Why is there resistance to works councils in Germany? An economic perspective

Abstract

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Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany

“…This cost comprises, for instance, the costs of becoming exposed as a works councilor, as many employers have reservations against works councils, as well as the costs of actively representing one’s colleagues’ interests and being personally responsible for the negotiation outcomes. For a recent discussion of the causes of employer resistance against the introduction of works council, see Mueller and Stegmaier (2020).…”

Do German Works Councils Counter or Foster the Implementation of Digital Technologies?

“…This constitutes important new theoretical predictions for the hypothesis how works councils and novel technologies might be associated. A widely held view among managers and employers' associations is that the presence of works councils counters economic activities and technological progress within establishments (Müller/Stegmaier 2017b;Hübler 2003). This argument draws upon the use of wide-ranging co-determination rights of works councils.…”

Using the endowment effect to explain managerial resistance towards codetermination: Implications for employment relations from the German case

“…Although some earlier studies showed a negative link with profitability, Mueller (2011) attributes such results to the use of data on managerial opinions or impressions; using actual profit data, he shows that the link is, indeed, positive. Moreover, Müller and Stegmaier (2017) discerned a number of reasons for managerial resistance to works councils in Germany, such as entrepreneurial freedom and shorttermism, that are consistent with the endowment effect. Surveying the wider European terrain, Osterloh et al (2011:339) found that countries with 'far-reaching co-determination laws generally had better economic performance in terms of employment, labour productivity, research investment, and labour peace.'…”