There are few regions in Germany where both, the energy transition and democratic structures, are being negotiated as intensely as in Lusatia. On the one hand, three lignite-fired power plants are to be shut down and four open-cast mines are to end coal extraction by the end of 2038. On the other hand, support for the far-right AfD exceeded 40 percent in recent elections in this very region.

Democracy must be the foundation for balancing the relationship between the economy, ecology, and social cohesion. From our perspective, Lusatia should not be treated as a mere “real-world laboratory”. Structural change, the energy transition, and co-determination are not experimental setups — they are fundamental prerequisites for social coexistence in Lusatia.

We are convinced that democracy is most resilient where workers can actively participate in shaping their future. They know their region and their workplaces — and they understand that socio-ecological development is necessary. With this contribution from the Lusatian coal region, we aim to show which democratic processes, from the perspective of workers, are crucial for a successful structural transition.

Coal phase-out and structural change

After the international community reached a global climate agreement in Paris in December 2015, the German federal government decided that Germany should become climate-neutral by 2050. A ruling by the Federal Constitutional Court in 2021 pushed this target forward to 2045.

The federal government at the time — a coalition of Christian Democratic Union (CDU) (active nationwide) and the Christian Social Union (CSU) (Bavaria only) and Social Democratic Party (SPD) — established the Commission on Growth, Structural Change and Employment (KWSB), which presented a concrete plan in January 2019 for a gradual reduction and complete phase-out of coal-fired power generation by no later than 2038. The commission also proposed accompanying economic, social, and structural policy measures that were to be implemented as prerequisites for the coal exit.

The Bundestag (the German Federal Parliament) largely followed these recommendations and, in August 2020, adopted the Coal Power Phase-Out Act (KVBG) and the Structural Development Act, also called Strukturstärkungsgesetz (StStG) for coal-mining regions. These laws define the legal framework for Germany’s coal exit. At the heart of the StStG lies the Investment Act for Coal Regions (InvKG), through which the federal government provides €41.09 billion to cushion the economic and social consequences of the coal phase-out in lignite regions and at hard-coal power plant sites. Nearly half of these funds flow to Lusatia and its two federal states Saxony and Brandenburg (43 percent, or €17.2 billion).

The goal of the coal phase-out is not merely to secure the continued electricity supply. It also concerns the local economic structures given the thousands of energy-sector workers and the local value creation generated by their above-average wages. The historic opportunity now lies in proactively shaping structural change in Lusatia with these €17.2 billion — rather than allowing a structural breakdown similar to that experienced after German reunification.

Participation and co-determination in structural change

Too often, people feel insufficiently involved and see too few opportunities for themselves in the process of structural change. This breeds resistance. Yet, managing structural transformation requires social acceptance and legitimacy — not only consent to outcomes, but trust in transparent and fair decision-making processes.

Information and knowledge are the foundation of participation. People in the region must be empowered to contribute their own ideas for change, irrespective of and beyond “typical” participatory modes like  parties and elections. For example, through municipal participation formats, citizen dialogues, or regional committees where ideas from the population can be translated into concrete projects. Such contributions must be taken seriously and implemented in binding decisions.

By co-determination (Mitbestimmung under German labour law), we mean employees' participation in companies, primarily through works councils. Unlike political participation, co-determination targets economic and social decisions within firms — such as working conditions, investments, or staffing — and thus represents an institutionalised form of democracy in working life. In the large remaining mining and power-generation companies (with more than 1,000 employees), a key element of economic democracy and strong addition to firm-level co-determination is the co-determination on board-level in coal and iron/steel companies (Montanmitbestimmung), including parity representation of workers on supervisory boards.

The combination of political participation and workplace co-determination, therefore, provides a central foundation for democratic resilience.

As the Coal Commission itself emphasised in its final report, structural development can only succeed together with the people, because their regions are part of their identity. Participatory bodies were intended to ensure that “social partners, economic actors, and civil society organisations are institutionally involved in approving funded projects and allocating resources.”

The commission itself served as a model for resolving societal conflicts. Established by the federal government and composed of trade unions, employers’ associations, environmental groups, federal states, municipalities, and a citizen representative, it achieved a broadly supported consensus. Crucially, it addressed not only energy policy but also concrete measures for infrastructure, public services, and research. The final report thus remains relevant beyond its federal-political implications, constituting an approach to regional policy that sees itself not merely as a funding mechanism but also as a participatory governance tool.

This becomes particularly clear in Lusatia, where funding was used not only for replacing old industries but also for supporting public services and research — e.g., through the establishment of the Medical University of Lusatia – strengthening healthcare provision and future medical capacity in the region.

This approach to regional and structural policy also enables major federal projects, such as expanding the rail infrastructure. Funding benefits municipalities, districts, federal states, and public-service providers such as hospitals and municipal utilities.

Between December 2018 and October 2020, Lusatia set up a broad participatory process with various formats, the “Zukunftswerkstatt Lausitz” (Future Workshop Lusatia), across both federal states Brandenburg and Saxony. This resulted in the “Lusatia 2050 Development Strategy,”. Unfortunately, the strategy was later only inadequately used as a basis for future decisions. Many actors who were involved, including trade union representatives, felt disregarded. Subsequently, both federal states developed their own guiding principles and action programs, which now form the binding framework for structural funding. 

Works councils as multipliers in difficult terrain

In the current funding process, the influence of trade unions, works councils, and employees in decision-making bodies remains limited. These committees accompany the allocation of structural funds and are intended to ensure broad societal representation — from municipalities and associations to churches and trade unions.

In Saxony’s Regional Advisory Committee, the DGB (German Trade Union Confederation) representative has a voice but no vote, and the committee intervenes only at the end of a lengthy process. In Brandenburg, by contrast, five thematic workshops are positioned at the beginning of the process, each including a trade union representative with voting rights — allowing for greater influence on project design.

Moving from funding governance toward real trust and influence for workers remains a long journey. Several key challenges persist:

First, most companies with more than 200 employees in Lusatia belong to external corporate structures. This limits the influence of local works councils. At the same time, median income in the region is comparatively low, making the loss of well-paid energy-sector jobs particularly damaging for local value creation.

Second, skepticism toward the structural transition is reinforced by delayed infrastructure projects, insufficient funding reaching municipalities adjacent to mines and power plants, and inconsistent political messaging — such as the 2021 coalition agreement’s suggestion of “ideally” advancing the coal exit to 2030. This fuels frustration and insecurity.

Third, openness to political “alternatives” like the AfD grows where people feel left behind due to poor infrastructure, broken political promises, and entrenched conservative attitudes. This also affects economic development: retaining young people, openness to migration, and diverse lifestyles are necessary for future growth — yet Lusatia faces pronounced demographic aging. In Saxon Lusatia, for example, 27 percent of workers are over 55.

In this difficult terrain, trade unions, works councils, and employees act as crucial multipliers. They enjoy high trust among colleagues, understand industries and value chains, and can translate political decisions back into workplace realities. Many are also civically engaged and deeply embedded in local communities. Decades of experience in industrial and regional policy give them unique credibility.

Works councils were central in communicating the coal exit in power plants and mines. This expertise must be integrated into energy and industrial policy. Research also highlights their dual mediating role in ecological transformation: they represent workers’ interests while simultaneously shaping the shift toward climate-friendly industry — generating tensions they must manage daily (Butting/Dörre/Fülöp 2025, p. 84 ff.).

Works councils — especially at the energy company LEAG — actively engage with political decision-makers from state to EU level, bringing workers’ perspectives directly into policy debates. Their involvement substantially increases both the quality and legitimacy of decisions. Trade unions and the DGB strongly advocate for this, but greater openness from political institutions is needed (REVIERWENDE 2025, p. 26).

Processes like the Lusatia 2050 Development Strategy have shown that broad participation is possible — even if results were insufficiently implemented. This experience should inform future efforts to strengthen participation and co-determination from the outset, sustainably and effectively.

Lusatia has a unique opportunity to use structural funding to pursue a socio-ecological transformation with those affected. Over the past five years, this opportunity has only been partially realized. Course correction is needed if Lusatia is to become a genuine European model region for structural change.

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Editorial Note:

This article is produced as part of a collaboration between Rethinking Economics International, Makronom and the Economists for Future DE and was originally written in German language. The 2026 contributions engage with ongoing debates on anti-authoritarian and anti-fascist perspectives on economic policy, with particular attention to how social security arrangements can help counter authoritarian and nationalist tendencies. Contributions in this series also explore welfare state design, property relations, pension systems, and institutional reforms with a view to strengthening democratic cohesion, ecological stability, and economic resilience. The views expressed in this article are the author’s own and do not necessarily reflect those of the participating platforms.

About the authors:

Marko Schmidt is a legal and social scientist who has worked in asylum and migration policy, civic participation, and regional development. Since 2022, he has worked for the DGB project REVIERWENDE in the Lusatian coal region, currently heading the offices in Cottbus and Görlitz.

Wolfgang Günther is a political scientist who researches at the intersection of collective bargaining, changing labor relations, and political economy. He works for the DGB project REVIERWENDE in the Central German lignite region.

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