60th anniversary: Works agreement of May 10, 1947 anchored co-determination as a key element of Volkswagen corporate culture
60 years ago today, the company agreement negotiated between the works management and the works council guaranteed the elected employee representatives an unrestricted right to a say in personnel and welfare issues and a right of participation in production planning and the introduction of new working methods. The agreement marked a further step in the efforts of Volkswagenwerk GmbH to overcome everyday difficulties immediately following the war and become the most successful German automaker post-1945. The foundations were laid by the pragmatism of the British military government which held the trusteeship of the ownerless company at the end of the Second World War. British officers placed vital orders with the Wolfsburg and Brunswick plants, giving people in the region work, housing and food. Series production of the Volkswagen limousine, the young company’s “life insurance” as it were, began on December 27, 1945. Based on the British understanding of democracy, Major Ivan Hirst, the representative of the British military government at the plant, agreed to the election of a works council, which assembled for the first time in November 1945, putting in place the first structures for co-determination. The ensuing intensive debate on the scope of participation to be granted to the workforce culminated in the Allied Works Council Law of April 10, 1946, which provided the formal framework.
At Volkswagenwerk GmbH, this Law was implemented in the form of a company agreement on May 10, 1947. From now on, plant management decisions on hiring and firing, transfers and promotions, as well as wage and salary provisions for all employees would be taken “in agreement with the works council”. The company agreement made provision for a right of say on the part of the works council in respect of “resuming operations, determining the production program and creating new work methods”, while “expanding, curtailing or closing operations and the cessation of present or the commencement of new areas of production” required the express agreement of the works council.
In the immediate post-war years, however, shortages dictated the content of this culture of participation. In particular, the imbalance between an increased production program and inadequate food supplies provided considerable potential for conflict. In the light of this situation, the provisions governing the right of employee representatives concerning food distribution and supervising the works canteen set out in the works agreement were crucial to preserving industrial peace at the plant. The cooperative conflict management typical of Volkswagen began to evolve during the years of British trusteeship. The co-determination anchored in the agreement of May 10, 1947 guaranteeing representation of the interests of the workforce was a significant factor in the rise of the Volkswagenwerk to become a symbol of the German economic miracle.
“The British military government thus laid the foundation for what still remains exemplary co-determination at Volkswagen, maintained and developed further by the works council and management over the decades. This culture of participation has led to corporate success and the internationalization of the company as well as safeguarding jobs,” Bernd Osterloh, Chairman of the Group and General Works Councils of Volkswagen Aktiengesellschaft, commented. The company and the works council agree that co-determination is an important instrument of entrepreneurial action.
One of the most recent company agreements between the Board of Management and the employee representatives at Volkswagen confirms the future viability of co-determination, specifically stating that competitiveness and safeguarding jobs are two corporate goals of equal ranking at Volkswagen.