Institutional Resilience in a Changing World Economy? The Case of the German Bankking and Chemical Industries
| DOI | http://doi.org/10.1111/1467-8543.00071 |
| Date | 01 December 1997 |
| Author | Michael Muller |
| Published date | 01 December 1997 |
British Journal of IndustrialRelations
35:4 December 1997 0007–1080 pp. 609–626
Institutional Resilience in a Changing
World Economy? The Case of the
German Banking and Chemical
Industries
Michael Muller
Abstract
This paper examines whether there has been a transformation towards
company-specific and unitarist industrial relations in Germany. On the basis
of 25 case studies of employment practices in German and foreign-owned
banks and chemical firms as well as industry data, the research found that the
German system has so far remained relatively stable. Companies in the two
industries studied generally still comply with the labour market institutions of
multi-employer collective bargaining, workplace representation and initial
vocational training. Pressures have been accommodated by changes within
the system rather than by a radical change of the system.
1. Introduction
More than a decade ago, Kochan et al. (1986) published their seminal book,
The Transformation of American Industrial Relations,inwhichthey
described the demise of trade unions and collective bargaining and the
emergence of a large non-union sector in the United States. Since then
similar transformations have been observed in other countries. There has
been a search for greater flexibility in the deployment of labour which has
partly been achieved by a decentralization of industrial relations. In the
process, trade unions have often been marginalized, and there has been a
shift from pluralist towards more unitarist industrial relations (Clarke and
Bamber 1994; Ferner and Hyman 1992; Locke et al. 1995; Ruysseveldt and
Visser 1996). As early as the 1950s, a worldwide convergence of managerial
practices towards those of the USA was predicted. However, whereas Kerr
et al.’s (1960) convergence thesis saw technology as the driving force behind
convergence, today’s transformation of industrial relations and human
resource practices seems to be driven more by competition.
Michael Muller is in the Business Education and Human Resource Management Department,
University of Innsbruck.
¥ Blackwell Publishers Ltd/London School of Economics 1997. Published by Blackwell Publishers Ltd,
108 Cowley Road,Oxford, OX4 1JF, and 350 Main Street, Malden, MA 02148, USA.
610 British Journal of Industrial Relations
The case of Germany is of particular interest when examining whether
there is a convergence towards unitarist industrial relations practices. Its
‘institutionally strong’ system (Marginson et al. 1993) exerts pressures that
could prevent such a transformation. German business is embedded in a
system of social institutions (Lane 1992) which legally impose a uniform set
of arrangements on companies and/or provide incentives for employers to
accept institutional constraints. In this system change is achieved by
negotiation rather than by a unitary imposition of managerial decisions.
Since the early 1990s, it has been disputedwhether the German model can
survive in times of increased competitive pressures. The government,
employers, the media, academics and foreign observers have questioned the
viability of the German model and have suggested that it must be changed.
The state has been accused of excess subsidization of ageing industries and
of the imposition of too high a tax burden (Smyser 1993). The strong links
between banks and industry and the German system of corporate govern-
ance as a whole has been criticized (Dunsch 1994). As big German
corporations are becoming increasingly dependent on international capital
markets, they are under more pressure to comply with Anglo-American
financial rules (Goodhart 1994: 52–3). A particular target of demands for
change has been centralized collective bargaining. Long before the recent
debate about the competitiveness of the German economy, neoclassical
German economists put forward the view that the centralized collective
bargaining system sets a high minimum wage and restricts flexibility. They
pointed out that this is a particular problem for low performing firms,
branches or regions as well as for unskilled workers and the unemployed
(Hiemenz 1992; Walter 1988). These arguments have been taken up by
employers and politicians. (For a critical review of this debate, see Hassel
and Schulten 1997.)
Considering the worldwide transformation of employment practices
along US lines and the apparent popularity of the US free market model
among German economists, employers and pol iticians, there are likely to be
increasing pressures on the three key labour market institutions of
centralized collective bargaining, workplace representation and initial
vocational training. One could expect that firms operating in Germany
would not any more comply with their requirements, as they severely restrict
organizational autonomy. This means that companies will avoid collective
bargaining; if this is not feasible, they will prefer company level bargaining.
Works councils will also be avoided, as they have strong co-determination
rights. There will be no compliance with the system of initial vocational
training, as it is regulated by a triparti te system that includes the government
and trade unions, reduces organizational autonomy and provides general
rather than specific skills.
The data reported here are part of a larger study of industri al relations and
human resource management in Germany. Case studies of 25 banks and
chemical firms as well as the two industries were conducted. This examined
not only the case study firm’s compliance with German labour market
¥ Blackwell Publishers Ltd/London School of Economics 1997.
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