Globalization and the future of central collective bargaining: the example of the German metal industry

The paper deals with the relationship of the German model of capitalism and the role of centralized collective bargaining within it. It is assumed that the system of central wage bargaining - leading to a relatively egalitarian wage structure and the absence of a non-union wage sector - is one of the major pillars of the national institutional framework of the German economy. Pressures towards the decentralization of collective bargaining will therefore not onlyy affect the distribution of wages and the patterns of social equality, but also have a profound impact on the functioning of the German model of capitalism. The first part of Paper links the system of collective bargaining and industrial relations with the wider macro-economic and political features of German capitalism. It defines three major challengers to the institutional framework of the German economy: structural challenges since the early 1970s, the impact of unification since 1989 and the impact of European integration and globalization since the mid-1980s. It concludes that not globalization as such but a complexity of different pressures might lead to drastic institutional changes. The second part of the paper analyses collective bargaining development in the metal industry in the early 1990s. It looks at the conduct of the bargaining rounds, the institutional set-up and the position of the collective bargaining actors respectively. It will be argued that collective bargaining in the German metal industry has become extremely pressurized in the early 1990s. We argue that pressure on collective bargaining stems from two sides: first, from thhe membership problem of trade unions and employers' associations and, second, from the narrowing scope of flexibility within the give system of wage determination. We will define three ways of achieving wage differentiation within and outside centralized bargaining structures and look at their changing role during that period. Finally, the paper presents two scenarios of collective bargaining in the future and discusses their implications for the German ecnomic model