Decline in employer organisations’ density rates

Based on 2008 figures, all member companies of employer organisations in Slovenia employ 80%–90% of private sector employees. This provides a rough estimate of the combined density of employer organisations. If this density rate declines further, it could in a few years fall below the required density threshold of over 50% that is necessary for the extension of collective agreements. This can have serious consequences for collective agreements.

According to the new Law on Chambers of Commerce and Industry (LCCI), in force since 24 June 2006 (SI0606019I, SI0807029I), membership of chambers of commerce and industry is voluntary for companies (SI0510307F, SI0508303F). Some other chambers that function as employer organisations still have compulsory membership.

Since the introduction of the voluntary membership, two forms of employer representation have emerged:

According to the International Labour Organization (ILO) conventions (international labour standards) concerning the freedom of association, both chambers of commerce and industry and pure employer organisations are equally entitled to represent employers’ interests as both have voluntary membership.

Aggregate density of employer organisations

The density of employer organisations is defined as ‘membership in terms of all employees employed by member firms as a share of the total of employees in the organisational domain of the organisations’.

The organisational domain of the employer organisations refers to the whole private sector. According to the Statistical Office of the Republic of Slovenia (Statistični urad Republike Slovenije) in May 2008, the private sector had a total of 605,379 employees – those in an employment relationship on the basis of an employment contract.

Estimate of aggregate density

It is estimated that the member companies of all employer organisations in Slovenia (SI0211102F) currently employ 80%–90% of all employees in the private sector. This is a rough estimate of the total density rate for 2008, including all employer organisations listed below:

  • Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije, GZS);
  • Slovenian Employers’ Association (Združenje delodajalcev Slovenije, ZDS);
  • Slovenian Chamber of Commerce (Trgovinska zbornica Slovenije, TZS) (SI0711019I);
  • Chamber of Craft and Small Businesses of Slovenia (Obrtno-podjetniška zbornica Slovenije, OZS);
  • Slovenian Employers’ Association of Crafts (Združenje delodajalcev obrtnih dejavnosti Slovenije, ZDODS).

The density rates of the individual employer organisations are presented in Table 1. The total density is higher than 100% because during the former period of compulsory membership all companies were GZS members (reflecting 100% density). Some of these companies were also ZDS members, so that GZS and ZDS memberships overlapped completely. In this regard, it can be assumed that their memberships continue to overlap to a great extent such that many companies are members of both organisations. The estimate of the aggregate density rate was calculated on the basis of this assumption by deducting the ZDS density rate from total density.

Because OZS has compulsory membership, OZS and ZDODS memberships overlap entirely.

Table 1: Estimated density of individual employer organisations, 2008
Organisation Density
GZS 47.58% – membership declining
ZDS 35% – estimate, membership overlapping with GZS membership
TZS 12.85% – membership increasing
OZS 18.1% – compulsory membership
ZDODS 2% – estimate, membership overlapping with OZS membership

Aggregate future density rate

The total density rate is expected to decrease in the near future to 63%–73% as, in line with the the provisions of the Law on Collective Agreements (LCA) (SI0604029I), OZS will cease to function as an employer organisation in 2009 due to its compulsory membership. According to Article 32 of the LCA, adopted on 12 April 2006, ‘collective agreements on the side of employers may also be concluded by associations of employers with mandatory membership in the transitional period of three years after this act enters into force’.

The total density rate will decrease even more if the number of GZS members, and thus its density rate, continues to decline very quickly while the number of private sector employees continues to grow.

Extension and coverage of collective agreements

Article 12 of the LCA states that ‘the minister recognises an extended validity of the whole or a part of the collective agreement if the collective agreement has been concluded between one or more representative trade unions and one or more associations of employers, the members of which employ more than half of all employees at employers for whom an extension of the collective agreement has been proposed’ (see also commentary section).

If the present downward trend of the density of employer organisations continues, their combined density rate and particularly the density rate in certain sectors of the economy could in two or three years become lower than the required threshold of more than 50% necessary for the extension of collective agreements. This can have serious consequences for the extension and coverage of collective agreements.

Density of individual employer organisations

GZS

According to data from GZS and the Association of European Chambers of Commerce and Industry (Eurochambres), as of 31 December 2004, GZS had 64,818 member companies, in May 2007 it had 45,000 members and in May 2008 it had 18,610 members. The above data show a sharp decline in the number of GZS members since the introduction of voluntary membership in 2006. On 5 August 2008, GZS members employed 288,019 workers, which represents 47.58% of all employees in the private sector.

ZDS

In May 2001, the ZDS member companies employed 45.06% of all private sector employees with natural persons excluded from the total number in the private sector, or 37.19% with natural persons included.

In 2008, ZDS did not want to disclose the most recent data on the number of member companies that it represents or the number of workers that those companies employ.

Table 2: Number of ZDS member companies, 1996–2002
December 1994 1995 1996 1997 1998 1999 2000 2001 2002
Members 1,600 1,570 1,480 1,232 1,398 1,269 1,303 1,107

Notes: 1994 figure is an estimate from ZDS, based on the number of written membership statements; 1996, 1997 and 1998 data are from ZDS, based on the number of invoices for membership dues; 1999 and 2000 data are from the ZDS register of members; 2001 figure is from the ZDS register of members as at May 2001; 2002 figure is from the ZDS register of members as at June 2002.

Source: Data taken from Pirš, S., ‘Interest organisation of employers in Slovenia and Europe’, Master’s degree dissertation, Faculty of Social Sciences, University of Ljubljana, 2002.

Table 2 shows a downward trend in the number of ZDS members. Looking at the optimistic scenario where all large and medium-sized enterprises remained ZDS members, it is estimated that in 2002 the member companies of ZDS employed about 40% of all private sector employees. According to the most optimistic scenario where no decrease in the number of ZDS members is recorded and employment rises in the private sector, it can be roughly estimated that in 2008 ZDS members will employ about 35% of all employees in the private sector.

TZS

On 17 November 2006, a new employer organisation, TZS, was founded to organise companies in the retail trade sector.

According to TZS, on 25 October 2007, the organisation had over 2,800 member companies. By 27 June 2008, this number increased to 6,229 members and to 6,510 members by 25 July 2008. On 1 August 2008, TZS members employed 77,805 workers, which represents about 12.85% of all private sector employees.

OZS

OZS has compulsory membership and its members are independent craftworkers and small enterprises. At the end of 2007, OZS members employed about 109,600 workers. According to OZS, by 1 August 2008, this number declined to 105,400 workers, which represents 18.1% of all private sector employees.

ZDODS

Membership of ZDODS is voluntary and its members are independent craftworkers and small enterprises. No data are available on how many workers its member companies employ. According to ZDODS, it currently has 2,700 member companies, which employ an estimated 2% of all employees in the private sector.

Commentary

Until now, only the Collective Agreement for the Retail Sector (CARS) (SI0604019I) was extended on 23 January 2008 and covers all employers in this sector. The employer organisations and the trade unions expect that more sectoral collective agreements will be extended in the future.

Štefan Skledar, Institute of Macroeconomic Analysis and Development

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