JILPT Research Eye
Collective Agreement Autonomy and the State
―Recent Legal Policies on the Collective Agreement System in Germany

June 14, 2016
Originally published on June 5, 2015 in Japanese)



Researcher (Labor Law), Department of Industrial Relations

JILPT has been conducting a “Research Project on Collective Labor Relations in Connection with the Establishment of Norms” since 2012, and part of this has involved research on systems of collective agreement in Germany, France and Sweden. For the detailed results of this research, please see the respective JILPT Research Reports in the [Related research results] listed below. Here, the focus will be on recent trends in legal policies on the collective agreement system, a hot issue in Germany today.

I. Weakening of the traditional collective agreement system

The recent trend in legal policies on collective labor relations in Germany is solely due to a weakening of the traditional collective agreement system.

In Germany, labor unions were organized in each industry after the war, and employers’ associations corresponding to these were also organized in each industry (under the principle of industrial organization). This meant that group negotiation (collective bargaining) was undertaken in each industry, and collective agreements were also concluded as industry-based collective agreements. Meanwhile, both labor unions and employers’ associations used to maintain comparatively high organization rates in Germany. This was supported by a system of universal applicability (AllgemeinverbindlicherklÁrung : AVE, Declaration of General Applicability), which allowed the binding force of collective agreements to be imposed on non-organized workers and companies of an entire industry, under certain conditions. As a result, industry-based collective agreements (hereafter referred to as industry agreements) broadly covered workers and companies belonging to the respective industries in Germany. At the same time, the principle of industrial organization also ensured that collective agreements applied to individual business sites or works were limited to agreements for the industries to which those works belonged (“one site, one agreement”). In this way, a high rate of agreement application and the principle of “one site, one agreement” have traditionally formed a stable system of collective agreement centered on industry agreements in Germany.

However, this traditional system of collective agreement is now going through some major changes. The first that could be mentioned is a sharp decrease in the application rate of industry agreements. According to a recent survey by the Institute for Employment Research (IAB), the rate of application fell from 70% in 1996 to 52% in 2013. The main reason given for this is that organization rates in both industrial unions and employers’ associations have fallen, with an associated increase in failures to meet the conditions for AVE. But whatever the case, the result of this decrease is a growing body of workers who are not subject to industry agreements and who work for low wages.

Since 2000, meanwhile, there has been a growing move for workers in specialist professions (e.g. train drivers and pilots) to withdraw from industrial unions and form separate occupational unions. This has invited a phenomenon whereby both industry agreements and collective agreements concluded by these occupational unions are simultaneously applied to individual works (known as “collision of collective agreements”). As a result, the principle of “one site, one agreement” – the mainstay of the conventional collective agreement system – has been shaken.

II. Legal policies under the third Merkel administration

Of course, faced with this situation, labor and management representatives are sparing no effort in promoting organization. A point to be noted here, however, not only labor and management are making their self-help efforts, but also the federal government (the current 3rd Merkel administration) is hammering out a rapid succession of legal policies over the collective agreement system.

The first policy measure taken was the amendment of Declaration of general binding force (AVE). As stated above, AVE is partly responsible for the high application rate of industry agreements being maintained in Germany. However, faced with an increase in failures to meet its requirements, article 5 of the Collective Agreement Act (which provides for the AVE system) was amended on August 11th, 2014 to deregulate the requirements. It is expected that this leads to improve the coverage rate of  industry agreements based on AVE, and to protect the interests of low-wage workers.

On the other hand, since AVE is a system premised upon the existence of industry agreements, it cannot be used to protect low-wage workers in sites where no such industry agreement exists. This has led to the enactment of a new Minimum Wage Act, which came into force on January 1st, 2015. The Act provides for the first statutory minimum wage system to be applied uniformly in Germany. Under its provisions, all employers who employ workers in Germany must now pay a wage no lower than the statutory minimum amount (currently €8.50 per hour).

Secondly, the Act on Collective Agreement Unity (Gesetz zur Tarifeinheit) was approved by the Federal Parliament (Bundestag) on May 22, 2015. The purpose of this Act is to ensure that, when the aforementioned “collision of collective agreements” occurs, only the agreement that applies to the majority of workers in the affected works will apply (this would normally be an industry agreement), while the application of other agreements will be excluded. In other words, the Act on Collective Agreement Unity sets out to restore the traditional scheme of “one site, one agreement”. One result of this is that the GDL, an occupational union of locomotive engineers, has given notice that it will legally contest the Act on grounds that it is unconstitutional (Frankfurter Allgemeine, May 23, 2015).

III. “Strengthening the Autonomy of Collective Agreement” by the State

Incidentally, of the measures outlined above, the AVE amendment and the implementation of the Minimum Wage Act were based on a composite act (a law providing for the establishment of new laws and amendments to existing laws) that was enacted on August 11th, 2014. The title given to this composite act was the “Act on Strengthening Collective Agreement Autonomy (Tarifautonomiestärkungsgesetz)”. Meanwhile, in a speech to the Bundestag on May 22, 2015 (the day when the principle of collective agreement unity was approved), Labour and Social Affairs Minister Andrea Nahles stated that “collective agreement unity strengthens collective agreement autonomy (Tarifeinheit stärkt die Tarifautonomie)”. Thus, “strengthening collective bargaining autonomy” is an underlying theme running throughout the various legal policies mentioned in section II above.

A point of note here is that in Germany, where collective agreement autonomy is constitutionally guaranteed under Article 9 (3) of the Basic Law (Grundgesetz), it has been seen as a duty of the State to develop framework conditions to ensure that this functions properly. The recent string of legal policies set out by the third Merkel administration can be evaluated as an attempt to retrieve the functions of the traditional collective agreement system, in response to such constitutional requirements.

Of course, it is a separate question whether these policies will satisfy the requirements of Article 9 (3) of the Basic Law and “strengthen collective agreement autonomy” on a legal basis. This is another issue to be studied. After all, Germany’s stance in first identifying one requisite system of collective agreement, then actively developing the legal policies to implement it, should provide a number of lessons for Japan, where the basic right to work is constitutionally guaranteed.