In an effort to unionize a Volkswagen plant in Chattanooga, Tennessee, United Auto Workers (UAW) is also seeking to create a European-style works council. The idea of unions, if disparaged, is at least familiar to Americans. But works councils have yet to formally break into the country the way they have in Europe. If they were to be adopted here, however, they could not only give workers a foothold in power in an era of declining unionization, but they could also benefit employers themselves.
Unlike unions, which handle negotiations over wages and benefits, works councils are a formal structure that facilitates dialogue between workers and management about the company’s finances and business plans, as well as perspectives from the shop floor on how to improve safety and productivity. Every VW assembly plant has works councils that include worker representation – except in Tennessee.
Employers see a big benefit. A paper from the 1990s by Richard Freeman and Edward Lazear found that works councils where management really shares information can produce new solutions to problems facing a company, increase workers’ willingness to communicate with management, and push workers to take a longer view of company decisions that means they invest more in their job skills while granting concessions that boost investment. A study in the U.S. of high-performance workplace tactics, similar to works councils, found that “unionized establishments… that promote joint decision making… have higher productivity than other similar nonunion plants.” One example is Sharp’s solar manufacturing facility in Memphis, where management meets monthly with the union to discuss workplace issues. As David Madland, director of the American Worker Project at the Center for American Progress, wrote of this model, it has “improved manufacturing capability by investing in plant equipment and technology.”
Volkswagen itself has a good track record: in a statement about the potential for a works council in its Tennessee, plant, a spokesperson said it “will be based on positive experiences in Germany and other countries where the Volkswagen Group is active.”
Workers can expect similarly positive experiences. “One of the key things about formalized works councils is they often require real sharing from management” about their plans, Madland told ThinkProgress. That gives workers more information and more of a chance to weigh in. But works councils also align closely with what workers want in their workplaces. “They really want a more collaborative process where workers have some power,” he said, but with unions, they worry that their employers will be antagonistic toward organizing. With a works council, workers “see that their employer recognizes and wants something like this too.” As Richard Freeman told ThinkProgress, “In Europe, workers are more favorable in general to their works council than they are to their union because it’s closer to them.”
The negotiations in Chattanooga may be over a single plant, but if a works council does come to the U.S., it could have a big impact on all workers. “I think it has tremendous potential to spread far and wide in the United States,” Madland said. “I can hardly think of an industry where having a better and productive discussion between workers and management wouldn’t work.” The idea is likely to start with multinational companies, such as those in Germany and Japan that already have works councils in their facilities. If it works at VW, it could soon spread to Mercedes and BMW, and if they work there, it could keep on spreading. “This is just part of the way [multinational companies] normally operate, and they see productivity advantages,” Madland added. Plus they could even get a boost from some labor foes. “Groups like the Chamber [of Commerce] or National Association of Manufacturers have traditionally been favorable to this kind of thing,” Freeman said. “I would think they would help employers set them up.”
These might not be traditional unions, so labor may be wary – but they can go hand-in-hand. Legally, to bring a works council to a workplace in the U.S., workers would likely have to unionize as well, because otherwise they could be seen as management unions, something that is against labor law. And for businesses to really experience the benefits of works councils, they may need unions too. That study of high-performance practices found that they only work with unions.
It could also change the way people view unions generally by highlighting the potential for workers and management to cooperate. “Unions could start to be talked about in a more positive light as important to a company’s future and helping the company, changing the dominant paradigm,” Madland said. UAW thinks as much. In March, the union’s president, Bob King, said, “We think there is an exciting opportunity in working with VW, the Volkswagen Works Council and IG Metall to set a new standard in the United States for innovative labor-management relationships that benefit the company, the entire workforce, shareholders and the community in general.”
There still may need to be some formal protections for workers in works councils. If workers speak up against management’s plans, management could respond by simply firing those workers. Labor law already protects workers who complain to their bosses – unionized or not – but in practice workers rarely have the resources to fight terminations. “We may want to have some regulations or company best practices,” Freeman suggested.
The experiment may soon play out. King told a German newspaper earlier this month that he expects the union to represent VW’s Tennessee workers by June and that a majority of the plants have signed a declaration that they want to be represented. If it succeeds, America will get its first works council.