The Extent of Collective Bargaining and Workplace Representation:
Transitions between States and their Determinants. A Comparative
Analysis of Germany and the United Kingdom

John T. Addison,* Alex Bryson,** Paulino Teixeira,*** André Pahnke,****and Lutz
Bellmann****** Moore School of Business, University of South Carolina** National Institute of Economic and Social Research*** Faculdade de Economia/GEMF, University of Coimbra**** Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit*****Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit

Abstract
Industrial relations are in flux in many nations, perhaps most notably in Germany and theUnited Kingdom. That said, comparatively little is known in any detail of the changing
pattern of the institutions of collective bargaining and worker representation in Germany
and still less in both countries about firm transitions between these institutions over time.
The present paper maps changes in the importance of the key institutions, 1998-2004, andexplores the correlates of two-way transitions, using successive waves of the German
IAB Establishment Panel and both cross-sectional and panel components of the U.K.
Workplace Employment Relations Survey. We identify the workplace correlates of thedemise of collective bargaining in Britain and the erosion of sectoral bargaining inGermany, and identify the respective roles of behavioral and compositional change.

1

I. Introduction
In recent years there has been an ongoing process of decentralization in Germany with adecline in sectoral agreements (Flachentarifverträge). The formal erosion of these central
wage agreements apart, the path toward decentralization is less transparent; for example,
many companies still pay above the wages agreed to in regional and industry-levelagreements, there is no obvious sign of a sustained growth in firm-level agreements(Firmentarifverträge), and many firms though not bound by collective agreements stillorient themselves toward sectoral agreements. The German system of industrial relations
continues to be characterized by its extensive juridification, framework of binding
collective agreements, and encompassing interest organizations on both sides of the labormarket. It is moreover a dual system of interest representation, of codetermination andcollective bargaining. But although few would claim today that Germany’s basic
industrial relations system remains intact (e.g. Klikauer, 2002), there is lingering
ambiguity concerning the facts of the case – let alone their determinants – allowing fordisagreement as to the consequences of the erosion that has been observed.1
The United Kingdom’s industrial relations system differs in a number offundamental respects from its German counterpart. First, it remains a system in which
employers are largely free to choose how they engage with employees and how they
associate with one another.2 There are few formal requirements placed upon employers tonegotiate, consult, or inform employees over employment relations matters. Those that doexist tend to originate at European level and have the greatest impact on transnational
corporations. Second, auxiliary legislation that supported employees’ bargaining rights –such as that which extended the terms of bargaining agreements to uncovered workers in
the public sector – were removed in the 1980s. As a result, there is very little statutory
underpinning to collective bargaining and that which does exist – such as the statutory
recognition procedure – is largely a dead-letter. Third, because of this framework, there islittle necessity for employers to seek derogations from sectoral bargaining arrangements.
And while it is possible under statute for employers to permit collective agreements to be
directly legally binding (via the 1992 Trade Unions and Labour Relations ConsolidationAct)3 this does not happen in practice. Instead, collective agreements take legal effect as
implied terms in employees’ contracts of employment. Fourth, the peak social partners

2are relatively weak in Britain. Employer association membership is low and declining,and employer associations have traditionally been very weak, with a few notable
exceptions such as the Chemical Industries Association and the Engineering Employers
Federation. As a consequence, there is little coordination in bargaining arrangements
across employers, and bargaining coverage tends to be low. Even a quarter century ago,
sectoral agreements were the principal method of pay determination in only one-sixth ofprivate sector workplaces and they declined dramatically through to the late 1990s(Brown, Bryson, and Forth, 2009: 34). In short, sectoral bargaining was already a spent
force in Britain by the time our analysis begins in 1998. Finally, because the system ishighly decentralized, fragmented and uncoordinated, British unions tend to focus theirorganizing activity at workplace or organization level, rather than sectorally or nationally.
Nor for that matter do they share responsibility for workplace governance issues withworks councils. Rather, the United Kingdom has joint consultative committees (JCCs)
which are voluntary structures usually set up at the behest of management and with little
or no authority derived from statutory arrangements.4 Consequently, British unions seek
to address the full range of workplace-related issues as they impinge upon the pay andconditions of employees.
The goal of the present exercise is to update research on the facts of the case inboth countries (even though we only cover the interval 1998-2004 because of our crosscountry focus), to chart transitions between collective bargaining states, and seek toaccount for the resulting collective bargaining structure. That is to say, we will firstexamine the course of collective bargaining (including the erosion of multiemployer
bargaining and the expansion of sectors without collective bargaining) and worker
representation (including works councils and Joint Consultative Committees) in greater
detail than has previously been undertaken in any comparative study of Germany or
Britain before turning to a descriptive examination of transitions between states over ourcommon sample period and thence an analysis of their correlates and the 2004 status quo
ante.

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II. Backdrop
Historically, centralized bargaining (or, more accurately, regional industry-widebargaining) has been the key form of collective bargaining in Germany, covering some
90 percent of all employees. As Schnabel, Zagelmayer, and Kohaut (2006: 168) note,things first began to change in the early 1970s with the emergence of what they term
“qualitative bargaining policy,” namely sectoral agreements that sought to accommodate
improvements in working life and the protection of employees against dislocations
caused by rationalization and technical change. Such provisions – first tackling changes
in the organization of work and subsequently in the flexibility of working time – were to
be implemented at local level.
Thence, in the 1990s, under the pressures of globalization, high unemployment,
and unification, all aspects of the system of collective bargaining are widely
characterized in the German literature as having being subject to more or less serious
erosion if not actual crisis (e.g. Artus, 2001). Thus, employers were increasingly
resigning from employers’ associations (Silvia and Schroeder, 2007), trade union strength
was declining rapidly (Addison, Schnabel, and Wagner, 2007), and the coverage ofcollective bargaining was shrinking (Kohaut and Schnabel, 2001). Moreover, thecoverage of that other pillar of the German dual system – the works council (see below) –was also subject to erosion (Hassel, 1999).
But in response to these challenges German collective bargaining wasdecentralizing. In part, this took the form of a rising number of company agreements –which increased from 2,550 in 1990 to 6,415 in 2001 – as many firms dropped out of thecentralized system. A more important and sustained tendency, however, has been thegrowth of decentralization in sectoral agreements through the device of ‘opening clauses’(Öffnungklauseln) that have allowed firms more flexibility through locally-negotiatedadjustments to centrally-agreed working time and wages (Bispinck, 2004). The former
adjustments allowed increases or decreases in working time and alterations to work
schedules. The latter permitted reductions in wages or a suspension/withdrawal of wage
improvements and/or working time adjustments involving wage changes (Hassel, 1999:
496-497). Of the two, agreements on working time reductions (without compensation)
were the more common (Kohaut and Schnabel, 2006). We note parenthetically that a4question on such opt-out clauses was first asked in the dataset used here (the IAB
Establishment Panel) in 2005, just outside the time frame of the present study. But giventhat opening clauses well preceded 2005 their potential influence will be accommodated
using industry dummies, the maintained hypothesis being that they offer a means ofstemming the erosion of centralized bargaining by better aligning outcomes to firmspecific needs
To complicate matters, so-called plant-level “pacts for employment andcompetituiveness” (betriebliche Bündnisse für Arbeit [und Wettbewerbsfähigkeit]) havealso proliferated in recent years (Berthold et al., 2003; Rehder, 2003). Such agreements
have also led to more flexible work rules and working time as well as reductions in totalcompensation. Although partially guided by opening clauses, they apply to covered anduncovered companies alike. The consensus view appears to be that while opening clauses
represent a trend to organized decentralization, pacts though no less a response to theeconomic condition of the firm, at least represent a different dynamic: a new normal
regulatory instrument. At issue is the extent to which such agreements if not in actual
contravention of sectoral labor contracts are in fact destabilizing (see Seifert and MassaWirth, 2005). The point is that while concession bargaining of this type typically operates
within the framework of sectoral agreements it may create pressures leading companies
to leave the system altogether – which effects might be long delayed and not yet evident
in data on the structure of bargaining (and certainly over the time interval examined
here.)
Recently, employer associations have also responded to the challenge ofmembership losses via a new form of membership affiliation known as membership“without collective bargaining ties” (ohne Tarifbindung) (see Silvia and Schroeder, 2007:1453-1455). Such affiliations allow members to take advantage of the relevant
association’s legal, lobbying, and personnel services without having to pay thecontractual wage. By the same token, such members are not shielded from union efforts
to extract a local agreement and they cannot collect strike insurance benefits as canregular members. This new membership form is common in the metals, plastics, andwoodworking industries and is popular among small firms. Silvia and Schroeder note thatabout one-quarter of member firms in metalworking (employing around 10 percent of5

workers in that sector) have this form of membership as well as some one-third of all
firms in the textile employer associations where losses of membership have been mostacute. Further, in eastern Germany the majority of members in many regional employer
associations have this status. Such membership developments do of course fall squarely
within our sample period but our data contain no information on their incidence. Onceagain, their effects will be recouped through industry dummies.
Finally, mention might also be made of so-called “quick notice agreements.”
German law requires any company leaving an employers’ association to adhere to allcontracts signed by that association when the company was still a member for theduration of those contracts. Employer associations of late have begun to offer quick
notice agreements that allow members to leave an association upon demand, even after aprovisional agreement with the unions has been reached but prior to its authorization.
Although quick notice may have alleviated some of the anxiety of nervous managers
about being trapped in a bad contract, Silvia and Schroeder (2007: 1453) contend that it
has not stopped the slide in sectoral agreements, arguing that those associations with suchagreements do not seem to have declined noticeably slower than those without them; andfurther caution that the option has rarely been exercised.
In sum, after sharp falls in industry-wide bargaining (by the start of our sample
period the number of employees covered by sectoral agreements had fallen to 68 (51)percent in western (eastern) Germany), recent innovations in collective bargaining may
well have blunted further erosion in the number of establishments and workers coveredby sectoral agreements and/or neutralized any trend toward increasing company
bargaining proper. This is not to imply that the process of decentralization is ongoing.
Indeed, the direct evidence is to the contrary. Thus, there are very few sectors where
opening clauses have not been agreed upon. For example, as of 2005 around 13 percent
of establishments in the IAB Establishment Panel covered by collective bargaining statedthat their collective agreements contained opening clauses and about one-half of theseestablishments had made use of them. Furthermore, pacts for employment have provided
the basis for yet further decentralization: a 2003 survey of works councils indicated thatsuch pacts were in existence at about 23 percent of German companies with at least 20
employees (the proportion was much greater – at 46 percent – in establishments with6

over 1,000 employees). The principal issue is whether this decentralization is planned ordestabilizing. And even where not destabilizing the ability of the system to meet theneeds of decentralization confronts the issue of workplace representation through theagency of the works council, that other pillar of the dual system of interest representation
comprising unions and works councils.
As we have seen, unified unions organize entire sectors and industries andnegotiate industry-wide collective agreements. For their part, work councils are elected atplant level and represent the interests of all employees in the plant, not just union
members. They enjoy relatively extensive powers, extending to codetermination rights,
but not covering wage negotiations per se unless the bargaining parties atregional/industry level expressly cede them a role. That said, the wide-ranging influenceof the council impart material de facto bargaining authority while over the course of time
more

conventional

bargaining

rightshaveaccrued

to

then

under

both

authorized/regulated and unauthorized decentralization. In other words, issues that wereformerly dealt with only under collective bargaining are increasingly being addressed
within the domain of works councils. At one level, then, works councils may be likened
to Anglo-Saxon workplace unions even though the strike weapon is foreclosed to them. It
follows that any discussion of collective bargaining necessitates analysis of the course ofworks council representation.
Any decline in works councils (and of the union movement as well given their
symbiosis)5 limits the regulative capacity of German industrial relations institutions; inparticular, the ability of the German system to decentralize may be threatened whilefurther undermining trade unions. In the present treatment, we will consider the factors
underpinning works council presence and works council formation/dissolution noted in
the works council literature (see, for example, Addison, Schnabel, and Wagner, 1997;
Addison et al., 2003; Addison et al, 2004; Jirjahn, 2009). We shall also consider the roleof collective bargaining in this regard, although we do not here explore the union-works
council nexus in any real detail.
The attitude of the unions is also a constraint since it is hard to conceive of theneeds of decentralized bargaining being best served by a situation in which thebargaining parties at sectoral level can exercise a right of veto as is the case with opening

7

clauses. Finally, we have to recognize that the influence of collective bargaining extends
well beyond its formal competence or reach. This is because a very considerable numberof uncovered establishments/employees are influenced by the wages set under sectoral
agreements by virtue of the ‘orientation’ of their employers toward such agreements.
Thus, our analysis must seek at least to document this behavior as distinct from theclassical uncovered case.
Despite the profound differences in the employment relations context charted
earlier, the U.K. private sector faces similar difficulties with respect to worker
representation and collective bargaining as does Germany. Writing at the beginning of
this decade, Millward, Bryson, and Forth (2000: 234), reflecting on the findings of astudy tracking employment relations over the previous two decades, commented: “Thesystem of collective relations, based on the shared values of the legitimacy ofrepresentation by independent trade unions and of joint regulation, crumbled … to suchan extent that it no longer represents a dominant model.” Even where unions retained
nominal bargaining rights, they were frequently overlooked in decision-making, and little
or no negotiation over terms and conditions occurred. Commentators were to refer tounions as “hollow shells” (Hyman, 1997: 314; Millward, Bryson, and Forth, 2000:
chapter 5; Brown et al., 1998). As a consequence, the financial state of British tradeunions is parlous (Willman and Bryson, 2009), severely limiting their powers to service
current members’ interests, let alone organize parts of the non-union sector. The tendency
was therefore for new workplaces and new entrants to the labor force to be ‘born’ nonunion (Machin, 2000; Willman et al., 2007), resulting in a rise in the proportion of all
employees in the labor force who had never been union members. This trend was evenapparent in organized workplaces (Bryson and Gomez, 2005).
Union organizational weakness has manifested itself in a decline in the union
wage premium (Blanchflower and Bryson, 2009) and, despite a more benign politicalclimate under ‘New Labour,’ a widespread perception of union ineffectiveness among
union members and non-members alike (Bryson, 2007; Bryson and Forth, 2009).
Perhaps somewhat perversely, weaker unions may have been more attractive toemployers as partners in organizational change and enhanced workplace performance.
Union capacity to organize industrial action seems to have diminished (Dix, Sisson, and8Forth, 2009), and with it the last vestiges of fear among employers with which unions
were viewed in the aftermath of the 1979 Winter of Discontent and the Miners’ Strike ofthe early 1980s. There is indeed new evidence to suggest that employers do perceive
unions as helpful in improving workplace performance (Bryson and Forth, 2009), andthere has been a diminution in union negative effects on profitability – such that theseeffects are no longer statistically significant (Blanchflower and Bryson, 2009). However,
employers have supplemented and, in some places, supplanted unions through thecreation and widespread adoption of non-union forms of two-way communication
offering employees ‘voice’ through non-union channels (Willman, Gomez, and Bryson,2009). Unlike the German case, where works councils provide a strong representative
form of voice at the workplace for workers, British employers have placed the onus on
direct communication mechanisms such as team briefings. Although they are the creationof employers, such mechanisms appear to enhance employee perceptions of managerial
responsiveness to their needs and problems at the workplace (Bryson, 2004), potentially
undermining the position of representative forms of worker voice such as trade unionism
and joint consultative committees. (And, unlike works councils, it will be recalled that
JCCs are voluntary rather than mandatory representative institutions, set up at the behestof management and not the workforce.)
The United Kingdom differs from Germany in another important respect. Unlike
German employers, their British counterparts are able to ‘mix and match’ pay bargaining
strategies, including bargaining coverage at workplace, organization, and sectoral level.
However, although employers are at liberty to deploy different levels of bargaining, inpractice, if there is any collective bargaining at all, it tends to be at a single-level (Bryson
and Wilkinson, 2002). Such single-level bargaining reflects a more general trend towards
the simplification of pay determination at workplace level (Kersley et al., 2006: 184).

III. Some Theoretical Reflections on Bargaining Structure
Abstracting from macroeconomic considerations attendant upon the covariation ofcentralization (latterly, coordination) of the bargaining system and macro aggregates,
centralized or at least more centralized wage agreements can be rationalized on a numberof microeconomic grounds. The standard argument is that centralization creates9homogeneous conditions for companies by taking the wage out of competition, providing
comparable labor costs for all companies. More formally, transaction costs can be
reduced by substituting collective negotiations for the plethora of individual bargains andthrough standardization of the terms and conditions of the employment relation. Thesesavings in the costs of negotiation and regulation are said to be increasing in the degree ofcollective bargaining centralization and coverage. Further, as Schnabel, Zagelmeyer, andKohaut (2006:172) point out, the transaction cost arguments may be stiffened by recourse
to power considerations. Thus, they refer to the advantages to the employer side of being
able to pool their resources when dealing with organized labor. Most obviously, employer
organizations are designed to counter whipsawing – the picking off of employers one at atime.
That said, the attraction of decentralization is that single-employer agreements (orindividual contracts) have the obvious advantage of allowing the parties to tailor theagreement to the situation of the company or plant. Establishment-specific problems canthen more easily be taken into account. But if unions are organized at a different level orinsiders have the power to dictate wages and conditions then more centralized contracting
may be beneficial, implying that there may be some optimal level of centralization.
External developments intrude on this scenario. In particular, the heightenedcompetition from globalization challenges existing structures and choices of theregulatory framework. Globalization increases the need for operational flexibility (i.e.
differentiated responses) in response to changing conditions in product and factor
markets – the notion of increased heterogeneity in production strategies and labor
practices. In such circumstances, as Schnabel, Zagelmeyer, and Kohaut note (2006: 173),“… the transaction-cost advantage of centralized arrangements decreases in favor of theinformational and flexibility advantages of decentralized regulation.” The requirementsof flexible and local decision-making confront the relatively rigid rules set by collective
bargaining. One aspect of this is the widely observed employer withdrawal from
employer associations, as well as the reticence of newly-founded firms to join them (onthe facts of the latter, see Kohaut and Ellguth, 2008, who further document the generalcourse of collective bargaining coverage between 1996 and 2007). .

10Much research has in fact been devoted to the effect of economic change on
employer associations. For example, Traxler (2004) has considered the ability of
employer associations to weather collective action problems in the face of unfavorable
economic conditions. In a cross-country setting he reports that institutional factors (ofwhich the most important is the extension of multiemployer agreements to those
employers not affiliated to the signatory employer association) are more important thaneconomic factors (such as foreign trade dependence) as determinants of the level of
employer density. This ties in of course with the varieties-of-capitalism model. However,
economic change requires adjustment strategies on the part of employer associations, andTraxler observes that the functional adjustments (e.g. political lobbying, mergers, cuts inbudgets, services, and dues, reorientation toward product market interests) have
weakened them in relation to their constituency – if not labor unions. Further, weakeningof the core function of multiemployer bargaining threatens the withdrawal of government
support (based on macroeconomic considerations) and at root the survival of employer
associations.
Traxler concludes importantly that supportive labor law has contained this risk bymeans of organized decentralization (see also Ochel, 2003, pp. 20-24). However, hecautions that the adjustment strategies followed by employer associations may exacerbate
their problems in the long run while noting that decentralizing tendencies may become sodominant that multiemployer bargaining loses control of the process and ultimately fades
away. A not dissimilar conclusion is offered in the very different treatment by Silvia andSchroeder (2009), who argue that the interests of large and small employers havediverged fundamentally since the mid-1980s with the attempt by the latter to shift theburden of adjustment to cost pressures on to the former, leading smaller employers todesert employer associations. The response of employer associations in the form twotiered membership and like measures is an attempt to bridge the gap. Not only is thisnarrative inconsistent with the predictions of the varieties of capitalism model but, if atipping point has already been reached, it may also constitute support for the polar
opposite position of the convergence (around an Anglo-Saxon model) thesis.
Finally, we have not mentioned the effect of transnational economic integrationon unions. Two points are in order here. First, there is broad consensus that unions have11

been impacted harder by the economic changes detrimental to collective action.
Heightened unemployment and growing internationalization, so the argument runs, haveexacerbated pre-existing, pre-associational power asymmetries. Second, weakened
unionism reduces the incentive to engage in multiemployer bargaining. Alternatively put,
union decline strengthens the importance of the supportive role of labor law and provides
the basis for Hassel’s (2002: 316) conjecture: “If it were not for such political support,
the erosion of the German system of industrial relations would be even more rapid andmore pronounced …”
And what of that other form or worker representation, the works council?
Transaction costs may be important here as well since works councils might lower
communications costs in larger and likely more complex and hierarchical organizations.
But theoretical considerations have mostly focused on the works council-collective
bargaining nexus. One idea is that where a works council is embedded in a collective
bargaining arrangement, the tendency of the works council agency to engage in rentseeking behavior will be sharply constrained, leading it to concentrate on production
rather than distribution issues. (Freeman and Lazear, 1995; Hübler and Jirjahn, 2003)
Thus, employers may be members of an employers association/participate in sectoral
bargaining so as to limit rent seeking by the works council and take advantage of the proproductive voice aspects of the entity. But works councils are elected by workers and notby management even if the latter can influence that decision (see section IV). And there
are grounds for expecting a positive association between sectoral bargaining and works
councils by reason of employee choice: works councils may need the support of unions tostrategically shape outcomes (Wever, 1994). On the other hand, if they are seeking to
extract rents, workers may see less value in voting in a works council in situations where
there is a collective agreement in place. More generally, since works council rights are afunction of employment size, workers should be less inclined to elect a council in smaller
establishments.
A very different view of works councils is that they are defensive agencies, sothat workers might elect them to protect quasi rents they have created through investingin firm-specific capital/training (Jirjahn, 2009). This time the opportunism is viewed as
emanating from the employer side. Attention then shifts to the factors that might make12

employer opportunism more likely, such as transitory negative shocks and adverse
economic situations more generally. On this view, works councils are likely to be
introduced when workers anticipate a financial crisis. Arguments such as a poor sales
situation might thus be included alongside other suspects reflecting heightened
uncertainties (such as those associated with certain payment systems, research-based
market strategies, and ownership forms that encourage employer risk taking).

IV. Empirical Studies
There have been comparatively few cet. par. investigations of the structure of collective
bargaining in Germany despite the extended debate on decentralization. We focus here on
the set of studies of Schnabel and colleagues since these are among the best known incharting changes in the structure of collective bargaining while using the same data set as
do we. Key arguments deployed in this series of studies and the related literature (onwhich, see the references contained in Schnabel, Zagelmeyer, and Kohaut, 2006) include
establishment/organizational size, establishment type, establishment age, workforce
characteristics, form of ownership, and (proxies for) the nature of the employer
association. The relevance of establishment/organization size is that the transaction costsof concluding individual contracts may be reduced by collective bargaining which may
also reduce complexity and improve communications. And if larger plants are more
likely to be unionized, there are advantages in collective action that may be underscoredby the orientation of the latter or at least by the collective good of wage moderation.6 For
its part, branch plant status likely reflects spillover effects from the parent company
favoring collective bargaining (vis-à-vis independent establishments of similar size)
Perhaps the most important reason for the inclusion of establishment age is amechanical one: the very persistence of bargaining structures. Further, younger plants
may need more flexible institutional structures first to survive and then to grow. For its
part, homogeneity of the workforce may point to greater benefits from the standardization
associated with centralization. Conversely, higher shares of (firm-specific) skilledworkers may mean that solutions are best handled in house. That said, expectations might
be reversed if the unskilled are less unionized or if lower skill levels limit the scope foropportunistic behavior and thence the need for collective regulation. Ownership of the13company may be influential in a number of respects. In the first place, it is less likely that
individually-owned businesses need follow a collective agreement on transaction cost
grounds. Moreover, foreign-owned establishments may need to follow different
institutional settings set from without. Finally, as our preceding discussion has suggested,
the type of employers’ association may be important. In particular, associations offering
opt-out clauses and more flexible forms of membership forms may stem membershiplosses. As a practical matter, however, lacking such information in regular data setsinferences have to be made on the basis of blunt industry dummies.
With these preliminaries behind us, we next review studies by Schnabel,
Zagelmeyer, and Kohaut (2006), and Kohaut and Schnabel (2001, 2003). Schnabel,
Zagelmeyer, and Kohaut (2006) provide a comparative study of the determinants ofbargaining structure in Britain and Germany in 1998 and 2000, respectively. Since theyreport that more or less the same set of variables in the two countries are associated withfirms’ choice of governance structure, we will focus on their results for Germany here.
The authors’ ordered probit results suggest that the probability of multiemployer
bargaining rises with establishment size (especially in eastern Germany, where adoubling in employment size from 100 to 200 employees increases the probability ofmultiemployer bargaining by 6 percentage points), albeit at a decreasing rate. Branchplants are less likely to have no collective agreements and more likely to have multi-plantbargaining than are independent businesses. Newly-founded establishments are less likely
to make use of multiemployer bargaining, while plants with larger shares of low-skilledworkers are more likely to engage in multiemployer bargaining. Finally, foreign
ownership has different effects in western and eastern Germany; increasing theprobability of no collective bargaining in the former region and lowering it in the latter.
Again using the IAB Establishment Panel, Kohaut and Schnabel (2001) provide a
probit analysis of the determinants of applicability of a sectoral wage agreement, anordered probit analysis of the applicability of contract type (where the dependent variable
is an index taking the value of 4 for a sectoral agreement, 3 for a firm agreement, 2 for nocollective bargaining per se but where the firm orients itself to a (sectoral) collective
agreement, and 0 where there is neither a collective agreement nor a process oforientation), and finally a probit analysis of the abandonment of a sectoral agreement. In

14each case the outcome year is 2000. The main results of the initial probit analysis is thatthe application of a sectoral agreement is positively associated with establishment size
(although again at a decreasing rate), branch plant status, and (on this occasion) with theshare of qualified workers, and negatively associated with the age of the establishment,
its legal form (where it is an individually-owned firm), and foreign ownership (though
not for eastern Germany). The factors that are associated with of a sectoral or
multiemployer agreement presence assume opposite sign when it comes to theirabandonment, although the effects are less well determined. In addition, firms are lessprone to leave a sectoral agreement where a works council is present and where they
already pay higher wages than laid down in that collective agreement. Finally, theauthors’ ordered probit analysis suggests that formalization is more likely the larger thefirm, among older and branch plants, and where the workforce is more qualified. Againas before, individually- and foreign-owned firms are less likely to apply (or refer to)contracts of any sort. In their subsequent analysis of the application/abandonment ofsectoral agreements, Kohaut and Schnabel (2003) obtain much the same set of results
using data for 2001 and pooled data for 1998-2001.
Two final studies by Schnabel and colleagues might usefully be addressed inconclusion. First, Kohaut and Schnabel (2006) examine the prevalence of opening
clauses in sectoral agreements and the extent to which they are utilized by firms. Using
data from the 2005 IAB Establishment Panel, the first to contain a question on such optout clauses, the authors note that 13 percent of covered establishments stated that theirsectoral agreements contained opening clauses. Interestingly, however, a much larger
share of these establishments were unaware of whether or not the sectoral agreement
contained any such clause(s). Subject to this caveat, approximately, one-half of theestablishments used such clauses. In examining the determinants of the use of the two
types of opening clauses – adjustments to working time and (less commonly) reductions
in wages – Kohaut and Schnabel report that poor profitability of the enterprise is a key
initiator.7 The authors conclude that improved information about existing opening clauses
as well as increases in their frequency might improve acceptance of the German systemof collective bargaining and reduce the tendency of firms to withdraw from employer
associations and hence sectoral bargaining.8

15

In a separate study of contractual wage payments in excess of those fixed under
sectoral bargaining (übertarifliche Entlohnung), Jung and Schnabel (2009) observe that
40 percent of establishments covered by sectoral and firm-level agreements pay higher
wages than are stipulated in the relevant agreement. Although their main concern is withthe determinants of the wage cushion (and, ultimately for technical reasons, with its
presence), our interest is mainly in their more descriptive findings. Jung and Schabelreport that establishments covered by firm agreements are significantly less likely to havewage cushions. The argument is of course that wage cushions are necessary to overcome
the restrictions imposed by centralized agreements, whereas firm-level agreements are
tailored to firm-specific conditions. Next, it is reported that the incidence of wage
cushions has declined in recent years, along with the coverage of collective agreements.
Finally, the excess of wages over contractual levels has also declined – from 48 percent
in 2000 to 43 percent in 2006. The authors’ interpretation is interesting: centralized
bargaining has become more dominant to the extent that fewer firms deviated from thesectoral contract.
In the light of the above, it seems that there are grounds for anticipating a positive(negative) association between establishment size and age (foreign ownership) andformalization (i.e. collective bargaining, ignoring for the moment the distinction between
single-firm and multi-employer agreements). There is some theoretical suggestion that amore homogenized and in particular less skilled labor force should be associated withcollective bargaining, although this relation may be undercut/reversed by the insider
behavior or unionization of more skilled groups. Single plants (as opposed to branchplants) may also on the basis of practical considerations and past research be expected tohave less recourse to formalization and the same may be true of individually-owned
enterprises although here there may be a positive association with works council
formation on managerial pressure grounds.
We include all such arguments and a range of others. First, we deploy a muchwider range of workforce characteristics (shares of female workers, part-timers, andfixed-term contract workers, as well as skilled workers). This is partly because we arealso interested in examining the determinants of (changes in) works council status. But
the use of atypical workers in particular may give plants an added degree of freedom and16other things equal weaken the tendency to leave collective agreements. Similarly,
expected increase in sales may give more room for maneuver. By the same token, they
may also lessen the attraction of works councils to workers (see below).
Higher shares of exports in output, greater product market competition, R&D andadvanced technology might all mirror the expected association between foreign
ownership and collective bargaining. Differences in export propensity limit productcommonalities and employment standardization needs of employers, heightenedcompetition strengthens the importance of differentiated responses, while technologicaland structural change may further affect companies (and also occupational groups)
differently and elevate the informational and flexibility advantages of decentralized
regulation.
The trend toward organizational change at the workplace – as manifested in adecentralization of decision making (delegation of responsibilities, introduction of teamwork and profit-centers) – might also be expected to require greater flexibility thanpermitted by the rules set under centralized (strictly sectoral) bargaining, subject to the
opt-out clauses mentioned earlier. Moreover, some or all of such measures may substitutefor other forms of workplace representation and in particular the work council.
Studies of the determinants of works council presence (and formation/dissolution)
are altogether more numerous than for collective bargaining status (see, for example, thereferences contained in Jirjahn, 2009), not least since they also form part of theburgeoning literature of the effects of works councils on firm performance (reviewed
extensively in Addison, 2009). Perhaps the main relation in the present context is that theentity is more likely to be observed in situations where the firm is covered by a collective
agreement, irrespective of the form of the agreement with the growth of decentralized
bargaining tendencies noted earlier. That is to say, works councils are not only
responsible for the local administration of collective agreements but also have become
more involved in their negotiation in recent years. To this largely descriptive association,
we can of course add the other predictions mentioned stemming from heightened
uncertainty directly proxied by, say, profit-sharing schemes and inversely proxied by
expected improvements in sales. A recent paper by Mohrenweiser, Marginson, andBackes-Gellner (2009) takes the issue further than can we. This is because the authors

17

have information from a unique data set on the extent to which the two sides – theworkforce and plant management – are involved in the setting up of a works council.
They report that although the former alone calls for the election of a works council inaround two-thirds of the 60 companies that set up a works council between 2001 and2005, in the remaining one-third of cases management was actively involved in theprocess (e.g. by motivating workers to call for an election). Consistent with Jirjahn(2009), they report that the establishment of a works council is basically triggered byuncertainty on the part of the workforce as to the security of employment caused byorganizational shocks and reflecting informational problems/asymmetries that can betackled by the information and consultation rights of the works council. The motive isdefensive: risk protection (or what Jirjahn terms ‘rent protection.’) Where management is
the triggering agent, it is argued that expected productivity improvement dominates
potential rent distribution. At issue of course is whether the authors’ methodology
establishes the primacy of rent protection over rent creation and the unexplored issue ofworks council dissolution.
Finally, we note that any study of changes in the structure of German collective
bargaining and worker representation should, for the reasons given earlier, control forindustry affiliation. Similarly, it should also control for region, given the different trends
in eastern and western Germany (namely, the more pronounced erosion of sectoral
bargaining in the former region).
Turning to the United Kingdom, the fragmented nature of the British industrial
relations system means that the focus of empirical investigation has been workplace-level
employment relations, facilitated by the publication of the Workplace Employment
Relations Surveys where the unit of analysis is the workplace. The standard measure used
to identify formal union bargaining rights has been union recognition, rather thancollective bargaining coverage. Union recognition indicates whether there are one ormore unions that the employer recognizes for pay bargaining – at workplace,organizational, or sectoral level. Although the two measures are conceptually very similar
and highly correlated in practice, there has been some divergence in recent years and a
growing proportion of workplaces with union recognition appear to have no active
collective bargaining. For many observers, this gap in the two measures, which we will18

return to below, is at least partly explained by the increasing inability of unions to get theemployer to bargain over terms and conditions, even when a framework for suchnegotiation is in place (Brown et al., 1998). In the absence of clear legal rules governing
the enforcement of bargaining rights in Britain, unions have tended to rely on theirbargaining power, traditionally proxied by the proportion of workers who are union
members at the workplace (i.e. union density). The latter magnitude continues to decline
in the private sector, even if the pace of decline is not as rapid as it was in the 1980s andearly 1990s. Measures of union strength used in the past – such as separate bargaining
arrangements in the face of multi-unionism – have become so uncommon that they today
are no longer the focus of attention, while others (such as closed shop arrangements) are
no longer permitted under British law. Nevertheless, it would be quite misleading toassume that all unions are weak in British workplaces. Indeed, Millward, Bryson, andForth (2000: chapter 5) show a bifurcation in union strength using measures of density,
on-site lay representation, and collective bargaining coverage. Unions continue toinfluence outcomes such as wage setting, but only where the workplace has a highpercentage of employees whose pay is set by collective bargaining (Millward and Forth,
2004).
Although there are potentially important theoretical implications for firm
performance having to do with the level at which bargaining occurs, their effects haverarely been tested in Britain of late due to the rapid decline of sectoral bargaining.9 The
empirical literature on the determinants of different bargaining levels is very sparse.
Instead, the focus has been upon whether a workplace is unionized or not and, if so, howstrong the union is at workplace level.
The analysis of Schnabel, Zagelmayer, and Kohaut (2006), mentioned earlier,provides the only study of the correlates of collective bargaining arrangements in Britain
and Germany, using workplace-level data. Based on empirical analyses of the 1998
Workplace Employment Relations Survey and the 2000 IAB Establishment Panel, theauthors argue that the correlates of bargaining arrangements are similar for bothcountries. They point to the significant role played by factors such as establishment size,
single versus multi-plant organizations, foreign ownership, and establishment age.
However, their analysis differs in a number of important respects from our own. First,

19their study covers the whole economy (public and private sectors together) whereas we
focus on the private sector. Second, they provide ordered probit estimates on a 2000
cross-section for three states: absence of bargaining, single-employer bargaining, andmulti-employer or sectoral bargaining. In contrast, we focus on probit and multinomial
logistic estimates for the presence or otherwise of particular bargaining regimes andswitching across regimes using panel data. Third, our model specifications differ in a
number of respects from theirs. For example, we incorporate lagged regime status in ourpanel models, JCC status, and variables capturing market competition. Finally, theseauthors’ models are unweighted whereas we use survey-weighted data.
The most recent cet. par. investigation of the correlates of union recognition in theprivate sector is by Blanchflower and Bryson (2009). In addition to sizeable differencesin the probability of unionization by region and industry, factors independently correlatedwith higher union recognition probabilities in this study are firm and establishment size,
domestic ownership, establishment age, and some features of workforce composition
such as the manual/non-manual split, although this effect has diminished over time.
Pooled analyses for the period 1980-2004 also show a strong independent time trend,with the probability of union recognition declining since the early 1980s. Others haveshown that this cohort effect may date back to the early post-war period (Millward,
Bryson, and Forth (2009: 55-56) go on to calculate that two-thirds of the decline inprivate sector union recognition is within-group and thus is more akin to a preference on
the part of employers (conditional on their observable characteristics) rather than being
accounted for by compositional change in the population of British workplaces.
Brown, Bryson, and Forth (2009: 26-31) undertake a similar analysis, but thistime focusing on the incidence of (any workers being covered by) collective bargaining at
the workplace. But their results are similar: the probability of collective bargaining ishigher among larger and older establishments and in multi-plant and larger firms. They
uncover similar time trends as well. They also present clear evidence of workforce
composition effects: collective bargaining coverage being less likely in workplaces with ahigher share of female workers and a greater proportion of non-manual workers.
However, the main thrust of their analysis relates to the pervasive influence of productmarket competition. They show that increasing product market competition has played a20

critical role in undermining collective bargaining arrangements, with employers
increasingly resorting to unilateral pay setting at the organization or workplace level.

IV. Data
The German data used in this inquiry are taken from the IAB Establishment Panel. The
Panel is based on a stratified random sample of the plants10 – the strata are currently
defined over 17 industries and 10 employment size categories – from the population of all
establishments with at least one employee covered by social insurance (see Fischer et al.,2009). The basis for sampling is the Federal Employment Agency establishment file,containing some 2 million establishments. The panel was set up in 1993 for western
Germany so as to provide a representative information system permitting continuous
analysis of labor demand. It was applied to eastern Germany in 1996 and is therefore now
nationwide in its coverage. From the outset the IAB Establishment panel was intended asa longitudinal survey, so that a large majority of the same plants are interviewed eachyear. To correct for panel mortality, exits, and newly founded firms, however, the data
are augmented regularly. Taken in conjunction with other extension samples (to allow
regional analysis at the federal state level), the panel has grown over time and now thenumber of plants surveyed is around 16,000 units.
The panel questionnaire consists of a set of questions that are asked in identicalform each year. Such questions cover employment development, business policy,
vocational training, personnel structure/movements, investment, wages and salaries, andadherence to collective agreements. Since 2007 these basic subject ‘blocs’ have been
augmented by questions on further training, innovation, and working time. And at regular
three-year (now two-year) intervals, the basic indicators are regularly supplemented byadditional questions on such things as public funding. In addition to these fixed andquasi-fixed elements, other varying ‘current focus’ subjects are included every year.
These have included questions on the demand for qualified employees and theemployment of older workers and the cooperativeness or otherwise of the works council.
Finally, the survey is conducted in mid year and as a result some questions – on annual
sales, investment, and the profit situations – are asked retrospectively in the following
year’s survey.

21

In the present study we restrict the German data to the period from 1998 to 2004
to maintain correspondence with the British WERS98. Over this entire period theGerman raw sample contains a total of some 95, 375 observations. The following filters
were applied to provide a sample of seven cross sections that are comparable to the final
estimation samples. The filters were as follows (with the number of observations lost in
applying each being given in parenthesis): selection of industries (15,560); selection ofplants employing at least 5 employees (13,688), excision of public corporations (1,133);
excision of plants where information on sales is not provided (6,967); and excision ofplants where information on either collective agreement status or works council status ismissing (4,892). Most of our descriptive results for Germany, therefore, are based on a
total number of 53,135 observations, or approximately 7,600 observations a year on
average.11
In a second step, this sample is reduced to establishments that are observed in1998 and 2004 (but not necessarily in any or all intermediate years) to provide a final
estimation sample similar to the WERS98. This estimation sample will be referred to as
the incomplete panel case, and contains 1,747 establishments or 3,494 observations. We
will also deploy a smaller sample made up of 1,060 establishments comprising thoseplants for which we have information in every single year of the sample period 1998 to
2004. This will be referred to as the complete panel case.
Prior to presenting the descriptive statistics, some additional comments on thedata set should be noted. First, we also used the 1993 and 2005 waves to check responses
to the collective bargaining (and works council) status questions. Given inertia, plantsthat responded to the status question(s) as either yes-no-yes or no-yes-no in the three
years 1997/99 and 2003/05 were treated as yes-yes-yes and no-no-no, respectively,
involving some recoding of the beginning and end-of-period responses. Second, changes
in industrial classification in 1999 do not cause any problems for us because of the designof the present study. Thus, for the descriptive analyses, the cross sections are reduced tothe same set of industries using the corresponding classification provided each year,
whereas our estimations are in most cases based on data for 1998 and hence areunaffected by changes in industrial classification. Moreover, our estimations are based on
the plants being observed in both 1998 and 2004, so that the classification for 1998 can22be used, assuming establishments do not change industry. Third, we use weighted data
throughout. The inverse of the selection probability is used for cross-section weighting.
Due to the nature of the weighting process, it is generally the case that an establishment isallocated different weighting factors in any two subsequent waves.12 Definition of thevariables used and descriptive statistics are provided in Appendix Table 1.
Our British analysis deploys three data sets. These are the Workplace
Employment Relations Surveys (WERS) of 1998 and 2004, which are cross-sectional
surveys of workplaces and their employees, and the 1998-2004 Panel. The latter is basedon a stratified random subsample of the 1998 WERS cross-section that was followed up
in 2004. That follow-up consisted of a dedicated panel survey which was considerably
shorter than the 1998 survey interview. This asymmetry in data collection means thatpooled analyses of the 1998 and 2004 Panel data draw on a more restricted set of data
items than those analyses which seek to predict 2004 outcomes with 1998 covariates.
Our empirical analysis is confined to private sector workplaces with 10 or more
employees, since this was the lower employment threshold for inclusion in the 1998
survey. The unweighted sample is 587 workplaces, though some cases are dropped in theanalysis because they have missing data on one or more key data items. Throughout ouranalyses are weighted with survey sampling weights that account for the probability ofsample selection (which in WERS is a function of establishment size and industry). The
population sampling frame from which the surveys are drawn is the Inter-Departmental
Business Register (IDBR).13
Unlike the IAB Establishment Data, in the British case we only observe
workplaces at two points in time, namely, 1998 and 2004. Thus the data offer ‘snapshots’of those workplaces at two points in time, although there is a small amount ofretrospective questioning about what has happened in the intervening years. Our data
structure allows us to identify three types of workplace. First, there are those thatsurvived throughout the period 1998-2004 and had at least 10 employees at the beginningand the end of the period, since this is the sampling threshold for inclusion in the 1998
survey. We call these units ‘stayers.’ All the Panel workplaces are, by definition, stayers
but we can also use information on age of establishment and establishment size toidentify stayers in both cross-sections. Second, we can identify ‘joiners,’ that is, those23new workplaces born since 1998 together with those that grew above the 10 employee
threshold since 1998. The third group is ‘leavers,’ consisting of workplaces that were
present in 1998 but had either died by 2004 or else had shrunk below the 10 employee
threshold. We use these data in combination first to establish net change in structures ofrepresentation and bargaining, but then to go on to establish reasons for the changes interms of behavioral change among stayers, on the one hand, and compositional change
arising from the incidence of structures among leavers versus joiners. In order toaccomplish this we must rely on definitions of union recognition, collective bargaining
and joint consultative committees (JCCs) that are consistently measured in both the twocross-sections and the Panel. This is relatively unproblematic in the case of union
recognition and JCCs. However, WERS collects bargaining coverage data in a numberof ways. The subset of measures available for the two cross-sections and the Panel meanthat we use a measure of collective bargaining that identifies those of the main
occupational groups at the workplace having their pay determined by collective
bargaining. The manager responsible for human resources is asked to identify which ofeight methods are used to determine pay for the single-digit occupations at the workplace.
The first three codes relate to sectoral, organizational and workplace-level bargaining,respectively. The reasons for relying on this measure are two-fold. First, it is the only
consistent measure of collective bargaining across the two cross-sections and the Panel.
Second, it is the only measure which permits us to distinguish between coverage at
workplace, organization, and sectoral level. However, the downside is that it understates
the level of collective bargaining relative to measures that also incorporate other WERS
data items.14 Definition of the variables used and descriptive statistics for the British caseare provided in Appendix Table 2.

V. Findings(a) Germany
Weighted data on the evolution of collective bargaining and worker representation –sectoral agreements, firm agreements, no agreements, and works councils – are provided
in Appendix Table 3. Figures 1 and 2 present the material in a more digestible form forestablishment and worker coverage, respectively. Beginning with collective agreements,24

it is clear from Figure 1 that employer coverage by sectoral agreements declined
materially over the sample period: from 48.9 percent to 40.4 percent coverage. On theother hand, the coverage of firm agreements among employers was more stable, declining
from 4.8 percent in 1998 to 2.8 percent in 2004, with most of that decline occurring after
the first year. Corresponding to the decline in sectoral bargaining was a marked increasein the number of firms without any collective agreements. These rose from 46.2 percent
in 1998 to 56.8 percent in 2004. For their part, the share of firms with works councils
showed considerable inertia, generally exceeding 9 percent over the sample period.
(Figures 1 and 2 near here)
Figure 2 looks at corresponding changes in the shares of covered and uncovered
employees. Beginning again with sectoral bargaining, the recorded fall in the share ofcovered workers was from 62 percent to 53.8 percent, somewhat less than in the case of
establishment coverage. Imperceptible falls were recorded for firm agreements (8.6
percent to 8.0 percent). Correspondingly, the number of workers uncovered by either typeof collective agreement duly rose from 29.3 to 38.2 percent. Again, works councils
coverage displayed considerable stability, although a small overall decline from 45.3 to43.7 percent was observed.
Two further points are in order. First, as regards the collective bargaining-works
council nexus, declines in sectoral agreement coverage among establishments with works
councils were no less pronounced than among establishments without works councils.
For example, sectoral agreement coverage of employees was 77.3 percent in 1998 inworks council establishments and 49.4 percent in their works council free counterparts;
by 2004 these figures had fallen to 69.2 and 41.9 percent, respectively. Similar declines
were observed in the sectoral agreement coverage of establishments in the two regimes.
Accordingly, there is nothing really to suggest that coverage in either case held up betterin the presence of workplace representation.
Second, there are those German plants that although they do not have collective
bargaining nonetheless orient themselves towards a collective agreement (The following
question is asked of those not bound by a collective agreement: “Are you [nonetheless]acting upon an industry-wide agreement?”). This raises the possibility that a decline incollective bargaining might nevertheless have been counteracted by an increase in the25number of firms orienting themselves towards such framework agreements. As a practicalmatter, we discover that the share of all employers (employees in establishments) that did
not orient themselves towards a collective agreement rose between 1999 (the first year
for which data were available) and 2004 from 25.4 (15.2) to 29.2 (18.7) percent. Over thesame interval, the share of all employees (establishments) that did orient rose more
slowly from 21.9 (15.5) percent to 25.1 (17.8) percent. In other words, there was somerelative fall in orientation among the steadily increasing numbers of plants andemployees not covered by collectively bargaining (see Appendix Table 4)(Figures 3 and 4 near here)
The next question that arises is whether the decline in collective bargaining isobserved throughout or is instead a compositional phenomenon, with different behavior
being recorded by stayers, joiners, and leavers. To examine this question we first examinechanges in the status of those establishments that remained in the panel throughout (callthem ‘stayers.’ Figure 3 presents weighted data for these stayers, based on theinformation supplied in Appendix Table 5. As can be seen, the broad trends evident in
Figure 1 are replicated in Figure 3. Beginning with sectoral agreements, establishment
coverage rates declined from 55.2 percent to 47.1 percent, while establishments withoutcollective agreements grew from 40.4 percent to 47.7 percent of the total. There wereeven modest increases in the share of establishments with works councils (from 9.8
percent to 13.2 percent) and with firm-level collective agreements (from 4.5 percent in1998 to 5.2 percent on 2004, albeit with several reversals). Figure 4 which describes thesituation from the perspective of employment shares reveals a more muted picture of
sectoral bargaining decline and uncovered sector growth, but more marked works council
growth.
At the same time, based on the data supplied in Appendix Table 6, it can be seen
that, among entrants to the panel, establishment (employment) coverage by sectoral
agreement fell from 50.4 (61.9) percent in 1998 to 31.6 (53.4) percent while the share of
uncovered plants (employment) rose from 45.5 (29.3) percent to 64.9 (38.6) percent.
Among ‘exits’ the corresponding values – from Appendix Table 7 – were (from 1999)
50.7 (56.5) to 38.2 (51.0) percent and 46.1 (31.5) to 59.8 (40.0) percent. In short, while
the basic trends in respect of sectoral agreements and the zero collective bargaining zone26

point to a general decline in the importance of framework agreements the tendencies aremuch stronger among entrants and exits than stayers. Finally, as far as works councils areconcerned inertia is the order of the day with little to choose between stayers, leavers, andentrants.
(Table 1 near here)
Let us next consider transitions into and out of collective bargaining andworkplace representation as between 1998 and 2004. Table 1 summarizes such
movements with separate results for the complete and incomplete panels. It will berecalled that for the former or balanced panel one has information on each and every yearof the eight years whereas in the case of the latter panel information on one or more of
the intermediate years is missing. Beginning with works councils we observe that just 3.7
percent of all firms changed their works council affiliation among the incomplete panel.
(These comprised the 1.83 percent of firms that had no councils in 1998 and 23.04
percent of the much smaller number of firms with councils in 1998.) Similar magnitudes
are reported for the balanced panel.
Somewhat less evidence of persistence is reported in the case of collective
agreements of any type. Now almost 20 percent of firms in the incomplete panel andslightly less than that in the balanced panel changed their collective bargaining status.
This reflects changes in industry-level agreements shown in the next two columns of thetable. In the case of the incomplete panel a little over 20 percent changed their sectoral
agreement status. (Made up of the more than one in ten firms without collective
agreements in 1998 that had entered framework agreements by 2004 and the more than
one-quarter that had left such arrangements.) Although the latter percentage was muchthe same as observed for works councils, note the very much larger sample of firms inboth categories. Again there are minor differences between the balanced and incomplete
panels.
Transitions into and out of firm level collective agreements tell a very different
story. Overall, there were fewer transitions than in the case of works councils: less than 4
percent of firms introduced or exited such arrangements. (But of those firms with firmlevel agreements in 1998 more than one-half had abandoned them by 2004.) Not

27

surprisingly in view of the numbers the huge majority of firms did not change their status.
Again, more firms exited collective agreements than entered them.
(Table 2 near here)
The results of trying to explain collective bargaining of any type using pooleddata for the two years 1998 and 2004 are given in the first column of Table 2, again using
weighted data. Our probit estimates suggest that larger and older plants, plants withworks councils, plants that have recently delegated decision making authority, and plants
located in Western Germany are all more likely to have collective agreements.
Conversely, establishments having a greater export share and a higher proportion ofworkers on fixed-term contracts are less likely to be covered by collective bargaining.15
The second and third columns of the table disaggregate by sectoral and firm-level
collective bargaining, respectively. With one exception – the foreign property variable –the findings reported for sectoral bargaining mirror those presented for any collective
bargaining, although there are of course differences in the precision of the estimates. But
only the works council result carries over in the case of firm-level collective bargaining
shown in the last column of the table. Note the oppositely signed coefficient estimate forexport share, foreign ownership, and region observed in the case of firm-level collective
agreements. Evidently, the determinants of sectoral and firm-level collective bargaining
differ materially.
(Table 3 near here)
Attention shifts in our second set of regressions, contained in Table 3, to theprediction of end-period collective bargaining status based on beginning-period values of
the covariates. All regressions include a lagged dependent variable to capture thepersistence indicated in our transitions analysis, and partly for this reason the good fit
obtained is not unexpected. The results for collective bargaining of all types, reported in
the first column, of the table show that there are seven statistically significant positivecoefficient estimates in addition to the lagged dependent variable. Thus, greater
establishment size, usage of advanced technology, delegation of authority to lower levelsin the organization, a larger share of female workers and location in western Germany are
all associated with an increased likelihood of observing a collective agreement in 2004.

28

On the other hand, introduction of profit centers and the share of part-time workers
detract (marginally) from collective bargaining.
As before, the findings for the two types of collective bargaining are sharply
differentiated. From the second column of the table it can be seen that, apart from thepersistence argument, establishment size, high-tech usage, single establishments, theproportions of skilled and female workers, and west German location are all associatedwith observing sectoral bargaining in 2004. For their part, the R&D and part-time worker
variables are negatively correlated with sectoral bargaining. Finally, for firm-levelagreements, the results given in the last column of the table suggest that expected
increases in sales, advanced technology, single plant status, and location in western
Germany are all less likely to promote such agreements. But export orientation, R&D
activity, delegation of authority, works council presence, and greater competition are now
associated with an increased probability of observing such agreements.
(Table 4 near here)
This leads us to the most interesting material of all dealing with the explanationof transitions. The results given in the first column of Table 4 consider collective
bargaining status of any type in 2004 conditional on an absence of collective bargaining
in 1998. We see that ‘joining’ is more likely the larger is the plant, the more advanced its
technology, the higher the skills of its workforce (and the share of female workers), andalso where the establishment is foreign owned, a single plant, has delegated decisionmaking authority, and is located in Western Germany. It is less likely when sales are
expected to increase, when competition is acute, and where the plant was set up before
1990. The second column of the table considers the likelihood of leaving a collective
agreement of any type. As can be seen, while the large majority of the coefficientestimates are indeed negative just three – increased sales, advanced technology, andlocation in western Germany – are statistically significant at conventional levels. The
share of part-time workers is the sole statistically significant positive coefficient. Clearly,
the specific characteristics identified in this equation other than the industry dummies areproviding few insights into the special circumstances of leavers.
The findings in the third column of Table 4 pertain to the determinants of sectoral
bargaining status in 2004 conditional on there being no such agreement in place in 1998.

29

Joining a sectoral collective agreement is more likely for larger establishments, high-techfirms, single plants, firms with greater shares of female and fixed-term contract workers,
foreign-owned enterprises, among those located in western Germany, and in situations
where some delegation of decision making has been initiated. Joining a sectoral
agreement is less likely among the firmament of older firms and those with greater exportorientation, and also in circumstances where sales are expected to increase. As before, wegain few insights into the process of leaving sectoral agreements from this set ofcorrelates.
The last two columns of the table consider joining and leaving firm-level
collective agreements. Joiners are more likely to be those plants with a higher export
share, having a works council, confronting greater product market competition, andengaging in a delegation of tasks. On the other hand, joining is less likely where sales are
expected to increase, among high-tech and single-establishment firms, and where theplant is located in western Germany. And from the last column of the table, abandoning
firm-level bargaining is more likely when sales are expected to increase, and where there
is a higher proportion of fixed-term contract and female workers. Further, leaving is also
more common among both high-tech and older firms. It is less likely for larger firms, forfirms practicing R&D, and for those with a higher share of part-time workers, practicing
profit sharing, and confronting greater competition.
(Table 5 near here)
Finally, Tables 5 focuses on changes in works council status, namely, on works
council joiners and leavers. First, consider the class of joiners. It can be seen that larger
and foreign-owned plants, plus those with advanced technology, recording R&D activity,and having higher shares of female workers are all more likely to introduce works
councils, as indeed are those with firm-level agreements. But note that establishmentsthat have introduced team-work, those expecting increased sales, and those individually
owned are all less likely to set up works councils. These results provide very mixed
support for the literature.
And what of the leavers? We find that plants covered by sectoral collective
bargaining evince a lower tendency to abandon works councils as do larger firms, firms
expecting increased sales, older firms, foreign-owned firms, as well as firms registering30

R&D activity, a higher proportion of skilled workers, foreign owned and confronting
higher competition in the market. But high-tech establishments, single plants,
individually-owned plants, and those with devolved decision-making, recently introduced
profit centers, and a higher proportion of fixed-term contract workers are all associatedwith a higher probability of abandoning works councils which evidence is perhaps moreconsistent with past research (e.g. Addison, Bellmann, Schnabel, and Wagner, 2003).
(b) The United Kingdom
Table 6 compares the incidence of our five measures of worker representation andcollective bargaining in the 1998 and 2004 WERS cross-sections. A number of things are
immediately apparent. First, unionization – whether measured in terms of union
recognition or the incidence of collective bargaining – is considerably lower in Britain
than in Germany throughout the period. Even at the beginning of the period, only one-infive private sector workplaces recognized unions for pay bargaining. Second, in contrast
to Germany, where pay bargaining does occur, it is more likely to occur at firm-level thanat sectoral level: it was twice as likely to do so in 1998, and three-and-a-half times more
likely to do so at the end of the period. (Although, as noted earlier, employers are free tocombine sectoral and firm-level bargaining, fewer than 1 percent of workplaces do so.)Third, as in Germany, the chief indicators of collective bargaining are in decline. The
percentage of workplaces with a recognized union fell by one-quarter over the period,
while collective bargaining coverage fell by over one-third so that, at the end of theperiod, only one-in-ten private sector workplaces used collective bargaining to set pay forat least some of their employees. This decline was particularly evident in workplaces withsectoral agreements. Fourth, the incidence of collective bargaining coverage is well
below the incidence of union recognition throughout the period, a finding consistent withearlier studies showing an absence of active collective bargaining among many
establishments even when they have a formal negotiating framework in place.
(Table 6 near here)
In the last column of Table 6 we turn to the incidence of JCCs, the closest analog
to works councils in Germany. As noted earlier, our JCC definition is confined tocommittees which tackle multiple issues. We present figures for two definitions of JCC

31

presence. The first definition includes JCCs at both workplace level and those at the levelof an organization in multi-site firms. Over a third of private sector establishments had
such a JCC in 1998, but their incidence fell by one-fifth over the sample period. The
figures in parentheses are confined to workplace-level JCCs. Around 15 percent ofprivate sector workplaces had a JCC in 1998, but this figure fell by one-third by 2004 tojust below 10 percent – a figure which is similar to the incidence of Betriebsräte in theGerman data.
(Table 7 near here)
Table 7 presents similar data but this time using employee weights to obtain theemployee coverage of these institutions. In all cases the percentages are substantiallyhigher than in Table 6 because these institutions of worker representation and collective
bargaining are concentrated in the larger workplaces that account for a higher share of all
employees. For example, in 1998 one-fifth of workplaces recognised a union for pay
bargaining but these accounted for almost two-fifths of employees. Similarly, almost halfof all employees work in a firm with a JCC, though closer to a third have one at their own
workplace.
The collective bargaining figures are constructed in a slightly different fashion to
those presented in Table 6. Rather than simply reweighting the workplace incidence ofcollective bargaining by the proportion of employees in those workplaces, the figures
shown in Table 7 ensure that uncovered employees in workplaces with a collective
agreement are not counted among the covered employees.16 That is they represent theactual coverage of collective bargaining We see that this magnitude falls from around
one-quarter to one-fifth over the period, with the vast majority of those workers coveredby firm-level agreements. However, the percentage covered by firm level agreements has
fallen quite dramatically.
(Table 8 near here)
Table 8 considers change in workplace representation and bargaining structures
among ‘stayers,’ ‘leavers’ and ‘joiners,’ respectively, offering insights as to how much of
the net change described above is driven by behavioral change among stayers, and how
much of it arises from compositional change in workplaces as some of them shrink or die(‘leavers’) while others grow or are new-born (‘joiners’). In each case, we show the32

incidence of arrangements in 1998 and 2004 and the percentage point difference over theperiod. Beginning with union recognition, its decline over the period appears to be driven
by compositional change: the rate of union recognition was two-and-a-half times greater
among leavers in 1998 than it was among the joiners in 2004 (19 percent versus 8
percent). In contrast, there was relative stability in the rate of union recognition among
stayers, although it is notable that the recognition rate in the panel rises a little whereas it
falls a little among the stayers in the cross-section. A very similar picture emerges
regarding change in the incidence of collective bargaining. Compared with joiners,
leavers are roughly twice as likely to have pay set by collective bargaining. Among
stayers, change is less pronounced.
The situation is more mixed in the case of JCCs. There is little difference in theuse of JCCs among joiners and leavers, whereas there has been a substantial decline intheir use among stayers in the cross-sectional data. However, the picture of decline is not
replicated in the panel. If we turn our attention to workplace-level JCCs, clearer
indications of decline emerge when comparing joiners and leavers (and among stayers),in the cross-sectional data. Once again, however, there is greater stability in the Panel.
Taken together, these findings suggest that compositional change in the population of
workplaces is playing a greater role than behavioral change among stayers in the declineof collective bargaining and in those institutions which represent workers. Nevertheless,in quantifying the overall effects of these changes induced by the behavior of stayers,
joiners, and leavers, one needs to bear in mind that stayers constitute around two-thirds of
all workplaces in the cross-sectional data so that their contribution to change iscorrespondingly large.17(Table 9 near here)
Table 9 focuses on regime switching among panel workplaces by focusing on
their union, collective bargaining, and JCC status at the time of the surveys in 1998 and2004. The amount of net change shown gives only a partial understanding of behavioral
change among these workplaces because it fails to capture the degree to which
workplaces either introduce or abolish mechanisms for worker representation andcollective bargaining. Union recognition is the most stable of the measures: only 6.5
percent of panel workplaces switch union status with new recognitions being a little more33

common than union de-recognitions. This finding is corroborated by retrospective
questions asked in the 2004 panel survey indicating that 2.8 percent of workplaces
claimed to have recognized unions since 1998, whereas fewer than 1 percent said they
had derecognised a union.18
Collective bargaining status is much less stable than union recognition status:
around one-fifth of panel workplaces switch in or out of collective bargaining. This may
reflect the fact that respondents only identify collective bargaining coverage when thereis active collective bargaining going on, whereas union recognition indicates theframework within which negotiation may take place. Alternatively, there could be moremeasurement error in collective bargaining status if employer respondents find it a moredifficult concept to comprehend. The amount of switching that occurs corresponds
roughly with that in the German panel, perhaps lending credence to the idea that thefigures are not driven by measurement error. However, in the German case, abolitions far
outway introductions of collective bargaining, largely due to movement out of sectoral
agreements. In the British case, movements into sectoral collective bargaining marginallyoutweigh exits but the key difference resides in the levels of bargaining incidence.
Compared with Germany, coverage by sectoral bargaining agreements is uncommon in
Britain’s panel workplaces.
The least stable of our measures is JCC status: one-third of panel workplaces
belonged to a firm that had either introduced or abolished a JCC over the course of ourstudy. However, this percentage falls to one-fifth in the case of workplace-level JCCs, arate of switching which is similar to that for ‘any collective bargaining’ coverage. Thesefigures are markedly different from those presented for German works councils in two
respects. First, JCCs are much more common than works councils. Second, switchers
outnumber those who retain workplace JCCs by a ratio to 3:2. In Germany by contrast,works council switchers are outnumbered by those who retain a council throughout,perhaps reflecting the greater transaction costs involved in changing arrangements when
they are underpinned by statute.
(Table 10 near here)
We now turn to the determinants of collective bargaining and workplace
representation. We begin in Table 10 with parsimonious probit estimation of the34

correlates of union recognition and collective bargaining status in models that pool the
workplace observations in 1998 and 2004. The outcomes of interest are union
recognition, any collective bargaining, sectoral bargaining, and firm-level bargaining.
The models perform reasonably well, accounting for between one-fifth and one-third of
the variance in the unionization outcomes, although few effects are significant across all
four measures. Union recognition and collective bargaining are more likely in larger
establishments, the latter association being driven by an association with firm-level
collective bargaining. Domestic ownership is also positively associated with collective
bargaining. Product markets also matter: those operating in a local market (as opposed toa regional, national or international market) are significantly more likely to haverecognized unions and collective bargaining, as one might expect if local markets are an
indicator of lower competitive pressures. Although the gender composition of theworkforce is not associated with unionization and collective bargaining, the presence oftemporary employees and those on fixed-term contracts is positively associated withsectoral bargaining. The presence of a joint consultative committee (either at workplaceor organization level) is positively associated with union recognition and collective
bargaining, a finding that perhaps reflects complementarity as opposed to substitutability,
and is reminiscent of the link between works councils and collective bargaining inGermany. Team working and the use of contingent pay schemes are negatively associatedwith collective bargaining, the former association being driven by firm-level bargaining
and the latter association by a sectoral bargaining connection. The year dummy indicates
an absence of significant time trends.
(Table 11 near here)
Next in Table 11 we model unionization and collective bargaining status in 2004
as a function of covariates measured in the base period, 1998. These models differ a little
from the previous specifications in Table 10 reflecting the greater range of covariates
available in the 1998 cross-section.19 There is strong persistence in recognition andcollective bargaining status, as indicated by positive, significant coefficients on thelagged dependent variables. This is particularly so in the case of union recognition, whichhelps explain the high percentage of variance accounted for by this model. The exception
is sectoral bargaining where the lagged dependent variable is not significant, either

35because it was in a state of flux or because these results suffer from measurement error,
as one might expect if workplace managers are being asked to identify practices
occurring above workplace level.
Being a single-establishment organization in 1998 is not associated with
unionization in 2004. However, larger establishments in 1998 were more likely torecognize unions and more likely to have firm-level collective bargaining in 2004 thansmaller establishments. Domestic ownership is positively associated with union
recognition. Family ownership, on the other hand, is negatively associated with all four
union measures. Workforce composition effects (percent female, percent part-time, andthe incidence of fixed-term or temporary employees) are generally not significant, apartfrom the case of sectoral collective bargaining where the percent female and the percent
part-time coefficients have opposite signs. The probability of sectoral bargaining
coverage in 2004 rises with the percent female in 1998, whereas it lowers the probabilityof firm-level bargaining. Occupational composition, as indicated by the largest nonmanagerial occupation at the workplace, is statistically significant. Craft and skilled
manual employees are least likely to work in workplaces recognising trade unions by
2004, whereas those in operative and assembly occupations are the most likely to be
doing so. Active collective bargaining in 2004 is least likely in workplaces where thelargest occupational group in 1998 was personal service employees. Workplaces where
professionals made up the largest group in 1998 had the greatest likelihood of coverage
under sectoral-level bargaining in 2004. The occupational pattern of firm-levelbargaining is quite different: it is least likely in 2004 in those workplaces where thelargest occupational group in 1998 was personal services or science/technical employees.
A positive association with local product markets was only apparent in case of sectoral
bargaining. There is a strong negative association between being located in London andcollective bargaining, both sectoral and firm-level. The presence of a JCC in 1998 was
positively associated with union recognition in 2004, but not with collective bargaining
coverage. Finally, the use of contingent pay in 1998 was negatively associated with union
recognition and sectoral bargaining in 2004, but not with firm-level bargaining. There are
two broad points emerging from Table 11 that are worthy of note. First, much of thevariance in unionization and collective bargaining status can be captured with workplace-36level covariates obtained some 6 to 7 years previously. Second, the correlates of thesealternative measures of union engagement in pay bargaining differ in a number ofdimensions. The only statistically significant effect that is common to all four models is
the negative association with family ownership.
The next logical step in our exploration of factors affecting collective bargaining
and worker representation is to identify workplace characteristics which predispose
workplaces to switch bargaining regime, as opposed to sticking with their original
arrangements. To investigate this we distinguish between four outcomes. The first, whichis the default position in the United Kingdom, is to remain without union representationor collective bargaining coverage throughout the period (0 in 1998 and 0 in 2004). The
second outcome is being covered in 1998 but uncovered by the time of the 2004 survey(1 in 1998 and 0 in 2004). The third outcome is entering into bargaining coverage overthe period (0 in 1998 and 1 in 2004). The final outcome is remaining covered throughout
the period (1 in 1998 and 1 in 2004). We seek to establish which 1998 workplacecharacteristics are independently associated with these four states by running multinomial
logits and using the same set of covariates as in Table 11.
(Table 12 near here)
Table 12 presents this analysis for union recognition status. Three-quarters (74percent) of panel establishments did not recognize unions in either 1998 or 2004; onefifth (20 percent) recognized unions in both periods; the remaining 6 percent had
switched status with 2 percent no longer recognizing unions and 4 percent recognizingthem for the first time over the period. The probability of recognizing unions throughout
the period, or recognizing them for the first time, was higher among larger workplaces.
Domestically-owned workplaces were more likely to stick with union recognition, or
become unionized, than workplaces that were foreign-owned in 1998. Family ownershipwas strongly associated with remaining non-union throughout the period, as was being
located in London.
It is a commonly-held belief that 1980 was a turning point in the unionization of
British workplaces: evidence has consistently indicated that workplaces set up prior to1980 have higher union recognition rates than younger workplaces, with some pointing to
the early post-war period as the ‘golden era’ for unionization (Millward et al., 2000: 101-37103). However, Blanchflower and Bryson (2009: 51-53) found this had started to change
observing a decline in the unionization rate among older workplaces. We find more such
evidence here, since workplaces born before 1980 are more likely to cease to recognize aunion and less likely to initiate recognition than their younger counterparts.
Relative to those operating in wider product markets, those with local markets
emerge as not only more likely to be unionized throughout the period but also more likely
to cease to recognise unions. The presence of a JCC in 1998 is conducive to remaining
unionized throughout, whereas the increased use of contingent pay schemes appears tohave reduced the probability of workplaces becoming unionized.
As noted earlier, the incidence of collective bargaining was less stable in the panel
than the presence of recognized unions. Although seven-in-ten (71 percent) workplaces
remained uncovered by any collective bargaining throughout, only 8 percent werecovered in both 1998 and 2004. The remaining one-fifth (21 percent) were ‘switchers,’
with 9 percent moving from covered to uncovered status and 11 percent moving back theother way. Table 13 adopts the same estimation approach to that adopted for Table 12 to
identify workplace correlates of these changes. The model explains less of the variance incollective bargaining status than it did union recognition (the pseudo-R2 being 0.37 as
opposed to 0.45).
(Table 13 near here)
The correlates of changing bargaining coverage status differ in a number ofrespects from the correlates of changing union recognition status. Larger establishments
are more likely to remain covered throughout, as in the case of union recognition in Table
12 but, in contrast to the union recognition model, larger establishments are also more
likely to quit the covered sector than smaller establishments. Domestic ownership in 1998
is associated with becoming covered by 2004, but not with persistence in coverage.
Family ownership is associated with a lower probability of becoming covered by 2004
but it is not associated with leaving coverage or with persistent coverage. Workplace age
plays no significant role. Workforce composition does play a significant role in coveragechange: a higher percentage of female employees reduces the probability of persistent
coverage relative to never being covered, whereas a higher percentage of part-timeworkers does the opposite. Compared with workplaces operating in regional, national,

38

and international product markets, those operating in local product markets are less likely
to be uncovered throughout and have a higher probability of switching in and out ofcollective bargaining. JCCs are associated with persistent collective bargaining coverage
but also with leaving coverage. Greater use of contingent pay schemes and location in
London are both associated with a lower likelihood of having any contact with collective
bargaining over the period.
(Table 14 near here)
Sectoral collective bargaining is relatively uncommon in the United Kingdom
compared with Germany. In the WERS Panel almost nine-tenths (86 percent) ofworkplaces had not used sectoral collective bargaining in either 1998 or 2004. A mere 1
percent used it in both years. Eight percent appear to have joined a sectoral agreement by
2004, while 4 percent had sectoral bargaining coverage in 1998 but were no longer
covered by a sectoral agreement in 2004. This distribution of responses makes it
relatively difficult to estimate changes in sectoral collective bargaining status over theperiod. The model in Table 14 accounts for 44 percent of the variance in sectoral
bargaining status, but much of this is soaked up by industry dummy variables, which is
why we include them here.
Compared with the reference category (Education, Health and Other Community
Services) workplaces in other industries were less likely to be persistently covered by asectoral agreement, with the exception of Construction where continued sectoral
coverage was most likely. Larger establishments in 1998 had a higher probability ofcontinued sectoral coverage compared with smaller establishments. Domestic and family
ownership were not significant. Four service sector industries – Hotels and Restaurants,
Transport and Communication, Financial Services and Business Services – all had ahigher probability of entering into a sectoral agreement than did Education, Health andOther Community Services. Workforce composition also played a role: in addition to anumber of significant occupational effects, the probability of persistent sectoral coverageand the probability of joining a sectoral agreement fell in those workplaces with higher
percentages of female employees in 1998. Links to firm-level human resource practices
are also apparent. Use of contingent pay was negatively associated with any contact withsectoral agreements over the period; having a JCC in 1998 lowered the probability of39

persistent sectoral bargaining coverage relative to no coverage; and a high incidence ofteam-working in 1998 led to an increased likelihood of leaving a sectoral agreement.
Those in local product markets in 1998 were more likely than those in larger markets tohave joined a sectoral agreement. Finally, location in London was associated with a lower
propensity to resort to sectoral bargaining.
Four-fifths (81 percent) of workplaces had no firm-level (either workplace-levelor organization-level) collective bargaining agreement in 1998 and 2004; 4 percent had
one in both years; and the remaining 14 percent were split evenly between those dropping
their firm agreement and those who had adopted one. The correlates of firm-levelbargaining status, shown in Table 15, differ in many ways from those for sectoral-levelbargaining. For instance, there is no significant association with the use of contingent pay
in 1998. Nevertheless, there are some points of similarity such as the negative association
between location in London and bargaining coverage. Once again, establishment size
plays a prominent role. The probability of retaining a firm-level agreement, and theprobability of leaving one, both rise with establishment size relative to the probability of
having no firm agreement throughout. Single-establishment organizations are less likely
than multiple-establishment organizations to maintain a firm-level agreement throughout,while family ownership in 1998 reduces the probability of adopting a firm-levelbargaining agreement by 2004. Workforce composition also seems to play a role, withoccupational composition, part-time and fixed-term employment all recording
statistically significant influences. So, too, does the location of the product market, withlocal product markets being more likely to abandon firm-level bargaining than otherworkplaces with wider markets. A high incidence of team working in 1998 is associatedwith a lower probability of firm-level bargaining in both years, whereas JCC presence isassociated with both a higher probability of persistence in firm-level agreements and ahigher propensity to cease to bargain at firm-level.
(Table 15 near here)
Finally, we consider the correlates of Joint Consultative Committee (JCC) status.
Table 16 presents results for JCCs at either workplace or firm level, while Table 17
presents identical multinomial logit models but restricts the definition of the entity toworkplace level alone. There is much more switching in JCC status than in bargaining40

arrangements. For JCCs at establishment or firm level, two-fifths (43 percent) had no
JCC in either year; one-quarter (23 percent) had one in both years; 16 percent abolishedan existing JCC; and one-sixth (18 percent) introduced one. The corresponding values forworkplace-level JCCs are 74, 7, 9, and 10 percent, respectively. Given these markedly
different distributions it is hardly surprising that the workplace correlates of JCC status in
the panel differ according to whether one uses the ‘any JCC’ variable in Table 16 or the‘workplace-level JCC’ in Table 17.
(Tables 16 and 17 near here)
The size and nature of the organization play an important role in determining JCC
status in Britain. The probability of having a JCC in both years is significantly higher
among larger establishments and JCCs are less in evidence in single-site firms. The
impact of establishment size is even greater in the case of workplace JCCs, but the single
establishment effect disappears. Domestically-owned establishments are less likely to be
adopters of JCCs than their foreign counterparts, but this effect is not apparent forworkplace-level JCCs. Family ownership is associated with a lower incidence of JCCs,
but the effect is confined to the persistence of JCCs when one focuses on workplace-levelinstitutions.
Whereas the presence of a recognised union in 1998 is associated with a higher
probability of JCC presence throughout the period, this association is totally absent in thecase of workplace JCCs. Another big difference is the London effect, which is associatedwith a significantly higher probability of having a workplace JCC throughout the period,
despite having no significant association with JCCs in general. Finally, thoseestablishments operating in a local product market in 1998 had a lower probability thanother workplaces of switching in and out of workplace-JCC status, a finding that only
holds for all JCCs in relation to the abolition option. Taken together, it is clear that one
needs to be cautious when generalizing about the correlates of JCC status since thefactors influencing the presence of workplace JCCs appear to differ in a number ofrespects from those factors influencing JCCs that exist at either workplace ororganization-level.

41VI. Conclusions-

The decline in collective bargaining coverage in Germany in the sample
period is less dramatic than might have been expected. After some pronounced
decline in the 1980s and early 1990s, a certain degree of normalcy has returned.
But only later years will tell whether this is sustainable and the outcome oforganized deregulation.

-

The decline in collective bargaining coverage cannot be due simply to industry
dynamics as trends across the subgroups examined here are roughly comparable.

-

The decline in collective bargaining coverage has not been offset by any opposite
shift in ‘orientation’. Orientation toward collective agreements on the part ofuncovered employers has remained fairly constant. This again qualifies the notionof there having been a continued erosion in the influence of collective bargaining.

-

Despite material institutional inertia, however, there is every indication of fairly
active switching in and out of collective bargaining.

-

Establishment size, branch plant status, skill composition of the workforce and, insome specifications, plant age and works council presence tend to favor sectoralcollective bargaining status and conversely in the case of market competition andexport propensity. But the evidence is weaker than in simple cross-section studies,while the correlates of firm-level bargaining emerge as quite distinct.

-

Changes in collective bargaining status are intriguing in the sense of offering
very mixed support for our priors both as regards joining sectoral and firm-levelagreements and leaving firm-level agreements. Little support is adduced for anyof our regressors (other than the industry dummies) in the case of establishments
abandoning sectoral agreements.

-

Works council introduction and abandonment appears both better determined andmore symmetric, even if the associations uncovered here are again not always
consistent with those reported in the literature.

-

A final issue is the collective bargaining-works council nexus. Works councils are
positively associated with collective bargaining presence but in terms of switching
only with the introduction of firm-level agreements. And the presence ofcollective agreements tends to favor the introduction of works councils and42

detract from their abandonment. Overall, the suggestion is that the two entities
play a supportive role-

The British and German systems are fundamentally different. In particular,
sectoral-level bargaining is the ‘default’ in Germany whereas, by the start of ourperiod of investigation, it had all but disappeared in the British private sector.
Instead, in the vast majority of British firms it is management that sets pay
unilaterally rather than resorting to collective bargaining.

-

In contrast to Germany, British firms can combine sectoral and firm-levelbargaining. In practice this does not happen: nearly all the firms setting some pay
with collective bargaining use either sectoral or firm-level bargaining. Among
those using collective bargaining, firm-level bargaining is more common thansectoral-level bargaining.

-

As in Germany, collective bargaining was in steep decline over the period 19982004. In Britain this was most evident in sectoral-level bargaining.

-

In contrast to works councils in Germany, Joint Consultative Committees (JCCs)
were also in decline over this period.

-

Much of the decline in collective bargaining is accounted for by compositionalchange in workplaces: those workplaces leaving the population, either because
they died or had shrunk below the size threshold for inclusion in the survey, had
higher rates of collective bargaining than new workplaces that had either beenborn since 1998 or had grown above the lower size threshold. Change amongcontinuing establishments was much less pronounced.

-

The amount of switching in and out of collective bargaining among panel
establishments is considerable. Nevertheless, there is substantial persistence incollective bargaining status, as indicated by the large positive effects of lagged
bargaining status in the regression analysis.

-

Switching is less common when one uses the measure of union recognition toproxy union involvement in pay bargaining.

-

The proportion of establishments introducing and abolishing JCCs is much higher
than the switching in collective bargaining status.

43-

Much of the variance in collective bargaining status can be captured withworkplace-level covariates obtained some six to seven years previously.

-

The correlates of sectoral and firm-level bargaining differ quite markedly.

44

Endonotes
1. For contrasting evaluations of the outcome of the process of decentralization, see
Ochel (2003) and Massa-Wirth and Niechoj (2004).
2. This is not to deny the fact that a process of ‘juridification’ has occurred which iscontinually shaping what was once a voluntaristic system (Dickens and Hall, 2009).
3. See http://www.opsi.gov.uk/ACTS/acts1992/ukpga_19920052_en_11#pt4-ch1-pb2l1g179
4. It is notable that when the U.K. government enacted the Information and Consultationof Employees Regulations, which brought into force at EU requirement for employers to
consult employees, they did so in such a way that employers were able to fulfill thiscommitment through direct communication methods – so that representative structures
were unnecessary. Health and safety committees and representatives are exceptional in
the British case: their status is underpinned by a strong tripartite system of statutory
regulation. However, here we follow the traditional approach of excluding single-issuecommittees such as health and safety committees from our definition of joint consultative
committees.
5. On this symbiosis, see in particular the recent work of Behrens (2009) who examineson the basis of the fourth WSI survey of works councils the extent to which the entity is
actively involved in the recruitment of union members based on such factors as union
support, union strategies, works council union density, the presence of workplace union
representatives as well as structural establishment and workforce characteristics. A wider
discussion of the union-works council nexus is contained in Addison (2009).
6. Noting, however, that smaller employers may have a greater need to increase theircollective bargaining power, Schnabel, Zagelmeyer, and Kohaut (2006) suggest using aquadratic in employment size.).
7. For a more detailed discussion focusing on the timing of opening clauses and theimpact of the two types on wages in the manufacturing sector of Baden-Württemberg
using the German Structure of Earnings Survey, see Heinbach (2007).
8. For a parallel analysis of the determinants of pacts for employment andcompetitiveness based on the 2003 WIC works council survey, see Massa-Wirth andNiechoj (2004); Siefert and Massa-Wirth (2005).

45

9. For discussion of these theoretical effects, particularly the effects of industry-levelbargaining, see Bryson and Wilkinson (2002: Chapter 2, endnote 6). And for a rare
empirical study exploring the effect of industry-level bargaining on firm performance in
Britain, see Menezes-Filho (1997).
10. Large plants are oversampled but the sampling within each cell is random.
11. A detailed overview of the sample sizes and the filters applied are available from theauthors upon request.
12. Either because the target structure (the number of establishments or employees in thetarget structure of the respective weighting cell) changes, or because the number ofsurveyed establishments in the weighting cell changes, and/or because an establishmentchanges, size, industry or federal state between two waves.
13. For full information on the surveys, see Kersley et al. (2006); Cully et al. (1999); andChaplin et al. (2005).
14. For a full discussion of this issue see Kersley et al. (2006), pp. 181-188 and footnotes
1 and 3 in Chapter 7.
15. Rather fewer coefficient estimates were well defined than when using unweighted
data, including the establishment size argument. Weighted data are used in the interestsof facilitating comparisons between Britain and Germany.
16. However, there is evidence of a spillover effect of collective bargaining on the wagesof uncovered employees in the same workplace (Millward and Forth, 2004).
17. In the 1998 cross-section, 69 percent of private sector workplaces were ‘stayers.’ Theremainder were ‘leavers,’ consisting of workplaces that closed down (19 percent) andworkplaces that shrank below the 10 employee threshold (12 percent). In the 2004 crosssection, 69 percent were stayers while 31 percent were joiners.
18. These figures do not match the estimates of switching behavior taken from theestablishment’s status at the two survey cross-section time points. This may arise forthree reasons. First, the retrospective questions may have captured new recognitions andderecognitions of unions in multiple union settings, whereupon such changes may notnecessarily have affected their status as having at least one recognised union or not. For
example, a workplace with three recognized unions in 1998 may report a derecognition in
response to the retrospective question covering the period 1998-2004. However, it may

46

still have two recognized unions remaining, in which case they will still be classified asunionized in 2004. Second, the retrospective questions may capture switches in theintervening period between 1998 and 2004 which, if reversed subsequently, will not be
captured in comparisons of union status at the beginning and the end of the period. Third,
responses to retrospective questions may be subject to more measurement error thanresponses about status at a single point in time.
19. Reflecting the fact that the 2004 follow-up survey was much shorter than the 1998
survey due to budgetary constraints.

47

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52

Table 1
Transitions in the Collective Bargaining and Works Council Status of German Establishments between 1998 and 2004,
Weighted Data
Works council

Collective bargaining of
any type
Incomplete
Complete
panel
panel
42.6%
44.4%

Sectoral collective
bargaining
Incomplete
Complete
panel
panel
39.3%
40.5%

Firm-level collective
bargaining
Incomplete Complete
panel
panel
1.3%
2.0%

Always existing

Incomplete
panel
6.7%

Complete
panel
7.3%

Introduced

1.7%

2.5%

4.2%

2.8%

4.9%

3.1%

1.2%

1.7%

Abolished

2.0%

2.5%

15.6%

15.2%

15.2%

14.7%

2.4%

2.5%

Never existing

89.7%

87.7%

37.6%

37.5%

40.6%

41.8%

95.0%

93.8%

Net change

-0.3%

0.0%

-11.4%-12..4%-10.3%-11.7%

-1.2%

-0.7%

Number of observations

318,561

184,021318,561

184,021318,561

184,021318,561

184,021

Source: IAB Establishment Panel 1998 to 2004, own calculations.

53

Table 2
Probit Pooled Estimates of the Determinants of Collective Bargaining (Any Type,
Sectoral, and Firm-Level), Germany, 1998 and 2004, Weighted Data

Year (2004)
Log establishment size
Increasing sales expected
High-techAge of establishment
Exports
Single plant
R&D
Delegation
Team-work
Profit-center
Skilled workers
Female workers
Fixed-term workers
Part-time workers
Works council present
Individually-owned firm
Foreign property
Western Germany
Constant

Collective bargainingof any type-0.301***(0.089)0.160**(0.076)0.046(0.137)0.066(0.124)0.345**(0.150)-0.009*(0.006)-0.225(0.214)-0.327(0.219)0.383**(0.183)0.200(0.196)-0.119(0.215)0.0020(0.002)0.002(0.003)-0.014**(0.006)-0.0007(0.003)1.281***(0.159)0.106(0.140)-0.386(0.285)0.607***(0.132)-0.154(0.497)

Sectoral collective
bargaining-0.259***(0.088)0.148**(0.070)0.083(0.132)0.047(0.122)0.309**(0.146)-0.013**(0.006)-0.166(0.196)-0.238(0.211)0.379**(0.173)0.246(0.184)-0.103(0.197)0.00244(0.002)0.0003(0.003)-0.013**(0.006)0.0002(0.003)0.759***(0.169)0.101(0.138)-0.695**(0.279)0.733***(0.129)0.106(0.504)Firm-level collective
bargaining-0.170*(0.099)0.057(0.089)-0.185(0.143)0.106(0.106)0.118(0.172)0.0137***(0.005)-0.098(0.129)-0.227(0.183)-0.125(0.179)-0.208(0.190)-0.022(0.163)0.001(0.003)0.004(0.004)-0.003(0.006)-0.003(0.003)0.674***(0.180)0.041(0.116)
0.773**(0.319)-0.651***(0.114)-3.177***(0.588)54

Pseudo R2
0.27
0.25
0.19
n
3,067
3,084
3,066
Notes: Robust standard errors are in parentheses. ***, **, * denote statistical significance at the
0.01, 0.05, and 0.10 levels.
Source: IAB Establishment Panel, 1998 and 2004.

55

Table 3
Probit Estimates of End-Period (i.e. 2004) Collective Bargaining Status, Germany,
Weighted Data (the determinants are beginning-period (i.e. 1998) establishment
characteristics)
Collective
bargaining of any
typeCollective bargaining of any type

Sectoralcollective
bargaining

1.757***(0.179)

Sectoral collective bargaining

1.701***(0.174)Firm-level collective bargaining
Log establishment size
Increasing sales expected
High-techAge of establishment
Exports
Single plant
R&D
Delegation
Team-work
Profit-center
Skilled workers
Female workers
Fixed-term workers
Part-time workers
Works council present
Individually-owned firm

Firm-level
collective
bargaining

0.198**(0.090)-0.014(0.161)0.454***(0.174)-0.143(0.186)0.007(0.006)0.260(0.228)-0.392(0.279)0.534**(0.258)0.060(0.269)-0.374*(0.222)0.004(0.003)0.009**(0.004)0.003(0.007)-0.007*(0.004)0.244(0.232)0.085(0.190)0.217**(0.088)0.087(0.162)0.551***(0.173)-0.142(0.183)-0.0008(0.006)
0.379*(0.224)-0.544**(0.272)0.414(0.269)0.137(0.272)-0.283(0.222)0.005*(0.003)0.010**(0.004)0.004(0.007)-0.009**(0.004)0.079(0.234)0.156(0.192)2.232***(0.377)0.037(0.108)-0.728***(0.192)-0.379**(0.188)-0.0004(0.211)0.0142**(0.006)-0.459**(0.226)
0.577**(0.281)0.443*(0.230)-0.257(0.245)-0.284(0.250)-0.004(0.004)-0.001(0.005)0.003(0.001)
0.004(0.005)0.841***(0.314)-0.415(0.256)56

Foreign property
Profit sharing
High competition
Western Germany
Constant
Pseudo R2nNote: See notes to Table 2.

0.505(0.397)0.147(0.225)-0.260(0.167)0.679***(0.169)-3.317***(0.777)0.276(0.272)0.185(0.226)-0.338**(0.169)0.788***(0.170)-3.326***(0.746)0.436(0.427)-0.302(0.283)0.432**(0.170)-0.895***(0.192)-2.440*(0.754)

0.44
1,624

0.45
1,624

0.51
1,494

57

Table 4
Probit Estimates of the Determinants of Transitions into and out of the Various Collective
Bargaining Regimes, Germany, Weighted Data

Log establishment size
Increasing sales expected

High-techAge of establishment

Exports
Single plant
R&D
Delegation
Team-work
Profit-center
Skilled workers
Female workers
Fixed-term workers
Part-time workers
Works council
Individually-owned firm

Foreign property
Profit sharing
High competition
Western Germany

Collective bargaining of
any type
Introduced Abolished0.345**-0.195(0.158)(0.121)-0.869***-0.199(0.303)(0.190)1.093***-0.394*(0.334)(0.212)-1.013***-0.122(0.304)(0.215)0.005-0.013(0.010)(0.009)1.074**-0.099(0.523)(0.270)-0.0500.527(0.360)(0.334)
1.209***-0.374(0.447)(0.236)0.323-0.0224(0.426)(0.279)-0.4410.250(0.427)(0.283)0.013***-0.003(0.005)(0.003)0.017**-0.007(0.008)(0.005)-0.016-0.0109(0.022)(0.0113)0.006
0.009**(0.007)(0.004)0.114-0.172(0.652)(0.260)0.168-0.152(0.340)(0.221)
1.575***-0.105(0.586)(0.455)-0.442-0.385(0.446)(0.275)-0.937***0.142(0.291)(0.197)0.571**-0.575***

Sectoral collective
bargaining
Introduced Abolished0.387***-0.156(0.141)(0.125)-0.502*-0.276(0.264)(0.201)
1.311***-0.455**(0.311)(0.217)-0.750***-0.080(0.273)(0.228)-0.028**-0.012(0.012)(0.008)0.837*-0.184(0.440)(0.274)-0.894**0.488(0.405)(0.343)
1.107**-0.276(0.466)(0.244)-0.013-0.226(0.445)(0.301)-0.4060.251(0.419)(0.288)0.006-0.005(0.004)(0.0040.021***-0.007(0.005)(0.005)-0.011-0.016(0.018)(0.013)-0.0060.020**(0.006)(0.005)0.286
0.074(0.538)(0.263)0.209-0.207(0.309)(0.235)
1.337***-0.697(0.495)(0.501)-0.858**-0.398(0.432)(0.289)-0.593**0.207(0.272)(0.208)1.207***-0.671***

Firm-level collective
bargaining
Introduced Abolished-0.005-0.321*(0.116)(0.179)-0.537*** 1.126***(0.194)(0.372)-0.456**0.845*(0.193)(0.461)-0.153
1.917***(0.196)(0.581)0.013**
0.002(0.006)(0.012)-0.492**0.215(0.250)(0.482)0.384-1.504**(0.270)(0.631)0.504**
0.038(0.239)(0.599)-0.0770.697(0.229)(0.494)-0.139-0.120(0.288)(0.515)-0.001-0.013(0.004)(0.008)0.002
0.020*(0.005)(0.010)0.006
0.036*(0.008)(0.019)0.0009-0.023**(0.006)(0.012)0.998*** -0.587(0.326)(0.531)-0.4660.027(0.292)(0.575)0.669
0.101(0.466)(0.601)-0.581*-1.134*(0.347)(0.604)0.359**-0.721*(0.177)(0.389)-1.176*** -0.340

58Constant(0.287)-5.128***(1.637)

Pseudo R2
0.45
n
418
Note: See notes to Table 2.

(0.196)1.603*(0.893)(0.304)-4.509***(1.278)(0.204)
1.886**(0.861)(0.198)-2.411***(0.884)(0.596)
2.572(1.915)

0.20
1,088

0.41
613

0.23
919

0.43
1,234

0.72
153

59

Table 5
Probit Estimates of the Determinants of Transitions into and out of Works
Council Status, Germany, Weighted Data

Log establishment size
Increasing sales expected
High-techAge of establishment
Exports
Single plant
R&D
Delegation
Team-work
Profit-center
Skilled workers
Female workers
Fixed-term workers
Part-time workers
Individually-owned firm
Foreign property
Profit sharing
High competition
Western Germany
Sectoral agreements

Introduced(1)
0.657***(0.143)-0.734**(0.303)0.837**(0.368)0.0509(0.355)0.007(0.009)-0.024(0.342)0.853**(0.394)0.437(0.483)-1.031**(0.523)-0.113(0.494)0.003(0.005)0.027***(0.009)0.005(0.016)-0.030***(0.012)-2.933***(0.672)
1.408**(0.578)0.259(0.391)-0.232(0.358)0.174(0.392)0.555(0.367)

Abolished(2)-2.445***(0.391)-1.307**(0.566)1.659***(0.477)-1.074**(0.499)0.011(0.011)1.302***(0.404)-1.947***(0.686)
0.793*(0.410)0.365(0.434)0.846*(0.462)-0.0103*(0.006)-0.008(0.010)0.103***(0.027)-0.016(0.013)2.277***(0.763)-2.547**(1.226)-0.382(0.501)-0.974**(0.470)0.251(0.489)-1.731***(0.524)60

Firm-level agreements
Constant
Pseudo R2nNote: See notes to Table 2.

1.208***(0.432)-13.360***(1.058)-0.798(0.589)13.864***(2.793)

0.57
487

0.77
586

61

Table 6
Workplace Incidence of Collective Bargaining, United Kingdom, 1998-2004
Union
recognition

Any
SectoralFirm-level
Joint
collective
agreement
agreement
Consultative
bargaining
Committee
1998 (%)
20.4
16.6
5.6
11.0
36.3 (14.3)
2004 (%)
14.8
10.6
2.3
8.4
29.4 (9.5)
∆
-5.6
-6.0
-3.3
-2.6
-6.9 (-4.8)
Notes: (1) ∆ denotes percentage point change. (2) Firm agreements include those at workplace
and at organization level. (3) JCC figures are for all JCCs whether at workplace or organizationlevel; figures in parentheses are workplace-level JCCs. (4) All figures are workplace-weighted.
(5) Unweighted workplace sample sizes in 1998 are 1469 for collective bargaining, 1,460 for
union recognition, and 1,494 for JCC. (6) Unweighted workplace sample sizes in 2004 are 1,458
for collective bargaining, 1,428 for union recognition, and 1,489 for JCC.

Table 7
Employee Coverage by Worker Representation and Collective Bargaining, United
Kingdom, 1998-2004
Union
recognition

Any
SectoralFirm-level
collective
agreement
agreement
bargaining
1998 (%)
38.7
26.9
4.6
22.3
2004 (%)
32.2
21.3
4.1
17.2
∆
-6.5
-5.6
-0.5
-4.1
Notes: (1) All figures are employee weighted. See also notes to Table 6.

Joint
Consultative
Committee
50.8 (33.2)
48.6 (32.7)-2.2 (-0.5)

62

Table 8
Behavioral Versus Compositional Change, United Kingdom, 1998-2004
Union
recognitionAnycollective
bargaining

Sectoralagreement

Firm-levelagreement

Joint
consultative
committee

Stayers
Cross-section:
1998
21.0
16.0
5.5
10.5
39.7 (15.5)
2004
18.1
12.1
2.0
10.0
30.2 (11.0)
∆
-1.9
-3.9
-3.5
-0.5
-9.5 (-4.5)
Panel:
1998
22.2
17.3
5.7
11.5
38.5 (15.8)
2004
24.2
20.0
9.4
11.4
41.4 (17.0)
∆
+2.0
+2.7
+3.7
-0.1
+2.6 (1.2)
Changers
Leavers 1998
19.1
17.9
6.0
12.1
28.7 (11.6)
Joiners 2004
7.5
7.1
2.9
4.8
27.4 (6.3)
∆
-11.6
-10.8
-3.1
-7.3
-1.3 (-5.3)
Notes: (1) ∆ denotes percentage point change. (2) Cross-section stayers are defined using survey
data on workplace age and size. 1998 stayers are those workplaces surveyed in 1998 that werestill in existence in 2004 with 10 or more employees. 2004 stayers are those workplaces surveyed
in 2004 that had been in existence with 10 or more employees in 1998. (3) All panel cases are‘stayers’ since they had 10 or more employees in both 1998 and 2004. (4) Leavers are workplaces
with 10 or more employees surveyed in 1998 that subsequently closed before 2004, or whose
employment size had shrunk below 10 by 2004. Joiners are workplaces with 10 or more
employees surveyed in 2004 that were either born after 1998 or had been in existence with fewer
than 10 employees in 1998. (5) Unweighted workplace sample sizes are as follows: panel
between 575 and 587 depending on workplace measure; 1998 stayers = 1,202; 1998 leavers =292; 2004 stayers = 1,206; 2004 joiners = 280.

63

Table 9
Switching Behavior in Panel Workplaces, United Kingdom, 1998-2004
Union
recognition

Any
SectoralFirm-level
Joint
collective
agreement
agreement
Consultative
bargaining
Committee
Always (%)
19.7
8.5
1.2
4.3
22.8 (7.0)
Introduced (%)
4.1
11.9
8.2
7.1
18.3 (10.1)
Abolished (%)
2.4
8.7
4.5
7.2
15.7 (8.8)
Never (%)
73.9
70.9
86.2
81.5
43.2 (74.2)
∆
+1.7
+3.2
+3.7
-0.1
+2.6 (+1.3)
Notes: (1) ∆ denotes percentage point change. (2) Unweighted sample size is between 568 and587 depending on workplace measure.

64

Table 10
Probit Estimates for Union Recognition and Collective Bargaining, United Kingdom,
Pooled Data for WERS Panel 1998-2004
Recognition
Year (2004)
Log establishment size
Single plant
U.K. ownership
Local market
Female workers
Fixed-term workers
Team work
No. of contingent pay practices
JCC
Constant-0.022(0.085)0.267***(0.099)-0.301(0.266)0.253(0.241)0.433**(0.201)
0.902(0.563)-0.063(0.123)-0.093(0.142)-0.071(0.070)0.731***(0.152)-1.511***(0.564)Anycollective
bargaining
0.159(0.166)
0.262***(0.084)-0.267(0.212)0.314*(0.176)
0.621***(0.193)-0.500(0.356)0.281(0.201)-0.322**(0.155)-0.256***(0.066)0.477***(0.155)-1.581***(0.399)

Sectoralagreement

Firm-levelagreement

0.344(0.251)-0.012(0.110)0.234(0.194)0.345(0.277)0.417*(0.225)-0.335(0.414)0.482*(0.247)0.039(0.181)-0.340***(0.109)0.241(0.173)-1.852***(0.481)-0.064(0.175)0.395***(0.069)-0.903***(0.232)0.300*(0.166)
0.471***(0.171)-0.280(0.354)0.024(0.160)-0.571***(0.163)-0.089(0.077)0.546***(0.168)-2.053***(0.423)Pseudo R2
0.37
0.22
0.21
0.28
n
1,167
1,167
1,167
1,167
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors clustered to account for repeated observations are in parentheses. All models
include 10 single-digit industry dummies. Controls are as follows. Year (2004): year dummy; Log
establishment size: log number of employees at workplace; Single plant: dummy for single
establishment; U.K ownership: dummy for U.K. ownership; Local market: dummy for local
product/service market (the default category is regional, national, and international markets);
Female workers: percentage of employees female; Fixed-term workers: dummy for any
temporary or fixed-term employees; Team work: 60% or more of employees in largest
occupational group work in teams; No. of contingent pay practices: count of contingent pay
practices (profit-related pay, deferred profit-sharing, employee share ownership, individual orgroup performance-related pay, and other cash bonuses); and JCC dummy for presence of a JCC
at workplace or organizational level.

65

Table 11
Probit Estimates for Union Recognition and Collective Bargaining Status in 2004
Conditioning on 1998 Covariates, United Kingdom, WERS Panel 1998-2004
Recognition
Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
JCC

0.346***(0.102)-0.220(0.260)1.028***(0.286)-0.967***(0.292)-0.49*(0.250)-0.447(0.473)0.073(0.600)-0.114(0.400)-1.270***(0.482)-0.071(0.550)-0.153(0.401)0.642*(0.379)-0.002(0.005)0.004(0.005)-0.125(0.211)
0.029(0.303)0.522**(0.224)

Any collective
bargaining
0.152(0.132)0.355(0.263)0.247(0.212)-0.666**(0.307)-0.387*(0.224)0.599(0.444)-0.065(0.422)0.089(0.438)0.233(0.416)-0.670*(0.401)0.169(0.433)0.181(0.389)-0.007(0.007)0.003(0.008)0.099(0.247)0.299(0.281)-0.047(0.219)

Sectoralagreement
0.027(0.175)0.295(0.286)0.225(0.373)-0.648*(0.383)-0.281(0.258)1.667***(0.598)0.766(0.615)0.189(0.477)-0.185(0.504)-0.631(0.662)0.224(0.516)0.271(0.438)-0.020**(0.008)0.024**(0.012)0.104(0.341)0.707**(0.345)-0.296(0.263)Firm-levelagreement
0.276**(0.130)0.069(0.277)0.266(0.252)-0.539*(0.305)-0.275(0.224)-0.343(0.441)-0.728*(0.429)0.004(0.490)-0.030(0.413)-0.901*(0.538)-0.469(0.426)-0.225(0.426)0.006(0.007)-0.012**(0.006)-0.140(0.223)-0.213(0.266)0.271(0.203)66

Team work
No. contingent pay practices

LondonUnion recognition-0.022(0.225)-0.199*(0.109)-0.294(0.232)2.808***(0.249)Any collective bargaining-0.133(0.237)-0.193(0.123)-0.699**(0.279)-0.233(0.297)-0.347**(0.148)-1.431***(0.529)0.936***(0.266)

Sectoral collective bargaining

0.176(0.474)Firm-level collective bargaining

Constant

0.083(0.226)-0.076(0.091)-0.53*(0.320)-3.136***(0.694)-1.600**(0.776)-2.667***(0.963)

1.105***(0.248)-1.804***(0.853)Pseudo R2
0.699
0.256
0.377
0.285
n
584
572
566
584
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors clustered to account for repeated observations are in parentheses. All models
include 8 single-digit industry dummies. Controls are all measured in 1998 and are as follows.
Log establishment size: log number of employees at workplace; Single plant: dummy for single
establishment; U.K ownership: dummy for U.K. ownership; Family owned: dummy for family
owned; Establishment age: a dummy for establishment aged 25 or more years; Occupation
variables identify the largest non-managerial occupational group in the workplace where 1 =professionals, 2 = scientific/technical; 3 = clerical/secretarial; 4 = craft and skilled manual; 5 =personal service; 6 = sales; 7 = operative and assembly and reference is routine unskilled manual;
Local market: dummy for local product/service market (the default category is regional, national,
and international markets); Female workers: percentage of employees female; Fixed-term
workers: dummy for any temporary or fixed-term employees; Team work: 60% or more of
employees in largest occupational group work in teams; No. of contingent pay practices: count ofcontingent pay practices (profit-related pay, deferred profit-sharing, employee share ownership,
individual or group performance-related pay, and other cash bonuses); London: dummy forlocation in London; and JCC: dummy for presence of a JCC at workplace or organizational level.

67

Table 12
Multinomial Logit Estimates for Union Recognition Status, United Kingdom, 19982004 (reference category is no recognition in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
JCC
Team work

1998 only
0.516(0.422)-1.714(1.109)-0.196(1.689)-3.259*(1.773)
1.291*(0.778)0.586(1.517)0.594(1.764)-0.926(1.223)1.998(1.606)-1.061(1.884)-0.274(1.363)-1.597(1.808)0.029(0.024)-0.003(0.016)-0.095(0.666)3.088***(1.151)-0.414(0.657)-0.287

2004 only
0.890***(0.199)-0.716(0.691)2.797***(0.719)-3.008***(1.080)-1.212*(0.674)-0.797(0.994)-0.141(1.211)-1.079(1.200)-2.986***(1.123)-0.72(1.358)-0.025(0.829)0.904(0.765)0.004(0.013)0.003(0.014)-0.007(0.574)0.567(0.760)0.726(0.645)-0.24

1998 and 2004
0.694***(0.230)-0.848(0.523)
1.463**(0.584)-1.893***(0.614)0.170(0.422)-0.612(1.034)-0.461(0.831)0.790(0.851)0.521(0.864)-0.899(1.055)-0.327(0.754)1.234(0.797)0.017(0.012)0.006(0.013)-0.117(0.486)
1.631***(0.518)1.326***(0.480)-0.17768

(0.757)-0.179(0.268)-33.969***(0.875)-6.958**(2.921)(0.519)(0.420)No. of contingent pay practices-0.527*-0.27(0.298)(0.186)
London-1.612**-1.044*(0.696)(0.579)Constant-6.967***-6.594***(1.476)(1.419)2
Pseudo R
0.45
n584
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. All models include 8 single-digit industry dummies. See also
notes to Table 11.

69

Table 13
Multinomial Logit Estimates for Collective Bargaining Status, United Kingdom, 19982004 (reference category is no collective bargaining in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
JCC
Team work

1998 only

2004 only

1998 and 2004

0.696***(0.228)-1.039(0.706)0.024(0.896)0.427(0.680)0.382(0.513)-2.076(1.297)0.055(1.143)0.263(1.120)1.148(1.175)-1.824(1.135)1.001(0.966)1.855(1.236)0.008(0.013)0.013(0.018)-0.217(0.599)1.719***(0.532)
1.425***(0.526)
0.687

0.058
(0.380)0.495(0.542)
1.348*(0.720)-1.249*(0.685)-0.894(0.608)0.222(0.932)-0.843(1.040)-0.206(0.928)0.585(0.886)-2.451**(1.129)1.202(0.865)0.518(0.888)-0.007(0.014)-0.022(0.016)0.476(0.567)1.520**(0.698)-0.099(0.541)0.067

0.744***(0.206)-0.881(0.621)-0.117(0.465)-0.813(0.649)0.110(0.405)2.001(1.395)0.550(0.897)0.902(0.770)0.158(0.929)1.107(1.129)-0.197(0.850)1.189(0.858)-0.028**(0.013)0.047***(0.017)-0.135(0.436)0.795(0.583)1.200***(0.427)-0.23170

(0.546)-0.504**(0.242)-2.392***(0.687)-6.183***(1.778)(0.643)(0.438)
No. of contingent pay practices-0.733***-0.241(0.267)(0.206)
London-2.430***-1.538**(0.913)(0.653)
Constant-2.046-6.598***(2.175)(1.414)2
Pseudo R
0.37
n572
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. All models include 8 single-digit industry dummies. See also
notes to Table 11.

71

Table 14
Multinomial Logit Estimates for Sectoral Collective Bargaining Status, United Kingdom,
1998-2004 (reference category is no sectoral collective bargaining in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
JCC
Team work

1998 only
0.170(0.316)-2.018*(1.166)0.570(1.788)0.493(0.806)0.060(0.838)-4.477***(1.723)-0.029(1.226)0.619(0.994)-0.546(1.015)-5.484***(1.631)-0.017(1.142)-2.067*(1.174)0.009(0.016)0.021(0.023)0.181(0.863)1.032(0.723)0.422(0.829)1.510*

2004 only-0.667(0.565)0.732(0.714)0.645(1.221)-0.834(0.768)-0.664(0.597)3.102**(1.238)1.956(1.434)-0.144(1.131)-0.819(1.361)-3.797(2.598)0.143(1.064)0.048(1.142)-0.049**(0.021)0.057**(0.027)1.211(0.923)2.224**(0.973)0.169(0.700)-0.441

1998 and 2004
1.117***(0.406)-0.786(1.032)0.310(1.390)-0.994(0.955)0.235(0.716)2.618(1.911)0.099(2.517)-31.056***(1.158)-1.427(1.846)0.494(1.654)-32.278***(1.893)0.908(1.571)-0.038**(0.019)0.021(0.022)-0.791(1.326)0.397(1.230)-1.684*(0.907)-0.70772

(0.900)-1.003**(0.450)-2.387**(1.077)2.222(1.550)3.981***(1.391)-1.339(1.350)-34.897***(1.035)-3.021(2.236)1.437(1.586)-1.743(1.132)-5.283**(2.272)(0.719)(0.864)
No. of contingent pay practices-0.707**-1.189**(0.285)(0.574)
London-2.517**-33.21***(1.104)(1.925)Sic1
4.768*-0.416(2.508)(1.149)Sic2
6.535***
3.788***(2.468)(1.187)Sic3
2.919-33.047***(1.882)(1.047)Sic4
2.906**-33.338***(1.227)(0.956)Sic5
6.036**-33.538***(2.580)(1.391)Sic6
7.937***-28.889***(2.619)(2.996)Sic7
3.176**-2.846*(1.558)(1.682)
Constant-4.857**-5.647**(2.265)(2.276)2
Pseudo R
0.44n566
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. SIC variables are the standard industry classification codes asfollows. Sic1: Manufacture and Utilities; Sic2: Construction; Sic3: Wholesale and Retail; Sic4:
Hotels and Restaurants; Sic5: Transport and Communication; Sic6: Financial Services; Sic7:
Other business services. The Sic reference category is Education, Health, and Other Community
Services. See also notes to Table 1173

Table 15
Multinomial Logit Estimates for Firm Collective Bargaining Status, United Kingdom,
1998-2004 (reference category is no firm collective bargaining in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
JCC
Team work

1998 only
0.616***(0.234)-0.865(0.564)-0.202(0.602)0.073(0.733)0.371(0.560)-0.427(1.623)0.116(1.506)-0.596(1.126)1.781(1.256)0.745(1.279)0.801(0.938)3.383***(1.280)-0.010(0.014)0.036*(0.019)-1.037**(0.474)
1.390**(0.642)
1.212**(0.556)
0.198

2004 only
0.418(0.309)0.411(0.590)0.882(0.647)-1.331*(0.696)-0.799(0.546)-1.432(1.107)-1.822*(0.951)-0.312(0.986)0.049(0.768)-2.377(1.458)-0.909(0.922)0.164(0.861)0.006(0.016)-0.029*(0.016)-0.855(0.546)-0.007(0.641)0.531(0.478)0.824

1998 and 2004
0.968***(0.203)-1.820***(0.697)-0.459(0.471)-0.279(0.688)0.685(0.499)1.079(1.016)0.000(0.870)0.812(0.821)0.498(1.031)0.678(1.087)-0.462(1.179)1.416*(0.757)-0.004(0.011)0.025*(0.013)0.375(0.480)0.491(0.580)1.768***(0.434)-0.839**74

(0.490)0.232(0.259)-2.375***(0.841)-7.026***(1.932)(0.600)(0.406)
No. of contingent pay practices-0.1880.146(0.221)(0.217)
London-2.174**-0.342(1.001)(0.611)
Constant-2.590-7.811***(2.316)(1.273)
2
Pseudo R
0.39
n584
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. All models include 8 single-digit industry dummies. See also
notes to Table 11.

75

Table 16
Multinomial Logit Estimates for Joint Consultative Committee Status, United Kingdom,
1998-2004 (reference category is no JCC in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
Union recognition
Team work

1998 only-0.027(0.302)-1.154*(0.668)0.111(0.642)-1.046**(0.502)-0.662(0.492)0.804(1.140)1.358(1.006)0.775(0.981)
1.179(0.876)1.031(0.958)-0.216(1.012)-0.747(0.875)-0.018(0.019)0.017(0.013)0.455(0.571)-1.418**(0.699)1.019*(0.610)-0.281

20004 only
0.213
(0.226)-0.843*(0.502)-2.163***(0.572)-1.372**(0.574)-1.818***(0.489)-0.855(0.897)-1.734(1.393)-1.083(0.728)-0.273(0.890)-1.62(1.001)-0.158(0.752)-0.01(0.803)0.015(0.012)-0.017(0.011)-0.429(0.540)-0.225(0.530)1.012*(0.605)0.180

1998 and 2004
0.522**(0.251)-2.420***(0.574)0.014(0.542)-2.657***(0.577)0.224(0.463)0.262(0.943)-0.659(0.986)0.571(0.782)0.894(0.834)-0.768(0.829)1.455*(0.780)-0.039(0.660)-0.006(0.012)-0.011(0.011)-0.427(0.537)-0.527(0.489)1.537***(0.497)-0.22876

No. of contingent pay practices

LondonConstant(0.569)0.328(0.263)-0.869(0.890)0.052(1.973)(0.467)0.001(0.180)-0.071(0.603)2.582*(1.385)(0.507)0.069(0.190)-0.022(0.758)0.190(1.700)Pseudo R2
0.31
n
584
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. All models include 8 single-digit industry dummies. See also
notes to Table 6 for a description of all other regressors; the only difference here is the inclusionof union recognition (a 1/0 dummy for the presence of a recognized union) and the excision of
JCC.

77

Table 17
Multinomial Logit Estimates for Workplace-level Joint Consultative Committee Status,
United Kingdom, 1998-2004 (reference category is no workplace JCC in 1998 and 2004)

Log establishment size
Single plant
U.K. ownership
Family owned
Establishment age
Occupation 1
Occupation 2
Occupation 3
Occupation 4
Occupation 5
Occupation 6
Occupation 7
Female workers
Part-time workers
Fixed-term workers
Local market
Union recognition
Team work

1998 only
0.893***(0.222)0.528(0.621)-0.56(0.580)0.121(0.498)0.035(0.454)2.733**(1.105)1.587(1.198)1.896*(1.107)1.896*(1.028)0.721(1.243)-0.364(1.690)0.487(1.005)-0.006(0.022)0.018(0.014)0.285(0.511)-1.765***(0.612)0.301(0.520)0.147(0.481)

2004 only
1.169***(0.200)-0.264(0.497)-0.635(0.485)-0.643(0.487)-0.573(0.444)0.289(0.731)-1.232(1.139)0.196(0.652)0.007(0.683)-1.125(0.815)-1.181(0.742)-0.78(0.653)-0.01(0.009)0.001(0.011)-0.405(0.383)-1.002**(0.452)0.262(0.456)0.352(0.387)

1998 and 2004
1.495***(0.214)0.396(0.552)0.459(0.533)-1.627**(0.696)0.140(0.472)-0.601(0.922)-0.712(0.814)0.784(0.831)
1.052(0.814)-2.004**(1.008)1.340(0.943)0.189(0.687)-0.008(0.011)-0.009(0.011)0.714(0.481)-0.738(0.473)-0.106(0.448)0.510(0.434)78

No. of contingent pay practices

0.107(0.227)-0.895(0.999)-5.802***(1.944)0.242-0.013(0.193)(0.208)London0.141
1.095**(0.538)(0.556)
Constant-3.693***-7.176***(1.144)(1.366)2
Pseudo R
0.25
n584
Notes: ***, **, * denote statistical significance at the 0.01, 0.05, and 0.10 levels, respectively.
Standard errors are in parentheses. All models include 8 single-digit industry dummies and aconstant. See also notes to Table 6 for a description of all other regressors; the only difference
here is the inclusion of union recognition (a 1/0 dummy for the presence of a recognized union)
and the excision of JCC

79

Figure 1
The Collective Bargaining and Works Council Coverage of Establishments in Germany,
1998-2004 (establishments with at least 5 employees, cross-section weighted data)
60.0%

50.0%

mean

40.0%

30.0%

20.0%

10.0%

0.0%
1998

1999

2000

2001

2002

2003

2004

year
sectoral agreement

firm agreement

no agreement

works council

Figure 2
The Collective Bargaining and Works Council Coverage of Employees in Germany,
1998-2004 (establishments with at least 5 employees, cross-section weighted data)
70.0%

60.0%

50.0%

mean

40.0%

30.0%

20.0%

10.0%

0.0%
1998

1999

2000

2001

2002

2003

2004

year
sectoral agreement

firm agreement

no agreement

works council

80

Figure 3
The Collective Bargaining and Works Council Coverage of Establishments in Germany,
Permanent Stayers, 1998-2004 (establishments with at least 5 employees, cross-section
weighted data)
60.0%

50.0%

mean

40.0%

30.0%

20.0%

10.0%

0.0%
1998

1999

2000

2001

2002

2003

2004

year
sectoral agreement

firm agreement

no agreement

works council

Figure 4
The Collective Bargaining and Works Council Coverage of Employees in Germany,
Permanent Stayers, 1998-2004 (establishments with at least 5 employees, cross-section
weighted data)
80.0%

70.0%

60.0%

mean

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
1998

1999

2000

2001

2002

2003

2004

year
sectoral agreement

firm agreement

no agreement

works council

81

Appendix Table 1
Variable Description and Summary Statistics of the Estimation Sample, Germany
Type

Mean

S. D.

n

Any type of collective agreement

Dummy

Sectoral (i.e.multi-employer) collective agreement

Dummy

0.685
0.583
0.102
0.142
0.133
0.043
0.190
0.216
0.522
0.431
0.038
0.076
4.093
0.339
0.026
0.288
0.224
0.156
0.260
65.20335.82013.870
3.929
0.198
0.722
0.539
8.541
0.083

0.465
0.493
0.303
0.349
0.340
0.202
0.382
0.412
0.500
0.495
0.192
0.265
1.692
0.474
0.159
0.453
0.417
0.363
0.439
26.84029.22620.966
9.878
0.399
0.448
0.499
19.328
0.276

0.157
0.656

0.364
0.475

0.463
-

0.499
-

1,747
1,747
1,747
550
728
1,569
1,197
1,019
178
1,747
994
753
1,747
1,737
1,745
1,731
1,731
1,731
1,744
1,746
1,742
1,741
1,741
1,736
1,744
1,743
1,701
1,725
1,747
1,747
1,747
1,747

Variable

Firm-level collective agreement

Dummy

Introduction of a collective agreement between 1998 and 2004

Dummy

Introduction of a sectoral collective agreement between 1998 and 2004

Dummy

Introduction of a firm-level collective agreement between 1998 and 2004

Dummy

Abolition of a collective agreement between 1998 and 2004

Dummy

Abolition of a sectoral collective agreement between 1998 and 2004

Dummy

Abolition of a firm-level collective agreement between 1998 and 2004

Dummy

Works council presence

Dummy

Introduction of a works council between 1998 and 2004

Dummy

Abolition of a works council between 1998 and 2004

Dummy

Establishment size (total number of employees; as of June30, 1998)

log value

Increasing sales expected

Dummy

High-tech (technology of equipment is high/very high)Dummy

Delegation (of responsibilities to lower levels during the last 24 months)

DummyTeam-work (introduction of team-work during the last 24 months)

Dummy

Profit-center (introduction of profit center during the last 24 months)

Dummy

R&D (establishment or another unit within company is engaged in R&D)

Dummy

Skilled workers

Proportion

Female workers

Proportion

Part-time workers

Proportion

Fixed-term contract workers

Proportion

Legal form: individually-owned firm

DummySingle establishment (independent company with no other place of business

Dummy

Age of establishment (founded before 1990)
Exports

Dummy
Proportion

Foreign property (foreign majority ownership [taken from 2004 data]}

Dummy

Presence of profit sharing schemes (in 1998)

Dummy

High competition (pressure from competition is ‘substantial’[in 1998])

Dummy

West Germany (establishment located in western Germany)

Dummy

Industry dummies (32)

Dummy

82

Appendix Table 2
Variable Description and Summary Statistics of the Estimation Sample, United Kingdom
VariableAny union recognition

Type
Dummy

Any type of collective agreement

Dummy

Sectoral (i.e.multi-employer) collective agreement

Dummy

Firm-level collective agreement

Dummy

Introduction of union recognition between 1998 and 2004

Dummy

Abolition of union recognition between 1998 and 2004

Dummy

Retention of union recognition between 1998 and 2004

Dummy

No union recognition between 1998 and 2004

Dummy

Introduction of a collective agreement between 1998 and 2004

Dummy

Abolition of a collective agreement between 1998 and 2004

Dummy

Retention of a collective agreement between 1998 and 2004

Dummy

No collective agreement between 1998 and 2004

Dummy

Introduction of a sectoral collective agreement between 1998 and 2004

Dummy

Abolition of a sectoral collective agreement between 1998 and 2004

Dummy

Retention of a sectoral collective agreement between 1998 and 2004

Dummy

No sectoral collective agreement between 1998 and 2004

Dummy

Introduction of a firm-level collective agreement between 1998 and 2004

Dummy

Abolition of a firm-level collective agreement between 1998 and 2004

Dummy

Retention of a firm-level collective agreement between 1998 and 2004

Dummy

No firm-level collective agreement between 1998 and 2004

Dummy

Any joint consultative committee

Dummy

Introduction of a JCC between 1998 and 2004

Dummy

Abolition of a JCC between 1998 and 2004

Dummy

Retention of a JCC between 1998 and 2004

Dummy

No JCC between 1998 and 2004

Dummy

Any workplace JCC

Dummy

Introduction of a workplace JCC between 1998 and 2004

Dummy

Abolition of a workplace JCC between 1998 and 2004

Dummy

Retention of a workplace JCC between 1998 and 2004

Dummy

No workplace JCC between 1998 and 2004

Dummy

Establishment size (total number of employees)

Log value

Team-work (60 percent or more of largest occupational group in teams)

Dummy

Percent female employees

Percent

Part-time workers

Percent

Any fixed-term or temporary contract workers

Dummy

Single establishment (independent company with no other place ofbusiness)
Age of establishment (founded before 1990)

Dummy
Dummy

Market for main product/service is local

Dummy

U.K.-owned

Dummy

Family-owned

Dummy

Number of contingent pay schemes (share ownership, profit-related pay,

Count

Mean
0.380
0.341
0.071
0.271
0.075
0.031
0.349
0.545
0.101
0.124
0.218
0.558
0.055
0.049
0.021
0.875
0.090
0.111
0.160
0.639
0.521
0.181
0.141
0.380
0.298
0.346
0.179
0.119
0.227
0.475
4.726
0.652
43.32321.361
0.465
0.273

S. D.
0.486
0.475
0.257
0.445
0.264
0.173
0.477
0.498
0.302
0.330
0.413
0.497
0.227
0.217
0.144
0.331
0.287
0.314
0.367
0.481
0.450
0.385
0.349
0.486
0.458
0.477
0.384
0.324
0.419
0.500
1.212
0.477
26.86227.058
0.499
0.446

n
587
577
580
587
587
587
587
587
574
574
574
574
568
568
568
568
587
587
587
587
587
587
587
587
587
587
587
587
587
587
587
587
585
585
587
587

0.356
0.256
0.768
0.187
1.522

0.479
0.437
0.422
0.391
1.220

587
587
587
587
586

83

deferred profit sharing, individual or group PBR, cash bonuses)(0,5)

London (establishment located in London)

Dummy

Largest occupational group (8)DummyIndustry dummies (10)

Dummy

0.135

0.342

Note: Descriptive statistics are for 1998 baseline data, with the exception of switching status in 1998-2004

84

587
587
587

Appendix Table 3
Number of Employees and Establishments Covered by Collective Agreements and Works Councils in Germany, 1998-2004,
Weighted Data
Collective agreement status
Sectoral agreement

Firm agreement

No agreement

Works council

TotalsYear

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

1998

469,272

13,259,878

46,454

1,845,006

443,245

6,266,971

88,1629,680,309

958,971

21,371,855

48.9%

62.0%

4.8%

8.6%

46.2%

29.3%

9.2%

45.3%

453,854

12,667,567

28,8701,687,144

459,346

6,660,295

88,8509,648,126

942,070

21,015,006

48.2%

60.3%

3.1%

8.0%

48.8%

31.7%

9.4%

45.9%

422,719

11,917,790

27,071

1,463,513

442,239

7,426,812

94,024

9,429,656

892,029

20,808,115

47.4%

57.3%

3.0%

7.0%

49.6%

35.7%

10.5%

45.3%

400,00911,805,583

29,086

1,664,439

430,685

7,089,134

89,9229,536,473

859,780

20,559,156

46.5%

57.4%

3.4%

8.1%

50.1%

34.5%

10.5%

46.4%

395,493

11,709,360

23,931

1,560,952

459,054

7,376,187

85,5799,545,364

878,478

20,646,499

45.0%

56.7%

2.7%

7.6%

52.3%

35.7%

9.7%

46.2%

377,128

11,439,852

25,392

1,673,711

471,057

7,508,745

79,9489,310,295

873,577

20,622,308

43.2%

55.5%

2.9%

8.1%

53.9%

36.4%

9.2%

45.1%

350,469

10,877,501

24,345

1,614,867

493,661

7,711,302

75,084

8,834,736

868,475

20,203,670

40.4%

53.8%

2.8%

8.0%

56.8%

38.2%

8.6%

43.7%

1999

2000

2001

2002

2003

2004

Source: IAB Establishment Panel 1998 to 2004, own calculations.

85

Appendix Table 4
Number of Employees and Establishments Not Covered by Collective Agreements and Works Councils but Acting upon a Collective
Agreement, Germany, 1998-2004, Weighted Data
Acting upon collective agreement
Yes
Year
1999

2000

2001

2002

2003

2004

Establishments

No
Employees

Overall numbers

TotalsEstablishments

Employees

Establishments

Employees

205,905

3,265,817

239,557

3,194,755

445,4626,460,572

21.9%

15.5%

25.4%

15.2%

47.3%

30.7%

215,617

3,761,630

213,123

3,455,910

428,740

7,217,540

24.2%

18.1%

23.9%

16.6%

48.1%

34.7%

192,599

3,517,545

207,954

3,097,784

400,553

6,615,329

22.4%

17.1%

24.2%

15.1%

46.6%

32.2%

210,636

3,745,272

231,537

3,352,851

442,173

7,098,123

24.0%

18.1%

26.4%

16.2%

50.3%

34.4%

232,241

3,820,184

213,870

3,245,989

446,111

7,066,173

26.6%

18.5%

24.5%

15.7%

51.1%

34.3%

218,247

3,598,989

253,611

3,778,227

471,858

7,377,216

25.1%

17.8%

29.2%

18.7%

54.3%

36.5%

Establishments

Employees

942,070

21,015,006

892,029

20,808,115

859,780

20,559,156

878,478

20,646,499

873,577

20,622,308

868,475

20,203,670

Note: Percentage values are based upon the overall number of establishments/employees. Because of missing values, the totals of employers/employees are
smaller compared with the total number of uncovered establishments/employees presented in Appendix Table 3.
Source: IAB Establishment Panel 1998 to 2004, own calculations.

86

Appendix Table 5
Number of Employees and Establishments Covered by Collective Agreements and Works Councils,
Permanent Stayers, Germany, 1998-2004, Weighted Data
Collective agreement status
Sectoral agreement

Firm agreement

Works council

No agreement

TotalsYear

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

1998

101,5393,240,623

8,219

338,041

74,263

1,067,858

17,9792,311,963

184,021

4,646,522

55.2%

69.7%

4.5%

7.3%

40.4%

23.0%

9.8%

49.8%

89,0752,947,818

4,429

236,590

80,336

1,192,041

17,6192,241,176

173,840

4,376,449

51.2%

67.4%

2.5%

5.4%

46.2%

27.2%

10.1%

51.2%

66,7022,430,972

5,548

207,633

55,439892,900

15,885

1,960,510

127,689

3,531,505

52.2%

68.8%

4.3%

5.9%

43.4%

25.3%

12.4%

55.5%

56,516

2,159,535

4,476

263,964

49,862

837,889

13,768

1,830,756

110,854

3,261,388

51.0%

66.2%

4.0%

8.1%

45.0%

25.7%

12.4%

56.1%

57,3172,277,864

3,496

268,272

50,374795,457

11,771

1,918,925

111,187

3,341,593

51.6%

68.2%

3.1%

8.0%

45.3%

23.8%

10.6%

57.4%

53,3742,293,113

2,808

273,965

51,508816,232

13,3982,029,893

107,690

3,383,310

49.6%

67.8%

2.6%

8.1%

47.8%

24.1%

12.4%

60.0%

48,873

1,991,173

5,411

276,291

49,527742,178

13,754

1,776,610

103,8113,009,642

47.1%

66.2%

5.2%

9.2%

47.7%

24.7%

13.2%

59.0%

1999

2000

2001

2002

2003

2004

Source: IAB Establishment Panel 1998 to 2004, own calculations.

87

Appendix Table 6
Number of Employees and Establishments Covered by Collective Agreements and Works Councils,
Entrants, Germany, 1998-2004, Weighted Data
Collective agreement status
Sectoral agreement

Firm agreement

Works council

No agreement

TotalsYear

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

1998

278,072

7,694,051

22,847

1,105,687

251,036

3,638,483

50,472

5,702,011

551,955

12,438,221

50.4%

61.9%

4.1%

8.9%

45.5%

29.3%

9.1%

45.8%

101,0312,479,482

7,792

275,098

102,509

1,481,099

17,017

1,713,606

211,332

4,235,679

47.8%

58.5%

3.7%

6.5%

48.5%

35.0%

8.1%

40.5%

123,427

3,192,307

6,108

387,848

136,861

2,287,127

27,7462,428,057

266,396

5,867,282

46.3%

54.4%

2.3%

6.6%

51.4%

39.0%

10.4%

41.4%

75,202

1,981,450

7,051

335,458

98,157

1,546,608

15,382

1,678,426

180,410

3,863,516

41.7%

51.3%

3.9%

8.7%

54.4%

40.0%

8.5%

43.4%

62,0601,489,400

3,170

177,627

78,6381,182,265

10,412

1,022,064

143,868

2,849,292

43.1%

52.3%

2.2%

6.2%

54.7%

41.5%

7.2%

35.9%

58,1501,292,368

5,670

221,410

94,7891,294,635

12,463901,964

158,6092,808,413

36.7%

46.0%

3.6%

7.9%

59.8%

46.1%

7.9%

32.1%

31,294

1,404,770

3,494

210,153

64,212

1,016,514

7,994

1,286,430

99,0002,631,437

31.6%

53.4%

3.5%

8.0%

64.9%

38.6%

8.1%

48.9%

1999

2000

2001

2002

2003

2004

Source: IAB Establishment Panel 1998 to 2004, own calculations.

88

Appendix Table 7
Number of Employees and Establishments Covered by Collective Agreements and Works Councils,
Exits, Germany, 1998-2004, Weighted Data
Collective agreement status
Sectoral agreement

Firm agreement

Works council

No agreement

TotalsYear

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

Establishments

Employees

1998

89,6602,325,204

15,389401,278

117,945

1,560,630

19,756

1,666,335

222,994

4,287,112

40.2%

54.2%

6.9%

9.4%

52.9%

36.4%

8.9%

38.9%

67,495

1,417,745

4,291

300,083

61,337

790,616

10,1491,030,570

133,123

2,508,444

50.7%

56.5%

3.2%

12.0%

46.1%

31.5%

7.6%

41.1%

43,843

1,047,473

4,503

166,125

48,014

793,086

96,3602,006,684

96,3602,006,684

45.5%

52.2%

4.7%

8.3%

49.8%

39.5%

100.0%

100.0%

46,052

1,535,021

4,177

183,685

51,052

908,131

11,5791,268,402

101,2812,626,837

45.5%

58.4%

4.1%

7.0%

50.4%

34.6%

11.4%

48.3%

56,401

1,521,910

8,032

293,90965,879984,222

16,283

1,351,303

130,3122,800,041

43.3%

54.4%

6.2%

10.5%

50.6%

35.2%

12.5%

48.3%

49,6601,632,561

4,463

288,233

57,920902,712

13,136

1,413,465

112,0432,823,506

44.3%

57.8%

4.0%

10.2%

51.7%

32.0%

11.7%

50.1%

44,482

1,119,542

2,308

197,490

69,510878,276

7,584

932,824

116,300

2,195,308

38.2%

51.0%

2.0%

9.0%

59.8%

40.0%

6.5%

42.5%

1999

2000

2001

2002

2003

2004

Source: IAB Establishment Panel 1998 to 2004, own calculations.

89