case in many cases and should be developed in the frame of the second part of the codification of employment rights), the collective agreements’ regulations can only vary in favour of the the employee, however, never to their disadvantage by law. According to the Constitutional Law on Work it is also possible, that agreements about the humanisation of the workplace and agreements about the common arrangements of the parties to the collective agreements, are secured in the sense of the protection of the employee from the consequences of rationalisation.

The Parity Commission

There are also agreements over price and wage policies in the frame of the very widely developed collaboration between the trade unions and the chambers of commerce in all areas of the politics of the social economy. The parity commission constitutes the institution for equalizing the interests in this sector for prices and wages. This institution, which has in no way legal anchorage, meets monthly under the chairmanship of the federal chancellor of the Austrian republic. Apart from members of the federal government the top functionaries of the employers’ and employees’ organisations take part in its conferences.

The trade unions have bound themselves to raise wage demands only if the parity commission opens negotiations. If a trade union wants to carry on negotiations by this about a new collective agreement, it must carry this wish above the Austrian federation of trade unions to the parity commission, that means, to the competent wages committee for it. There will commonly be consultations between chambers and the trade union federation, whether new negotiations should be permitted on the grounds of the terms of the collective agreement and the general economic situation.

The judgments of this system must nevertheless be clear, that the decision of the parity commission is practically never refused; the influence of the commission in practice merely extends, to that it can delay the point in time of the wage negotiations.

The Employees’ Representative at the Workplace

The most important employees’ organ in the workplace is the factory council. A factory council can be elected by the employees in every workplace, in which at least five people are employed. When at least five workers and five staff are employed at the same time, so in almost all cases separate factory councils for the workers and the staff are elected. There is, however, also the possibility, under certain conditions, of electing common factory council in such factories. Where there exist separate factory councils for workers and staff, these commonly form the factory council. In such councils a worker can be elected in the staff factory council, and a member of staff in the workers’ factory council.

The number of members in the factory council is set down by law. For five up to nine employees, a single member of the factory council is to be elected; from ten to 19, it is two, from twenty to 50, three members of the factory council, from 51 up to a hundred, four factory council members, and so on. In factories with 500 employees there are eight, with a thousand, thirteen, and with 5,000 employees 22 factory council members.

The factory councils are elected in a written and secret ballot of all employees of a factory for a duration of service of three years. Basically the system of proportional representation is used; in the smallest workplaces voting takes place solely for persons. To tender a candidate list for the factory council elections – varying according to the size of the factory – a number of signatures of those entitled to vote is required. In practice standing as a candidate is either through a list of names or lists ov candidates, who declare themselves for a particular political part. Lists drawn up by the trade unions are not usual.

Foreigners Also Vote

Foreign employees (of which at the moment about seven per cent of the employees active in Austria are foreign citizens) possess a fully active right to vote in elections to the factory council. There have no right to a passive right to vote.

As workers in the sense of the Constitutional Law on Work, employees belonging to middle management are also valid. Only managing and work directors of a factory and executive employees with similar wide-ranging powers do not fall under the conception of a worker and are from this neither active nor passive in the frame of the entitlement to vote in the employees’ organisation.

The execution of elections to the factory council is a duty of the electoral board, which is to be elected in a factory meeting. The factory council is also duty bound to render accounts of its activity regularly to the workforce in the frame of factory meetings (at least once a half-year). It can be recalled by the factory meeting with a qualified majority under certain conditions. All employees (i.e., the workers or staff) of the factory concerned take part in the factory meeting. The factory meeting can also be held during working time, if the factory owner is agreeable to this. It can be agreed in collective negotiations or at the factory level, that salaries will be fully paid for the time of the factory meeting; this is the rule in the most cases.

If an enterprise consists of several factories, a central factory council is to be established. The central factory council is elected on the basis of proportional representation by all the factory councils of the respective enterprise from their midst. It represents the whole staff opposed to the enterprise management in all questions, which go beyond the sphere of action of a particular factory. It reports to a meeting of factory councils, to which all the factory councils of a particular company belong.

The employer is bound to place at the disposal of the factory council space and working material, which it needs to exercise its activity. It is usual in Austria, for the factory councils to have in middle, and in many cases, also in small enterprises to have at their disposal at least its own room and corresponding office materials. In larger factories it falls to the share of the factory councils to have a clerk, whose cost is born by the enterprise. The factory councils also have at their further disposal financial means in the form of factory council funds. These funds are fed by a distribution of cost, the height of which is established by the factory meeting. It can amount to half a percent of the salary, that means, of the pay, and is deducted by the employer from the salary’s payment and transferred to the factory council. Apart from the organisation’s cost, social contributions are also paid from these funds.

The employer has to grant the members of the factory council the free time necessary, with the further payment of their wages, for the fulfillment of their duties.

Free Opinion Without Disadvantage

At the offer of the factory council, in factories with more than a hundred and fifty workers, one, in factories with more than seven hundred workers, two, and in factories with more than three thousand employees three members of the factory council (for the further three thousand employees yet another member of the factory council is elected) are to be exempted from the stoppage of wages for their capacity to work. The law prescribes, that these exempted members of the factory councils, who fully dedicate themselves to representing the interests of their colleagues, are in no way allowed to accrue to themselves disadvantages in pay or promotion.

Every member of the factory council is entitled to an exemption from work to take part in training and educational events, up to a maximum of two weeks in their three year term. In factories with more than twenty workers during this period the full wage is to be paid. In factories with more than two hundred employees a member of the factory council on the factory council’s application is exempt during the term of the factory council for a maximum period of up to a year in order to take part in training and education events – at any rate, without stoppage of pay. These decisions serve to give the members of the factory council the opportunity to acquire those perceptions, that they require for the better exercise of their functions. This stands to them as a rich offer to have at their disposal the employees’ organisation’s educational event.

The members of the factory council choose from their midst a factory council chairman. The members of the central factory council elect the central factory council chairman. The factory council chairman represents the factory council to those outside and convenes its sessions at least once a month. In the larger factories the factory council chairman is, as a rule, identical to the exempted members of the factory council.

Rights of the Factory Council

Apart from its common powers of representing the staff, the factory council is entitled to precisely defined rights in social, staff, and economic questions.

It has as part of its usual powers, the right to supervise compliance with legal prescriptions and collective agreements in the factory. For this goal the factory council is granted the right to inspect payrolls and lists of salaries. If staff actions are conducted in a factory, the factory council can take judgment through an agreement of the employees for the actions of the staff.

The factory council has the right, in all matters, which affect the interests of the workers, to propose appropriate measures to the factory owners or his competent co-worker and, if need be, the responsible agencies outside the factory. The factory owner is obliged to listen to the demands of the factory council, in all matters, which concern the interests of the factory’s employees.

The factory owner is further obliged to give information on all matters, which affect the economic, social, health or cultural interests of the factory’s employees. He has to hold common conferences with the factory council at least quarterly about current matters, general principles of factory management in social, staff, economic and technical respects as well as about the shape of working relations and inform it of important matters with that. Such conferences are carried out monthly at the demand of the factory council.

Co-operation in Training

The factory council also has the right to arrange and administer supporting arrangements for the benefit of the workers and those belonging to their families, as well as other welfare institutions. In the larger factories in many cases there exist such support funds from the factory council; in some cases these are paid in by contributions by the enterprise to these supporting arrangements based on agreements at the factory.

The factory council is further entitled to co-operate in the planning and execution of the factory’s vocational training as well as educational and retraining measures. It has the right to take part in the administration of the factory’s and enterprise’s own training and educational arrangements, as well as the administration of the factory’s and enterprise’s own welfare arrangements.

Factory Councils and Workers’ Co-Determination in Austria: Part 2

June 28, 2016

Co-Determination Austra Cover

This is the second part of my translation of Co-Determination at the Workplace: The Constitutional Law on Work (Vienna: Federal Press Service 1983). As I said, this is very much not an official translation, and the information in it is more than thirty years out of date, so please don’t take it as a guide to present-day Austrian employment law. As I said, I put it up because it shows the system of factory councils and associated bodies, which give Austrian, and German workers some official representation and participation in the management of factories and businesses.

Extensive Co-Determination in Personal Matters

A range of measures can only be legally enacted by the factory owner with the express agreement of the factory council:

* The execution of factory disciplinary orders.
* The planning of staff questionnaires, in so far as they are to include not only general information about the person and about the technical assumptions for the proposed employment of the employees.
* The execution of control measures and technical systems for the control of employees, as far as these measures (systems) affect human dignity.
* In so far as regulations in the collective agreement do not exist, the execution and regulation of performance related pay.

The right of co-operation of the factory council in staff matters are especially important. The factory council is to be informed in advance of staff planning, the recruitment of employees and the placement of works accommodation, at its wish matters from the employees are to be consulted with it.

That is equally valid for an employee’s proposed promotion. Promotion is every raise in employment at the factory, which is connected to a higher ranking in the pay scheme or otherwise with a rise in salary. If the factory owner infringes one of these decisions, he can only be punished with a fine.

The settlement of efficiency wages in individual cases can, if the employee himself doesn’t agree to it, take place with the consent of the factory council. The transfer of an employee to a bad work place or the infliction of disciplinary measures also requires the agreement of the factory council. Agreements of the factory council to a settlement can also be superseded by one from the Settlement Office.

Veto on Dismissal

The factory council’s position in cases of employee’s dismissal is particularly strong. The entrepreneur must inform the factory council in advance of the proposed dismissal; the factory council can contest the dismissal within a determined time through the settlement office (an arrangement for the mediation of disputes over workers’ rights which exists outside the factory).

Appeals against dismissal by the factory council is allowed in two cases: if the dismissal has taken place because of the activities of the employee for the trade union or the factory council, and if the dismissal is socially unjustified. A dismissal is socially unjustified, which adversely affects the employee’s present interests. Dismissal is nevertheless also permitted in this case, if the entrepreneur brings proof, that the dismissal is based on conditions, which lie in the person of the employee and adversely affect the factory’s interests or factory requirements oppose the further employment of the employee. In practice that means, that a dismissal, which means social hardship for the person dismissed, is only then admissible, if the dismissed person has allowed any such offence to be his fault, or if it has been unavoidable because of a necessary reduction of the employee’s condition.

On the basis of the factory council’s possible veto against dismissal, it is necessary that the entrepreneur establishes contact with the factory council early before the proposed dismissal measures and discusses matters precisely. Pains can be taken with that, to find ways, in which the necessary measures can be carried out with as little social difficulties as possible. Frequently the help of the state administration of the labour market is is also called on.

Economic Proposals

In the frame of the factory council’s right to co-operate in economic matters the factory owner has to give information to the factory council about the economic position of the factory, the type and size of production, orders in hand, quantity and value of sales, investment plans, as well as about other measures to raise the factory’s efficiency. The factory council can lay before the entrepreneur proposals on all these areas. In middle and larger factories the entrepreneur has to convey annually to the factory council the balance, including the accounts of profit and loss. The factory council is also to be given supporting documents, and explanations as required, to understand them.

The entrepreneur is further bound to inform the factory council of planned changes to the factory, as early as possible and consult with it about them. Changes to the factory comprise especially the reduction or closure of the whole factory, the factory’s transfer, its combination with other factories, changes to the factory’s purpose, equipment, work and factory organisations, the introduction of new working methods, the introduction of measures for rationalising and automation, and of considerable significance and change for the factory’s legal forms or property relations. The factory council can deliver proposals for preventing, removing, or ameliorating the detrimental consequences of such measures for the employees. The factory council also has to take into consideration with that the factory’s economic necessities. In factories with at least 20 employees a factory agreement can be concluded over appropriate measures.

The factory council is further entitled to co-operate in the company’s organs in joint-stock companies. These rights, recognised as ‘co-determination’ as well as the right to invoke the state economic commission are handled in more detail later.

Legal Protection for Factory Councils

The law provides for the protection of the members of the factory council from arbitrary dismissal by an entrepreneur, that the dismissal of a member of the factory council can only take place with the agreement of the Settlement Office. The Settlement Office is only allowed to agree to the dismissal of a member of the factory council, if the factory council’s workplace does not exist any more because of alterations to the factory and he can not be employed any more in one of the other workplaces in the factory, if the member of the factory council is not able to perform his work any more, or if he persistently violates his duty. A dismissal is also possible because of quite gross offences by the member of the factory council. In all cases, in which a proposal for the dismissal or release of a member of the factory council is based on his personal conduct in the exercise of his mandate, the Settlement Office, has to consider, whether this behaviour, was based on the function of the member of the factory council – the representation of the employee’s interests.

In practice these decisions means, that a member of the factory council can only be dismissed or released, if he commits serious, inexcusable offences, or further employment in the factory is not possible due to factory reasons (above all from the serious reduction of numbers of staff). In the last instance, nevertheless, the rule in doubt, is that the members of the factory council are the last to be eliminated from a factory.

Apart from the factory council, for which they are nevertheless not entitled to vote, there are youth trust councils, which are also convoked and elected by young people, for the protection of the special rights of youthful employees. The youth trust councils are elected similarly to the factory councils through secret ballot and exercise in collaboration with members of the factory council analogous functions for young people. They also are covered by similar protective decisions regarding the dismissal and release as factory council members.

The Role of the Trade Unions in the Factory

In connection with the business of negotiating for the employees’ organisations and the trade unions at the level above the factory, and especially in connection with the employees’ organisation in the factories, the question arises of the legal regulation of the trade union organisations. In Austria the trade unions are not subject to their own legislation, but fall under the common law on associations, which proceed from the principle of freedom of association, protected by the constitution. Legal regulations thus merely relate to which rights belong to the trade unions in their capacity as recognised bodies capable of collective agreements.

Except for the already mentioned right to concluded collective agreements, it deals with the right of access of trade union officials to the factory. The factory councils can draw on the organs of the trade unions for consultation in all matters at any time. In these cases, and so far as this otherwise necessary for the exercise of the powers granted to them through the Constitutional Law on Work, the factory owners have to grant the organs of the trade unions access to the factory. He is to be informed prior to the forthcoming visit. Further, the organs of the trade union are to be invited to the factory assembly and also in these cases access is to be granted. The factory council is free to consult a representative of the trade union for the regular consultation with the factory owners mentioned above. It has to inform the factory owner in time for this work. In factories, in which there is no factory council, the trade union can take the initiative under agreed conditions through which a factory assembly is convened to prepare a factory council election.

The constitutional law on work also establishes that staff organs in the factory should proceed with the realisation of its tasks in agreement with the trade unions.

According to the statutes of the Austrian Federation of Trade Unions the elected members of the factory council (as far as they belong to the trade union, which is almost always the case) automatically constitute the trade union’s board in the factory group. In trade union practice, this means that the factory council elections, and also equally, as a rule, the original elections for the trade union functionaries, are elected in an indirect electoral system from the local level to the district and land level up to the federal level.
The Factory Agreements

In principle the entrepreneur and the factory council are free to conclude agreements, which also have effects on the particular work negotiations according to prevailing jurisdiction. Such agreements are met above all in the area of wage rights. In its frame, for example, are agreed higher wages than the set minimum wage established in the collective agreement. Beyond this are special regulations concluded for wage additions, frequently at the factory level. There are nevertheless factory agreements, which are naturally legally dependent on the agreement of the factory council, such as the initiation of a disciplinary order, the introduction of staff questionnaires, as far as it does not only deal with general information on their person, furthermore the execution of control measures, if these affect human dignity (for example, control system to tap telephone conversations) and finally regulation of remuneration for performance, which means payment systems, which rest on performance (for example, piece-work). The last regulation is only valid, as far as the collective agreement does not assign a regulation.

Free factory agreements are not especially regulated in the Constitutional Law on Work, which are concluded on the basis of the law itself or on the basis of the authority of collective agreement. The law provides a whole range of matters, about which such factory agreements can be concluded between the entrepreneur and the factory council. Even the settlement of a factory agreement can be compelled in several matters. If a factory agreement in these cases is not reached, a mediation agency makes a decision on the offer of one of the conflicting parties, which is proportionally put together from the representatives of the employer and employees.

The settlement of a factory agreement is compelled about the following questions in the form outlined:

* General orders, regulating the conduct of the employees in the factory.
* General establishment of the beginning and end of the working day, the duration and position of breaks and the division of work time in particular days of the week.
* The type and means of deductions and especially the time and place for the payment of salaries.
* Measures for the prevention, removal or amelioration of the consequences of an alteration to the factory, as far as this brings with its present disadvantages for everyone or an increased part of the workforce.
* The type and scope of the participation of the factory council in the administration of the factory and the enterprises own training, educational and welfare arrangements.
* Measures for the use of factory arrangements and factory resources appropriate to the purpose.

Apart from these matters, about which the factory council can compel the settlement of a factory agreement, there are a multitude of subjects, about which factory agreements are likewise possible with a legally valid action between the factory council and the management of the enterprise. To these matters belong, among others:

* Directions for the award of works accommodation
* Measures for forms of work according to human justice
* Methods of making proposals in the factory
* Profit-sharing systems
* Factory pensions and payment of retirement money
* Methods for making a complaint in the factory.

Altogether 24 areas of rights are specified in the law, about which factory agreements can be concluded. This specification is an estimate. Agreements between enterprise management and factory councils about other matters are merely free factory agreements, whose legal validity would have to be bested in individual cases.

Tertiary Representation of Employees in the Supervisory Councils

Austrian enterprise law also provides for a supervisory organ for joint-stock companies apart from the organs of complaint for the daily business management. As a rule, this supervisory organ is called the Supervisory Council. Especially extensive powers fall to the share of the supervisory council in joint-stock companies, and partly in co-operatives. In joint stock companies the supervisory council elects the members of the board, which applies itself to the business’ management.

The Constitutional Law on Work now gives the factory council (where there are several factories, the central factory council) the right to appoint a third of the members of the supervisory council from the circle of the members of the factory council. The members of the supervisory council, who have been sent by the employees must thus be serving members of the enterprise.

The employee’s representatives in the supervisory council fundamentally have the same rights and duties, as those members of the supervisory council elected by the businesses meetings of the shareholders. However, apart from a majority of votes in the supervisory council a majority of the votes of those members of the supervisory council, who were elected by the shareholders’ meetings, is required for the appointment of the board of managing directors and the election of the chairman as well as its first representation.

Two of the workers’ representatives in the supervisory council in particular also have the possibility to demand at any time a report from the board about company matters, including their relations tot eh group of enterprises.

In combines, in which the parent company employs less than a third of the employees of the whole combine, there is the possibility, for the factory councils of the daughter companies to cooperate in the election of employees’ representatives in the parent company’s supervisory board.

The decisions about the tertiary representation in the supervisory council for joint-stock companies are valid independently of the numbers of their employees. A tertiary representation in the supervisory council, is also provided with that to companies with a limited liability, also independently of the number of its employees, although such companies must only then appoint a supervisory council, if they employ more than three hundred employees. Tertiary representation in supervisory councils first comes into affect in co-operatives, if they employ at least 40 employees.

These regulations, which have been fought about particularly vehemently, for Austria mean a present broadening of the right of co-determination in factory organs. Up to 1974 it was only provided, that two representatives of the factory council should belong to the supervisory council in joint-stock companies. In other forms of companies generally not representation of the workforce in the supervisory council was prescribed. A representation of the employees in the managing organs of the companies (like, for example, in the board of directors of joint-stock companies) is not striver for by the Austrian trade unions.

The State Economics Commission

In factories with more than two hundred employees the factory council can raise an objection with the entrepreneur against alterations to the factory or other economic measures, as far as they bring with them disadvantages for the employees. A factory closure can be delayed for four weeks through this objection. If no agreement is reached in direct negotiations between factory council and the enterprise management about the planned measure, a mediation commission can be called in, formed proportionally by the sides of the employers and employees, whose task it is, to mediate and work towards an agreement of the conflicting parties. The mediation commission can nevertheless only then pronounce an award, when both the conflicting parties submit themselves before its award.

In factories with more than four hundred employees, if the efforts of the mediation commission are in vain, an appeal can the be raised above the Austrian Trade Union Federation with the State Economics Commission. Apart from representatives from the side of the employers and employees, representatives from the federal government also belong to the State Economics Commission. It is also their task to mediate between the conflicting parties and to deliver suggestions for the settlement of the points at issue. If an agreement also is not reached with the help of the State Economic Commission, the factory owner has to convey all the necessary supporting documents to this commission for it to handle the objection. The State Economic Commission has to establish in the form of an expert opinion, whether the objection is justified.

Agencies of Labour Constitution

The agreement offices mentioned, which, for example, have to decide in questions of dismissal, to which representatives nominated by the state also belong, apart from the representatives from the sides of the employers and employees, are permanent state agencies. These are to make decisions according to hearings of the employers’ and employees’ organisation.

The mediation agency, which, for example, is responsible for the enforcement of factory agreements, is newly assembled for every particular case of conflict. Representatives of the sides of the employers and employees belong to it, in which, in each case, a representative on each side of the factory in question should be represented in the mediation agency. It is presided over by a professional judge.

Rights and Duties

The entire Constitutional Law on Work is based on the principle mentioned at the beginning, which is also anchored in the text of the law: the goal of the decision about the constitution of the factory and of its application to it is to bring about an equalization of interests to the welfare of the employee and the factory.

For that the rights of the factory council have been so far developed, that in practice is becomes necessary for the entrepreneur to strive for a successful co-operation with his factory council. As the law gives the factory council the possibilities of taking an influence in so many particular questions, that a factory, in which there is a lasting conflict between management and the factory council, would be severely hampered in his work.

There far-reaching possibilities for the factory council and the necessity, which results from it, of the management and factory council co-operating, means, however, not just rights, but also duties for the factory council. The factory council has with its possibility of making co-decisions, then naturally as has a co-responsibility. It bears this responsibility not only towards the enterprise, but above all towards the employees, who have elected it, and which it has to represent.

The efforts for an equalization of interests are not just a lip service for the entrepreneurs and trade unions of Austria. That is proven amongst other things by the parliamentary decisions agreed about the Constitutional Law on Work, which has been realised after protracted negotiations about its extremely complicated matters at the end of the 1973. Once again the system of partnership has provide, that is has contributed so much to economic and social progress in Austria.

Fabian Pamphlet for Worker’s Management in Industry: Part Two

April 27, 2016

Guild Socialist Letter

Management hostility to trade unions and shop stewards’ committees.

The writer of the pamphlet also notes the capitalist resentment of the shop’s stewards’ committees and trade unionists, but have been forced to grudgingly recognise the powerful assistance they are giving the war effort.

Take for example your position as a shop steward. Your employers very much resent the kind of organisation you have been able to introduce into their works since the outbreak of war. They dislike it, because their idea of the right way of running industry is that they give the orders and you obey them without asking why. They dislike even the fact of your belonging to a Trade Union; but that they have come to accept, provided that your Union confines itself to ordinary collective bargaining outside the factory and makes no attempt to interfere inside the factory as long as they observe standard rates and conditions. They dislike your shop stewards’ committee very much more, because its very reason for existing is to interfere inside the factory, and to take charge of grievances of your which the Trade Union, as long as it stays outside the factory, can hardly touch. They dislike shop stewards, because shop stewards stand essentially for the claim of the workers to an effective voice in the CONTROL OF INDUSTRY – a control exerted when the shoe pinches, a control which involves the worker’s demand to be treated as a partner in industry, and not merely as a hired hand. (pp. 6-7).

Shop Stewards to Show They are Sensible and Competent

The only way of overcoming these fears, which are formidable obstacles in the way of workers’ control, is for the shop stewards to give plain proof of their competence and sense of responsibility. To the extent to which they can show themselves able to help in raising production, and therewith in securing redress for grievances which are holding it up, they will be in a position to command the respect of both employers and Trade Union officials: whereas, if they rest content with mere slogans and political agitation, without making themselves masters of practical workshop affairs, they will fail to command general backing among the workers, and will consequently forfeit their title to the employers’ full recognition and respect. If Trade Unionists wish to take a vital share in the running of industry, they will have to choose shop stewards who are competent, not only as agitators, but also as practical contributors to workshop efficiency. These stewards will have to be men who recognise the difficulties and problems of the industrial managers, and are prepared to cooperate in solving them. The reluctance of most managements to give a cordial welcome to delegations chosen by the rank and file as co-partners in the work of organising production will need to be met by a determination on the workers’ part to choose only those best fitted for such offices, and by a readiness on the part of the Trade Unions to give the delegates so chosen a position of unequivocal recognition as agents of Trade Unionism in the particular factory.

Assertions are often heard at present that the shop stewards, far from having a mandate either from the Trade Unions or from the main body of the workers, are in truth self-appointed stirrers-up of trouble, however desirous they may seem to be of seconding the demand for ‘bigger and better production’. This reproach needs to be met by deeds rather than words, for in proportion as the shop stewards prove their mettle as effective participants in workshop control the Trade Unions’ case for a share in the settlement of industrial policy will be reinforced and it will be much more difficult for the managers and directors of industry to reject the help of the shop stewards in matters of immediate workshop concern. Workers’ control cannot be won merely by talking about it, but only by plain demonstrations of practical competence; and this demands the service of the ablest men in the Trade Union ranks- the ablest in workshop technique, as well as in the art of commanding the respect and countenances of their fellow-workers.

To an ever-increasing extent, shop stewards chosen in this spirit should be able to take over from the factory managements many of the tasks of workshop discipline and ordering of the process of production, and to contribute therewith many suggestions for speeding up the pace of production without imposing unbearable strains upon the workers. The worker knows best where the shoe pinches, and is often times well equipped for proposing salutary changes in the arrangement of work. The printer’s chapel, a time-honoured institution among compositors, is an excellent example of what can be done by a closely organised body6 of craftsmen to take the discipline of workshops into their own hands, and there is no reason why the engineers or shipbuilders should be behindhand in their exercise of collective power. (A Letter To A Shop Steward, by ‘Guild Socialist’ (Fabian Society, No Date, pp.9-11).

A Workers’ Council in Every Factory

There ought to be, in every war factory of any considerable size, a fully recognised works committee consisting of workshop delegates chosen directly by the workers. These works committees ought to be linked up with the regular Trade Union machinery by adequate representation on Trade Union District Committees, which should hold regular policy-making conferences with the shop stewards from the various works. The works meeting convened by the shop stewards should largely replace the Trade Union branch as the place where matters of Union policy are regularly discussed, and resolutions to be sent forward for consideration by District Committees and, through them, by the national Trade Union authorities. The centre of Trade Union gravity ought to be shifted, as far and as fast as possible, from the branch, which has usually no direct contact with any particular factory, to the factory itself; for if workers’ control is to be won in any real sense it must be won in the factories, where the workers have to endure the hard discipline of capitalist industry. It is in the factory that workers of different crafts and callings come together to serve the common purpose of production; and the factory is clearly the unit on which must be based a workers’ movement capable of a real assumption of power.

Co-determination and Workers in the Boardroom in Germany

April 18, 2014

Factory Elections

Elections for the Factory Council in Germany

I’ve posted up a few pieces about industrial democracy and worker’s control in Yugoslavia and in the former Soviet Union under Lenin. Capitalist West Germany also has a similar system of co-determination in which members of the workforce are represented in the boardroom in a system of factory councils, thus creating the ‘constitutional factory’.

The system is described in the book, Tatsachen Uber Deutschland: Die Bundesrepublik Deutschland (Facts about Germany – The Federal Republic of Germany’) (Munich: Bertelsmann 1985). This is my translation of some of the relevant passages.


Human self-determination is indisputably valid as the foundation of our social order. It results from the constitutional guarantee of the right to the free development of the personality. It would contradict this image of self-determined people, to regard the worker merely as a component of a system of production, who is solely determined by the interests of capital. Starting from this basic thought, he far-reaching unity exists today that that the aims of the enterprise must be stamped with the interests of the working people, and that the workers’ democratic say in the matter must be heard, when the entrepreneur’s decisions, touch on their vital interests. It has been attempted to do justice to these demands and concede to the workers, legally secured, a considerable measure of co-determination in the factory.

The factory council law of 1920, that first created this possibility of setting up elected representatives of workers and employee in all factories, stood at the beginning of this development. The young Federal Germany made a great step in the direction of employee co-determination in 1951, when it set in force the so-called ‘Coal, Iron and Steel Co-Determination Law’, which granted employees in the large enterprises of the coal, iron and steel industries considerable rights to co-determination, as well as the co-staffing of the organs of management. The Factory Constitutional Law of 1952 provided the employees of nearly all industries co-determination rights in nearly all factories in social and personal matters, and a hearing with in economic decisions. The second factory constitutional law of 1972 brought substantial improvements, above all for the employees’ representatives. This was considerably reformed in the comprehensive co-determination law of 1976. With all these laws the idea of the ‘constitutional factory’, which still appeared as a utopian dream a few decades ago, becomes a reality in the Federal Republic of Germany. The Basic Law’s principle of the social state is filled with life in an important area.

The Factory Council

the most important arrangement for the representation of the employees’ interests in the factory is the factory council. It is elected by all employees over 18 years old. Foreign employees are also entitled to vote and be elected. Everyone entitled to vote can equally stand as a candidate, whether or not they belong to a union. In practice, however, and above all in the larger factories, the unions have a considerable influence in the composition of the candidate lists. The number of members of the factory council is determined by the size of the enterprise. Its term of office lasts three years. As an employer could be tempted to dismiss an ‘uncomfortable’ member of the factory council, the members of the factory councils enjoy a stronger level of protection from dismissal during their time in office and for a year afterwards. The members of the factory council normally practice their office outside of their professional work. Only in the larger factories must a member or several members of a factory council be exempted from their professional activities.

The officials, employees and workers of the Civil Service equally have a representation of their interests, the personal council, whose tasks and powers resemble those of the factory council.

The Rights of the Factory Council

The factory council has multiple rights, above all in social and personal matters. In some things it must be heard, in others it can co-operate, and in some particular matters it finally has a real right of co-determination. ‘Real’ co-determination means that the employer cannot make decisions without the agreement of the factory council. If they cannot come to terms, an agreement office makes the decision, put together from equal numbers of the representatives of employers and the factory council as well as an impartial president.

Without the agreement of the factory council, the firm’s management are not allowed, for example, to arrange any overtime, short-time work, control clocks or introduce other control equipment, issue contract or premium rules, and give notice to vacate company accommodation. The factory council can even compel vacated or newly created positions to be first advertised within the factory.

The factory council cannot stop the dismissal of a fellow worker. They must be heard before every dismissal, and have a right to reply within certain limits. If they reply and themselves make a complaint, they are to be employed until the tribunal’s decision. If the employer plans the dismissal of a large number of workers, they must inform the factory council in time. This then has the right to demand the drawing up a ‘social plan’, that ameliorates the negative aspects for those affected. For example, a settlement, or the costs of removal, would be paid to them.

Also, where the factory council only has a right to a hearing, it can very frequently achieve improvements for the workers through skilful negotiation. In practice the factory council and the employer only rarely stand opposed as irreconcilable opponents, but work together, as the law expressly demands – and strive for sensible compromise.

The individual employee, apart from their electoral rights to the factory council, has rights, which could be called the ‘Innerfactory Basic Rights’. They have the right above all to be informed of the type of job and the arrangements for the termination of work; to demand information on the remuneration of work and the calculation of wages; to inspect their personal acts; and to complain if they feel discriminated against or unjustly treated. In most cases the employee is allowed to draw on a member of the factory council.

Co-determination in Large Factories

The factory council has no influence on the economic management of the enterprise. It is above them only in having a certain compass to inform, and only that in factories with over 100 employees.

There is, however, economic co-determination in various forms in almost all big factories. In the German Federal Republic more than half of large enterprises are joint-stock companies. German joint-stock companies have two management premiums: the supervisory board as supervisory organ and the board of directors, which conducts current business. From 1951 onwards a third of the members of the supervisory board in every joint-stock company must be elected representatives of workers and employees. This rule is valid for small and medium joint-stock companies (up to 2,000 employees), and also today in certain other legal forms for enterprises with 500-2000 employees.

There are, however, two special co-determination regulations for big businesses. In the large enterprises of mining, iron and steel production, with over 1,000 employees the so-called Iron, Steel and Coal Co-determination Law has been applied since 1951. According to this law, one half of the supervisory board is occupied by representatives of the investors and the other by those of the employees respectively. Both sides must then agree on a further, neutral member. A work director must be a member of the board of directors as a fully-qualified member, who cannot be elected against the voices of the employees representatives in the supervisory board.

For the big businesses of the remaining industries, which have more than 2,000 employees, the general co-determination law of 1976 is valid. In this law, which encompasses around 500 enterprises in all branches of the economy with the exception of the coal, iron and steel industries, and the press, the regulations are more complicated. According to this, there is complete parity per capita between the sides of the shareholders and the employees. But in cases of a tied vote, the voice of the chairman decides, who cannot be elected against the wishes of the investors. Furthermore, at least one representative of the ‘managing employees’, meaning an employee with management functions, must belong to the supervisory board on the side of the workers. The unions would have preferred it, if the co-determination law for the coal, iron and steel industries, which has stood the test of time over three decades, would have been extended to the remaining large factories. But the same have succeeded with legislation, which sees it as a too sweeping limitation of the basic constitutional right to property. The employers’ federations are of the opinion, that in this form the law places too strongly places narrow limits on property rights, and raised a constitutional complaint. The Federal Constitutional Court referred the complaint back and declared that the Co-determination Law is consistent with the Basic Law. The co-determination of workers has proved to be a stabilising element for the economic and social order of Germany. This order depends not least on the readiness of all parties to working together more fairly. The possibility of active co-creation increases the workers’ and employees’ motivation to work and thereby strengthens the efficiency of German industry.


Composition of the Supervisory Board according to the Factory Constitutional Law

10:4 Investors to workers.

In the coal, iron and steel industry the proportion is 7:7 investors to workers with a neutral member.

According to the Co-determination Law of 1976

Investors to workers – 7:7 + 1 president with a deciding vote and 1 managing employee.

Forms of Co-determination and its Area of Validity

Co-determination after the law of 1976 – 4.5 million employees, large, joint-stock companies.

Coal, Iron and Steel Co-determination law – 0.6 million employees.

3rd Partnerships – 0.6 million, small joint-stock companies.

Interfactory Co-determination (Factory Constitution Law) 9.3 million, the remaining economy.

Interfactory Co-determination (Personal Representation Law) – 3.6 million, the Civil Service.

No co-determination – 3.4 million – small factories with less than 5 employees.

Rights of the Factory Council


Personal planning, dismissals, termination of employment, work arrangements, factory organisation, factory alterations, work protection.


Working time, principles of pay, holidays, social facilities, professional education, factory regulations, recruitment and promotion.


This isn’t workers’ control, but it is a type of industrial democracy, giving the workers a voice in some of the decisions made by management concerning their pay and conditions. I don’t know if this legislation survived the administrations of Franz-Josef Strauss, Helmut Kohl or Gerhard Schroder, Germany’s answer to Tony Blair. Some of the functions of the factory council could be performed through a good trade union, if such things were still permitted in post-Thatcherite Britain. Nevertheless, it seems that German workers, at least the period from 1975 to the book’s publication a decade later, enjoyed a degree of legal protection and a presence in the boardroom that their British counterparts lacked. This is one lesson from our friends on the Continent, which we should learn, no matter what the narrow chauvinists in UKIP may shout to the contrary.

The Nazis and Conservatives as Faux-Workers’ Parties

February 28, 2014

A few days ago I posted a piece pointing out the similarity between workfare and the commercial exploitation of poor souls the Nazis imprisoned in the concentration camps as ‘anti-social elements’. These included not only Jews, but also the voluntarily unemployed – called the arbeitscheu – and political dissidents, which were mainly Communists, Socialists and trade unionists. Now it seems the Tories are attempting copy the Nazis’ propaganda tactics still further: Grant Shapps, the Tory chairman, wants to rebrand them as the ‘Worker’s Party’.

There is an excellent post at Another Angry Voice attacking this rebranding. See The bizarre Tory effort to rebrand themselves as “The Workers Party” at

The Tories attempt to rebrand themselves as the ‘Worker’s Party’ is exactly what Hitler did with the Nazi party. And that ain’t an exaggeration.

There’s an attempt by the Conservatives to claim that Fascism is a form of Socialism, like Communism. Yesterday I reblogged a piece about the way this piece of Tory propaganda had been repeated yet again by Daniel Hannan in the Telegraph. Shapps’ proposed rebranding is an attempt to reverse the current images of the Tory and Labour parties by claiming that Tories somehow represent the workers, while Labour represent … well, it’s unclear who the Tories think they represent, but the clue was historically in Labour’s name: the working class. I expect the Tories will start attacking Labour by claiming they are the party of unelected bureaucrats, the feckless, unmarried mothers and skivers, as well as a condescending ‘liberal elite’ that secretly hates and despises the working class. This is, after all, the line they’ve been running for the past couple of years.

It’s also in line with the attempts of some prominent members of the Conservative party to appeal to trade unionists. I did hear of one, who had attended every one of his local trade union conferences, who was explicitly arguing that the Tories should attempt to win them over. According to the Fabian pamphlet, Labour and the Unions: Natural Allies about fifty per cent of trade unionists do in fact vote Conservative, basically because trade unionists tend to be better paid and have their own homes compared with non-unionised workers. It’s also not the first time the Tories have attempted to present themselves as a labour-oriented movement. In the 1970s there was a Conservative trade union movement. Any trade unionist, who seriously believes that the Tories have any sympathy with the working class would, however, be seriously mistaken. The Tories have consistently hated and opposed the unions, who have been one element in the formation of the Labour party. The origins of the Labour party go back to the late 19th century when some trade unionists entered parliament as ‘Lib-Labs’ as party of the Liberal party. These broke with the Liberals and, together with socialist societies like the Fabians, the Social Democratic Federation and others, formed the Labour party as they felt that the working class needed a party to represent them.

The Conservatives, however, have consistently attacked the unions, especially the ties they have to the Labour party. Thatcher’s ideology included as one of its fundamental elements an attack on trade union power. Witness the way she and the other Conservatives mobilised the police to destroy the miners. The Conservative trade unions were dissolved sometime in the 1980s or 1990s, if I remember correctly, leaving the movement’s leader feeling bitterly betrayed. He then denounced the Tories as the party of the bosses. Well, he had to wake up sometime.

Their cynical tactics in this are very much those of the Nazis. The Nazis started out as a fringe, socialist group calling itself the National Socialist German Workers’ Party. However, they don’t seem to have taken the ‘socialist’ elements of their ideology at all seriously. Of the 25 points of the original party programme, the only one that Hitler attempted to implement once they were in power – and that only half-heartedly – was the breaking up of the large department stores. Hitler was determined to try to win over the workers, and disappointed that the Nazis actually succeeded in gaining very few members from the working class. Much of the Nazis’ image as a ‘workers’ party’ was deliberately copied from the left-wing parties in order to steal their constituency. Joachim C. Fest, in his biography of Hitler, gives a statement by der Fuehrer, where he says that he consciously copied the red in the Nazi flag to stress the ‘socialist’ part of the party, in order to win the workers over from ‘Marxist’ socialism. He then analyses Hitler’s peculiar idea of the term ‘socialist’ to conclude that to Hitler, words like ‘socialism’ were simply counters being used to gain votes.

And once in power, the Nazis smashed genuine working class organisations like the trade unions, the SPD – the German Socialist party, the Communist party, as well as the various Anarchist and Syndicalist groups. These parties and groups were dissolved, and their members and leaders sent to concentration camps. They also destroyed the system of factory councils, which had been set up in Germany during the ‘Raeterevolution’ – the Soviet revolution – of 1919. These were replaced by the DAP – the Deutschearbeitsfront or German Labour Front. This attempted some alleviation of conditions in factories, and organised workers’ holidays and recreational activities following the Italian Fascist Doppolavoro. However, it was designed as a conduit for promoting the idea of the Fuehrerprinzip – the ‘Leader principle’ in the factories. The factory managers were the leaders, and the workers their followers with few rights. In theory, however, they had the right to appeal to the local Nazi leadership to replace a bad manager during a dispute. I can’t imagine the Tories tolerating something like that. It would be far too left-wing for them.

As for representing the workers, in 1933 Hitler gave a speech to a meeting of German industrialists stating that ‘Private property cannot survive an age of democracy’, declaring that it could only be preserved by his personal dictatorship. In another speech, Hitler declared that ‘the class conscious worker is as welcome in our party as the race conscious Jew’. When he was asked in the 1920s what action he would take against the German industrialists, he replied that he would do nothing. They had shown themselves to be naturally superior to other people, and so deserving of their position, through their efforts to rise to the top of society. it’s a social Darwinist attitude entirely in accord with the views of this administration on the right to rule of the middle and upper classes.

So let’s look at the similarities between Grant Shapps’ vision of the Tories as the Workers’ Party, and the Nazis.

Both are parties that deliberately appeal and represent the interests of the industrialists and upper classes.

Both are hostile to genuinely left-wing working class organisations, such as Socialists, trade unions, Communists, Anarchists, and Syndicalists.

Hitler smashed the German trade unions. The Tories wound up the Conservative trade union movement.

Both the Nazis and the Tories have imposed compulsory, forced labour on the unemployed, who were denounced by the Nazis as ‘arbeitscheu’ and the Tories as ‘skivers’, for the profit of private industry.

I therefore feel that if Grant Shapps genuinely feels that the Tories are the ‘worker’s party’, he should go all the way and make it explicit. I therefore recommend that the Conservatives rename themselves ‘The National Conservative British Workers’ Party’. This is, after all, a clear expression of their attitude towards the workers.