Works councils, wages and job satisfaction

Abstract

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Do works councils raise or lower firm productivity?

“…The activities of the council protect employees' interests and may lead to an increase in job satisfaction. Respect and appreciation from the employer positively influence job satisfaction [6]. A works council's behavior can therefore lead to an increase in procedural fairness and to a rise in job satisfaction, combined with increased commitment and higher effort.…”

“…Empirical investigations of dismissals by the firm and voluntary resignations by employees show a negative relationship between works councils and both kinds of separation. Empirical analysis finds that this is particularly valid for skilled blue-collar as well as for qualified white-collar workers [6].…”

“…This field is less relevant for white-than for bluecollar workers. As tasks of white-collar workers are less clearly regulated than those of other employees, councils are more engaged in open questions of working conditions for the former [6].…”

“…If employees prefer direct participation and autonomy at the workplace, works councils can constrain this possibility and create employee dissatisfaction. Although works councils may aim to mobilize employees to reach stronger support in formalized negotiations with the employer and to have a better chance of enforcing their demands, individual liberties may suffer from this behavior [6].…”

“…In many cases, the employer is also interested in information about the workers' preferences in order to adjust the working conditions. If the employer follows the council's advice, it would be expected that employees' job satisfaction will improve [6].…”