Why Are German Employers Associations Declining? A Challenge to the Conventional Wisdom

Author
Wolfgang Schroeder, Stephen J. Silvia
Content Type
Working Paper
Institution
Minda de Gunzburg Center for European Studies, Harvard University
Abstract
This paper challenges the conventional explanation for declining density of German employers associations. The dominant account asserts that German trade unions have taken advantage of increased globalization since the 1980s – which has made internationally active enterprises more vulnerable to production disruptions – to extract additional monopoly rents from multinational employers via aggressive collective bargaining. Small firms have responded to the increased union pressures by avoiding member ship employers associations, which has produced the density declines. Data, however, disconfirm the conventional explanation; compensation increases have actually become increasingly smaller over the decades. This paper presents an alternative explanation that is consistent with the data. We argue that it is the large product manufacturers rather than the trade unions that have greatly increased price pressures on parts suppliers, which has led to a disproportionate number of suppliers to quit employers associations. The paper also discusses these findings in light of the “varieties of capitalism” literature. It points out that this literature has depicted national models as too homogeneous. The decision of several German employers associations to offer different classes of membership represents an accentuation of variety within national varieties of capitalism.
Topic
Civil Society, Economics, Politics
Political Geography
Europe