Have Labor Unions outlived their usefulness in the modern business working environment?

Term Paper, 2010

17 Pages, Grade: 1,7


Index of contents

1. Introduction

2. What are Labor Unions?

3. History of Labor Unions in Germany

4. The role of Labor Unions in Germany

5. International comparison

6. Arguments that Labor Unions have not outlived their usefulness in the modern business working environment
6.1. Higher standard of living
6.2. Labor Unions grant benefits in certain business branches
6.3. Better healthcare
6.4. Labor Unions offer the bargaining power
6.5. Labor Unions guarantee more security

7. Arguments that Labor Unions have outlived their usefulness in the modern business working environment
7.1. Labor Unions need too much support
7.2. Costs of Labor Unions
7.3. Support and services for employees
7.4. Labor Unions use a wrong policy

8. Conclusion

9. Bibliography

10. Internet Sources

1 Introduction

„Unionized power is organizational power, which is based on the number of members. The number of members has a demand on the legit representation of the working population. Preservation and extension of this power are orientated on the interest of every labor union. “[1]Labor Unions in Germany are documenting an ever declining number of members. Although, Labor Unions are performing the „most considerable form of organized interest on the labor market“[2]Labor unions are more and more endangered by the decreasing number of members and recruiting deficit. Some experts even believe that labor unions will not exist anymore in the future. One question, of course is, if labor unions really have outlived their usefulness in the modern business work environment. Remembering headlines in newspapers like: „New Year – new resistance“[3]or "The protest will continue“[4]I think that labor unions are still important. Especially in the modern business work environment where the competition in different sectors is very fierce and where management tries to safe costs, and working power, in order to increase the company’s profits. This thesis was written to demonstrate that Labor Unions are still important in our modern business work environment. Therefore the following act was chosen: To get an insight how Labor Unions in Germany were established, the part “History of Labor Unions in Germany” gives a first insight. Afterwards the role of Labor Unions in Germany will be investigated and then a comparison from different countries. In the main part the arguments that Labor Unions have not outlived their usefulness in the modern business working environment and the arguments that Labor Unions have outlived their usefulness in the modern business working environment will be shown. Last but not least my personal opinion about this topic will be shown in the last part “Conclusion”. But first of all I would like to explain what Labor Unions are.

2 What are Labor Unions?

„Trade unions are organizations that represent people at work. Their purpose is to protect and improve the paying and conditions of employees. They also campaign for laws and policies from which the working population will benefit. “[5] The main ideology of trade unions is that „an individual worker has very little power to influence decisions that are made about his or her job. By joining together with other workers, there is more chance of having a voice and influence. “5 We have a wide range of different labor unions in Germany. The Deutscher Gewerkschaftsbund/DGB (Confederation of German Trade Unions) is the national peak association of the German labor movement and encompasses sixteen unions, from metalworkers to leather workers. The DGB represents virtually all organized industrial workers, most white-collar employees, and many government workers.[6]

3 History of Labor Unions in Germany

The industrialization started in Germany at the beginning of the 19th century. Many farmers could not avoid the selling of their farms and so many farmers had to work in the industrial sector. In 1849 there were 56 per cent people employed in the rural sector. This number declined to 49.3 per cent in 1871. The number of workers in the sectors industry, traffic and service increased during the same period of time.[7]New inventions like the fully mechanic cotton-spinning mill in 1784 and the first steam engine, which was invented in Hettstedt in 1785, changed the industrial structure.[8]In 1855 payment was so low that one family member could not support the whole family and so wives and children had to work as well. The weekly working hours were about 90 hours and people had also to work on Sundays.[9]In contrast to the social change the industrial change turned out to be much faster. Workers tried to change their situation by building a majority or by rebelling. Reforms from the German state to prohibit child labor or the introduction of a social system through Bismarck should create better social conditions. But laborers still had not a voice within the companies.

The labor movement in the 1860s not only created labor unions, but although political parties, like the Social Democratic Party (SPD). Many members of the labor unions felt associated with this Party. Unfortunately, this led to problems with the imperial government, which prohibited the labor unions as the government felt threatened by the establishment of such unions.

In the middle of the 19th century there existed employee’s associations, but only from the year 1871 onwards there was economic freedom and freedom of association. Wages increased higher in Germany in 1914 than in other European countries. The daily working hours decreased in the same period of time. At this time trade unions were „external representations of interests“.[10]

Trade unions in the German Reich were prohibited from 1933 to 1945. Members of labor unions, who could not flee or hide, were arrested. After World War II labor unions were able to perform their job again.

After World War II, Labor Unions got new areas of responsibilities. The Allies allowed the Labor Unions to start a new establishment. In 1945 the Deutsche Angestelltengewerkschaft (German Employee Union) was founded in Hamburg. There were many foundations of labor unions and in 1949 the Deutsche Gewerkschaftsbund was established.[11]In 1955 the Christliche Gewerkschaftsbewegung Deutschland (Catholic Labor Union) was founded.

Labor unions in Germany enjoy special security through article 9 in the German basic law. Here labor unions get „the right of observing and advancement of working conditions and economic conditions to built associations. “[12]

The Freie Gewerkschaftsbund (Free German Federation of Trade Unions) was founded in the German Democratic Republic and all other labor unions had to integrate. Unfortunately, the Freie Gewerkschaftsbund could not manage to exist after World War II.

Labor unions are financed by membership fees which are on average about one percent from the gross income and from donations. The refunds for organizational members in the board of management are invested into the Hans-Böckler-Stiftung.[13]

4 The role of Labor Unions in Germany

In addition to the classical tasks, for example to help their members to manage the bargaining policy and the codetermination of members, Labor Unions have the aim to improve „the working conditions of employee’s through an influence of the social legislation“.[14]Labor unions demand a change in society. Especially at the time of the economic miracle, labor unions were successfully in introducing a recreation holiday and an extra vacation payment. In addition to this, the weekly working hours were reduced to 40 hours per week and people had not to work on the weekends. Having searched on the Internet I found a slogan from the Deutscher Gewerkschaftsbund/DGB (German Federation of Trade Unions) which says: „My Daddy belongs to me on Saturdays“.[15]In the same way, the DGB could reach the same treatment from workers and employees in the case of an illness. Sickness benefit was also introduced. Labor unions could reach a lot of improvements for the workers and employees during the time of the prospering and economical growing Federal Republic of Germany. However, labor unions are also active in the domestic policy. They assembled for example for the German reunification or against the emergency law from 1968.

An important date for the labor dispute is the first of May. On this date, labor unions worldwide stand up and vote for better working conditions.

Nowadays globalization has had an enormous impact on the free market economy for 50 years. Companies were now able to decide whether they want to produce in their home country or whether they want to go abroad. A company may decide for different reasons to out-source certain parts of their production in order to save money. In other countries the wage level might be lower or raw materials can be bought for less money. Every time when Labor Unions try to bargain with employees they get as answer that the company could also go abroad and save so costs. That is why Labor Unions got new pressure. New tasks follow from this situation for Labor Unions. On the one hand, the position of labor members should be secured and on the other hand Labor Unions have to try to create the same changes all over Europe. Labor Unions have to work on the task to maintain a company in their home country. At the same time they also have to try to establish new companies in Germany.

The most important target is it to attract more people to join the union, because only then can a social policy, based on partnership,[16]be reached. Exactly the declining number of members in Labor Unions is the problem. The Deutsche Gewerkschaftsbund (German Federation of Trade Unions) is noticing this decline since the German reunification. But how is the situation in other countries, like Great Britain and the United States of America? Are they facing the same situation or have Labor Unions in this countries an easier job?


[1]Müller-Jentsch 1997: page 119

[2]Hassel 1997: page 10





[7]compare: John Breuilly; 1983, S. 137.

[8]compare: Toni Pierenkemper; 1994; S. 195

[9]See: ibidem, page 196

[10] Walter-Raymond-Stiftung; Aufgaben und Stellungen der Arbeitgeber- und Arbeitnehmer-
Organisationen in der Bundesrepublik Deutschland; Westdeutscher Verlag, Köln und Opladen,
1966, page 15

[11] For a complete list of German Labor Unions please see:

[12]See: Grundgesetz, from 01. October 2001, Deutscher Taschenbuch Verlag, München


[14]Stefan Remeke; 2005; page 11.


[16]Jürgen Hoffmann/Jürgen Peters; 2007; page 21

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Have Labor Unions outlived their usefulness in the modern business working environment?
Berlin School of Economics
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Ingrid-Sofia Roth (Author), 2010, Have Labor Unions outlived their usefulness in the modern business working environment?, Munich, GRIN Verlag, https://www.grin.com/document/158491


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