Extension of collective agreements – a supporting leg for the Danish labor market model?

Abstract

In the last 15 years, the Danish labor market has experienced a decline in union membership density from 73 percent to 67 percent. The fall is concentrated in the private sector, especially in the private service sector, but also manufacturing and construction have suffered membership loses. After 2004, a growing number of immigrants have entered the Danish labor market, coming primarily from Poland and the Baltics. The immigrants working conditions were in general much poorer than the Danish workers, and especially in the construction and the transport sector, the immigrants replaced the Danish workers, and their unemployment rates increased rapidly. As a consequence, the Danish union began to talk about ‘social dumping’, and the Danish labor marked model suffered now from two diseases: falling union membership density and rising unemployment because of social dumping. What could be done about it? The unions were looking for a new strategy, coping with both problems at the same time. Could extension of the collective agreements to the uncovered part of the labor market be the appropriate remedy and then be the ‘supporting leg’ for the Danish labor market model? This article explores the connection between the coverage of collective agreements and union membership density. A survey from 2010 provides insight into the connection between these two variables, and concludes that the probability of not being a union member is four times greater than if the employee is not covered by a collective agreement compared to where the employee is covered by a collective agreement. This statistically-significant result applies to the private sector in the Danish economy which is where union density is falling most rapidly. The article poses the question: could an extension of the collective agreement in the private sector be a strategy against the fall in union membership density? The rest of the article investigates how the extension models are working in the EU countries when it comes to the coverage of the models, the contents and the process of implementing the extensions. The Norwegian example is analyzed more in detail, because both the unions and employer’s organizations are in favor of the extension model in some sectors and branches. Finally, the article considers how the Danish federation of unions (LO) views the extension model as a useful means to fight both ‘social dumping’ and falling union membership density. LO is not in favor of the extension strategy, primarily because it is afraid of political intervention in the process of fixing wages and working conditions. LO considers itself strong enough to deal with both the problem of social dumping and union membership density, but if the fall in the density continues at the same rate as in the past ten years, it is a perhaps a question of time before LO is forced to change strategy.