Germany and Co-determination

 Modern Germany is the biggest industrial nation in Europe and the second only to the USA on earth. As regards GDP the position of unified Germany moves between the second and the third in the world. It enjoys the sixth position among the industrialized countries regarding per capita income. Moreover, this country has been enjoying a very strong balance of payment position during the last three decades. Unemployment problem is also the lowest, while the German companies have excess capital awaiting investment to the extent of over 700 billion Marks. Price level has also been the most satisfactory during the last few decades. German success in post-war reconstruction and development can be compared to that of Japan only. There is widespread interest among western scholars to find out the secret behind the grand success of Germany in this regard. Many of them attribute it to the unique system of German management. called "Co-determination". The name itself indicates that it is participative in nature. In fact it ensures the extreme form of workers' participation in management. Important decisions are being taken jointly.

            Technical efficiency and experience of German workers have made co-determination successful. Workers need little or no supervision and the managers act as initiators, not as their bosses. Labor management relation in Germany is thus of a relation of mutual co-existence and co-determination. This relation is the specialty of German management. Managers give due weight to the opinion, efforts and judgment of their subordinates. Different research studies indicate that the extent of workers' participation that is being allowed under Co-determination is unparalleled in Western Europe.21 Nevertheless the fact remains that in the past. and to a lesser extent today, the German cultural environment favoured reliance on authority in directing the workforce. although it was often benevolent authoritarianism. Even today, while managers arc required to show concern for subordinates, they also expect obedience.

            It is almost a paradox that on the one hand, the managerial style of Germany is characterized by considerable use of authority, while on the other hand, labour, by law, is represented by and actively involved in managing large corporations. In 1951 a law was passed that provided for co-determination, which requires labour membership in the supervisory board and the executive committee of certain large corporations. Furthermore, a labour director is elected as a member of the executive committee. This position is a difficult one. Labour director supposedly must represent the interests of the employees and, at the same time, must make managerial decisions that are in the best interest of the enterprise.