This paper by Alexander Lammers, Felix Lukowski, and Kathrin Weis examines how the presence of works councils affects firms’ provision of further training, particularly in the context of rapid technological change in Germany. Using detailed firm-level data from the BIBB Training Panel (2019), the study investigates both the probability that a firm offers training (extensive margin) and the share of employees participating in training (intensive margin), with a specific focus on employees in low-skilled jobs and on differences between firms with varying levels of digital technology.
Key Findings
The research finds that works councils significantly increase both the likelihood that a firm provides further training and the share of employees—especially those in low-skilled jobs—who participate in such training, but this effect is concentrated in firms below the industry level of technology. In these firms, works councils act as a crucial advocacy channel, ensuring that employees, particularly those at higher risk of automation and with weaker labor market prospects, have access to skill development opportunities. This supports the “collective voice” and “exit–voice” theories, which posit that employee representation helps retain human capital and motivates both workers and employers to invest in training.
In contrast, in firms above the industry level of technology, the presence of a works council does not significantly affect training provision or participation rates. Here, employers and employees tend to be more aligned in their interests regarding training, likely because high-tech firms already recognize the necessity of upskilling to remain competitive and thus invest in training regardless of whether a works council is present.
The positive effect of works councils on further training is especially pronounced for low-skilled workers, who typically participate less in employer-provided training but stand to benefit most from it in terms of employability and upward mobility. The study also finds that the effect is robust across different firm sizes, sectors (manufacturing and services), and whether or not the firm is covered by a collective bargaining agreement, though the effect is generally stronger in manufacturing and in firms with collective bargaining coverage.
Methodology
The authors use logit and tobit regression models, as well as entropy balancing to address potential endogeneity—ensuring that differences in training outcomes can be attributed to the presence of works councils rather than other firm characteristics. The analysis is based on a large, representative sample of German private sector firms with at least five employees.
Implications
The results highlight the ongoing importance of works councils as advocates for training, particularly in less technologically advanced firms and for employees in low-skilled jobs. As technological change continues to reshape job requirements, works councils help ensure that vulnerable workers are not left behind. The findings also suggest that policy efforts to strengthen co-determination rights and employee representation can play a key role in supporting workforce adaptation to digitalization and automation.
Conclusion
Works councils are a vital institution for promoting further training in firms that are not at the technological frontier, especially for low-skilled workers. In high-tech firms, training is already a strategic priority, making the additional effect of works councils less pronounced. As the pace of technological change increases, the presence of works councils may be particularly important for supporting inclusive skill development and safeguarding employability for those most at risk from automation and digital transformation.
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