Collective Bargaining in East Germany: Between Economic Constraints and Political Regulations

Reinhard Bispinck

Cambridge Journal of Economics, 1993, vol. 17, issue 3, 309-31

Abstract: The rapid transition from a centrally-planned economy to a market economy in East Germany constituted a profound challenge to the system of industrial relations, in particular to collective bargaining. After the transfer of western bargaining procedures and basic pay strategies, the unions' strategy of rapid implementation of wage parity has turned out to be hard to realize given the disastrous economic situation in the East, although it seems to be reasonable and necessary from a socio-political point of view. Actually, the delicate balance which the trade unions tried to maintain has led to a remarkable increase of eastern basic pay up to about 75 percent of western remuneration levels albeit the complete equalization of pay and conditions is not yet in sight. It is argued that wage subsidies might be a measure to bridge the gap between productivity and income level during the period companies need for technical and economic modernization. Copyright 1993 by Oxford University Press.

Date: 1993
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