WORLD FUTURE FUND
GIVING LABOR A VOICE IN COMPANY MANAGEMENT
THE HUGE SUCCESS OF THE GERMAN ECONOMIC MODEL
Codetermination is a policy that gives workers a voice in the management of the company they work for. It is commonly found in coordinated market economies such as Germany, and a majority of the 28 state members of the EU plus Norway provide for some level of employee representation at the board level. Liberal market economies such as the United States, however, do not require this.
To those who would try to argue against this, we will point out that Germany is a smashing economic success. In terms of real GDP per capita average growth, they are one of the strongest economies in the world. And between 2007-2016, they had more GDP growth than the United States. So it seems that their policies supportive to labor, with high-cost workers have actually been quite successful. (Quartz)
Germany has had a strong history of support for workers rights, and the rights of the worker to express themselves at the management level. The modern German law on codetermination is found in the Mitbestimmungsgesetz of 1976. This law allows workers to elect representatives (usually trade union representatives) for almost half of the supervisory board of directors. It applies to public and private companies as long as there are over 2000 employees. For companies with 500-2000 employees, one third of the supervisory board must be elected. This means that workers get to have a say in the organization of a business, the conditions of the work, and the management of personal and economic decisions affecting their future.
There is also legislation in Germany, known as the Betriebsverfassungsgesetz, whereby workers are entitled to form Works Councils at the local shop floor level.
Today's German codetermination laws originated from the 1920 German "Works Council Act." And the Weimar Constitution after World War I said, "Works and staff are appointed to participate with equal rights together with the company in the regulation of wages and working conditions, as well as in the complete economic development of the producing powers." The first codetermination law was even passed in 1848, in which the Frankfurt Parliament processed a minority proposal for industry organization that included boundaries for corporate power by setting up work councils.
Today, codetermination laws are beneficial for both workers and employers. They can help a company to re-orient their goals to the interest of the worker, and make sure company interests are not one-sided. And for employers, such agreements can help to maximize the productivity of the worker.
For more information on codetermination, and the involvement of workers in company management, read the links below.
Codetermination Overview (Wikipedia)
GERMAN CODETERMINATION LAWS
Codetermination in Germany (Wikipedia)
Mitbestimmungsgesetz "The Codetermination Act" (Wikipedia)
Mitbestimmungsgesetz (in English, Codetermination Act) of 1976 is a German law which requires companies of over 2000 employees to have half the supervisory board of directors as representatives of workers.
Betriebsverfassungsgesetz Law (In German)
The law allowing workers to form Works Councils at the local shop floor level.
Germany is the world’s strongest economy (Quartz, 1-5-16)
Codetermination in Germany – a role model for the UK and the US? (Bruegel, 10-13-16)
Co-determination: its practice and applicability to the U.S (Free Patents Online)
Hans Böckler Foundation (In German)
The Hans - Böckler - Stiftung ( HBS ) is the co-determination, research and study promotion of German Trade Unions