WP 59 - Globalization and working time: Work-place hours and flexibility in Germany

This paper examines how economic globalization affects work-place arrangements regulating working time in industrialized countries. Exposure to foreign direct investment and trade can have off-setting effects for work-place bargaining over standard hours and work-time flexibilization, and can be expected to more strongly spur the latter than the former given stronger employer support for and weaker employee opposition to flexible time management in open economies. The paper also considers, however, how works council or other work-place representation likely mediate which of globalization’s effects dominates the shaping of work-time. Based on enterprise-level panel data from the German Federal Labor Office, the analysis supports two major findings consistent with such expectations. First, globalization measured at the establishment or branch level – including total foreign direct investment (FDI), trade, and export orientation (share of foreign sales) – tends to have either no or weakly negative effects on total standard working hours, but to yield higher incidence of overtime, temporary and fixed-contract work. Second, works councils mediate these effects in ways that differ between standard hours and flexibilization. With respect to standard weekly hours, globalization measures tend to trigger more standard hours among firms without works councils, but fewer hours among firms with works councils. With respect to flexibilization, however, globalization tends to modestly spur incidence of temporary- or fixed-term contracts and overtime, and to do so more strongly where works councils are present than when they are not. These results suggest how economic openness can have important, uneven consequences for working time, and that firm-level institutional context can channel those consequences, highlighting an area of agency in responses to globalization.