The Effects of Different Types of Works Councils on Bargaining Outcomes: Results of an Empirical Study

This article looks at the effects that different types of works councils have on the results of bargaining between a works council and management. It investigates, in particular, how the works council type has an influence on the use of company or works agreements and the assessment of such agreements by 1000 interviewed human resource managers. The typology combines two dimensions: power and willingness to cooperate. The resulting four types of works councils show different effects, controlling for other variables: overall, works agreements are widespread and highly valued by the majority of human resource managers. However, firms with a works council that the management perceives as being more powerful and less willing to cooperate have a higher number of works agreements. In this constellation, one also finds the worst assessments of works agreements by the human resource managers — they perceive such agreements as reducing flexibility and having fewer advantages. A more detailed analysis shows two more results: first, it is the power or strength of a works council, rather than the willingness to cooperate, that influences the frequency of works agreements. Second, the perceived willingness to cooperate has an effect on the assessment of works agreements, but not on their frequency.