Co-determination has come under pressure in the Federal Republic of Germany. However, this is not so much due to foreign investors, who - it is claimed - are avoiding the German economy due to workers’ participation in corporate decision-making. Nor can such pressure be blamed on the EU legislation so far adopted on the matter, which is alleged to be jeopardising joint employer-worker decision-making in Germany. No, according to Reiner Hoffmann, the Deputy General Secretary of the European Trade Union Confederation (ETUC), speaking at the IG Metall conference on worker participation held in Dortmund on 17 November, the main threats to worker participation are coming from the unobjective, ideologically motivated attacks being made by various industrial associations and employers’ federations.

One frequently repeated claim is that ’Germany plc’ is of no interest to foreign investors because of co-determination. But the truth of the matter is very, very different. For instance, U.S. chambers of commerce in Germany - which represent the interests of American and German companies engaging in transatlantic trade - believe that Germany has the highest concentration of American investment in Europe. A survey conducted by the Boston Consulting Group points out that Germany remains attractive in Europe and is even regarded as the best location for management holdings. Germany also ranks as the third most attractive place for investment, after Eastern Europe and Great Britain, the two key factors here being access to the market and the availability of a highly qualified workforce. There is no question of worker participation constituting a barrier to foreign investment.

Hoffmann deplores the fact that in the public debate on the matter, the critics of co-determination are ignoring the fact that of the 770 or so companies which engage in joint decision-making, over 30% are directly or indirectly owned by foreign investors. This clearly undermines the claim that co-determination deters foreign investment. Just a few weeks ago another American company embraced the concept, in a move which Michael Rogowski of the Federation of German Industry (BDI) referred to as a "historic error": Kraft Foods Germany merged its previously autonomous companies and introduced joint decision-making.

The claim that co-determination is an alien concept in Europe does not stand up to scrutiny either. Even though the German arrangements regarding worker participation are more extensive than in other European countries, Hoffmann points out that this is far from equivalent to saying that other European countries have widespread co-determination-free areas. In fact 18 of the 25 EU Member States have binding rules governing co-determination, and in many cases their arrangements provide for an extensive workforce presence on companies’ supervisory boards. In the new Member States company bodies are taking their lead from German law, and in Slovenia - by law - companies employing more than 1,000 staff have to guarantee the workforce 50% participation.

In recent years, workers’ rights to information and consultation have continued to develop at European level. One example of this is the compromise on worker representation in the European company (SE). The incorporation of the European Charter of Fundamental Rights into the future Constitutional Treaty will even elevate the right to information and consultation to the status of a civil right. However, there is no guarantee of the European Union being able to continue securing and building on such rights to participation in the future. The current debate about the EU directive on mergers is very much being hijacked by representatives of industry and the employers to declare German worker participation dead and buried.

Hoffmann maintains there is a need to make sure that participation and co-determination remain permanent fixtures in any future EU company law. The European Company Statute offers companies sufficient ways of operating within the European internal market under harmonised corporate law, be it by merging, setting up a holding or subsidiary, or undergoing transformation, he believes. This tool should first be used; only then might it become apparent that there is no longer any need for the controversial merger directive. The social costs of a merger directive adopted without safeguarding co-determination rights would be high, and would inevitably undermine companies’ competitiveness.