Background information

The massive economic downturn of 1992 and 1993 drove up mass unemployment in Germany and intensified the pressure on collective bargaining. Public employment policy was subject to limitations due to the fact that fiscal policy was strictly based on the Maastricht criteria. At the same time, the economic slump and increased international competition intensified the search for ways to reduce costs and increase productivity in companies. Against this background, the parties to the collective bargaining agreements agreed on opening clauses or hardship case regulations that defined possible derogations for company level actors under certain conditions (precarious economic situation, company size, etc.) with regard to wages and the duration of working time from the agreed standards set by sectoral collective agreements.

Content of measure

These agreements, or pacts, are made between the company's management and a works council. Workers have to accept pay scales below the collectively agreed sectoral levels or pay cuts in the form of reduced or lost bonuses (such as Christmas or holiday bonuses or pay for overtime) or accept changes to collectively agreed working time.

In exchange, the employer commits to an employment guarantee; employees would not be dismissed for reasons related to business conditions.

Company alliances for work represent a compromise in a situation that is threatening for both parties in a company. As a rule, the promises made by the employees will be implemented immediately, those of the employer point to the future and are therefore subject to greater uncertainty. Whether an employer will keep the promise remains uncertain until the agreed contract period expires.

Use of measure

Survey findings, based on IAB Establishment panel data (Bellmann, 2008) do not show a significant and positive association between company-level agreements and employment stability. Employment pacts offer little scope for prompting positive employment changes. At the same time, pacts have been shown to foster usage of working time accounts, short-time working and training provision. The agreed measures were not implemented in all cases: In 2010, nearly 24% of all firms with an employment pact did not implement all agreed measures (Bogedan et al, 2011; WSI works council survey).

When pay cuts were negotiated, around half of the companies (50.6%) introduced pay cuts for overtime, postponement, reduction or cuts in collectively agreed annual bonuses (42.7%) or holiday bonuses (33.3%). A reduction of monthly pay was only noted by 16.1% of the surveyed companies. With regard to changes in working time: longer working hours with no increase in pay were introduced by 42.7% or with increase in pay by 38.5%. In more than 90% of the cases, intended management's goals were fully or partially reached (Lesch, 2008).

Contents

• Basic working time
• Bonuses
• Employment retention
• Pay freezes or cuts
• Working time flexibility

Target groups

Workers	Businesses	Citizens
Employees in standard employment Workers in non-standard forms of employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
Trade unions Company / Companies	Employees

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Company level

Involvement

Unknown

Views and reactions

Unknown

Sources

• 01 April 2011: Bogedan (2011) - Wie Krisenfest sind betriebliche Bündnisse zur Beschäftigungssicherung (www.boeckler.de)