70 Years of the Coal, Iron and Steel Co-Determination Act

Exactly 70 years ago tomorrow, the German Bundestag passed the Coal, Iron and Steel Co-Determination Act. What sounds unwieldy is in practice still the basis for the work of companies in the iron and steel industry today and will continue to shape the interaction between employee and employer interests in companies like e.g. thyssenkrupp in the future.

It is – it should also be remembered – of particular importance that the law was drafted and passed in 1951 by the two big parties – “Volksparteien” – of the still young Federal Republic, after wrangling with trade unions and employers over the right way forward. One side did not impose its maximum position on the other, but a workable compromise was worked out. It was not about socialisation – quite conceivable after the war – but about co-determination.

I know the practice of co-determination from both sides and I am convinced that the special framework conditions of co-determination in the coal and steel industry bring the better, because more sustainable and stable results for the companies and their employees in the long run. This basic consensus is of great advantage in times of increasing centrifugal forces, as we are experiencing again today, and was a condition for the success of our German system, which is unparalleled internationally.

What is co-determination in the coal and steel industry about? It is about constructive cooperation between employee and employer representatives in the supervisory and decision-making bodies of companies. Coal and steel co-determination guarantees that half of the members of the supervisory board are appointed by employee representatives from the companies and the trade unions. In addition – a special feature even in Germany – a neutral person, "the eleventh man", is responsible for clarification and decision-making between the two benches of the supervisory board in the event of a voting tie. The labour director, too, can only be appointed and dismissed with the employees in montan co-determined companies – never against them.

A special event occurred – as so often – at Krupp in 1970: Berthold Beitz and the IG Metall chairman Otto Brenner made economic history. After Krupp was transformed into a corporation with the banker Hermann Josef Abs as Chairman of the supervisory board, Beitz unceremoniously made common cause with co-determination. Brenner – who Beitz had previously pushed through as the shareholders representative on the supervisory board – is known to have said the less than diplomatic "Then you'll be deposed straight away" to an evasive Abs. From then on, the new Chairman of the supervisory board was Berthold Beitz, the style-defining Chairman of the Board of Trustees of the Friedrich Krupp von Bohlen und Halbach Foundation.

The rules and regulations of the industry are also special features of German business life that have to prove their justification in the actual outcome. What are the benefits of these regulations?

Experience shows that, contrary to what one might think, there is usually no total blockade and "nothing works anymore" in montan co-determined companies.Of course, at first glance many things are tougher, more strenuous and more protracted because of the constant co-determination in the central questions of company management. But in return, the decisions made and compromises negotiated are of a lasting viability not found in other areas. A word is usually a word – and both sides stick to it. In my view, this is because the representatives of the employees' side also have to make difficult decisions for the company and take responsibility for the future viability of their company. Proximity creates concern – or to put it another way: those who have a say in decisions automatically do so with a different attitude than if they were only allowed to accept decisions. This active responsibility can be of great advantage, especially in times of crisis, because the difficult decisions made through this compromise inherent in the system ensure greater legitimacy and understanding among all the employees represented.

The branches of the "coal and steel industry" are certainly not industries flowing with milk and honey – and not just since yesterday. It is therefore all the more remarkable that it has been possible to shape structural change successfully and in a socially responsible manner with co-determination and not against it. For the upcoming restructuring – the transformation – to a decarbonised industry, we will need this strength again if it is to succeed – and above all if it is to succeed sustainably. 70 years of co-determination in the coal and steel industry – sure, sometimes quite exhausting and sometimes nerve-racking, but: it's worth it. Even today.