Skills Development and Labour Union- A Case Study on the Analysis of the Role of Labour Union in Skills
1. Recent Socio-economic Trends
1) Recent economic trends
The German economy is experiencing unstable growth. Real GDP grew by 0.8 percent in the first quarter of 2014 after adjustment for the season and the number of calendar days and this positive development will probably continue into the second quarter, albeit on a smaller scale. The third quarter started out rather hesitantly. The uncertainties in the world economy are showing their impact such as the consequences of the unrest in the Middle East and in Ukraine.
Nevertheless the Federal Ministry for Economic Affairs and Energy (BMWi) is still optimistic.
Two years of economic success lie ahead of Germany. According to the forecast, there is a broad- based and robust growth, driven by the domestic economy and based on the continuing good development of the labour market. Incomes of private households are recording a strong increase.
German companies are optimistic and investments are on the rise again. The measures introduced by the Federal Government - including for instance a stable and balanced budget and therefore increased investments in infrastructure, education and research aim to secure the basis for growth in the future.
Here are some of the main points in the spring projection 2014:
· German companies are investing more again. In Q3 and Q4 2013, companies significantly ex- panded their investments in machinery and equipment. Given the favourable financing condi- tions and an improved sales outlook, gross fixed capital formation will increase by 4.1 % this year. Next year, we expect an increase of 4.7 %. Thus, investments will contribute significantly to stronger growth.
· The continuing upswing on the labour market means that employment and incomes are rising
considerably. Disposable incomes of private households will also grow significantly, with fig- ures set to jump by 2.9 % this year and by 3.3 % in 2014.
· In conjunction with moderate inflation, this increase in income results in stronger purchas- ing power. Net wages and salaries per employee will rise by 1.2 % in 2014 and by 0.7 % in 2015 (adjusted for price). As an annualised figure for 2014, consumer spending is likely to rise (price-adjusted) by 1.5 %, with the rate of expansion increasing to 1.7 % in 2015. Low interest rates and a high propensity to purchase are to result in a slight fall in the savings ratio of private households next year.
· The recovery in the global economy will gain ground this year. The outlook is particularly bright in the euro zone. German exports will therefore increase by 4.1 % this year. For next year, the Federal Government is expecting a rise of 4.6 %. Due to the broad-based upswing, imports will experience a stronger increase than exports: 4.7 % in 2014 and 5.1 % in 2015. The current account surplus is decreasing.
Table 1. Key figures in the 2014 spring projection
Key Data on the Macroeconomic Development
in the Federal Republic of Germany [1] 2012 2013 Spring Projection
2014
Spring Projection
2015 Year-on-year change in %
unless otherwise stated GDP (price-adjusted)
Gainfully active persons (domestic)
Unemployment rate in % (statistical definition of the Federal Employment Agency [2]
0.7 1.1 6.8
0.4 0.6 6.9
1.8 0.6 6.7
2.0 0.3 6.6 Use of GDP price-adjusted (real)
Including private households and non-profit-making organisations Machinery and equipment Construction
-4.0 0.8 -1.4
-2.4 0.9 0.1
1.5 4.0 4.0
1.7 6.3 3.7
Domestic demand -0.3 0.5 1.9 2.1
Exports Imports
Net exports (stimulus) [3]
3.2 1.4 0.9
0.8 0.9 0.0
4.1 4.7 0.0
4.6 5.1 0.1
Gross wages and salaries per employee 2.9 2.2 2.9 3.5
[1] Up to 2013, preliminary figures from the Federal Statistical Office as of February 2014.
[2] Based on total number of persons employed.
[3] Absolute shift in net exports as a percentage of the GDP of the preceding year (=contribution to GDP growth rate).
Source: BMWi, press-realese 2104-4-15
The final consultations on the Federal Government’s spring projection were concluded on 15 April 2014 within the framework of the Interministerial Working Group on Macroeconomic Forecasting, which is chaired by the Federal Ministry for Economic Affairs and Energy. The Federal Statistical Office and the Deutsche Bundesbank were also involved.
(Source: Federal Ministry for Economic Affairs and Energy (BMWi), Press Release 2014-4-15 “The German Economy: ‘A broad-based upswing’ (Federal Minister Gabriel)”, http:// www.bmwi.de/
EN/press-releases.did=637158.html)
2) Recent labour market development
All-round the labour market is developing moderately positively in the mid of 2014. Employment is still expanding, but not as strongly as during the winter months. Unemployment and underemployment went up in July merely due to the start of the summer break, when seasonally adjusted both are down. The level of gainful activity will increase by 240,000 people this year and by 120,000 people in 2015. Registered unemployment will decrease this year by 60,000 people and by 35,000 people in 2015. The unemployment rate will decrease to 6.7 % this year and 6.6 % in 2015. Not least due to the increase in labour participation, the increase in employment will be stronger than the drop in unemployment.
With the beginning of the summer break unemployment went up in July. Against June it increased by 39,000 to 2,871,000 (+1percent). Most of the increase is due to the high number of young people that temporarily register as unemployed at the end of their last year of schooling or vocational training. Youth unemployment went up in July. When the training and academic years end an increase is quite normal in July and August. Unemployment among people younger than 25 rose by 38,000 to 277,000 (+16 percent) from June to July 2014. This is, however, a smaller increase than the three year average. Unemployment among young people is generally at a low level, the youth jobless rate was 8.2 percent in May 2014 This means, Germany has the lowest youth jobless rate in Europe (latest available data for May 2014), followed by Austria (8.9 percent) and the Netherlands (10.8 percent).
The jobless figure calculated by the Federal Statistical Office using the ILO jobless concept was 2.12 million in June 2014 (latest available data) and the jobless rate was 5.0 percent.
According to the Federal Statistical Office the number of persons employed (based on the concept) expanded by 63,000 to 42.24 million people from May to June. Seasonally adjusted their number increased by 16,000 which means that 377,000 people more (+0.9 percent) were gainfully
employed than in the previous year. This increase is mainly due to the expansion of employment covered by the social security system. All other forms of employment (self-employment, exclusively minor employment, work as additional expenditure) had lost against last year.
(Source: Federal Employment Agency (Ed.), Labour market report for the month of July 2014, http.//statistic. Arbeitsagentur.de/Navigation/Statistik/Arbeitsmarktbericht/Labour-Market-Germa- ny-Nav.html)
3) Educational Attainment
The qualification of the population is particularly important from an economic point of view as it has a positive effect on the performance of the national economy. As regards individuals, a high educational level improves their chances on the labour market and their active participation in social life. In Germany the educational level of older people differs markedly from that of the younger age groups, especially for women. Today the learning opportunities offered by the educational system are used equally by men and women, so that women of the younger generations now have higher qualifications than men. For example in recent years slightly more women aged 30 to 34 have a university degree than men of that age group (23% compared to 22%).
A high proportion of people in Germany have upper secondary level qualifications (58.2% in 2012 compared to an EU average of 46.5%). One reason for this is the longstanding tradition of the dual system of vocational training. For higher education, Germany approximates the EU average:
34% of all school leavers in 2012 acquired a university entrance qualification (Abitur) and 15% an entrance qualification for universities of applied sciences (Fachabitur).
The proportion of people aged 15 to 64 with a low level of qualification was constantly extremely below the EU average in the last years (13.7% in 2011compared to an EU average of 28.5%).
Table 2. Educational attainment 2010-2012 (DE Statis, www.destatis.de)
Educational attainment 2010 2011 2012
1,000 % 1,000 % 1,000 %
Total population 71,046 100 71,167 100 71,421 100
Highest level of general education completed
Presently attending schools 2,511 3.5 2,715 3.8 2,657 3.7
Secondary general school-leaving certificate 26,264 37.0 25,859 36.3 25,392 35.6 Certificate of ten-grade school of general education in the former GDR 5,042 7.1 5,021 7.1 4,961 6.9 Intermediate school-leaving certificate 15,404 21.7 15,479 21.8 15,818 22.1
Educational attainment 2010 2011 2012
1,000 % 1,000 % 1,000 %
Fachhochschule/University entrance qualification 18,329 25.8 18,957 26.6 19,488 27.3
Type of general qualification not specified 267 0.4 158 0.2 141 0.2
No secondary general school-leaving certificate 2,926 4.1 2,684 3.8 2,700 3.8 Vocational qualification attained
Apprenticeship (Dual system) qualification 35,661 50.2 35,725 50.2 35,653 49.9 Qualification from trade and technical schools 4,514 6.4 5,358 7.5 5,363 7.5 Qualification from trade and technical schools in the former GDR 910 1.3 906 1.3 808 1.1 Degree from universities of applied sciences (Fachhochschulen) 3,535 5.0 3,489 4.9 3,666 5.1
University degree 5,322 7.5 5,155 7.2 5,542 7.8
Doctor's degree 792 1.1 752 1.1 771 1.1
Type of vocational qualification not specified 166 0.2 150 0.2 128 0.2
No vocational qualification attained 19,724 27.8 19,230 27.0 19,082 26.7
The proportion of the population of early school leavers in 2011 is 10.5% and lies under the EU average (12.8%).Since 2006 the number of early school leavers declined in Germany steadily (2006:
13.7% / 2007: 12.5% / 2008: 11.8% / 2009: 11.1% / 2010: 11.9%/ 2011: 11.7%). These young adults experience particular difficulty in finding a training place or job. Various state programmes have been developed to provide this group of persons with support and funding. Nevertheless, Germany’s school dropout rate (10.5%) remains below the EU average (12.8%) in overall terms and is at a good level. The same applies to the educational participation of the German population.
A particularly high degree of educational participation is revealed at upper secondary level and in the post-secondary non-tertiary sector.
Compared with older age groups, young people with a migrant background also tend to achieve a higher level of educational attainment. Based on results of the 2012 micro-census, the report on
“Education in Germany, 2014”, published on 13 June 2014, shows that 37% of the people with a migrant back ground aged 30 to 34 have the necessary quali fications for enrol ment at an institution of higher education, while the relevant proportion amounts to only 24% among those aged 60 to 64. While the proportion of people with a migrant back ground who have no vocational qualifi- cations is lower among those aged 30 to 34 (35%) than among older people, too, this proportion is still more than three times as high as the relevant proportion among same-age people without a migrant background (11%).
For Germany as in many other countries it is obviously: the higher the level of school or vocational qualifications, the higher the education yields. The number of gainfully employed persons is
higher if they have a higher qualification, as in their monthly income; the risk of unemployment falls. An increase of the level of education also has a positive impact on social participation, since membership of organisations, social commitment and political participation increase with higher qualification levels.
Although the number of university graduates has risen over the past few years, they usually manage the transition into a job or into the labour market successfully. Periods of unemployment are rather rare and short, inappropriate jobs are also relatively rare. In the long term, different starting conditions following graduation generally even out. It remains to be seen whether a bachelor’s degree will provide access to similar positions on the labour market as traditional degrees. Many students still have doubts about the labour market value of bachelor degrees.
(Source: Refer Net Case Study Germany 2012; Federal Statistic Office, DESTATIS) 2. Labour Union Trends
1) Work and structure of the DGB and its individual trade unions
At the end of 2013 around 8 million people were trade union members in Germany. These members are spread across three large and competing Trade union Confederations and a number of individual trade unions not linked to a federation. By far the largest Trade Union Confederation in Germany is the DGB, founded in 1949, which at the end of 2013 represented around 6.1 million members, a good three-quarters of all trade union members in Germany.
The second largest umbrella organisation is dbb Beamtenbund und Tarifunion (a confederation especially for civil servants), with around 1.3 million members at the end of 2013. The third and by far the smallest umbrella organisation is the CGB – Christian Trade Union Federation, with 273,000 members, according to its own figures. It is in conflict with the DGB trade unions because CGB unions have concluded numerous agreements that undercut the collective agreements concluded by DGB unions on working time and pay. Finally, there are a number of trade unions with no links to an umbrella organisation, whose membership is estimated at 240,000 or so. The largest of these is the Marburger Bund – a confederation of medicine staff in Germany. In recent years small federations with no links to the DGB have been the focus of considerable public attention due to industrial action sometimes involving substantial demands, thereby challenging the collective bargaining of individual DGB trade unions.
As the trade union umbrella organisation, the DGB (German Confederation of Trade Unions) represents the German trade union movement in dealing with the government authorities at federal state and national level, the political parties, the employers’ associations and other groups within the society. The DGB is a member of the European Trade Union Confederation (ETUC) and the International Trade Union Confederation (ITUC).
The DGB coordinates joint demands, themes and campaigns for its 8 member unions. It supports them in industrial disputes, advocates their interests vis-à-vis politicians and the general public. The DGB itself is not directly involved in collective bargaining and cannot conclude pay agreements.
However, it is important for its competence as a special body for lager issues in matters of general political nature. The responsibility for running the DGB’s work rests with a five-member Executive elected by the Federal Congress every four years. This Congress set the framework for trade union policies. The DGB as umbrella organisation is financed by the individual trade unions. Employees are not members of the DGB, but direct members of the member trade unions, to which they pay their contributions.
The position of the umbrella organisation in relation to its individual trade unions is relatively weak and largely limited to representative tasks. The principal policy agenda is determined by the member trade unions. The DGB is not, as a rule, directly involved in negotiations with employers’
organisations and companies, collective bargaining and industrial disputes. If recent trends are anything to go by, the DGB’s role may be changing, given the changed political situation outlined above. For example, the DGB has played a more prominent role as coordinator of large-scale actions involving all trade unions, such as the recent minimum wage campaign.
2) The DGB and its Individual Trade Unions
Within the DGB the principle of one company, one trade union applies. The eight individual trade unions regard themselves as industry unions, which organise all the employees in the branch and firms and offices within the scope of their organisation. As a result of mergers and regroupings multi-branch trade unions have emerged.
Table 3. Individual DGB trade unions
Trade unions Important branches
Industriegewerkschaft Metall (IG Metall) Metal and electrical industry, textile and clothing, dry cleaning, wood processing, automobile trade, electrical trade, joinery, plumbing etc.
Vereinte Dienstleistungsgewerkschaft (ver.di) Civil service, commerce, banks and insurance companies, health care, transport, ports, media, social and educational services, printing, private services, fire services etc.
Industriegewerkschaft Bergbau, Chemie, Energie
(IG BCE) Chemical industry, pharmaceutical industry, mining,
energy supply companies etc.
Industriegewerkschaft Bauen-Agrar-Umwelt (IG Bau) Construction, industrial cleaning, agriculture Gewerkschaft Erzeihung und Wissenschaft (GEW) Teachers, educators, universities staff Eisenbahn- und Verkehrsgewerkschaft Railways, rail transport
Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) Food industry, mills, catering, restaurants
Gewerkschaft der Polizei (GdP) Police
Source: Dribusch et al.
The restructuring of branches, dual responsibilities (such as in the education sector) or the emergence of new industries (IT, solar and wind energy) have, in recent years, led more frequently than in the past to demarcation problems and conflicts between individual DGB trade unions.
However, the industry association principle remains dominant.
Around 20 per cent of members of the DGB trade unions are pensioners and around 7 per cent unemployed. A total of 463,000 members are civil servants (Beamte). The latter have special status in Germany, although this is losing significance both quantitatively and with regard to the guarantees attached to it. Basically, civil servants cannot be dismissed. They enjoy freedom of association, but their pay and working time are laid down statutorily by parliament. Collective bargaining does not exist for them. According to established legal interpretation civil servants thus have no right to strike.
The DGB trade unions are financed exclusively from member contributions and income from their assets. The monthly contribution is 2 per cent of the gross monthly wage at most DGB trade unions. If the number of members falls a trade union faces financial problems for trade unions do not receive government money or public subsidies. The whole apparatus, all administrative staff and all full-time officials have to be paid by the trade unions themselves. In contrast to some
European countries, such as the Netherlands or Switzerland, the trade unions do not receive additional income from levies laid down in collective agreements to be collected by companies.
The biggest individual trade unions within the DGB are the industry trade union IG Metall and the Vereinte Dienstleistungsgewerkschaft (ver.di), which represents around 70 per cent of all DGB trade union members together. Ver.di and – especially – the GEW (Education and Science Union) are the two DGB unions in which women make up the majority of members.
Since 2004 the DGB trade unions have lost almost 900,000 members or 12 per cent, a dramatic development, although different trade unions are affected very differently. While the GEW has been able to increase its membership, for example, IG BAU has lost almost one-third. Since 2009 the loss of members has slowed significantly. In 2013 five of the eight DGB trade unions enjoyed positive membership development. Of these, GdP and GEW have enjoyed continuous positive growth since 2009. The same applies to NGG. IG Metall has been gaining members again since 2010 and in 2013 had more members than in 2009. Ver.di ended 2013 with a positive net balance for the first time since its founding in 2001. The DGB’s problem cases are IG BAU and EVG, both of which are far from turning the tide in terms of membership development at the moment. IG BCE has also had to struggle with membership losses.
Union density – the proportion of employees who are members of a trade union (DGB, DBB, CGB and trade unions not linked to an umbrella organisation) – was just under 18 per cent in 2013 and thus almost up to the level of 2009 (19 per cent). By European comparison Germany is thus – despite its large individual trade unions – slightly below average.
Table 4: DGB Trade Unions: Membership 2009-2013 (1.000)
Trade union 2013 2012 2011 2010 2009 Proportion of
women 2013 in %
IG Metall 2.266 2.264 2.246 2.240 2.263 17,7
Ver.di 2.065 2.061 2.071 2.094 2.138 51,3
IG BCE 664 669 672 676 687 20,5
IG BAU 288 298 306 315 325 23,3
GEW 270 267 263 260 258 70,7
EVG 209 214 221 232 219 21,4
NGG 207 206 206 206 205 41,7
GdP 174 173 172 171 169 23,2
DGB 6.143 6.151 6.156 6.193 6.265 33,0
Note: Membership numbers also include unemployed and pensioners, Source: DGB German Trade Union Confederation
3) Challenges for the German Trade Unions - Membership Recruitment
After unavailing efforts to counter the problem of falling membership with mergers in the 1990s the DGB unions now regard expanding membership as their biggest practical challenge. It remains the case that the best organised employees in Germany are those in the metal and electrical industry. The proportion of trade union members at the large car makers is particularly high: in individual production plants sometimes nine out of ten employees are members of IG Metall.
Similarly well organised are the – albeit greatly diminished – steel industry, energy supply and individual parts of the public service and the core areas the companies that emerged from the privatisation of postal services and the railways. The situation is very different in the chemical industry. This is also the case in the construction industry, in which the large building companies have shrunk. Between 1995 and 2005 the number of employees in construction halved, from 1.4 million to 700,000. IG BAU lost many of its members as a result of this and is finding it difficult to organise the new small companies emerging in the market. Among the new companies in wind and solar energy the trade unions remain underrepresented. However, in recent years they have begun to make progress, improving the development of trade union structures. IG Metall has experienced significant success in recent years with long-term recruitment campaigns.
In public services, local public transport and waste disposal have traditionally been trade union bastions; the same applies to the railways and postal services. As a result of privatisation and