Co-Determination

Little Rock We all learn things in weird ways, I suppose. Yesterday there was an article planted in the Times attacking the corporate governance practices in Germany called “co-determination” which provide proportionate representation to labor on the boards of German companies.

The law there seems to be that any company with more than 2000 workers has to avail half of its board seats to labor representatives. Austria and Luxembourg have a similar rule providing for one-third of the seats to go to labor. It turns out that 13 of the 27 countries in the European Union have similar requirements. [Interestingly, because the Times was presenting a masked “opinion” piece by reporter G. Thomas Sims they ran the article as “Fourteen of the 27 members of the European Union have no such requirements” — in other words about half have such rules and half do not — are we really supposed to be that inept in math?]

The attack on such laws is being driven by employer associations taking advantage of some sad scandals where several big companies moved business or money to outfits associated with their labor board representatives. In other words, some CEOs of German companies did the same thing with their labor reps as they are accustomed to doing with the board members from other companies. I’m not defending the practice, but it is a little hard to find the virgins there.

The harder question of whether the practice of co-determination has been good for the workers is harder to resolve on the merits in Germany, but it is hard to say that the practice in the US where workers have been forced by law and court decisions to concede total rights in many areas to management in exchange for no power at the governance level is better, even if there have been occasional abuses hither and yon.

Scandals at the corporate level around the world are a dime a dozen. This seems to be just another effort in these hard times of assault on unions everywhere in the world to erode one of the few bastions of influence, even if not power, that unions have in Europe where some part of the historical social contract still remains both in memory and in law.

Free Workers’ Union of Germany
Facebooktwittergoogle_plusredditpinterestlinkedinmail

Leave a Reply

Your email address will not be published. Required fields are marked *