Deutschland AG rethinks workers’ role in management(economist.com)
economist.com
Deutschland AG rethinks workers’ role in management
https://www.economist.com/business/2020/01/30/deutschland-ag-rethinks-workers-role-in-management
54 comments
"Deutschland AG" was commonly used in political discussion up until the early 2000s, it even made it into Wikipedia https://de.wikipedia.org/wiki/Deutschland_AG and other encyclopedias. It has nothing to do with the Reichsbürger movement
Wow, I didn't know :)
That said, I haven't encountered the terminology elsewhere, so I was surprised to read it in this article.
That said, I haven't encountered the terminology elsewhere, so I was surprised to read it in this article.
Is it basically the equivalent of the phrase "Corporate America"?
Yeah, the Deutschland AG where all companies were in one way or the other intervened with each other with Deutsche Bank in the middle is long gone. At least since the 90s.
“UK plc” is common parlance here. I’m guessing the (British) Economist is awkwardly trying to use the same idiom.
A more accurate title seems to be “Management rethinks workers’ role in management.” Are there complaints about co-determination from workers themselves (I’d be more interested to hear those)? Or is this management complaining they can’t mistreat workers in the name of corporate profit?
It's the latter and the article even concedes that mistreating workers won't help much, either.
"European countries which do not embrace it hardly do better."
"European countries which do not embrace it hardly do better."
“Only [...] SAP, a software-maker, is among the world’s 100 biggest companies. Apple’s $1.4trn market value is roughly that of the entire DAX 30.”
Is this actually a problem though? The model seems to have provided some insulation from global turmoil in the past; is having enormous corporations the only important thing for a country’s economy? For as long as it doesn’t fall foul of EU laws, I can see Germans wanting to maintain this strategic advantage that other nations ignore while they’re busy chasing down every last short-term dollar.
Is this actually a problem though? The model seems to have provided some insulation from global turmoil in the past; is having enormous corporations the only important thing for a country’s economy? For as long as it doesn’t fall foul of EU laws, I can see Germans wanting to maintain this strategic advantage that other nations ignore while they’re busy chasing down every last short-term dollar.
Their GDP per capita is about 17% lower than the United States, but their GDP per hour worked is only 3% lower with their average work-week being 22% shorter than in the United States.
So, from a very narrow and short-sighted point of view.. they're just as productive as we are, but they have 1/3 our population and they work fewer hours which limits their ability to compete in the global marketplace.
For German companies that serve only domestically or within the EU, I doubt the councils are a problem or even an impediment.. but for companies that want to operate globally, I imagine it does reduce their ability to compete.
I guess the question for Germany is, do they want to sacrifice these broader protections and slightly better working conditions in order to improve profits for a handful of companies that can actually take advantage of it? I hope not, but it looks like the groundwork is already being laid for a campaign to change this.
So, from a very narrow and short-sighted point of view.. they're just as productive as we are, but they have 1/3 our population and they work fewer hours which limits their ability to compete in the global marketplace.
For German companies that serve only domestically or within the EU, I doubt the councils are a problem or even an impediment.. but for companies that want to operate globally, I imagine it does reduce their ability to compete.
I guess the question for Germany is, do they want to sacrifice these broader protections and slightly better working conditions in order to improve profits for a handful of companies that can actually take advantage of it? I hope not, but it looks like the groundwork is already being laid for a campaign to change this.
The "reduces their ability to compete"-argument does not hold water considering the data, though. One useful measure of a countries competitiveness is the size of their exports (because it implies that there is a lot of foreign demand for the products from that country), or in their "exports-to-population" ratio.
If you check https://tradingeconomics.com/germany/exports you can see that Germany exports about EUR 112bn worth of goods per month, on a population of about 83 million, about EUR 1350 per head. For comparison:
Canada exports about 49bn CAD per month, on a population of 38m, for approximately 1297 CAD per head.
The US exports about 208bn USD per month, on a population of 327m, for approximately 638 USD per head.
If anything, the big weakness of the German economy is not that it is not competitive enough, the big weakness of the German economy is a lack of domestic consumption due to not much of the money actually reaching workers pockets; this is a result of a fairly aggressive wage stagnation that set in in the 2000s.
If you check https://tradingeconomics.com/germany/exports you can see that Germany exports about EUR 112bn worth of goods per month, on a population of about 83 million, about EUR 1350 per head. For comparison:
Canada exports about 49bn CAD per month, on a population of 38m, for approximately 1297 CAD per head.
The US exports about 208bn USD per month, on a population of 327m, for approximately 638 USD per head.
If anything, the big weakness of the German economy is not that it is not competitive enough, the big weakness of the German economy is a lack of domestic consumption due to not much of the money actually reaching workers pockets; this is a result of a fairly aggressive wage stagnation that set in in the 2000s.
I've never heard of anybody using exports as development metric. It's usually just a sign of developing country with cheap labor.
> wage stagnation that set in in the 2000s.
And imagine that. Seems to fit the low wage story pretty well.
> wage stagnation that set in in the 2000s.
And imagine that. Seems to fit the low wage story pretty well.
When speaking about "competitiveness", what measures aside from current account balance and share of global exports is better suited?
Not to be snarky, but you can't do any reading in economics about competitiveness and not encounter the current account balance (which is exports - imports): https://www.economicshelp.org/blog/6701/trade/importance-of-...
Not to be snarky, but you can't do any reading in economics about competitiveness and not encounter the current account balance (which is exports - imports): https://www.economicshelp.org/blog/6701/trade/importance-of-...
I wonder if the question is really, do the giant corporations that want to compete globally have as much ability to get laws passed in Germany as they do here in the US? If they do, you can bet that those protections and working conditions will start looking a lot more like what we see in the US even if it's only a benefit for a fraction of a percentage of people in Germany and a detriment for all the rest.
It sounds to me like Germans are doing better than US people in competing on the global marketplace? Shorter hours is a valuable advantage.
More vacation, too. 28-30 days plus bank holidays being the norm. And all the social security and health care stuff.
German parental leave is pretty good too, I believe even the husband can take two months without an issue, and the wives can take a year at 60% pay, and two years more after that.
Both can take either the two months or the two years. It's usually women who take the longer period. But yeah, socially Germany isn't that bad!
I think these huge companies are not good for the economy, the country or innovation. They are too powerful and they have the ability to suppress competition by just buying it up.
Workers’ Councils often don’t exist because people don’t dare to form one. Despite pretty good rights for employees, it can still feel like painting a target on your back.
I should have more forcefully driven for the creation of one in my small company. But it’s all too late now. The company was sold by the owner to a much larger US company and the day after that was announced, nearly a third of employees were fired.
We are developing B2B SaaS and sold that in combination with professional services, with about a 50:50 split in revenue from those two parts. The company built its product without outside investments and has practically always been profitable in the past, with ok revenue growth, but we were seeing pressure from competitors who did have large investments.
The US company didn’t want professional services (and also not anyone doing sales and marketing), they wanted the developers. A couple of weeks into this that seems absurd, especially since they seem to be expecting to keep most of the existing revenue which seems impossible since, you know, we had a 50:50 split in revenue and the people responsible for 50% of that (who had close working relationships with the clients) are no longer there. They are now flying people here but there is hardly anyone to teach them and … you know … usually it takes at least a couple of months to get people up to speed. Months in which our existing clients want to get work done! It’s so irrational. It’s also deeply immoral and unethical.
Whether it be greed or a fundamental misunderstanding of how the product works or what do I know … that whole thing was surreal and weird and I kept thinking that one of the problems was that the person making the deal was fundamentally not understanding the business. Maybe a workers’ council could have helped or at least found a socially more responsible way.
But when the acquisition was only a rumor I frequently mentioned to my colleagues that forming a council would be a good idea but never actually did it. Because, you know, who would want to paint a target on their back.
But it is important for such institutions to exist. Employees inherently tend to have less power than employers and their work is not really optional. They can’t just decide to not do it and changing jobs or career or places where you live can be difficult to impossible. That’s why that isn’t just some kind of exachange of money for work. It has to be specifically and explicitly and strongly protected and workers should always have a say in the business because it concerns them. And their interests and the employers interests are not always aligned.
I should have more forcefully driven for the creation of one in my small company. But it’s all too late now. The company was sold by the owner to a much larger US company and the day after that was announced, nearly a third of employees were fired.
We are developing B2B SaaS and sold that in combination with professional services, with about a 50:50 split in revenue from those two parts. The company built its product without outside investments and has practically always been profitable in the past, with ok revenue growth, but we were seeing pressure from competitors who did have large investments.
The US company didn’t want professional services (and also not anyone doing sales and marketing), they wanted the developers. A couple of weeks into this that seems absurd, especially since they seem to be expecting to keep most of the existing revenue which seems impossible since, you know, we had a 50:50 split in revenue and the people responsible for 50% of that (who had close working relationships with the clients) are no longer there. They are now flying people here but there is hardly anyone to teach them and … you know … usually it takes at least a couple of months to get people up to speed. Months in which our existing clients want to get work done! It’s so irrational. It’s also deeply immoral and unethical.
Whether it be greed or a fundamental misunderstanding of how the product works or what do I know … that whole thing was surreal and weird and I kept thinking that one of the problems was that the person making the deal was fundamentally not understanding the business. Maybe a workers’ council could have helped or at least found a socially more responsible way.
But when the acquisition was only a rumor I frequently mentioned to my colleagues that forming a council would be a good idea but never actually did it. Because, you know, who would want to paint a target on their back.
But it is important for such institutions to exist. Employees inherently tend to have less power than employers and their work is not really optional. They can’t just decide to not do it and changing jobs or career or places where you live can be difficult to impossible. That’s why that isn’t just some kind of exachange of money for work. It has to be specifically and explicitly and strongly protected and workers should always have a say in the business because it concerns them. And their interests and the employers interests are not always aligned.
...the problem is that "worker codetermination" is not really about owners and workers pulling on the same string, but rather worker representatives often have a ridiculously narrow-minded focus on workers' interests while completely disregarding what is and isn't economical for a company to do.
To give you one example: I used to work for one of Germany's biggest telcos. Believe it or not: That company is unable to do geographically-targeted advertising for reasons of worker codetermination. Worker reps in the company's supervisory board argue that, since some employees get part of their compensation through sales commissions, targeting advertising to region X gives employees in region X an unfair advantage to earn more money than employees in other regions.
Working for the same company, I was involved in a project to do natural language processing in a ticket system the company was using to track repair and maintenance work of radio units, with the goal of building a model to recognize tickets that were in increased need of attention by higher-level management. Even though it wasn't initially the project's goal to do so, the thing that the model ultimately picked up on was basically indications of employees being lazy as they handle those tickets. -- But the data I was given was anonymized. It was argued that if it weren't anonymized, my project would have never been approved by worker representatives in the supervisory board for reasons of violating workers' right to "data protection".
To give you one example: I used to work for one of Germany's biggest telcos. Believe it or not: That company is unable to do geographically-targeted advertising for reasons of worker codetermination. Worker reps in the company's supervisory board argue that, since some employees get part of their compensation through sales commissions, targeting advertising to region X gives employees in region X an unfair advantage to earn more money than employees in other regions.
Working for the same company, I was involved in a project to do natural language processing in a ticket system the company was using to track repair and maintenance work of radio units, with the goal of building a model to recognize tickets that were in increased need of attention by higher-level management. Even though it wasn't initially the project's goal to do so, the thing that the model ultimately picked up on was basically indications of employees being lazy as they handle those tickets. -- But the data I was given was anonymized. It was argued that if it weren't anonymized, my project would have never been approved by worker representatives in the supervisory board for reasons of violating workers' right to "data protection".
It seems to me that many programmers suffer from some privacy blind spot where their brain literally freezes when they have to think about the negative consequences of their latest software gizmo.
It was decided in a court of law that employers can't spy on their employees. It's good that companies are being cautious. Not everything in this world revolves around efficiency and tracking everything.
It was decided in a court of law that employers can't spy on their employees. It's good that companies are being cautious. Not everything in this world revolves around efficiency and tracking everything.
I certainly do not suffer from "privacy blind spots". As a matter of fact, I've worked for one company in the telco space doing industry-leading work on setting standards about how to properly anonymize call detail records. And then, in this German telco that I mentioned, we were doing groundbreaking work setting up our data engineering in such a way as to comply with Germany's stringent privacy protections where consumers are concerned. I now work in another privacy-focused company.
But this one story I was telling:
Management: Please make a mathematical model that will predict if a radio unit has repeated and prolonged outages, using well over a hundred independent variables, ranging from technical information, to network topology, to information from the ticket system.
Me: Done. Mathematical model says: Radio units have problems if the people servicing them are lazy bums. Here is a system, based on natural language processing, that will predict people being lazy bums with huge accuracy.
Management: So who are the lazy bums?
Me: Can't tell you that. Because privacy.
I mean. Come on...
But this one story I was telling:
Management: Please make a mathematical model that will predict if a radio unit has repeated and prolonged outages, using well over a hundred independent variables, ranging from technical information, to network topology, to information from the ticket system.
Me: Done. Mathematical model says: Radio units have problems if the people servicing them are lazy bums. Here is a system, based on natural language processing, that will predict people being lazy bums with huge accuracy.
Management: So who are the lazy bums?
Me: Can't tell you that. Because privacy.
I mean. Come on...
"Here is a system, based on natural language processing, that will predict people being lazy bums with huge accuracy."
What could go wrong... I was quite impressed until you got to this point too and thought I had been too harsh.
What could go wrong... I was quite impressed until you got to this point too and thought I had been too harsh.
The patterns my system noticed were literally things like this: There's an error entered into the system by the NOC operator as an intermittent error on the station. Field technician drives there. Enters something like "Station on air upon arrival" into the ticket system. Does nothing else. (Like nothing to diagnose or fix the actual problem). Closes the incident. Drives home. Pockets the money for the time spent driving. A few days later (who would have thought that?) a new incident is opened for the same station. Repeat once a week for months and months.
I'm definitely not someone who is too naive to understand that technology like NLP has limits. But this was a perfectly appropriate usecase for NLP and it worked perfectly fine.
And people acting in this manner should not be immune from repercussions for reasons of data protection.
I'm definitely not someone who is too naive to understand that technology like NLP has limits. But this was a perfectly appropriate usecase for NLP and it worked perfectly fine.
And people acting in this manner should not be immune from repercussions for reasons of data protection.
...also, it seems weird to me that workers representatives knew, before the project even started, that it was in their best interest to ask for this data to be anonymized. It was as if workers, collectively, knew the whole time that this sort of thing was systematically happening, and were actively working towards preventing management from finding out. That's what I mean by "not pulling on the same string".
It's legally their job to represent only the workers. And they legally have no way of knowing, what's really going on economically. They may be informed about the financial status, if the company is big enough for a economic sub-committee. But they can't make any decisions on that. They aare there solely to represent the interests of the workers. See paragraph 80 Betriebsverfassungsgesetz.
Your example only shows, that your workers council is unhappy with the provision based system, because it's unfair. Regional targetting would make it even unfairer. The solution is easy: abandaon the provisions and let the people do their jobs.
Your example only shows, that your workers council is unhappy with the provision based system, because it's unfair. Regional targetting would make it even unfairer. The solution is easy: abandaon the provisions and let the people do their jobs.
If they have seats on the supervisory board, then they have wide-ranging legal powers to know about everything that's going on in the company.
And thanks for pointing me to paragraph 80 of the Betriebsverfassungsgesetz. I read it just now, and "representing the interests of workers" is totally not what it's saying. It's saying: They should ensure that legal & contractual provisions that exist in order to further workers' interests are observed. That's totally not the same thing. -- Because a law doesn't become law unless the needs of both workers and employers have been considered. And a contract doesn't become a contract unless both workers and employers have agreed. And their role is simply to ensure compliance with those provisions. Where there is no provision, they have no mandate. For example, coming back to my example: There is no legal provision that protects workers from repercussions if there is documented evidence that they have been lazy, so the workers council has no mandate to try to protect lazy workers, yet for some reason they do.
The legal duty of the supervisory board is to watch out for the company's best interests, period. Even those board members who are sent there by the workers council are, in theory, bound by that duty.
I'm not against trade unionism. Trade unions exist so that workers don't suffer from reduced bargaining power when making contracts with employers. But still: Employers and employees are separate economic entities with separate interests who engage with each other over a market interface, with each looking out for their own bests interests (and no one else's).
Workers' codetermination is taking it one step further: You have a company that has certain interests. And you insert people into the decision-making process of that company who observe the best interests of an entity that is completely separate and has completely separate interests.
Imagine the relationship between General Motors and Microsoft as an analogy for the relationship between General Motors and General Motors Employees. With GM having lock-in for Windows software, MSFT has a lot of bargaining power. But each of GM and MSFT look out for their own best interests when they negotiate licensing. -- That's trade unionism.
Now imagine what it would be like if providing software licenses legally entitled MSFT to put people onto GM's board. This would mean GM would actually be hampered in its ability to make decisions that are in its own best interests (both as it negotiates with MSFT, but also as it does pretty much anything else). -- That's worker codetermination.
And thanks for pointing me to paragraph 80 of the Betriebsverfassungsgesetz. I read it just now, and "representing the interests of workers" is totally not what it's saying. It's saying: They should ensure that legal & contractual provisions that exist in order to further workers' interests are observed. That's totally not the same thing. -- Because a law doesn't become law unless the needs of both workers and employers have been considered. And a contract doesn't become a contract unless both workers and employers have agreed. And their role is simply to ensure compliance with those provisions. Where there is no provision, they have no mandate. For example, coming back to my example: There is no legal provision that protects workers from repercussions if there is documented evidence that they have been lazy, so the workers council has no mandate to try to protect lazy workers, yet for some reason they do.
The legal duty of the supervisory board is to watch out for the company's best interests, period. Even those board members who are sent there by the workers council are, in theory, bound by that duty.
I'm not against trade unionism. Trade unions exist so that workers don't suffer from reduced bargaining power when making contracts with employers. But still: Employers and employees are separate economic entities with separate interests who engage with each other over a market interface, with each looking out for their own bests interests (and no one else's).
Workers' codetermination is taking it one step further: You have a company that has certain interests. And you insert people into the decision-making process of that company who observe the best interests of an entity that is completely separate and has completely separate interests.
Imagine the relationship between General Motors and Microsoft as an analogy for the relationship between General Motors and General Motors Employees. With GM having lock-in for Windows software, MSFT has a lot of bargaining power. But each of GM and MSFT look out for their own best interests when they negotiate licensing. -- That's trade unionism.
Now imagine what it would be like if providing software licenses legally entitled MSFT to put people onto GM's board. This would mean GM would actually be hampered in its ability to make decisions that are in its own best interests (both as it negotiates with MSFT, but also as it does pretty much anything else). -- That's worker codetermination.
On the extremes, I see two ways of doing negotiation - or in general, reconciling conflicting interests: a competitive one, and a cooperative one.
What you're describing is the competitive one: you have sides focusing solely on their local, direct, short-term interests, in hopes that as they all fight each other, the aggregate state of the system will be a decent compromise. The cooperative way would be if all parties got together, did a global optimization across all their goals, and went along with the result until something changes and it needs to be readjusted.
For some reason, the competitive way is the most common one. It's in what you say about worker representatives vs. company. It's how the whole market works. The good side is, such system is very dynamic and quick to respond to shifting preferences (and shifting landscapes). The bad side: it's ridiculously wasteful, and it turns people against each other.
I suppose the reason the competitive model is more common is because you can't just get random people to do global optimization together - it's hard to ensure honesty and mutual understanding of all participants.
RE wastefulness, I like to compare it to the issue of active vs. passive stationkeeping in physics[0]. Imagine that your village wants a new fire tower. You want to have a few cameras 50 meters above ground for spotting fires. There are two ways to approach it. You could build an actual 50m tower and place cameras there. Or you could go to the store, buy a large quadcopter (and a lot of spare parts), tether it to mains power and keep it continuously flying at 50m. Building an actual tower has a much bigger up-front expense, but then it's essentially free. Getting a camera-equipped drone flying is cheap, but keeping it flying for days, weeks, years would waste absurd amounts of energy, very quickly exceeding all the energy put into building the tower.
Obviously, cooperative approach is like building the tower - the desired goal is made explicit and free to maintain. Competitive is like flying that drone - the desired goal emerges from opposite forces fighting, and requires the battle to go on forever.
--
[0] - it's not the real name of the consideration, it's just how I call it. I wonder if it has a proper name.
What you're describing is the competitive one: you have sides focusing solely on their local, direct, short-term interests, in hopes that as they all fight each other, the aggregate state of the system will be a decent compromise. The cooperative way would be if all parties got together, did a global optimization across all their goals, and went along with the result until something changes and it needs to be readjusted.
For some reason, the competitive way is the most common one. It's in what you say about worker representatives vs. company. It's how the whole market works. The good side is, such system is very dynamic and quick to respond to shifting preferences (and shifting landscapes). The bad side: it's ridiculously wasteful, and it turns people against each other.
I suppose the reason the competitive model is more common is because you can't just get random people to do global optimization together - it's hard to ensure honesty and mutual understanding of all participants.
RE wastefulness, I like to compare it to the issue of active vs. passive stationkeeping in physics[0]. Imagine that your village wants a new fire tower. You want to have a few cameras 50 meters above ground for spotting fires. There are two ways to approach it. You could build an actual 50m tower and place cameras there. Or you could go to the store, buy a large quadcopter (and a lot of spare parts), tether it to mains power and keep it continuously flying at 50m. Building an actual tower has a much bigger up-front expense, but then it's essentially free. Getting a camera-equipped drone flying is cheap, but keeping it flying for days, weeks, years would waste absurd amounts of energy, very quickly exceeding all the energy put into building the tower.
Obviously, cooperative approach is like building the tower - the desired goal is made explicit and free to maintain. Competitive is like flying that drone - the desired goal emerges from opposite forces fighting, and requires the battle to go on forever.
--
[0] - it's not the real name of the consideration, it's just how I call it. I wonder if it has a proper name.
Interesting. This is a pretty common criticism of unions in the anglosphere as well -- often alongside a note that the problem has been "solved" in Germany via worker codetermination.
Have you found this situation to be universal in Germany or only at some employers? This is one of those things I'd actually expect "the market" to be good at regulating. Bad union or management kills a company, company with better management or union fills the market void etc...
Have you found this situation to be universal in Germany or only at some employers? This is one of those things I'd actually expect "the market" to be good at regulating. Bad union or management kills a company, company with better management or union fills the market void etc...
This was the only company with worker codetermination that I've ever worked at, so I don't have anything to compare it to. Part of the reason is that, as the article says, companies will try at all costs to avoid it when there is legally a way it can be avoided, and I'm guessing that this in and of itself speaks to the fact that there's a problem there. Otherwise you might expect companies to volunteer into it for reasons of improving their employer brand and so forth. But the opposite is the case, with many large companies going as far as incorporating in other European jurisdictions and using European freedom-of-movement rules for legal entities to operate out of Germany. N.b.: This confers no tax advantages. It is done solely for the purposes of escaping Germany's companies' law. (Examples: The German department store "Müller" with over 700 retail locations in Germany and "Air Berlin", a major airline out of Germany, were incorporated in Britain).
Why would a company's board of directors volunteer to, basically, hand off a significant part of their power to somebody else? Somebody whom they know will definitely not optimize for upper executive compensation.
Actually, executive compensation is usually subject to board approval. The board is answerable to the shareholders. Executive compensation hits a company's bottom line, and therefore shareholders' pockets. Shareholders are perfectly well-placed to keep executive compensation low, if they feel that that's what gets them the best value, or allow it to go high (with that compensation coming from their own pockets) if they feel that that's what gets them the best value.
I really don't see where employees come into this equation, other than perhaps wanting to keep executive compensation low for reasons of petty jealousy.
I really don't see where employees come into this equation, other than perhaps wanting to keep executive compensation low for reasons of petty jealousy.
This is extremely naive. One reason executives get more compensation is because they frequently sit on each-other's boards and are more than happy to scratch each-other's backs. At large companies, most shareholders are "institutional investors" (rich dudes managing other people's money) and are not going to be showing up to shareholder's meetings complaining about executive compensation.
Meanwhile those same shareholders are very happy to complain about worker's compensation[1], for reasons of petty greed.
[1] https://www.salon.com/2017/04/28/labor-is-being-paid-first-a...
Meanwhile those same shareholders are very happy to complain about worker's compensation[1], for reasons of petty greed.
[1] https://www.salon.com/2017/04/28/labor-is-being-paid-first-a...
If shareholders were indeed "rich dudes", then why do you have a problem with rich dudes paying too much money to other rich dudes for being executives? With that logic, "normal" folk don't even enter into the equation, do they?
Institutional investor is not a euphemism for "rich dudes". Institutional investors are overwhelmingly things like pension funds and insurance companies, whose clients are people like you and me. -- Even more so in Europe, where stock ownership by individuals and private equity makes up an even smaller proportion than it does in the U.S., and top-level executives in large corporates still make a lot of money.
If a pension fund wanted to, it could represent the interests of pension fund holders in general meetings, although I will grant to you that they don't usually live up to that duty. But that doesn't mean that such a thing as shareholder activism doesn't exist. We are seeing increasing activity by agencies who collect proxies from institutional investors to push for change around certain issues at shareholders' meetings.
...even with all of that discussion, I really don't see why employee activitsm is needed over shareholder activism to rectify the situation, if indeed there were something wrong with the situation.
Furthermore, I don't believe that there is anything wrong with the situation: A C-Suite executive at an S&P 500 corporate or a EuroStoxx 500 corporation should, in my opinion, make more money than a football player or Hollywood star, because what they do is actually more valuable. -- For some reason, the general public never complains about the level of compensation of the latter, even when, as is the case in Europe, it is the taxpayer who pays for this through mandatory contributions to public broadcasting (which, in turn, get used to pay for broadcast rights to sports events and so forth).
Institutional investor is not a euphemism for "rich dudes". Institutional investors are overwhelmingly things like pension funds and insurance companies, whose clients are people like you and me. -- Even more so in Europe, where stock ownership by individuals and private equity makes up an even smaller proportion than it does in the U.S., and top-level executives in large corporates still make a lot of money.
If a pension fund wanted to, it could represent the interests of pension fund holders in general meetings, although I will grant to you that they don't usually live up to that duty. But that doesn't mean that such a thing as shareholder activism doesn't exist. We are seeing increasing activity by agencies who collect proxies from institutional investors to push for change around certain issues at shareholders' meetings.
...even with all of that discussion, I really don't see why employee activitsm is needed over shareholder activism to rectify the situation, if indeed there were something wrong with the situation.
Furthermore, I don't believe that there is anything wrong with the situation: A C-Suite executive at an S&P 500 corporate or a EuroStoxx 500 corporation should, in my opinion, make more money than a football player or Hollywood star, because what they do is actually more valuable. -- For some reason, the general public never complains about the level of compensation of the latter, even when, as is the case in Europe, it is the taxpayer who pays for this through mandatory contributions to public broadcasting (which, in turn, get used to pay for broadcast rights to sports events and so forth).
Version without paywall: https://outline.com/SvtKVv
This is the situation in europe at the moment:
As far as the rules on employee participation are concerned, three groups of countries can be distinguished in the 28 EU countries and Norway. In the first group, consisting of ten countries, there is no employee participation. In the five countries in the second group, employee participation is limited to state-owned or recently privatised companies. But the largest group is made up of 14 countries that provide for employee representation on the boards of private sector companies above a certain size. There are large differences in the minimum numbers of employees and other aspects of the procedures for employee involvement at national level.
http://de.worker-participation.eu/Nationale-Arbeitsbeziehung...
As far as the rules on employee participation are concerned, three groups of countries can be distinguished in the 28 EU countries and Norway. In the first group, consisting of ten countries, there is no employee participation. In the five countries in the second group, employee participation is limited to state-owned or recently privatised companies. But the largest group is made up of 14 countries that provide for employee representation on the boards of private sector companies above a certain size. There are large differences in the minimum numbers of employees and other aspects of the procedures for employee involvement at national level.
http://de.worker-participation.eu/Nationale-Arbeitsbeziehung...
Does anyone have first hand experience with this system?
Many German workers have experience with this system. I have had 3 years. It works pretty well in my view and creates some balance. It's probably not as much fun for management but that's Ok. It bugs me that in the US the only accepted stakeholders are the shareholders and nobody else counts.
Do you have any familiarity with IG Metall? If so, how helpful do you think are they, or were, for organized labor?
Also, worker-owned co-ops seem the only way out of shareholder rent-seeking and narcissistic management behavior because just giving workers input without a fair share of profits is still similar to keeping slavery but adding a suggestions box.
Also, worker-owned co-ops seem the only way out of shareholder rent-seeking and narcissistic management behavior because just giving workers input without a fair share of profits is still similar to keeping slavery but adding a suggestions box.
I was IG Metall. As a young person it felt a little restrictive but now I feel it strikes a good balance. You make good money, no abusive workplace practices and the companies are also successful. Win-Win for everybody.
Those of us who are Americans sorely need to rediscover general strikes and practical labor unions that don't go crazy with organized crime or utopian politics. Oklahoma was a socialist bastion, Henry A. Wallace got the DNC Bernie Sanders-treatment, strikers of the 19th century were summarily executed by Pinkerton and hired snipers like it was a prison riot, and decades of strikes/strike breaking and unionization helped usher in a brief post-WW2 era of prosperity. Now, poor and white-collar Americans argue unthinkingly and constantly for austerity, mindless deregulation and giving more money to only the rich (because of manufactured consent). I don't see how there's anything but misery, fear of major disease and destitution for 75-90% of Americans; and there aren't many good jobs for average workers because there's almost no manufacturing ecosystem like there is in China.
Generally speaking, workers councils are a good thing. In praxis, it depends. The main issue I have is, that sometimes worker councils are more looking at the workers council's interests then employees or the company's. Same for trade unions. I have had cases where workers councils blocked hirings to reserve a job ticket for one of there own because of the higher salary. Ignore the fact the guy was 100% council member and not at all qualified. Or where the council wanted one guy from middle management elected because that would have raised salaries for the whole council.
Good thing, so, is the collective bargaining power. That usually increases salaries, in some industries more than in others, and improves overall working conditions.
So I'd say it depends. Especially on the people on both sides of the table. Maybe every company has the council it deserves.
Good thing, so, is the collective bargaining power. That usually increases salaries, in some industries more than in others, and improves overall working conditions.
So I'd say it depends. Especially on the people on both sides of the table. Maybe every company has the council it deserves.
It bugs me that in the US the only accepted stakeholders are the shareholders and nobody else counts
This isn’t quite true... the main stakeholders in a US corporation are the senior management. They will continue to receive lavish rewards even when shareholders, customers and employees alike are all getting shafted. Then when they have drained the last drop for themselves and the company expires, they go straight to the same jobs at another company and repeat.
This isn’t quite true... the main stakeholders in a US corporation are the senior management. They will continue to receive lavish rewards even when shareholders, customers and employees alike are all getting shafted. Then when they have drained the last drop for themselves and the company expires, they go straight to the same jobs at another company and repeat.
> It bugs me that in the US the only accepted stakeholders are the shareholders and nobody else counts.
Executives, too (or mostly)
Executives, too (or mostly)
Most workers are granted shares in the companies they work in. Doesn’t that make them stakeholders already? They could band together and control the company if they wanted to and were granted or bought enough shares.
The holdings of institutional investors (pensions, mutual funds, and so-called “activist investors” with a lot of cash) far outstrip the shares issued to employees as compensation. Plus, since it is seen as part of pay, many employees sell their holdings quickly. There’s no reason to suspect US companies would ever grant enough shares for employees to band together in this way. That would be anathema to management and board control of worker conditions and output.
Regular employees are interested in the company’s shares insofar as the price is high, not as a means to influence company governance.
Regular employees are interested in the company’s shares insofar as the price is high, not as a means to influence company governance.
I've seen both. The remuneration aspects were not so much affected, but there were several quality of working life improvements around hours, vacation, sabbaticals, having a voice and privacy as someone else in the topic argues, etc.
Even if management doesn't like it, it's good even for them because it helps keep them honest.
Even if management doesn't like it, it's good even for them because it helps keep them honest.
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Paywalled beyond the first two paragraphs.
If there's a workaround, it's ok. Users usually post workarounds in the thread.
This is in the FAQ at https://news.ycombinator.com/newsfaq.html and there's more explanation here:
https://news.ycombinator.com/item?id=10178989
https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
This is in the FAQ at https://news.ycombinator.com/newsfaq.html and there's more explanation here:
https://news.ycombinator.com/item?id=10178989
https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
Please don't complain about paywalls.
I'm German and my impression is that almost everyone is happy with the current model where you have a legally guaranteed right of holding CEOs accountable.
Everyone, except the American hedge funds trying to squeeze out more profits by increasing working hours, that is.
So to me, this article reads like "let's make Germany more like America in that the rich rule the poor".
And I find it rather surprising that they went with "Deutschland AG" because treating Germany like a country is usually only done by a rather weird tiny subset of citizens who refuse to adhere to laws and instead revel in conspiracy theories about foreign overloads secretly deciding what everyone has to do.
But most weirdly I find that I haven't heard this set of laws being discussed critically in German at all, but that instead an English article with odd word choice should be the first to criticise it.