Professor Otto Sandrock

German and international perspectives on the German model of codetermination

The German model of codetermination by the employees of a company bears two idiosyncrasies: its extremely complicated nature and its uniqueness in the international setting.

It is scattered over three statutes: (i) the Mining, Iron and Steel Industry Codetermination Act of 1951 (Montan-Mitbestimmungsgesetz) has introduced full parity codetermination on the supervisory boards of all companies within its purview; (ii) the Codetermination Act of 1976 (Mitbestimmungsgesetz) has established quasi parity codetermination on the supervisory boards of all other companies engaged in industry or commerce; (iii) the One-Third Participation Act of 2004 (Drittelbeteiligungsgesetz), provides for one third of the seats of supervisory boards to be occupied by employee representatives.

In comparative context, no other nation knows of a statute or statutes allowing for more codetermination by employees than the statutes just referred to.

The German system of codetermination has some definite advantages and disadvantages, not only viewed form a German point of view, but also in international context. Strikes occur less often in Germany than in other countries where codetermination is less prominent. During the global and European economic financial crisis 2007-2012, codetermination facilitated the cooperation between management and employees to overcome difficulties. On the other hand, employee representatives have abused their powers at times and the management of many companies feels constrained by codetermination when hard decisions have to be taken, desperately required for the economic success of their companies, but these decisions are blocked by employee representatives.

Could anything be changed in the future? That is hardly to be expected. For many decades, German trade unions have, for example, prevented the SE (Societas Europaea) to come into existence. Now they flex their muscles to hinder the formation of SPE’s (Societies Privata Europaea). They planned their strategy for decades and seem determined not to give away any of their powers. This may predicts stagnation for the foreseeable future!