Recent trends in German co-determination: a critical assessment of new research evidence

Abstract

The purpose of this paper is to look at the developments in co-determination at workplace level as well as at the level of supervisory boards during and after the financial and economic crisis of 2007-2009. In Germany, co-determination is not only considered a way to develop industrial democracy, but also a way of increasing the efficiency and competitiveness of companies. Various studies show that co-determination contributes to the competitiveness of companies and that co-determined companies have also recovered from the financial and economic crisis more quickly. Although co-determination has a positive influence on the productivity, innovative capacity and competitiveness of companies, there is a growing number of companies that put in place strategies aimed at avoiding co-determination. However, despite the reduced spread of co-determination the German participation model has survived so far and is still part of the key institutional settings of German industrial relations. This is also due to the fact that the German co-determination system has always shown a remarkable capacity to adapt to new developments. The most recent examples in this regard are the Works Council Modernisation Act and the Act on Corporate Due Diligence in Supply Chains. That also means that basically co-determination has proved to be a stable yet flexible institution. Today, employee participation thus appears to be a helpful instrument for successfully managing transformation processes.