Industrial relations

Industrial democracy still in vogue

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The workings of industrial relations are constantly evolving. In this blog piece, Eurofound authors Christian Welz and Ricardo Rodriguez Contreras discuss a tool that Eurofound has developed to enable this process of change to be monitored and analysed, enabling stakeholders in Member States to assess the functioning of industrial relations within their country and to compare it with others.

Industrial democracy is in vogue because it has never ceased to be at the core of working life. As debates on the role of industrial relations systems grow in this volatile economic, political and social transition from crisis to recovery, industrial democracy is more relevant today than ever. Yes, the ‘old’ concept of industrial democracy still matters in 2018 since it is the governance process best suited to integrating the economic and social dimensions of the European Union.

By ‘industrial democracy’ we mean the rights of employers and employees to participate in the decision-making that defines the employment relationship. The concept acknowledges the autonomy of both sides of industry as collective organisations and their collective capacity to influence decision-making. It is the core dimension of the four dimensions of industrial relations identified by Eurofound in its 2016 report Mapping the key dimensions of industrial relations, which developed a framework for analysing the complex reality of industrial relations. Industrial democracy is central to this framework, supporting the other three dimensions: 

  1. Industrial competitiveness: The ability of an economy to achieve a consistently high rate of productivity growth and good performance among its small and medium-sized enterprises.
  2. Social justice: The fair and non-discriminatory distribution of opportunities and outcomes within a society, in order to strengthen the capabilities of each individual for self-determination and self-realisation.
  3. Quality of work and employment: Conditions of work and employment that provide career and employment security, health and well-being, the ability to reconcile working and non-working life, and the opportunity to develop skills over the life course.

Figure 1: Compass of ‘good’ industrial relations

 

A dashboard of indicators

Now Eurofound has developed a dashboard of 45 statistical indicators based on these four dimensions, providing a tool to analyse national industrial relations systems across the EU. These systems have been evolving over recent decades and showing divergent trends across countries. Throughout most of the 20th century, the role of industrial relations and its importance in the political, economic and societal context was not questioned. However, from the 1980s onwards, factors such as increased globalisation, technological progress, decline in trade union density and decentralisation of collective bargaining started to have a significant impact on industrial relations systems.

In recent years, changes in some Member States as a consequence of the economic and financial crisis have accelerated some of these long-term trends: further decentralisation of collective bargaining; destandardisation of employment relations; growing social, economic and territorial inequalities; and changes in the welfare systems of many countries. The new Eurofound report Mapping varieties of industrial relations: Eurofound’s analytical framework applied uses the 45 indicators to measure the current state of the play in the Member States as a consequence of the transformations that have taken place.

Dashboard of 45 indicators

Industrial democracy

  • Time resources for employee representatives
  • Trade union density
  • Employer organisation density
  • Collective wage agreements
  • Collective bargaining coverage
  • Employee representation at the workplace
  • Direct employee participation at the workplace (management evaluation)
  • Direct employee participation at the workplace (employee representative evaluation)
  • Participation of the employee representation body at the workplace
  • Direct employee influence in decision-making at the workplace
  • Influence of the employee representation in decision-making at the workplace

Industrial competitiveness

  • GDP growth per capita
  • Employment rate
  • Infrastructure ranking
  • Incidence of corruption
  • Percentage of individuals with a high level of education
  • Percentage of individuals with at least a medium level of computer skills
  • Percentage of individuals with at least a medium level of internet skills
  • Percentage of R&D personnel
  • R&D expenditure as a percentage of GDP
  • Percentage of enterprises newly born in t-2 having survived to t

Social justice

  • At risk of poverty or social exclusion rate
  • In-work poverty rate
  • Ratio of women to men employment rate
  • Gender pay gap
  • Older to non-older people employment ratio
  • Young to non-young people employment ratio
  • Employment rate of people with disabilities
  • Early leavers from education and training
  • Old-age dependency ratio
  • Long-term unemployment rate
  • Youth unemployment ratio
  • Gini coefficient

Quality of work and employment

  • Unemployment protection coverage
  • Low pay incidence
  • Involuntary temporary employment
  • Job security
  • Income development
  • Career prospects
  • Subjective workplace well-being
  • Depression or anxiety
  • Excessive working time
  • Unsocial working time
  • Ratio of women to men hours spent on unpaid work
  • Lifelong learning

Varieties of industrial relations

This exercise, as expected, shows substantial differences across countries. The results are relatively consistent with the typology of industrial relations regimes developed by Jelle Visser for the European Commission: ‘organised corporatism’ in Denmark, Finland and Sweden; ‘social partnership’ in Austria, Belgium, Germany, Luxembourg, the Netherlands and Slovenia; a ‘state-centred’ model in France, Greece, Italy, Portugal and Spain; a ‘liberal pluralism’ model in Cyprus, Ireland, Malta and the UK; and ‘transition economies’ in Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.

Yet, the results also highlight interesting variation within the typologies usually applied in the literature. For instance, the UK does not share the same features in terms of industrial democracy as the other countries in the liberal pluralist cluster. On most of the indicators of industrial democracy (such as trade union density, collective bargaining coverage and employee representation at the workplace), the UK’s performance is below EU averages. 

Figure 2: Comparison of UK and EU performance on key dimensions of industrial relations

 

In the state-centred cluster, Italy’s higher trade union density rate distinguishes it from France and Spain. And in the transition economy group, Croatia and Romania differ from their neighbours insofar as their trade union density rates and collective bargaining coverage rates are above the EU averages.

The results illustrate how the different national industrial systems are evolving, showing divergent trends across countries and, to some extent, within the different industrial relations clusters. This makes the dashboard a valuable tool that stakeholders can use for monitoring progress in this complex interweaving of economic and social relations. The study has also collected meaningful insights on how to move forward, in terms of further developing the conceptual approach and improving the set of indicators.

Looking to the future of industrial relations

Safeguarding and promoting fair, well-functioning and balanced industrial relations is a key component of ensuring inclusive sustainable growth and social progress. In an increasingly unstable world, fraught with uncertainty in many policy fields, industrial democracy is a key mechanism supporting the integration of the economic and social dimension of the EU, as laid out in the European Pillar of Social Rights. Being able to map, measure and analyse its workings provides evidence on how most effectively to contribute to a better collective and individual governance of work and employment. The extent to which industrial democracy operates at all levels within fair and competitive industrial relation systems may decide whether EU workers and employers are able to embrace the challenges they are confronted with. This is why industrial democracy still matters, or matters even more than ever! 

Image: ©Oleksandr Osipov/Shutterstock

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