The Federal Constitutional Court (BVerfG) has been hearing today whether the changes to the law that Andrea Nahles pushed through with the Collective Bargaining Unity Act in 2015 are constitutional.
The issue is highly controversial both legally and politically.
The right to strike and collective bargaining autonomy are constitutional interests.
Reason enough to keep an eye on the hearing in Karlsruhe and shed light on the legal and political background.

Collective bargaining unit – what is it?

Superficially, the question is whether only one collective agreement applies in a company or whether several can be applied.
Essentially, however, it is ultimately about what the answer to this question means for the right to strike and the collective bargaining autonomy of trade unions.
If a company has employees who are organized in different trade unions, each of which has concluded its own collective agreement with the company or an employers’ association, several collective agreements may be applicable as a result.
A well-known example of this from the press is Deutsche Bahn.
Here, some employees are organized in the train drivers’ union (GdL), others in the railroad and transport union (EVG), which is part of the German Trade Union Confederation (DGB).

Until 2010, the Federal Labor Court (BAG) resolved these and similar conflicts according to the principle of proximity.
In principle, only one collective agreement should apply in a company – the one that best suited the requirements and characteristics of the company.
In a far-reaching decision in 2010, the BAG overturned this case law.
There is no legal basis for only one collective agreement to apply in a company.
The principle of collective bargaining unity restricts the freedom of collective bargaining and freedom of association of those trade unions whose collective agreement is ultimately not applied.
After all, these are fundamental rights that the constitution guarantees the trade unions.

Great power of small trade unions

For small trade unions, which previously did not have the necessary bargaining power to negotiate a collective agreement, the abandonment of the collective bargaining unit changed the situation.
After the BAG’s decision, it was possible for several collective agreements to be applied in one company.
The train drivers were therefore able to negotiate their own collective agreement and no longer had to accept the collective agreement of the EVG, which was supposed to apply to all railroad employees.
This resulted in strikes.
The train drivers organized in the GdL practically brought rail traffic to a standstill.
The fact that the members of the GdL only made up a fraction of the total rail workforce was particularly controversial and widely criticized.
However, because trains really cannot (yet) run without train drivers, these few employees managed to put enormous pressure on the company.

Solution – Collective Bargaining Unity Act?

The strikes and the GdL’s negotiating policy led to resentment in many places.
This prompted politicians to take up the matter.
As Federal Minister of Labor, Andrea Nahles finally set the legislative initiative in motion, which is now being examined by the Federal Constitutional Court.
The key point of the Collective Bargaining Unity Act is that, in future, only one collective agreement is to apply in a company.
This is now to be the one concluded by the trade union with the most members in the company concerned.
The effect on small trade unions is obvious.
The law does not directly prohibit them from striking.
However, there is virtually no chance that a negotiated collective agreement will be applied in practice.
This is because the large trade unions generally not only organize employees from a specific occupational group, but employees from all occupations represented in the company.
The large trade unions will therefore always have more members in the companies and their collective agreement is likely to prevail.

Could the right to strike be restricted after all?

This consequence is now being criticized above all because it may restrict the right to strike – a fundamental right protected by the constitution – through the back door.
A strike must serve a permissible purpose, namely the conclusion of a collective agreement.
Strikes that are purely politically motivated are in any case inadmissible according to BAG case law.
If a small trade union goes on strike, there is now a risk under the Collective Bargaining Unity Act that a court will prohibit the strike.
The employer can defend itself in court with the argument that the strike is not pursuing a permissible strike objective, but is purely politically motivated.
If a collective agreement that the trade union wants to achieve with the strike cannot be applied in the end anyway, what permissible strike objective is the strike pursuing?

Another reason why the Collective Bargaining Unity Act is so politically controversial is that strikes by small trade unions regularly affect areas of life that directly affect the general public.
While a strike in a cement factory primarily affects the factory owner and at best indirectly affects society, the opposite is true for strikes on the railroads, in air traffic or in hospitals.
Many commuters, travelers and sick people are affected.
Supporters of the Collective Bargaining Unity Act see this as a way of ensuring that public services do not suffer as a result of unions and employers (associations) failing to reach agreement.
It also strengthens the community of solidarity within the company, as individual occupational groups cannot improve their position at the expense of others.
Opponents, on the other hand, see the restriction as a danger that entire occupational groups will be deprived of the opportunity to counter the forces of the market economy and negotiate appropriate wages by withholding their work performance.
In the current proceedings, the Federal Constitutional Court will have to decide whether one or the other interest prevails and whether Ms. Nahles has succeeded in striking an appropriate balance with the Collective Bargaining Unity Act.
However, it will be a few months before a decision is reached.

Background: How does a strike actually work?

From the trade unions’ point of view, a strike is the central means of ensuring that employees can maintain their standard of living in the long term or participate in the economic upturn.
Let us assume that in a market economy, an appropriate price for a product is defined by supply and demand.
If supply falls in relation to demand, the price rises and vice versa.
So far so market-liberal.
There are supposed to be areas of life in which the unbridled forces of the market fail to create a social balance of interests.
The market for labor is one of these areas of life.
The reason for this is the so-called competition paradox: in the relationship between employer and employee, work performance is exchanged for wages.
The wage is therefore the price for the work.
Due to constant inflation, the cost of living tends to become more expensive.
In order for employees to maintain their standard of living, they need more money.
If wages remain unchanged, they can achieve this by working more.
But then the supply of labor increases in relation to demand.
As a result, the price of labor, i.e. the wage, continues to fall.

In this respect, a strike is nothing more than withholding labor in order to stop the mechanism described above.
If labor is withheld, the ratio of labor supplied to labor demanded is rebalanced and the price of labor rises again.