The impact of unification on German industrial relations

This paper analyses the stability of the German collective bargaining system by utilising a framework based on the concept of bargaining inclusiveness and exclusiveness. Examining collective bargaining developments in the metalworking industry, the adaptability of the west German bargaining system in the 1970s and 1980s is contrasted with the problems experienced in the new Lander, where institutional transfer and economic collapse, by substantially weakening IG Metall at establishment level and presenting employers with the opportunity to exit from the multi‐employer bargaining system, limited the prospects for organised decentralisation. The result has been the undermining of the inclusive German bargaining system in the east, as measured by collective bargaining coverage, which by creating labour market dualism, also threatens the stability of collective bargaining across Germany.