Co-Determination Flourishes In European Firms


Co-determination is not a popular practice towards representing workers, except in European firms.

Co-determination is when workers have representation and voting power on decision-making boards of a firm. The structure originated in Germany and has become popular in other European countries.

However, within Europe co-determination has taken different shapes. For example, different countries have different thresholds on how large a company must be to make worker representation on a board necessary. In Sweden the threshold is any company that employs more than 25 people, but in Luxembourg the threshold is 1,000.

Additionally, worker representation differs from country to country within Europe. Some countries, such as Sweden, allow representatives to hold voting power in the only management board in the company, while other countries, such as Germany, keep workers’ representatives tied to a certain tier of decision-making bodies.

The U.S. does not legally allow co-determination. The Wagner Act of 1935 prevents any type of organization within the firm that holds both employees and employers and decides on working conditions. Additionally, some unions in the U.S. are not interested in pursuing co-determination as a form of representation. Some union leaders will feel that they will not hold the same power in affecting decisions if they pursue co-determination.

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Economics, Finance and Investing