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Up until the re-unification of East and West Germany during the 1980's, West Germany was considered to be the biggest exporting nation in the world. In the 1980's it was exceeding Japan in terms of output and growth.

The costs of re-unification have seen the 'German economic miracle' go into a stagnant status. This is because one side the old West Germany, is still highly successful, whilst the old East Germany needs a lot of rebuilding. The old East Germany was in an almost post world war status under communism.

The 'German economic miracle' that took place to West Germany was remarkable, but attributable to the post war regeneration process by the allied forces.

West Germany re-built itself and with it, the entire industry of it's nation. Like Japan there was scope for total reconstruction of it's manufacturing and industrial relations systems, this was opposed to the traditional industrial relations systems that remained in the UK and USA.

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THE BASIC PREMISE - Unlike other nations the basic premise of the German industrial relations system is based on a framework of policies where employers and employees have to work together towards achieving harmony.

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MINIMUM WAGE - There is no minimum wage in Germany.

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GOVERNMENT ROLE - In Germany, there is no legal role for the government to become involved in disputes between employers and employees.

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EMPLOYEE INVOLVEMENT  - Under evolving co-determination laws, German workers enjoy legal rights that their counterparts in other countries would be amazed at. There is a legal requirement to ensure employees are placed in Works Councils, which determine some of the decision making processes in business.

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WORKS COUNCILS - Works Councils are regulated by the Workplace Labour Relations Act.  Works Councils can occur in any business that has more than 5 permanent staff.

The logic is that when a works council has been set up between the employer and employees the works council will have several rights to be placed onto its member these rights include:

  1. The right to make suggestions.
  2. The right to be consulted.
  3. The right to be information.

Under the co-determination laws these rights only apply to certain types of decision making, they do not affect the financial direction of a business.

So it should be seen that under the works councils employees can have a great impact on the direction a business takes, far more than in other countries.

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SUPERVISORY BOARDS - Where a business employs more than 2000 employees it is has to have a supervisory board. Supervisory Boards consist of 50% from the business owners (shareholders) and 50% from employees. 

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EMPLOYERS ASSOCIATIONS - These associations as well as looking after the general interests of it's members also become involved in the collective bargaining process in Germany.

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GERMAN TRADE UNIONS - Trade unions in Germany like the UK cover specific industries. The German unions however have stronger relationships with their members and employers associations. This can be attributable to both the works councils and supervisory boards. In addition to this there are a lot fewer unions in Germany as opposed to the UK.

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COLLECTIVE WAGE BARGAINING - The German wage bargaining differs from the UK in that employers associations  will negotiate with a single union for an entire industrial sector. This is has similarities with the Japanese 'Shunto'.

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The immediate problems in the country revolve around the pace of re-unification and the harmonizing of industrial relations.

There should be no doubt that once the economic reconstruction of Germany is fully complete, Germany will again become a dominant force in world economics.

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(c)  Est 08/00 - Last Updated 28/05//2001