Overview of Employee Relations in Germany and the United Kingdom

At the macro-economic level, the importance of employee relations (ER) in contributing to countries’ economic success has recently been highlighted by a number of authors (see, for instance, Hall and Soskice, 2001; Whitley, 1999). The focus of much of this literature is on the differences in ER in groups of countries. The contrasts between the United Kingdom and Germany are regarded as being particularly stark. Given the importance of the differences between the two countries, this chapter will set out the broad developments in ER, first in Germany, and then in the United Kingdom. It should, however, be noted that accounts of ER at the national level may overlook significant developments at either the sectoral or the firm level. This chapter will also, therefore, cover developments in direct employee involvement systems in both countries. Whilst these direct-voice systems have received a great deal of attention within the HRM literature (Pfeffer, 1994), they tend to be downplayed within that on the varieties of national capitalisms (Allen, 2006). One possible reason for this is that direct involvement systems do not rely overtly on legislation for their establishment. The omission of direct involvement systems in the literature on national varieties of capitalism is a serious one as these mechanisms may have a positive effect on firm performance.