Works council introductions in Germany: Do they reflect workers’ voice?

Abstract

While most previous studies focus on the monopoly aspect of works council introductions, this article explores the collective voice face of introductions and investigates workers' decision as an exit-voice consideration. Using a large linked employer-employee dataset from Germany, the present study finds that council introductions are more likely if workers have high plant-specific human capital or earn high wages. These results are consistent with exit-voice considerations as well as with attempts to protect an existing distribution of rents. Redoing the analysis for plants in which the protection of rents against management decisions is less relevant yields similar results supporting a voice interpretation.

Owner‐Managers and the Failure of Newly Adopted Works Councils

“…Previous econometric studies have examined the determinants of works council incidence and the determinants of changes in works council status (e.g. Addison et al 1997Addison et al , 2013Jirjahn 2003a;Mohrenweiser et al 2012;Oberfichtner 2013). Our study is the first to investigate the survival or failure of newly adopted works councils.…”

“…, ; Jirjahn a; ; Mohrenweiser et al . ; Oberfichtner ). Our study is the first to investigate the survival or failure of newly adopted works councils.…”

When Do Employees Choose to Be Represented on the Board of Directors? Empirical Analysis of Board‐Level Employee Representation in Denmark

“…, ; Jirjahn ; Jirjahn and Mohrenweiser ; Mohrenweiser et al . ; Oberfichtner ) by studying a mechanism of employee voice that is complementary and sequential to works councils and labour unions. The special mandate entrusted to the board of directors, and in particular the role of worker directors in the formation of firm strategy, demands an adaptation of the cost–benefit considerations that apply to works councils, and a reconsideration of the factors leading to the implementation of a specific voice mechanism.…”

“…To test our theoretical propositions on BLER, we run a probit regression using a dummy for the presence of at least one employee director on the board ( BLER ) as our dependent variable. In terms of our main explanatory variables, different measures have been suggested to quantify the specificity of human capital; some studies rely on the length of employees’ tenure (Bingley and Westergaard‐Nielsen ; Oberfichtner ), while others propose more complex skill‐based measures (Leping ). Based on the literature and data availability, we employ three different empirical proxies to capture firm‐specific investments in human capital: (1) workers’ tenure in the firm, measured by the average tenure of workers in the firm ( Employee tenure ); (2) distribution of workers by qualifications, since highly qualified employees are indeed more likely to become specialized to their current employer (Hansmann ); we measured employee qualifications by the average length of education for the employees in the firm, in months ( Employee education ) and, alternatively, by workers’ job position, namely, the incidence of professionals and top‐level employees among all workers ( Experts, Top‐level employees ); (3) industry‐level measures (two‐digit NACE code) of the relevance of workers’ skill and specialization, namely, labour costs as a percentage of total firm sales ( Labour costs ) and intangible assets per employee, in 1,000 DKK ( Intangible assets per emp .…”

Digital Technology to Support the Trade Union Movement

“…An employee's own internet access is likely to be available in such instances and The recent application to establishment data of the exit-voice concept [26] shows that the introduction of a works council is the more likely the higher the …”