The tariff dispute at the railway tested the limits of tariff autonomy. Weak points became visible. Industrial dispute law, competition on the railways, privatization of the railways are the most important construction areas.
“The greatest business strength in our age is the edge.” (Walther Rathenau)
A collective bargaining battle has been fought. More will follow. After violent strikes, the GDL and Deutsche Bahn have agreed on a new collective agreement. It plans to gradually introduce the 35-hour week for shift work by 2029. However, employees can decide individually whether they want to work shorter hours without sacrificing wages or whether they want to work between 35 and 40 hours. Those who work more receive 2.7% more pay per hour of additional working time. That is the core of the agreement. In addition, the collective wage increase of 420 euros, the inflation compensation bonus of 2,850 euros and the term of the collective agreement of 26 months were lost. The industrial dispute tested the limits of collective bargaining autonomy. What lessons can be learned from this?
1. Lesson: (Sectional) unions are still to be expected
Divisional unions are experiencing a renaissance. The industrial sector has had its best days behind it. This means that uniform unions also lose influence. Employee qualifications are becoming (even) more heterogeneous. Certain professional groups are difficult to replace, at least for a while. This includes the train drivers. Their market power will remain high for the foreseeable future. They want a bigger piece of the pie. The “redistributive” regional tariffs of the unitary unions are a thorn in their side. Wage and collective bargaining policy solidarity with employees who have less market power is eroding. If the “switch point employees” in divisional unions act on their own account, they can achieve their goals better.
2. Lesson: Weak competition in sales markets strengthens unions
If employees in companies go overboard in terms of wage and collective bargaining policies, highly competitive sales markets bring them back to their senses. They lose market share, make losses, relocate production abroad or go bankrupt. That doesn’t seem to be the case at Deutsche Bahn. “Rails cannot be relocated abroad” (Richard Giesen). That’s not even necessary. It is enough if competition is intense on domestic railways. It tightens the budget restrictions of companies. In fact, (performance) competition on the railways is severely restricted politically. Deutsche Bahn does not have to fear competition in passenger transport. This strengthens the market power of the sectoral unions.
Lesson 3: State-owned companies have soft budget restrictions
Specific qualifications are one thing, state support is another. Both strengthen the market power of sectoral unions. State-owned companies are particularly active in the areas of transport, health and public services. Deutsche Bahn is one. Such companies have deeper financial pockets. If they run deficits and the going gets tough, taxpayers will be asked to pay (today and tomorrow). The budget restrictions of such companies are extremely soft. This is a welcome invitation to (sectoral) unions to go above and beyond in terms of wage and collective bargaining policy. The GDL has once again gratefully accepted this invitation.
4. Lesson: The “new” market power of unions is fragile
The industrial dispute on the railways was probably so tough because the situation on the labor markets has changed. (Global) employer markets have become (national) employee markets. It is no longer the Chinese labor supply that dominates, it is the domestic demographics. There is a shortage of skilled workers everywhere, including train drivers. This strengthens the GDL’s negotiating position. Nothing will change that quickly. But it is unclear whether this will strengthen the (unified) unions. Structural change challenges them. Strongly unionized industrial workers are leaving, weakly unionized service workers are coming. Demographics and structural change are ambivalent for the unions.
5. Lesson: The distribution struggles of the collective bargaining partners are changing
The labor dispute is changing. The fronts are different than before. This was also shown by the industrial dispute on the railways. The “old” class struggle between labor and capital is fading into the background. Claus Weselsky’s verbal attacks against the “bonus capitalists” at the top of the railways don’t change that. The conflict between the interests of labor and capital is becoming smaller. More and more workers are becoming capitalists themselves. A “new” class struggle is emerging. Labor not only fights against capital, labor also fights against labor. In the railway’s wage dispute, a new front is also emerging between train drivers and the rest of the workforce. The increasing heterogeneity of work favors this new variant of class struggle. Defamatory statements made by the GDL towards the EVG speak volumes.
6. Lesson: Competition between unions makes sense
The interests of employees are differentiated. It no longer pays to lump everything together. Single unions cannot resolve conflicts of interest. Professional unions fill the gap. A competition between the unions makes sense. However, it needs a framework so that it does not become dysfunctional. The result is more collective bargaining plurality and less collective bargaining unity. The conflicts in the companies are programmed. The Unified Collective Bargaining Act was unable to prevent this at the railway. The negative third-party effects are large. One possible way is through company alliances for work (here). Capital and (all) labor must come together as a fighting community against entrepreneurial competitors. This is only possible under strict budget restrictions. They do not exist at Deutsche Bahn.
7. Lesson: Wage and collective bargaining agreements are becoming more individual
The GDL’s collective agreement with the railway shows that the greater heterogeneity is gradually being taken into account. In the past, (unitary) trade unions and employers’ associations – often driven by the works councils – grumblingly agreed to make wage and collective agreements more differentiated within the company. Collective bargaining opening clauses were more often accepted, at least in times of crisis. The GDL’s latest agreement with the railway has further advanced this more heterogeneous development. The train drivers can organize their working hours more individually. The collective agreements specify a framework of between 35 and 40 hours. Employees can individually deviate from the agreed steps to reduce working hours and work more for higher earnings.
8. Lesson: Germany is losing interest in working!?
The trend is clear: employees want to work less. The GDL has now also paved the way for a 35-hour week. In times of a growing shortage of skilled workers, which also applies to train drivers, this seems out of date. This is not the case if shorter working hours and wages are covered by labor productivity. However, it remains doubtful whether this is the case with the state railway, which runs high (tax-financed) deficits. Basically, how employees allocate higher work productivity to higher wages and more free time is up to them. However, experience shows that shorter working hours reach the limit of stagnating wage income for employees in times of weak growth in labor productivity. The hope with the agreed option model is that many train drivers will be more likely to exchange money for shorter working hours.
9. Lesson: Germany needs a new industrial dispute law
The GDL’s collective bargaining conflict with the railway was fierce. The economic collateral damage was considerable. Negative third-party effects of the strikes could be limited if the market power of train drivers could be limited. There are many suggestions. Some want to raise the hurdles for strikes and introduce cooling-off periods with a peace obligation, others want to install mandatory conciliation and arbitration procedures, others want to codify industrial dispute law and take away its status as a judge’s law. Still others want to take away the unions’ right to strike for minority collective agreements. That would affect the GDL. Finally, some want to introduce special regulations for critical infrastructure. Whatever you do in terms of labor dispute law, the conflict with collective bargaining autonomy and the collective bargaining partners is inevitable.
10. Lesson: Competition on sales markets must become more intense
More competition on the railway’s sales markets would reduce the negative third-party effects of collective agreements with train drivers (here). A first step is to separate rail and transport. The state is responsible for a functioning infrastructure. The Cartel Office ensures (performance) competition on rail, for people and goods. In a second step, Deutsche Bahn must (really) be privatized. Both would tighten the budget restrictions of all rail competitors, including those of Deutsche Bahn, if it faces competition. The incentive structure of the rail unions would change fundamentally. Your wage and collective bargaining policies must take the viability of your company into account. Cooperation is required. Wage and collective bargaining rampages à la GDL would be rare.
Conclusion: The train drivers get rid of themselves faster
Wage and collective bargaining policy is under scrutiny. The tough tariff dispute at the railway also ensured this. Demographics play into the hands of workers, some more than others. Employees in key positions, such as train drivers, benefit more. This is especially true in the areas of public services. But: The third-party effects of their wage and collective bargaining policy behavior are significant. It needs to be contained. A reform of industrial dispute law is an alternative, not a politically realistic one. More competition in the sales markets for public services is another. Privatization of state-owned companies in these sectors is another. Neither of them is realistic. But the chances are not bad that the GDL’s wage and collective bargaining policy will lead to the abolition of train drivers more quickly (here).
Blog posts on the topic:
Norbert Berthold (JMU, 2024): Who is afraid of the GDL? More (performance) competition on the rails
Julius Maximilian University of Würzburg