German Unification and Emerging Divisions within German Employers' Associations: Cause or Catalyst?

Abstract

The terms Verbandsvermeidung (association avoidance) and Verbandsflucht (association flight) have appeared with increasing frequency in analyses of the German economy over the past few years.' They vividly encapsulate the observation that fewer new firms are joining employers' associations, compared to a decade ago, and that members are both threatening to leave and actually leaving employers' associations at an unprecedented rate. The specter of declining membership in German employers' associationscentury-old pillars of organized German capitalism-is noteworthy because of the importance of these institutions to the German economy and society. A broad spectrum of scholars and practitioners agree that Germany's industrial relations system, which relies heavily on powerful employers' associations, has been a key component helping to generate its postwar economic success.2 Why, if employers' associations are so important, are companies fleeing them? Some attribute association flight to general social trends. Declining membership across a vast assortment of organizations throughout the world's most affluent countries is undoubtedly a hallmark of the postmodern age.3 Others blame the onset of association flight on German unification. Whereas scholars within this latter camp disagree over the possibilities of preserving the old western constellation of social and economic forces within the newly united Germany, they share the conviction that the immense economic, political, and social transformations triggered by the absorption of the German Democratic Republic and the implosion of the Soviet Union were external shocks that disrupted an otherwise smoothly functioning western German economic order.4 This article argues, in contrast, that neither a general social trend nor German unification has caused association flight. Association flight is instead the product of contradictions that arose within Germany's system of comprehensive pattern bargaining during the 1980s (well before German unification) that disrupted the distributive balance between large and small enterprises. Despite the upsurge in association flight, not all classes of firms are interested in leaving their associations. For the most part, Germany's largest and most