JILPT Research Report No.157
Collective Agreement Systems in Modern Industrialized Nations:
Industry-Based Agreements in Germany and France

March 29, 2013

Summary

Research Objective

To clarify the extent to which industry-based collective agreements are still important in Germany and France, and the degree to which decentralization to the company or works level has advanced.

Research Method

Basic survey using reference materials obtainable in Japan, and interview surveys and gathering of reference material in the countries concerned (Germany and France).

Major Findings

(1) Industry-based agreements in Germany

Under German law, collective agreements apply directly to union members only (Collective Agreement Act, Article 3 para. 1). In practice, however, such agreements are often treated as applying indirectly to non-members as well. This is achieved by including clauses (attribution clauses) in individual labor contracts between non-union members and employers, to the effect that collective agreements applied to union members also apply to non-members. According to German statistics, these direct and indirect applications of collective agreements mean that around 70% of workers in the former West Germany region and around 60% of those in former East Germany are, still today, working under labor conditions governed by industry-based collective agreements. Judging from this, we may judge that industry-based collective agreements in Germany still include the majority of workers within their application and continue to occupy an important position when establishing labor-related norms.

Of course, the rate at which agreements are applied has been in a consistently falling trend in recent years. This results from a variety of factors; for example, a declining unionization rate among industrial labor unions and employers’ organizations, an increase in “members not bound by agreements” within the latter, an increase in company-based collective agreements, generous use of open terms, and an increase in collective agreements covered by the government’s declaration of general binding force. Study of these factors reveals that the force of working condition regulation across companies, which had previously been maintained by industry-based collective agreements in Germany, has steadily weakened compared to previous levels, and that the “crisis” or “disturbance” of industry-based collective agreements in Germany that has long been pointed out, even in Japan, could be said to be still in progress today.

In particular, two trends can be highlighted in connection with the “decentralization” of authority to regulate working conditions from industry level to company or establishment level. The first is the regulation of working conditions by concluding company-based collective agreements; the second is regulation by concluding works agreements based on open terms provided in industry-based collective agreements. The present Research focuses particularly on the latter, examining collective agreements in the metals industry and a service industry (retail trade).

Specifically, this Research clarifies the degree to which industry-based collective agreements actually specify open terms and entrust authority for working condition regulation to labor relations within a business site (labor relations between works committees and individual employers). According to this, there are numerous open terms pertaining to important interests of workers (mainly in matters related to working hours) in the metals industry. Among others, these include the allocation or extension of weekly scheduled working hours, Saturday work, introduction of the working hours account system, overtime working hours with weekly and monthly limits of 10 and 20 hours, reduced operations, late night work, and work on Sundays and public holidays. With respect to wages, similarly, there are open terms to the effect that pay grades and rating procedures differing from those provided in agreements should be stipulated in works agreements, and open terms to the effect that, if a pay rise due to a collective agreement causes a management crisis in the company, the employer and works committee may propose to the agreement signatories that special treatment be given to the business site in question. These significantly open the way to decentralization for the business site partners.

By contrast, collective agreements in the retail trade only include open terms related to the important interests of workers. Specifically, they dictate that systems of variable working hours, permitting variation to weekly scheduled working hours as long as average weekly working hours within a 52 week period are 37.5 hours, may be undertaken based on works agreements, as may an extension of working hours allocated to part-time workers from 5 to 6 days in principle. Thus, compared to metal industries, the number of open terms is extremely small. As a result, there could be said to be little room in the retail trade for decentralization of the authority to regulate working conditions by concluding works agreements. On the other hand, the possibility still remains that decentralization will arise by concluding company-based agreements.

(2) Industry-based agreements in France

1. In France, labor unions are positioned as representatives of profession (all workers) within a given industry, and have negotiated working conditions in units of profession (industries). Partly influenced by this historical background, labor relations inside companies are still not sufficiently mature (particularly in small and medium enterprises, and in industries where there are many small and medium enterprises), in spite of government policies encouraging labor negotiations within companies in recent years. Thus, industry- or profession-based collective agreements still have a large influence on decisions of working conditions, on the premise of a fixed sharing of burdens with company-based agreements. As one proof of that, the content of provisions in industry-based collective agreements is very detailed; for workers, the content of provisions in industry- or profession-based collective agreements applied to them is very important. These agreements serve particularly significant functions in preventing competition to degrade (make worse) working conditions in the marketplace by setting minimum industry- or profession-based wages, and building workers' careers by establishing industry-based vocational qualification systems and implementing vocational training.

2. However, industry-based collective agreements in France merely serve to set "minimum standards" for different industries; in many cases of large corporations (or medium-sized companies) and high-ranking workers (e.g. management personnel) within a given industry, working conditions are topped up or decided independently through company-based agreements or individual contracts. By contrast, in small businesses with less than 200 employees, almost no internal negotiations of any substance exist within the companies, as stated in 1. above. As a result, the working conditions stipulated in industry- or profession-based collective agreements are often applied more or less as they are. Specifically, this gives rise to a wage gap of around 1:2-1:3 between workers in large corporations and those in small businesses.

3. Following an amendment to the law in 2004, a system of exemption from application of industry-based collective agreements based on company-based agreements was introduced. With this, the "stratified nature" of collective agreements based on "the principle of favor (advantage)", whereby working conditions determined by industry-based collective agreements could not be changed detrimentally by company-based agreements, was dismantled as a system. Viewing the actual situation, however, schemes for exemption from the application of industry-based collective agreements have hardly been used at all. That is to say, as it stands currently, "the abolition of the principle of favor" has only symbolic significance; the reality is that there has hardly been any progress in "decentralizing" the decision of working conditions, whereby working conditions are decided in units of individual companies. Behind this lies the fragility of the infrastructure for company-based negotiation (labor relations) in France, and particularly the shunning of (company-based) labor negotiations by employers in small and medium enterprises; and the fact that the importance of controlling minimum standards of working conditions at industrial level still enjoys a degree of support, not only by labor unions but also by employers (mainly industry-specific employers' organizations). As the aim of the French government and MEDEF (French business confederation), however, the promotion of legal policy to prepare a basis for company-based negotiation is currently under review. This will need to be watched closely in future to see if any change in the situation can be achieved by promoting the preparation of a basis for company-based negotiation.

Policy Contribution

This Research is expected to be used as a basic material for macro-policy discussions on issues such as future directions for collective systems of labor relations.

Contents

Vol. 1 Germany

  1. Cover - Preface - Authors - Contents - Introduction
  2. Chapter 1 Current Status of Collective Labor Relations Law in Germany
  3. Chapter 2 Reality of Industry-Based Collective Agreements in Germany
  4. Afterword Summary, data, Collective Agreement Act

Vol. 2 France

  1. Cover - Authors - Contents
  2. Introduction
  3. Chapter 1 History and Legislation of the French System of Industry-Based Collective Agreements
  4. Chapter 2 Present State of the French System of Industry-Based Collective Agreements
  5. Chapter 3 Summary, data

Research Categories

Project Research “Survey Research on Systems for Deciding Working Conditions Centered on Labor Relations”

Subtheme “Research Project on Directions for Collective Labor Relations in Connection with the Establishment of Norms”

Research Period

FY2012

Authors

Yota YAMAMOTO
Researcher, The Japan Institute for Labour Policy and Training
Ryo HOSOKAWA
Researcher, The Japan Institute for Labour Policy and Training
 

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