Co-determination at Nordic level in finance examined

The development of transnational financial corporations is a relatively recent phenomenon within the Nordic countries. A report published in April 2000 by the Norwegian research institute, Fafo, investigates the effects of "transnationalisation" in the finance sector on employees' rights to co-determination, and how employee organisations and representatives have dealt with these developments.

The development of transnational financial corporations is a relatively recent phenomenon within the Nordic countries. After a period of financial crisis in the early 1990s, which hampered expansive financial activity, there was a considerable growth in takeovers, mergers and strategic alliances between Nordic companies in the latter part of the 1990s. A report by the Norwegian research institute, Fafo, published in April 2000, investigates the effects of such "transnationalisation" of company structures on employees' rights to co-determination, and how employee organisations and representatives in the financial sector have dealt with these developments ("Medbestemmelse og faglig innflytelse i overnasjonale nordiske konsern", Martin Byrkjeland, Report 329, Forskningsstiftelsen Fafo).

Industrial relations in the Nordic finance sectors

The Fafo report is the result of a survey project commissioned by the Confederation of the Nordic Bank, Finance and Insurance Unions (Nordiske Finansansattes Union, NFU), and is based on four case studies in the financial sectors of the Nordic countries. The four cases considered are: MeritaNordbanken, a Swedish/Finnish merger between equal partners; the purchase of smaller banking networks in Norway and Sweden by the Danish bank, Den Danske Bank; a strategic alliance between savings banks in Sweden, Norway and Finland; and the Swedish insurance corporation Skandia, which has subsidiaries in Norway and Denmark. These cases represent four different corporate strategies and degrees of co-determination, and include both banking and insurance.

Among the themes considered in the report is the impact of national trade union systems and practices, and national legal frameworks, on the possibilities for transnational trade union activity.

Banking and insurance employees in Sweden and Finland are organised in separate unions, and in Denmark there are three separate finance unions, two of which organise employees in the insurance sector. In Norway there is now one single union for the whole financial sector (NO9902117N), and in Iceland bank employees have their own union, while insurance employees are organised by the union for employees in commerce and offices. The various national systems differ in their approaches and trade union practices, from the "cooperative" and "process-oriented" approach seen in the Swedish and Norwegian unions, to a more "confrontational" or "bargaining-oriented" approach favoured by the Finnish and Danish unions.

With regard to the impact of national regulatory systems, employees' rights to co-determination, and procedures for this co-determination, are specified in basic agreements in all Nordic countries, and in Finland and Sweden agreements are also supported by legal provisions. However, according to the report, variations in national regulatory frameworks have only minor practical consequences for variations in employee participation in the Nordic countries. The right to co-determination does not give employees decisive influence on corporate decisions in any of the Nordic countries, but provides for the right to be informed of management's planned actions and to state opinions. As such, the practical solutions concerning co-determination, and the degree of trade union involvement, are thus more dependent on corporate strategies and market positions than national regulations.

Nordic systems for co-determination

The report identifies several important factors that may be seen to determine the existence of "transnational space for union activity" in the Nordic financial sectors, although its main emphasis is on corporate structures. Three company-specific factors are seen as particularly important for an understanding of variations in systems of co-determination:

• the degree to which corporate activities have been integrated at the Nordic level (decision-making authority);

• the corporation's (or management's) strategy for involving employees in decision-making; and

• the balance of power between the merged companies.

The report finds that MeritaNordbanken scores highly on all these counts, with a high level of transnational integration of corporate activities, substantial involvement of employee representatives in decision-making processes at different levels, and a relative equality of strength between the two merged banks. There is one employee representative from each country on the board, as well as a "Nordic Works Council" providing regular meetings between management and employee representatives. These factors, according to the report, have produced a joint "Swedish-Finnish agenda for union action". This may be contrasted with Skandia, in which the "unequal size and position of the parent company vis-à-vis subsidiaries have resulted in national cleavages, both between the company unions in the three countries, and between employees in Norway and Denmark and top management in Sweden". This has led to "half-hearted" and failed attempts to create a Nordic Works Council. Skandia has now moved away from the idea of a Nordic system for co-determination, however, and established a European Works Council (EWC), in accordance with EU requirements. However, Skandia is still in a process of transformation, focusing more on its business activities outside the EU, and as such it remains to see how effective this EWC will be. On a more general note, the report finds that in three of the four cases considered, including Skandia, decision-making authority is still vested in the national companies, and this makes the coordination of trade union activity at the Nordic level more difficult.

It is worth noting that the report finds that, in order fully to understand variations in systems for co-determination at the Nordic level, national differences in trade union procedures and general union activity are less significant than variations in corporate structures. Skandia is the only case in which differences in trade union practices are in fact regarded as obstacles to coordination and cooperation between the national employee representatives. However, the report perceives this to be an effect of the company-specific factors mentioned above, rather than variations in national trade union activity as such.

Commentary

The report concludes that the Nordic level of co-determination in the financial sector is poorly developed, and that the degree to which employees may exert influence depends very much upon company-related factors. Given the relatively small selection of financial institutions considered in the report, it is difficult to determine the general applicability of its findings. The report is significant, however, because a large proportion of the literature on Nordic-level arrangements for co-determination have tended to focus on sectors other than the financial sector, such as the manufacturing industries. This may be explained by the fact that the trade unions within manufacturing are the most active when it comes to coordination of trade union activity, which is beyond doubt the case for Norway.

On a more general note, however, one may argue that since the regulatory framework remains located at the national level, the focus of trade union activity will also be on this level. Yet, given regulatory developments at the transnational level - including the 1994 EU Directive on EWCs - providing at least a minimum of regulation, trade unions may in the future be encouraged to direct their efforts towards the establishment of transnational systems for co-determination. In other sectors, such as the metalworking industry, there are steps being taken in the direction of closer coordination of trade union activity across national boundaries, at the European level (TN9907201S) as well as the Nordic level (NO9909152N). Furthermore, the present scope and pace of transnational company mergers at various levels, and the continuing pooling of corporate decision-making power at the transnational level, provide further incentives for transnational coordination of trade union activity in the future. (Håvard Lismoen, FAFO Institute for Applied Social Science)