Not only in Germany but in many European states the level of coverage by collective agreements is declining. Since collective bargaining autonomy is based on the principle of voluntary membership, one of its weaknesses lies in the declining degree of organisation on both the employers’ and the employees’ side. In the long term, weak unions cannot ensure fair working conditions. As a result, collective bargaining agreements lose their inherent warranty of correctness. In the legal policy discussion, this has led to calls for the legislator. In response, in 2014 the German legislature passed the ‘Act to Strengthen the Autonomy of Collective Bargaining’ ( Tarifautonomiestärkungsgesetz) to lower the requirements for the extension of collective agreements and to introduce a national minimum wage. As this has not led to significant improvements, there are further-reaching proposals for the statutory extension of collective agreements. The extension of collective bargaining agreements to non-members does not strengthen the social partnership on the employee side. However, it is a legitimate means to avoid a race to the bottom in competing for the lowest social standard; extensions help in creating common labour standards as long as a sufficient margin is maintained for the social partners to negotiate sector-specific regulations and to shape working conditions. A legal system, which is based on rights of freedom and does not consider the freedom of association to be a solely goal-orientated right, offers limited options to strengthen the social partners through legislation. Extensions become increasingly difficult to justify, the higher the existing level of legal protection. Especially in countries with minimum wage legislation and a large amount of employee protection legislation the justification requirements increase. However, at least in Germany, to date the judiciary has not sufficiently considered these aspects. Even though international laws leave substantial freedoms to the states, all legal systems that are based on a strong and vital social partnership should be interested in obtaining and protecting the plurality of collective bargaining agreements. They should only lay down limits, where there are tendencies of eroding solidarity among workforces due to the parallel existence of several collective bargaining agreements. The associations themselves possess limited resources for extending their member base. Still, the more the individual can gain from association membership, the more likely employees and employers are to join their respective associations. Therefore, the state should demonstrate restraint regarding the regulation of labour conditions. However, such restraint will prove difficult for welfare states. Their governments will most likely opt to eliminate deficiencies through legislation, even at the price of further weakening collective bargaining autonomy. Compared to extensions, legal provisions have the disadvantage of being too general and less flexible because of the much slower adaptation process. Therefore, the main argument in favour of extensions is that they facilitate the differentiation of mandatory working conditions. To ensure their legitimation, a number of design options can be considered. Regarding this, neither European nor international law impose high requirements but existing differences between national legal systems demand custom-fit solutions.
Settlement Rates and Settlement Stages in Compulsory Interest Arbitration