Much of Germany’s labor relations system is governed by the idea of a social partnership between capital and labor – camouflaging the stark asymmetry between both by pretending labor and capital are, somehow, equal “partners” under capitalism. One of the clearest expressions of this hallucination is Germany’s much admired system of co-determination. In recent weeks, celebrations of co-determination took place, marking its 50th anniversary since it was introduced on 18 March 1976.
On that day, Germany’s parliament, the Bundestag, led by a social-democratic-liberal coalition government, adopted Germany’s Co-Determination Act with a large majority. For the social-democratic SPD – which moved from a formerly revolutionary party towards becoming a political party that supports capitalism with its Gotha Party Program (May 1875) – this day carried particular significance. Incidentally, May is also the month during which Karl Marx wrote his influential Critique of the Gotha Programme almost exactly 150 years ago.
Undeterred, the social-democratic party marched on while the much hoped-for historic step towards the democratization of the economy never happened. This is all too often precisely the moment when German workers sing an old song: „Wer hat uns verraten? – Sozialdemokraten!“ – “Who has betrayed us? – Social democrats!”
Meanwhile, on the other side of the coin, there are consistent complaints from capital – Germany’s employer associations, i.e. corporate lobbying groups – about co-determination. Yet, with Germany’s 1976 Co-Determination Act, workers “can” have a say in what is happening inside companies. Before all that, and for two years, Germany’s coalition government of the social-democratic SPD and the liberal-democratic FDP on the one side, and Germany’s conservatives, the CDU, and corporate bosses on the other, had been wrestling over co-determination in German companies.
On Thursday, 18 March 1976 – after an intense debate – Germany’s parliament reached a decision when 389 politicians voted in favor of co-determination. Twenty-two rejected the bill. Germany’s social-liberal coalition sold it as bringing democracy behind the factory gates. To a rather limited extent, this was not totally wrong.
For the social-democratic SPD, this was a clear success in its desire to realize democracy behind the factory gates. Then as today, the SPD celebrates co-determination as “an important day.” In spite of all opposition from corporate bosses and conservatives, the coalition had found a common solution.
Yet there are limitations, as capitalism does not really like democracy inside companies – usually camouflaged through business ethics and corporate social responsibility under the motto: everything but democracy. One limitation is that the act applies to only roughly 600 companies – by no means all companies in Germany. Worse, it applies only to companies with more than 2,000 workers. In other words, Germany’s vast sector of small and medium-sized companies is virtually free of co-determination.
Yet co-determination had reached the corporate boardroom, as corporate boards of directors must, in principle, be composed of equal representation. That is, employees and shareholder representatives make up the same number of members. Trade unions send delegates. Such supervisory boards elect labor representatives to represent the “social interests” of the workforce. In other words, capital is still largely free to reign.
Despite such severe limitations, co-determination is celebrated as a democratic process. Others see it as a milestone strengthening Germany’s trade unions. For the SPD, co-determination is the model that followed Germany’s 1952 Works Council Act, which had already enshrined the idea of social partnership inside companies.
The even more pro-capitalist Godesberg Program of the SPD (1959) ingrained co-determination as a core element of the democratic welfare state. In reality, it came down to: let’s give German unions a little say so that they will not join the student movement of the late 1960s and early 1970s as happened in France or Italy. Since the days of Gustav Noske, Germany’s SPD has preferred order over rebellious workers or anarcho-syndicalism.
That set forth the ideological goals of social democracy, aligned with the conviction that only its social-liberal coalition could bring “ real reform ” – namely, a small voice for workers and trade unions in Germany’s corporate boardrooms.
The SPD’s Willy Brandt declared in 1973 that “the expansion of participation through co-determination progresses the democratization of our society,” while his more moderate social-democratic successor, Helmut Schmidt, emphasized a year later that: “If we want to move economically and socially, we need to think participation and responsibility.”
In the end, the SPD called co-determination “true parity.” The FDP saw it as the protection of minorities. The CDU recognized that a little union intervention would not challenge the guarantee of ownership – the core of capitalism.
In the end, unions were disappointed while Germany’s employers launched a constitutional complaint at Germany’s supreme court. In 1979, the Constitutional Court rejected the claim. Co-determination, it ruled, is compatible with Germany’s constitution.
On the upswing, co-determination slightly changed the ratio between capital and labor – not in a revolutionary way, but in a sustainable one; sustainable for capitalism and German corporations, that is.
Fifty years later, Germany’s system of participation is still in danger, as corporate bosses never accepted even this mild intrusion into what they perceive as their domain – the right to manage unilaterally and without interference from workers and trade unions. This remains true despite the much celebrated ideology of social partnership. Perhaps German capital has accepted that co-determination is good for Sunday speeches but that, on Monday, back inside companies, corporate management runs the show while workers remain merely human resources – Menschenmaterial.
In other words, there will be challenges to co-determination today and into the future. In short, co-determination in Germany continues to be targeted by employers and corporate bosses – those who are supposedly engaged in social partnership. Just to ensure that social partnership and democracy do not go too far, the chair of a supervisory board under co-determination is “always” a representative of capital furnished with “a double vote.” In other words, the democratic principle of “one person, one vote” is good for parliament but, please, not inside companies.
Enforcement, according to the inherent logic of the law – that is, in support of capitalism – favors capital, just as business law or labor law, labor relations, and, of course, social partnership do. In other words, workers can sit at the table, but please shut up.
Yet some have argued that the “ double vote ” for capital is more a sign of weakness than strength on the part of the chair of the supervisory board because it shows that the boss cannot achieve a viable and sustainable compromise “for all.” It follows the corporate-managerial delirium that your boss knows what is best for you.
In short, real democracy – seen by corporate bosses as “a risk” – and co-management structures are systematically bypassed within Germany’s co-determination system. It gets worse: more and more loopholes allow corporate bosses to avoid employee participation. Already, more than 2.4 million workers in Germany across 400 major corporations are prevented from joint participation.
It gets even shoddier at the European level. On 18 March 2026, the neoliberal European Commission under – rather fittingly – the German arch-conservative Ursula von der Leyen, published a draft of a new “legal company framework,” as it is known. It is for an “ EU Inc.” Ironically, it came on the very day of the 50th anniversary of Germany’s co-determination. The new legal form of an EU Inc. starts from a business perspective. In other words, workers and trade unions are mostly excluded. The entire von der Leyen project is fraught with dangers. It contains no protection for German-style participation. In short, von der Leyen’s EU Inc. will endanger worker participation in Europe. It is designed to systematically circumvent existing co-management structures.
Most worryingly, the EU Commission’s EU Inc. is set to harmonize – the EU’s magic term for neoliberal pro-business re-regulation – the legal format of European companies. This will allow corporate bosses to register their company as a Euro Inc. within 48 hours from any location inside the European Union. The cost? Less than €100 ($115). Bingo! Mandatory co-determination and the protection of workers’ rights are completely excluded. Unsurprisingly, it is supported by the European employers’ association “BUSINESSEUROPE,” working under the so-called idea of social partnership.
Back in Germany, a union official from IG Metall said that Germany’s co-determination and participation “are good for each other” and have strengthened Germany as an industrial location. Decoded, “good for each other” means good for trade unions and for capitalism. Worse, the phrase “industrial location of Germany” sells co-determination as merely an auxiliary to the so-called industrial location of Germany.
In other words, co-determination is reduced to being merely a functional additive for capitalism. Gone are rebellious ideas like workers’ factories, industrial democracy, and even the moderate social-democratic idea of limited “participation” (i.e. not co-decision-making), which has vanished into thin air. Yet, German trade unions have issued seven demands to improve co-determination:
- Extend co-determination to companies with legal formats set outside of Germany.
- Prevent any circumvention of co-determination through the use of other legal setups like Societas Europaea (SE) and other European forms like EU Inc.
- Close the gap in workers’ representation – extend co-determination to all companies.
- Introduce an effective sanctions regime against companies and improve the right of workers and trade unions to file complaints.
- Active advocacy by Germany’s government for an effective EU directive on co-determination with binding minimum standards.
- Lowering the threshold for co-determination to 1,000 employees.
- Abolishing double voting rights for corporate bosses – democracy is: one person one vote.
Thomas Klikauer has over 800 publications (including 12 books) and writes regularly for BraveNewEurope (Western Europe), the Barricades (Eastern Europe), Buzzflash (USA), Counterpunch (USA), Countercurrents (India), Tikkun (USA), and ZNet (USA). One of his books is on Managerialism (2013).
DEFEND A LIBRARY OF IDEAS
Your $5/month helps preserve a treasure trove of transformative films — free from ads, algorithms, and corporate influence.
Subscribe here.