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Business

Germany's collective bargaining rules in focus

Germans famously take two things very seriously: Their work, and rules. That makes rules governing work doubly important. A fight over collective bargaining rules has huge implications for Europe's powerhouse economy.

The past year has been one of

repeated strikes

by small profession-specific unions, resulting in outsize negative impacts on the German economy. A seemingly unending series of strikes by train drivers' and airline pilots' unions has been particularly disruptive. Spurred on by an angry public and by rail-freight-dependent companies struggling to ship their goods, the federal parliament passed a collective bargaining law on Friday that the government hopes will put an end to the phenomenon of small unions holding the country to ransom.

The new law was championed by Labor Minister Andrea Nahles - a prominent figure in the Social Democratic Party (SPD), the soft-leftish minority partner in the governing coalition dominated by Chancellor Angela Merkel's party, the Christian Democratic Union (CDU).

The law specifies that if workers in a given category - machinists, say, or train drivers - are represented by more than one union at a given corporation, then whichever union has the largest total number of members employed at that corporation will be the principal negotiating partner across the table from management. The contract it agrees with management will be binding - not only on its own members, but on those of other unions as well.

A key implication is that German courts will be in a position to forbid strikes by smaller unions when these contravene the collective bargaining framework set out by the new law.

Deutsche Bahn chief Weber und train drivers' union chief Weselsky shake hands as strike ends

Deutsche Bahn chief Weber und train drivers' union chief Weselsky shake hands as the ninth rail strike in the past year ends

Cooperation vs. competition

"Pretty much everyone agrees that cooperation between different unions representing workers at the same company makes sense," said Thorsten Schulten, a labor economist at the Hans Böckler Foundation in Düsseldorf. "DGB, the German trade union council, certainly sees it that way."

Schulten said that even when unions compete for members amongst the workers in a company, they often voluntarily join forces to negotiate with management. For example, two of DGB's biggest members are the service workers union Verdi, which has two million members, and the Deutscher Beamtenbund, the German civil servants' union, with well over a million members. According to Schulten, "Verdi and the Beamtenbund cooperate on bargaining with the government over civil service working conditions."

However, some unions - the train drivers' and airline pilots' unions, for example - are not DGB members, and they aren't bound by its culture of reasonable accommodation in labor-management relations.

Schulten cast doubt on whether the new law is the best way to foster cooperation bewteen unions: "The new law could lead to increased rivalry - they'll try to grab members from each other, because now the game is, who is the biggest, who gets to negotiate with management?"

Back to the future

The law isn't really an innovation - it's a return to the status quo ante that prevailed prior to a controversial ruling by Germany's federal labor court in 2010, a ruling that set small niche unions loose to pursue their members' interests. It specifically allowed competing labor contracts to be negotiated by different unions within the same company - and led directly to an increased incidence of strikes by small profession-specific unions over the past five years.

Special hats worn by Germany's top constitutional justices

Special red hats are worn by Germany's top constituional justices. They'll need to be wearing their thinking caps as they adjudicate the new collective bargaining law

For several decades before that, ever since the founding of the west German Federal Republic in the postwar period, collective bargaining rules - coupled with a law that required large companies to give workers' elected representatives seats alongside management on works councils - had blessed Germany with a less turbulent, less strike-prone business environment than that of neighboring countries like France or Italy.

Narrower interests, more strikes

Since 2010, corporate managements have increasingly found themselves having to negotiate separately with different unions to arrive at separate contracts on pay and working conditions for unionized workers doing the same jobs.

That didn't merely increase management's workload. It also more than doubled the risk of strikes. The reason: Large, broad-based unions representing workers from a range of trades and professions have often tended to take a broad, relatively conciliatory view of labor and management's shared interests.

By contrast, when small, profession-specific unions such as train drivers meet to vote on whether or not to go on strike, they're more likely to vote yes - because the voting members tended to be more united and more focused on the narrow interests at stake for their professional group.

That's how it came to pass that GDL, the small but aggressive train drivers' union, has launched nine strikes within the past year. "It wasn't just about pay and conditions," labor economist Schulten explained. "For GDL, the issue at stake was the organization's survival. Claus Weselsky, the union's leader, has been insisting that he would not agree to a new contract with Deutsche Bahn, the state-owned railway company, unless it included a clause agreeing that the GDL would have the right to negotiate contracts on its members' behalf in future as well, regardless of any new collective bargaining law."

Watch video 01:19

German train drivers return to work - for now

Nevertheless, Schulten said, "the conflict shouldn't be personalised" - noting that Weselsky had been harshly criticized, even demonized, in the popular press for his hard-line stance.

Constitutional challenge on its way

The legal basis cited by the federal labor court in its 2010 ruling was Article 9 of Germany's Constitution, which says that Germans have a a right to form associations in order to preserve and promote their interests in respect of economic and working conditions. Article 9 says this right is guaranteed "for everyone and for every trade or profession."

Subsequent rulings of the federal labor court in 1954 and 1984 clarified that Article 9 implied the right for unions to call strikes, since otherwise, collective bargaining would be a mere "hollow shell" - and contract negotiations between labor and management would amount to "collective begging" if unions did not have a right to strike. But other rulings have indicated that the constitutional court doesn't interpret Article 9 to mean that no limits whatever to the right to strike may be imposed by law.

The airline pilots' union, Vereinigung Cockpit, had announced well before Minister Nahles' collective bargaining law was passed that it would immediately launch a constitutional challenge against it. The question now is whether the court will deem the new collective bargaining law consistent with Article 9.

Nahles has insisted that the law was carefully drafted to avoid contravening Article 9, but many legal experts have cast doubt on whether it will withstand a challenge before the constitutional court. The only thing that's clear at this point is that the court's ruling on the new law will help define the balance between conciliation and confrontation in German economic life.

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