Why does codetermination exist in Germany? Law and economics theories have contended that if there were no legal compulsion, codetermination would not exist. It would seldom arise through voluntary market interactions. This positive analysis typically supports a normative argument that codetermination is inefficient. In response, this article undertakes a careful study of German codetermination from the mid-19th century to the present, and finds that the evolutionary inefficiency argument is at odds with the evidence. In its very inception, codetermination came from collective agreements. It was not compelled by law, but was collectively bargained between business and labour representatives. Codetermination laws then codified the models set by collective agreements. This was true at the foundation of the Weimar Republic from 1918 to 1922 and, after abolition in 1933, again from 1945 to 1951. Those foundational ‘codetermination bargains’ seem to have been made because of two ‘Goldilocks’ conditions (conditions that were ‘just right’) which were not always seen in countries like the UK or US. First, inequality of bargaining power between workers and employers was temporarily less pronounced. Second, the trade union movement became united in the objective of seeking worker voice in corporate governance. As the practice of codetermination has been embraced by a majority of EU countries, and continues to spread, it is important to have an accurate positive narrative of codetermination’s economic and political foundations.
Friday, January 9, 2015
McGaughey on German Labor Law in the 20th Century
Ewan McGaughey, King's College, London, Dickson Poon School of Law, has posted The Codetermination Bargains: The History of German Corporate and Labour Law. Here is the abstract: