Posts Tagged ‘Mitbestimmung’

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.

Trade Unions and Works Councils in Britain and the Continent

May 8, 2016

I’ve posted up a number of pieces describing and arguing for a system of works councils in Britain similar to those in Germany, Austria and Sweden, which give workers in companies representation on the boardroom and at other levels, including the factory floor. I found a description of them and how they work in Colin Crouch’s Trade Unions: The Logic of Collective Action, published by Fontana in 1982. Crouch’s book is a sociological study of trade unions, which amongst other issues examines the question of when and how trade unionists decide to go on strike and the entire decision-making process around industrial disputes, trade union membership – why some people join unions while others don’t, government policies towards the unions and so on. Of workers’ councils, he writes

But some industrial relations take a different form. Instead of confronting each other ‘across the table’ with demands and threats of sanctions, seeing their interests in conflict, managers and union representatives may tackle what they see as common problems, with a mutual interest at stake. The belief that such an arrangement can provide either a supplement or an alternative to bargaining has often led various social actors to establish joint committees, works councils and other devices for consultation and worker participation which will embody the idea. After the First world War a committee of the House of Commons chaired by the Speaker, Mr Whitley, proposed the establishment of consultative committees on these lines throughout Britain in order to reduce the prevailing intense conflict between employers and workers. The plan collapsed as, during the depression, most employers decided that they need not bother with such devices since high unemployment was doing enough to make their workers forget conflict. However, the idea persisted within the public services, where ‘Whitley councils’ still exist today, though they have become normal collective-bargaining channels. A similar initiative followed the Second World War; committees for ‘joint consultation’ were established in many industries and it was generally agreed that this provided a second limb of British industrial relations, equal in importance to, but quite distinct from collective bargaining. This gradually faded in importance as shop stewards in an increasing range of firms and industries extended collective bargaining to cover many of the issues supposed to be dealt with by joint consultation, though there has been some evidence of a revival during the current recession, signification as shop stewards’ movements have been weakened (Department of Employment Gazette, 1981).

Elaborate consultation schemes involving representatives of management of employees, usually called works councils, exist in some British firms, most noticeably in ICI Ltd, but in most Western European countries these exist as a legal requirement in factories over a certain size, and employers are required to consult the workforce within this forum on certain prescribed issues. More ambitious schemes for involving workers’ representatives in non-conflictual participation are those involving worker-representation on company boards, such as was proposed for Britain, though without practical effect, in the report of the Bullock Committee (Bullock, 1977). In West Germany such a scheme has existed since the 1950s, being strengthened in 1976: worker-representatives comprise up to 50 per cent of the supervisory boards of all companies over a certain size. In that country and in Austria there are also work councils (Betreibsrate) which differ from those found elsewhere in Europe in that they comprise worker-representatives alone, not workers and managers; these councils have some signification powers of veto over aspects of management policy, and rights to consultation the receipt of information over many others.

In each case these participative or consultative forums, to which I shall refer generally as concertation, exist alongside normal collective bargaining. While the latter deals with wages and conditions and is assumed to involve conflict, the former tackle various issues of company policy, especially those affecting employment and workers’ welfare, and are supposed to be free of conflict.

It is an interesting issue of debate whether concertation constitutes a further step along the road towards even more institutionalization of conflict. In terms of Dahrendorf’s theory, I think one has to answer no; rather than institutionalizing conflict, these devices try to exclude it, at least from those areas which are seen ripe for consultation or participation rather than bargaining. Worker-representatives with a works council are not empowered to back their demands by strike threats; German Betriebsrate are required by law to co-operate with management and are not permitted to call strikes. In Dahrendorf’s study of German (1965), which is largely a criticism of that country for its continued fear of conflict, he used the preference for Mitbestimmung (that is, co-determination, the principle embodied in both Betriebsrate and worker membership of supervisory boards) as evidence of devices for conflict avoidance rather than institutionalization.
(Pp. 109-111).

He provides a few further details of the responsibilities of these councils on page 150, where he writes

A more formalized sharing in control is found in German industry. There, works councils consisting entirely of worker-representatives have a legal veto over several areas of plant- and company-level decision-making (such as overtime working, dismissals, certain working conditions) and a right to share control with management over other issues (such as redundancies and future employment policy). Further, in larger German companies workers have up to one half representation on the supervisory board of the company, with the same rights as other directors to information and decision-making. On a different model again, it is possible for workers to own and control firms themselves, without either a capitalist entrepreneur or the state intervening. This form of ownership is called producers’ co-operatives, and is found in many different countries, though usually only as a very small component of the total pattern of employment. (P. 150).

So instead of opting for confrontation, the Germans chose to include workers in factory management, though hedged about with certain legal restrictions against calling strike action. My guess is that such councils have probably played a part in the ‘social peace’ that has contributed to the German wirtschaftswunder. It also contrasts very strongly with the Thatcherite desire to remove as many rights as possible from workers, and grind them down as far as possible in order to have a compliant, and fearful workforce.

And I wonder how far the existence of such councils and similar power-sharing organisations and arrangements across Europe have stoked the fears about Europe underlying the Brexit campaign. Despite Farage’s rhetoric about immigration, one of the major unspoken cause of Tory hostility to the EU is the Social Charter. This grants European workers some basic rights. One Tory politico, who appeared on Wogan back in the 1980s openly stated that he liked the EU when it was the ‘Common Market’. This was a good thing. But the drafting of the Social Charter was a Bad Thing that should be got rid of. UKIP and the Tories hope that by leaving Europe, they can force an already prostrate working class to accept further degradation and impoverishment that would be unacceptable in the European Union, in order to make us a sweatshop economy like those in the Developing World.