The complexities of stability – how and why Nordic employers stay put

A paper by Søren Kaj Andersen, FAOS, Jon Erik Dølvik, Fafo, and Christian Lyhne Ibsen, FAOS

This paper analyses how and why multi-employer bargaining and the overall collective bargaining coverage has remain intact in the Nordic countries while bargaining coverage has been declining in almost all other developed economies. It tries to solve this puzzle by investigating variations of and causes for stability in the Nordic models of multi-employer collective bargaining by studying employer behavior since 1990 in Sweden, Denmark, Norway and Finland. Conventional accounts have highlighted the significance of strong and encompassing unions for the emergence and persistence of the Nordic bargaining models. Conversely, other scholars have stressed how employers drove greater coordination in the search for greater internal control over labor and product markets. This paper complements and qualifies these accounts by tracing employer behavior since 1990 and highlights important conjunctures in which employers in the Nordic countries, mostly unsuccessfully, attempted to pursue strategies of liberalization akin to employers’ strategies in countries, e.g. Germany and Great Britain, where coordinated collective bargaining has eroded. While the relative stability of Nordic collective bargaining can generally be interpreted as a result of path dependency detailed process-tracing of reforms reveals a different picture. In line with work by Thelen we show that employer demands for liberalization have been partially fulfilled in some instances, while coordination has increased in others. Hereby, we show that the dynamics behind the apparent stability in recent decades are highly complex and rely on coalitions and power struggles between and within the associations of employers, unions and changing governments in the pursuit of restoring competitiveness in small-open economies while maintaining solidaristic elements.

One key coalition has been the cross-class coalition in manufacturing and we show how this coalition – often in cooperation with governments – has been a key driver for the Nordic developments, albeit in different ways. The analysis of coalitions and processes thus underlines the distinctiveness of each Nordic country and their institutional trajectories. In Sweden and Denmark, employers have largely been successful in restoring wage moderation through pattern-bargaining around the manufacturing agreements. Conversely, in Finland and Norway the peak level actors have been key to ensure moderation. All four countries differ in the extent to which they allow company level bargaining on wages and working time and the extent to which they include so called welfare provisions like pension, education and leave arrangements. By employing the most-similar comparative design we are thus able to draw out theoretical In the concluding section, we discuss whether the Nordic employers are likely to continue being committed to further developing the bargaining systems, if they would prefer to reduce the significance of the collective agreements, or if they simply want to abandon the bargaining systems altogether? The background for raising this question is the development observed in recent decades in Germany and other European countries, where the bargaining systems have eroded in large segments of the labour market. During the crisis, the European Central Bank and EU Commission have also argued for limiting the significance of the bargaining systems. This includes proposals such as increased decentralization, the right to opt out of central agreements and reduce the use of extension mechanisms linked to collective agreements. In the Nordic context, we will especially cast light on the development in the coverage of the collective agreements in those segments of the labour market in which coverage has been low and further declining. This pertains in particular to private services such as cleaning, hotels and restaurants and the retail sector.

The article is based on empirical studies carried out in 2013 and 2014 for SAMAK, a joint committee of the Nordic Social Democratic labor movement.

The full paper was presented at the SASE conference, Chicago, USA, July 10-12 2014.