Mitbestimmungs

Mitbestimmung, or co-determination, refers to a system in which workers participate in company management and, in some contexts, in broader economic decision-making. In Germany this concept operates on two main levels: workplace-level participation through works councils (Betriebsrat) and company-level participation in the governance of large firms through representation on the supervisory board (Aufsichtsrat).

The works councils are established under the Works Constitution Act (Betriebsverfassungsgesetz) and provide employees with rights to information, consultation, and, in many matters, co-determination in social, personnel, and organizational issues. Elections to the Betriebsrat are conducted among the workforce, and the council acts as an informal channel between employees and management on a range of workplace policy topics.

Company-level codetermination focuses on the supervisory board of joint-stock companies. In large German companies, a significant portion of supervisory board seats are occupied by employee representatives. This arrangement has its historical roots in the Montan-Mitbestimmungsgesetz of 1951, which applied to coal and steel industries and guaranteed substantial employee influence on the board. A broader framework, the Mitbestimmungsgesetz of 1976, extended worker participation to many other sectors, often resulting in near-parity or substantial influence of employee representatives on the Aufsichtsrat, depending on the company’s size and sector.

The aim of Mitbestimmung is to align management decisions with workers’ interests, promote industrial peace, and encourage long-term planning. Proponents argue it enhances governance and social legitimacy, while critics contend it can reduce managerial flexibility and competitiveness. In Europe, variations exist, but Germany remains the most extensive example of corporate co-determination in practice.