What is sector bargaining and how is it important to German labor relations? How is sector bargaining changing in response to the pressures of globalization?

Germany's labor relations system relies on two important mechanisms: codetermination and sector bargaining. Each major industry or sector has a dominant employer association and union and these two organizations engage in "sector bargaining" that results in a contract that covers the entire industry. Sector bargaining takes place at the regional level but is coordinated by the national union and thus pattern bargaining is common. Basic agreements on wages, pay structures, working time, and working conditions are negotiated and can be extended to other companies by the government. Contracts cover about 65% of workers and are legally enforceable. Strikes are illegal during the life of the contract. Globalization has increased pressure for decentralization of contracts and thus more companies are negotiating independently with unions, rather than through the employer association.