Works Councils, Collective Bargaining and Apprenticeship Training

Ben Kriechel
Maastricht University – Research Centre for Education and the Labour Market (ROA); Institute for the Study of Labor (IZA)

Samuel Muehlemann
University of Bern

Harald Pfeifer
Bundesinstitut für Berufsbildung (BIBB)

Miriam Schuette
Ludwig Maximilian University of Munich – Munich Graduate School of Economics (MGSE)

IZA Discussion Paper No. 6497

Abstract:

In this paper, we investigate the effects of works councils on apprenticeship training in Germany. The German law attributes works councils substantial information and co-determination rights to training-related issues. Thus, works councils may also have an impact on the cost-benefit relation of workplace training. Using detailed firm-level data containing information on the costs and benefits of apprenticeship training, we find that firms with works councils make a significantly higher net investment in training compared with firms without such an institution. We also find that the fraction of former trainees still employed with the same firm five years after training is significantly higher in the presence of works councils, thus enabling firms to recoup training investments over a longer time horizon. Furthermore, all works council effects are much more pronounced for firms covered by collective bargaining agreements.

Works Councils, Collective Bargaining and Apprenticeship Training