Industrial relations scholarship is increasingly characterized by a focus that favors quantitative breadth over historical and interpretive depth, a trend exacerbated by a widening gulf among disciplines and subfields that rarely addresses each other’s most promising lines of inquiry. Stephen J. Silvia’s book provides a welcome counterexample to these trends. It draws upon historical, legal, economic, and sociological literature in order to yield a fuller account of how and why employment relations and firm governance trends have changed. With clear and elegant exposition, it provides in-depth accounts of changes not only in union membership and organization but also in employer associations, as well as the broader legal and economic contexts bearing upon these interlocutors’ strategies of collective action. The familiarity and ease with which Silvia renders complex detail in easily graspable narrative form are the quintessential virtues of an informed outsider’s decades of continuous fieldwork.
Abjuring grand theories, the book’s dispassionate tone nonetheless expresses a strong normative commitment to the German model’s values of collective and institutional learning, consensus, and compromise. The major debate it engages is with those who argue that this model suffers from “exhaustion” or “erosion.” Silvia argues, by contrast, that the framework of industrial relations has shown resilience and a capacity to adapt; it is the bargaining interlocutors, the unions and employers’ associations, by contrast, that have experienced erosion of membership, exhaustion of ideas, and not a little exasperation with their members and each other.
The first two chapters provide a concise overview of the evolution and function of the laws and state functions governing the German system. The first chapter provides an admirably comprehensive account of labor law and related structures of state support. It documents substantial elements of continuity that characterized the legal framework shaping industrial relations after World War II, arguing that these were an important component of the postwar “economic miracle.” Indeed, collective bargaining autonomy itself depends upon this broader legal context of regulation.
The second chapter reviews the evolution of, and debates about, German codetermination as manifest at the workplace level, in employee-elected works councils, and the enterprise level, in supervisory board representation of employees. Much of this material will be familiar to students of German political economy, but it neatly encapsulates key developments, particularly since reunification. It emphasizes that most reforms (such as the laws passed in 1971 and 1976, and reformed or amended in 2001 and 2009) have been favorable to employees, particularly at the works councils level.
For all its durability, however, the German system is vulnerable to several challenges. The repeated attacks on the principle and substance of codetermination provisions by substantial segments of the employers’ organizations and representatives, which Silvia amply documents, cast a pall on the theme of consensus and resilience. Moreover, they now wage this struggle at the European Union level as well; and indeed, some EU-level legal reforms are more ambiguous in their effects on worker power and representation. In 2004, EU-enacted statutes allow for newly established, merged, or reincorporated enterprises to incorporate at the European-wide (rather than national) level as “Societas Europeas” (SEs). SEs can bypass codetermination by allowing for opt-out clauses or by adopting Anglo-American-style single-board structures, rather than the dual-board structure upon which codetermination depends. As of 2011, although only 87 have been established in Germany, 27 adopted the Anglo-American single-board structure, and roughly the same number maintaining the traditional dual-board structure have chosen not to conform to the 1976 Codetermination Act. This modest number may demonstrate codetermination’s acceptance “among the vast majority of German business leaders” (p. 62), or it may be too early to tell. Either way, it would be interesting to know more about the sectoral profile and size of the German firms adopting SEs. Other EU-level threats to codetermination include increasingly numerous European Court of Justice decisions rejecting discrimination between different forms of corporate governance.
Chapter 3 provides a statistical analysis of union membership density trends. It purports to provide a fuller account of density changes by including variables measuring trade levels and social milieu together with more familiar ones, finding that “milieu is the single biggest factor affecting union density” (p. 102). Variables such as increased foreign employment, protracted wage restraint, and sluggish job growth show more modest negative effects, and increased levels of trade and public-sector employment have modest positive effects.
Most of these correlations are neither surprising nor contradictory with much of the comparative political economy literature. By contrast, Silvia’s definition of milieu—“membership in left-of-center parties as a percentage of the population”—is innovative, but for me at least, not entirely convincing. The idea is that party membership expresses a stronger form of political identity than voting, with the rise of alternatives to the Social Democratic Party (SPD) such as the Greens and newer Left Party compensating for the SPD’s relative decline. He lags the milieu variable in order to avoid biasing coefficient estimates due to endogeneity, making changes in party membership “causally prior to changes in union density” (p. 96).
A minor quibble is that this definition does not account for the abiding role that the Christian unions play in the Christian Social Union in Bavaria, a factor in the center-right party’s relative moderation. A more significant shortcoming is that since the Green Party never enjoyed significant ties with the major unions—indeed, was viewed by them with great suspicion, as Silvia acknowledges (p. 157)—and since the Left Party’s major base in eastern Germany suffered a major implosion in employment in the 1990s far steeper than the region’s union declines, membership in these parties could serve to mask the much more consequential declines in and demoralization among SPD membership. Indeed, many commentators have observed that the relations between the SPD and Deutscher Gewerkschaftsbund (DGB) unions were increasingly strained even prior to reunification, and only grew worse afterward.
Moreover, a major reason for this fractiousness has been the inability of the party to convert the unions’ “heroic” and long-lasting wage restraint into welfare policies that improve living standards for most working-class Germans, an inability rooted even more deeply in the distance and compartmentalization that long characterized party—union relations. A focus on milieu by this definition, in other words, discounts the interaction effects among many of the variables considered.
This focus also lets the failures of individual union efforts—above all, of ver.di, the service-sector union—off the hook, and tends to overlook the longer-standing areas of weakness in union organization and works council establishment, such as in the fast-food and supermarket sectors, which have always been almost completely union and council free—by employer design, not by accident or through lack of worker interest. The debacle of ver.di’s mergers and subsequent performance receive excellent in-depth discussion in Chapter 4, contrasting with the more innovative strategies of the historically militant metalworkers, IG Metall, although both are complicit in the Hartz and Agenda 2010 reform debacles, also detailed here. Inter- and intrasectoral diversity also characterizes employers’ associations, as detailed in Chapter 5, which argues that the relative importance of small- and medium-size enterprises (SMEs) explains the unevenness of density changes across sectors, much more than trade exposure, for example. A net effect of declining membership is declining (especially private-sector) collective bargaining coverage.
Silvia concludes on a cautionary note, emphasizing that while the system still shows resilience, much more needs to be done to reverse membership and bargaining decline. Holding the Shop Together makes a sober and informed contribution to this broader project.
