The Volkswagen way to better labor-management relations — Matthew Finkin and Thomas Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From the Los Angeles Times

Works councils — elected bodies representing all workers in a plant, both blue and white collar — are acclaimed as one of the best, most innovative features of Germany’s labor relations system. They have been shown to enhance efficiency, adaptability and cooperation. By supporting the use of work sharing (agreeing to reduce everyone’s hours rather than laying some people off), for example, these councils helped Germany experience less unemployment during the Great Recession and a faster, more robust recovery since then.

For years, labor law, labor economics and labor-management researchers like us have urged experimentation with works councils in the United States. Volkswagen and the United Auto Workers are proposing to do just that at Volkswagen’s Tennessee plant. This could be a watershed in American labor relations, one that rejects the outmoded adversarial doctrines that have built up in U.S. labor law and practice. And it signals management and labor support for a new model of cooperation and partnership.

Unfortunately, the National Right to Work Legal Defense Foundation and others are opposing this effort by arguing that such cooperation would violate U.S. labor law’s 1935 ban on sham or “company” dominated unions.

A comparison of German and American labor law makes it clear they are dead wrong.

German law conceives of employees not as adversaries of management but as valued participants in the enterprise. German unions bargain about wages and hours. But, if workers choose to have a works council, it becomes a representative body in running the firm. Management must share extensive and even confidential business information with the council, and matters of critical concern on the shop floor or in the office must be discussed with the council and agreed to by its members. Most large enterprises, such as Volkswagen, have works councils.

Read the full article in the Los Angeles Times. 

Matthew Finkin is a professor of law at the University of Illinois and a member of the governing board of the Institute for Labor Law and Labor Relations in the European Union in Trier, Germany.

Thomas A. Kochan is a professor of management and co-director of the Institute for Work and Employment Research at theMIT Sloan School of Management.

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