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Photo: Roger Wollstadt, CC BY-SA 2.0, via Wikimedia Commons
Because the law says so. Since 1976, in any German company with more than 2,000 staff, the workers elect half the supervisory board. From 500 staff they elect a third. The Germans call it Mitbestimmung: deciding together. The best evidence says it costs the owners nothing, and when a crisis hits, it helps keep people in their jobs.
A large German company has two boards. The management board runs the business day to day. The supervisory board above it appoints and oversees the managers. That's where the workers sit.
| Company size | Workers elect | Law |
|---|---|---|
| Coal, mining and steel, over 1,000 staff | Half, with a neutral extra member | 1951 |
| Over 2,000 staff | Half the seats | 1976 |
| 500 to 1,999 staff | One third | 2004 (first set in 1952) |
(Wikipedia, 2026a; Wikipedia, 2026b)
Half isn't quite equal. Outside coal and steel, the shareholders pick the chair, and the chair has a casting vote to break a tie (Wikipedia, 2026a). The owners keep the last word. The workers get a full hearing before it's said.
The board is the top layer. The layer that touches daily life is the works council, the Betriebsrat. Any workplace with five or more permanent staff can elect one (Works Constitution Act, s 1). The council doesn't just get consulted. On some questions the boss can't act without it, including when the working day starts and ends, and any "temporary reduction or extension" of normal hours (Works Constitution Act, s 87).
That last right matters more than it sounds. It means a cut to everyone's hours is something the staff agree to, not something done to them.
When the global financial crisis hit, German factories lost orders overnight. Many firms didn't sack anyone. They used Kurzarbeit, short-time work: everyone works fewer hours, the company pays for the hours worked, and the Federal Employment Agency pays 60% of the pay for the hours lost. A 30% cut in hours costs a worker only about 10% of their income (Wikipedia, 2026c).
In 2009 more than 1.4 million German workers were on it, at a cost of 5.1 billion euros. An OECD report found it saved nearly 500,000 jobs during the recession. The IMF calls it "widely considered the gold standard" of such programs (Wikipedia, 2026c).
The idea is old. Germany first used it in 1910, for the potash industry. But it works best where the people on the shop floor and the people at the top already talk. A works council that must agree to shorter hours, and worker directors who sit with the managers, turn "who do we let go?" into "how do we all get through this?".
When orders came back, the trained staff were still there. Firms didn't need to hire and train from scratch. Shorter hours shared by everyone look a lot like the four-day week idea, covered in Do shorter working weeks work?
The old fear: give workers seats, and they'll vote themselves pay rises and scare off investment. Economists Simon Jäger, Benjamin Schoefer and Jörg Heining tested it. In 1994 Germany dropped the one-third rule for new companies, but kept it for companies formed before August that year. Two groups of near-identical firms, one with worker directors and one without.
They found no effect on wages or the share of income that went to workers. And no flight of capital. Shared governance, they wrote, "if anything, increases capital formation" (Jäger et al., 2021). Firms with workers on the board invested at least as much.
That cuts both ways, and it's worth saying plainly. One-third of the seats didn't make workers richer. What it changes is who's in the room: how decisions get made, not how much is paid.
The roots go back to November 1918. The war was lost and the country was in revolution. The industrialist Hugo Stinnes and the union leader Carl Legien, from opposite sides of everything, signed a deal. Employers recognised unions and their right to bargain, workers got the eight-hour day, firms of more than 50 staff got workers' councils, and returning soldiers got the right to their old jobs back (Wikipedia, 2026d).
After the Second World War the question came back harder. Heavy industry, coal and steel above all, had an economic interest in the war (Wikipedia, 2026e). Giving the workers half the seats in those firms, by law in 1951, put a check on that power. It passed after the metalworkers' unions threatened mass strikes (Wikipedia, 2026b).
The rebuilt West Germany called itself a "social market economy", a term coined in December 1946. Markets, yes, but with "secure social peace" as a condition of the economic miracle, not a nice extra (Wikipedia, 2026f).
Germans call unions and employers Sozialpartner: social partners. Not everyone likes the word. Critics call it a euphemism and prefer "antagonistic cooperation" or "conflict partnership" (Wikipedia, 2026g). That's the real insight. Nobody pretends bosses and staff want the same things. The system assumes they don't, and builds a table where they have to settle it anyway.
Australia has no such law. "Australia has not yet passed a general federal law, like a majority of wealthier OECD countries, to protect the right to vote for directors at work" (Wikipedia, 2026i). There are a few exceptions in public bodies, and nothing across private companies.
The other channels have thinned out too. Union membership was about 15% in 2024, down from close to 60% in 1962. Enterprise agreements covered 15% of workers in 2021 (Wikipedia, 2026i). Most Australian workers have no vote on the board and no council with a say over their hours.
Now picture going further than Germany. Worker directors in every company with more than 50 staff, not just the giants. The owners keep their capital and their casting vote. The people who do the work get seats at the table where the work is decided. On the German evidence, the owners lose nothing measurable. In the next downturn, the first question in the boardroom would be how to keep everyone, and someone in the room would be there to ask it.
Keynes predicted a 15-hour week by 2030. David Graeber blamed pointless jobs. What the studies found, and why the paperwork still matters.
Photo: author unknown, Public domain, via Wikimedia Commons
Since 1987 the workforce doubled while manager, program and HR jobs grew four times over and secretaries halved. The ABS numbers, and why it happens.
Photo: Missionedit, CC BY-SA 4.0, via Wikimedia Commons
Worker-owned firms last longer and match ordinary firms on productivity. Mondragon in Spain has 70,000 people. Australia has 1,800 co-ops of its own.
Photo: Zarateman, CC0, via Wikimedia Commons
