Labor union density and collective bargaining rights in Germany 2000-2019

The German labor market has experienced significant deregulation since the early 2000s. The Social Democrat-Green coalition government of 1998-2005 engaged in reforms of the labor market, industrial relations, and social welfare system, which resulted in a liberalization of labor standards and a reduction in unemployment. The 'Hartz' reforms made it easier for workers to be hired on short-term or fixed-term contracts, while making unemployment benefit less generous and more time limited. This reform program pushed inactive and unemployed workers back into the labor market, as it made the alternative of receiving social welfare benefits less attractive.

At the same time, the density of union membership and the percentage of workers covered by collective bargain agreements fell dramatically, as more workers were employed in shorter term and more precarious forms of employment, which are less likely to have union involvement. This trend coalesced with a long term decline in trade union membership in Germany (and in Europe as a whole) since the latter decades of the twentieth century. Traditionally 'coordinated' market economies such as Germany have experienced significant pressure to liberalize their labor market institutions in order to compete in global economic markets against lower wage competitors such as China and Vietnam.