Works councils in Germany: Falling numbers, increasing importance!

Works councils in Germany: Falling numbers, increasing importance!

There is a remarkable trend in Germany: the number of works councils is decreasing. According to a current evaluation by the Institute for Labor Market and Occupational Research (IAB), the proportion of employees in the private sector who are represented by a works council has fallen from almost 50% in 1996 to just 33% in 2023. Only 7% of companies currently have employee representation. What is causing this decline? The causes are manifold, from bureaucratic hurdles to resistance from employers, as rechtsanwaelte-gottschalk-wetzel.de reports.

Traditional industries are increasingly retreating while the service sector is growing. In addition, setting up a works council often proves to be lengthy and complicated. Many initiators feel frustrated by the lack of protection against dismissal and the resistance of some companies. The modern corporate culture, which favors flat hierarchies and alternative forms of co-determination, also contributes to the fact that classic works councils are less in demand.

The advantages of works councils

Nevertheless, works councils have many advantages. They strengthen co-determination on key issues such as working hours, salaries and occupational safety. They contribute to the creation of socially acceptable solutions, particularly in economically difficult times. In addition to monitoring compliance with laws and collective agreements, they bundle the interests of employees and advocate for better working conditions. This is also shown by a study by the Ifo Institute, which found that works councils can increase the productivity of companies. Deutsche Wirtschafts Nachrichten reports that companies with well-functioning works councils are often more successful.

In Germany, companies with at least five employees entitled to vote have the right to elect a works council. These elections take place regularly and the next one is scheduled for 2026. It is important to note that the legislature sets strict rules to protect the election and its initiators. Obstruction or undue influence is a punishable offense, which means that no one should feel disadvantaged before or during the election. In larger companies, general and group works councils can even be formed, which ensures comprehensive representation of employee interests, as explained on bmas.de.

The situation naturally raises questions: What does the future of co-determination look like? If the decline in works councils continues, it remains to be seen whether alternative models such as employee representation can have the same effect. It is becoming increasingly clear that a reform of the Works Constitution Act is necessary in order to reduce bureaucratic hurdles and create better protection for employees. Ultimately, employees' strong say is essential for the positive development of the world of work.