Workers on Boards

To an American, the idea of United Auto Workers President Leonard Woodcock and some of his union colleagues serving as directors of General Motors, and voting on such matters as the bonus of President Edward Cole, might seem farfetched. Yet something very like this arrangement has existed since 1952 in West Germany, where under law all large companies must give at least a third of the seats on their supervisory boards* to directors representing their workers. Now this system, known as Mitbestimmung (literally, having a voice), is spreading throughout Western Europe and has become the subject of heated controversy.

Inside Germany, the Brandt government has pledged to give workers' representatives not just a voice, but an equal voice in company policymaking. It proposes to require all major German corporations to establish boards composed of equal numbers of workers' and stockholders' representatives, with an impartial chairman acceptable to both sides. At present only the coal and steel industries have to give labor that much say, but the idea is moving beyond German borders. In Switzerland three trade unions have petitioned the country's Parliament to call a national referendum on labor's right to sit on supervisory boards, and Sweden has launched a three-year experiment to test worker representation on boards of companies with 100 or more employees.

Most important, the European Common Market has proposed that any company that wants to incorporate itself as a Societas Europa (a still-to-be-created type of company free to operate in all nine Common Market countries under a single set of incorporation rules) must establish a board on which one-third of the directors will represent labor, another third will speak for shareholders, and the remaining third will be chosen by the first two groups. Predictably, corporate leaders have been horrified. Even in Germany, some heads of major corporations predict that giving labor an equal voice in company planning will lead only to endless deadlock, with the worker-directors vetoing everything that the shareholder-directors want to do, and vice versa.

Shattered Peace. In fact, Mitbestimmung has worked better than that in the German coal and steel industries. The worker representatives (who include not only unionists but government officials and even, in one case, a banker considered sympathetic to labor) have been notably cooperative, and probably deserve some of the credit for having kept the German economic boom remarkably free of strikes. The ten labor directors of steelmaking August Thyssen-Huette approved a takeover of troubled competitor Rheinstahl, which is still awaiting Common Market clearance, knowing that it would mean the elimination of some duplicate jobs. Says Thyssen Director Karl-Heinz Weihs, who worked as a roll-turner for eleven years: "If we hurt the profitability of the company, we are also jeopardizing the security of our workers. The company's interests are really the interests of the workers."

There is a legitimate question, though, whether that spirit can be extended. In Germany itself, labor peace was shattered late last summer by a series of wildcat strikes. Having a voice in company planning did not soothe workers who were unhappy about rising prices and the modest wage hikes negotiated by their unions early last year (worker-directors stay out of pay bargaining, which is conducted by regional unions and federations of employers). And would the cooperative attitude of Germany's soberly capitalist labor leaders be matched by representatives of strike-happy British unions, or Communist-led French and Italian unions, who might sit on company boards? Organized labor in France and Italy voices an opposite fear: that Mitbestimmung would only lead worker-directors to become too chummy with management.

* Unlike U.S. companies, German corporations have two boards: a management board that actually runs the company, and a supervisory board that selects the management board's members and approves or rejects their major decisions.

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