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Wage bargaining in Germany : the role of works councils and opening clauses

  • Ellguth, Peter


    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Gerner, Hans-Dieter

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Stegmaier, Jens


    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

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    "German employment relations are characterized by a distinct dual system: First, working conditions and wages are determined by industry level collective bargaining agreements. Second, on the establishment level the works council is responsible for employer-employee negotiations. But since the mid-1980s more and more areas of regulation were transferred from the industry to the establishment level using so called opening-clauses. Our analysis relies on rich German establishment data and reveals new insights in the institutional machinery of wage bargaining: While the existence of such clauses is related to higher wages (11 %), their application results in wages cuts of roughly the same size. Regarding works councils our results suggest that they are able to prevent negative wage effects of opening clauses on average." (Author's abstract, IAB-Doku) ((en))

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    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201205.

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    Length: 21 pages
    Date of creation: 08 Mar 2012
    Date of revision:
    Handle: RePEc:iab:iabdpa:201205
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    1. John T. Addison & Paulino Teixeira & Thomas Zwick, 2010. "German Works Councils and the Anatomy of Wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(2), pages 247-270, January.
    2. Jens Mohrenweiser & Paul Marginson & Uschi Backes-Gellner, 2009. "What Triggers the Establishment of a Works Council?," Working Papers 0101, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jul 2010.
    3. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers 16, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    4. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, 06.
    5. Kornelius Kraft & Julia Lang, 2008. "The Causes and Consequences of Adopting a Works Council," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(5+6), pages 512-532, December.
    6. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-94, October.
    7. John Addison & Stanley Siebert & Joachim Wagner & Xiangdong Wei, 2000. "Worker Participation and Firm Performance: Evidence from Germany and Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(1), pages 7-48, 03.
    8. John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2005. "Works Councils in the Production Process," GEMF Working Papers 2005-12, GEMF - Faculdade de Economia, Universidade de Coimbra.
    9. Fitzenberger, Bernd & Franz, Wolfgang, 1999. "Der Flächentarifvertrag: Eine kritische Würdigung aus ökonomischer Sicht," ZEW Discussion Papers 99-57, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    10. Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
    11. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2009. "Work councils and separations: voice, monopoly, and insurance effects," Discussion Papers 62, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
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