A question regarding Germany's VW scandal.

[Mokito]

VW's personnel chief offered to step down on Friday, amid claims that union leaders at the carmaker were bribed with holidays and prostitutes.


Critics say the scandal is focusing attention on corporate Germany's system of works councils, in which union leaders and company officials make decisions together. Some argue that the system is a breeding ground for corruption.

BBC World

So can anybody with some insight into corporate speech tell me if my gut feeling is right; That some are taking this scandal and spinning it into a pseudo-reason for an abolishment of unions, or at least an attempt to seriously curb union's power?

[bobbieinok]

1. 'codetermination' is thename for how boards of directors MUST be

organized

many US companies with subsidiaries in Germany hate the German law of 'codetermination'

the following university article also discusses workers' councils, etc

http://xroads.virginia.edu/~MA98/pollklas/thesis/codglossary.html

....

Codetermination
Worker participation in company affairs is one of the mainstays of the social order of the Federal Republic. It is based on the conviction that democratic legitimation cannot be confined to government but must apply in all sectors of society.
The workforce in medium-sized or large companies (stock corporations, limited liability companies, partnerships limited by shares, cooperatives or mutual insurance companies) can influence company policy through their representatives on the supervisory boards.

This codetermination in the supervisory board extends to all company activities. Thus the supervisory board, for instance, appoints the members of the management board. It may also revoke their appointment, demand information on all company matters, and have the last word on important business decisions, e.g. with regard to major investments or rationalization measures.

Codetermination in Large Enterprises
Enterprises other than iron, coal and steel companies which either alone or together with their subsidiaries have a workforce of more than 2,000 are governed by the Codetermination Act of 1976 which requires the supervisory board to be made up of equal numbers of representatives of shareholders and employees. However, the shareholders have a slight advantage in the event of a stalemate in that the chairman of the supervisory board, who is always a representative of the shareholders, has a second, casting vote. In the appointment of a labor director the employees' representatives have no veto.

more....

NOTE half of the board is made up of employees....the chairman is always a stockholder......1-2 employee representatives MUST be union members

NOTE this statement

Worker participation in company affairs is one of the mainstays of the social order of the Federal Republic. It is based on the conviction that democratic legitimation cannot be confined to government but must apply in all sectors of society.

Germans call their economice system a 'soziale Marktwirtschaft'......a social market economy.......

the composition of the board of directors means that decisions such as downsizing, outsourcing, plant closing, etc......HAVE employee input

on Yahoo, a Business Week article and an article at Liberty Haven (aparently extremely RW) 'show' how codetermination is ruining global German competitiveness; LH complains that employees do not see only the bottom line and therefore damage a company's profits

[JackRiddler]

2. You got that right

Lived in Germany 15 yrs, translated various articles on the works-council and "dual representation" system.

At companies of a certain size, the entire personnel (including management) elect works councils to represent their interest with top management. Since most personnel are unionized workers, unions tend to hold majorities within these works councils, which negotiate on conditions of work, not wages.

Meanwhile, unions represent workers in whole industries and reach regional wage agreements with corporate cartels. For example, IG Metall union will reach a package wage agreement for all metal-working factories of all corporations located in the region of Hesse.

This is called the "dual system" of workers representation.

I think we're still talking around 35 percent overall union membership with impact on all other sectors. Jobs in Germany are very secure, but there is a shortage of new ones.

Also by law, almost half the positions on the board of directors (the people who meet a few times a year or so to determine broad outlines) go to workers and union leaders - i.e., the majority is still in the hand of shareholders, but workers are represented. Of course the real day-to-day management board under the CEO consists entirely of highly paid executives.

This system has been a great deal for German workers. Of course it's as subject to corruption as every single other institution of capitalism, without exception.

The entire time I was there, advocates of the Anglo-American system never tired of claiming Germany was stagnant, imminently bankrupt, stifling, unfree, blah blah. And this while German factory workers are making double the wage of Americans with full health and pension benefits!

The imminent catastrophe of Germany (which is so uncompetitive that it curiously still manages to have the highest trade surplus of any country) is always blamed on the works council system, the presence of union leaders in directorships, high benefits for workers, etc. etc.

The real problem for German workers is not that they are so expensive, but that they are so productive. The extremely well-organized system requires less of them.

In the propaganda, America is always supposed to be the positive example. (As you know, the unions here are far less corrupt, insofar as they generally don't even exist.)

Did you ever read anything like the following?

"The scandal focused attention on oligarchic ownership, in which a a few thousand millionaires and bankers, who tend to know each other, own majorities in all of the major corporations, and possess the financial means to influence all government decisions. Some argue the system is a breeding ground for corruption."