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Panel Examines Difference in EU and US Labor Relations

March 31, 2011
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On Tuesday, the European Union Center partnered with the IU Labor Studies program to sponsor an event at IUPUI in Indianapolis on “European Approaches to Labor Relations: Are There Lessons for the US?”.  In order to bring together a diverse range of participants, the panel consisted of a labor lawyer, a director of the United Auto Workers (UAW), and a vice president of a small medical products manufacturer in Germany.

While everyone commented on the statutory benefits of the German system, such as six weeks of vacation a year, the panelists also pointed out that labor was viewed differently in Germany.  For instance, Tom Geoghagan—the author of Were You Born on the Wrong Continent? How the European Model Can Help You Get a Life—repeatedly talked about who labor and management are forced to work together, more so that in the US.  Through collective wage bargaining, works councils, and co-determination, the workers in Germany have a direct say in how the firm is run.  For instance, co-determination mandates that larger companies must have boards where half the members represent labor and the other half management.  Through this process, labor is better able to present its views on how a firm should be run.  This allows firms to be more efficient and is one of the secrets to Germany’s exporting power (Germany was the world’s largest exporter until recently, despite having high wages).

Mo Davison, who is the Director of Region 3 (Indiana/Kentucky) of the UAW argued that labor in the US has implicitly moved towards the German model, as labor is a lot less confrontational than previously, and the UAW’s goal is to make a plant more successful.  However, the UAW would like to be in a similar situation as Germany, where the law requires the two sides to work together, as suggestions from UAW and other unions are still routinely ignored.

Nicholas Strout, the Vice President for Global Sales & Marketing at Novalung in Germany, gave personal examples about the German labor system.  From his experience, he has seen that German management feels that if they have employees whose productivity is below average, they tend to provide more training instead of just firing an employee.  Mr. Strout also about some of the short falls in the German system.  For instance, Germans who worked in the US feel that they have more individual power to make decisions on this side of the Atlantic.  In addition, despite the safeguards enshrined in German labor law, German companies have found numerous ways to still fire workers.

As a result of these discussions, the panel agreed that while the German system still has plenty of pitfalls, there is a lot that American labor and management could learn from this system.

To view the event in its entirety, click here.

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