Veto

Labour economics

Bargaining power

German

Statutory law

Microeconomics

Economic system

Wage

Archaeology

Scope (computer science)

Economics

Market economy

Computer science

Business

Liberalization

Politics

Political science

Political economy

Revenue

Programming language

Finance

Collective bargaining

History

Economic and Industrial Democracy

Against the European trend, German statutory collective bargaining extensions (SBEs) have decreased in the last two decades, contributing to the exceptional erosion of German wage-bargaining coverage. This article distinguishes between two liberalization dynamics: an intrasectoral dynamic that started with the introduction of employers’ association memberships outside the scope of collective agreements, and an intersectoral dynamic. The latter is the result of an abnormal German institutional feature, the veto power of the employers’ umbrella association in the committees that have to approve SBE applications. Activation of this veto enabled employers to promote collective bargaining erosion in sectors other than their own, in order to contain cost pressures. This intersectoral liberalization dynamic has been part of Germany’s transition into an asymmetrically export-driven growth regime and could be stopped by means of political reforms.

Why does Germany abstain from statutory bargaining extensions? Explaining the exceptional German erosion of collective wage bargaining