Central and eastern European industrial relations in the crisis: national divergence and path-dependent change
Vera Glassner
Abstract
This article presents an overview of the effects of the recent economic crisis on industrial relations in the central eastern European (CEE) EU member states. The analysis is based on the theoretical framework of three types of CEE capitalism, i.e. the neoliberal, embedded neoliberal and neocorporatist type (Bohle and Greskovits 2012).The paper briefly introduces the individual articles of this issue. It argues that the impact of the crisis on processes and institutions of collective bargaining is shaped by economic and political factors and, above all, the institutional setting of industrial relations. Trade unions‘ responses are explained by the varying use of two strategic sources of power, i.e. participating in formal collective bargaining or strenthening the membership base. Despite considerable variation between countries with regard to these factors, recent develpments in collective bargaining tended to be path-dependend and resulted in a further shift of the regions industrial relations towards neoliberalism.
Introduction
The effects of current the global economic crisisthat has hit Europe in autumn 2008 and is currently bringing the Eurozone on the brink of collapse, on the EU member stats‘ industrial relations were uneven. Social partners‘ and goverments‘ responses to the downturn were varying widely. During the onset of the crisis, when industrial output contracted suddenly and steeply and unemployment was soaring, governments responded by implementing a mix of different measures in the fields of industry, employment, labour market and fiscal policy. Social partners played a crucial role in drafting and implementing measures to maintain and promote employment and to mitigate the negative social consequences of redundancies. Instruments such as short-time working, aiming at maintaining employment by flexibly reducing working time, and subsidising wages to maintain purchasing power and enhance skill levels of workers, were implemented via collective bargaining in a number of EU countries.
In those countries where collective bargaining is centralised at the inter-sectoral or sectoral level and effectively coordinated between levels, social partners were better able to respond to the crisis and to make use of a broader set of instruments and measures. Thus, the crisis has increased the use of collective bargaining as an instrument to tackle the economic downturn. By contrast, in countries where collective bargaining takes place exclusively or primarily at company level, social partner organisations did not play a prominent role in finding solutions to the crisis and individual and management-led, company-specific measures prevailed (Glassner et al. 2011; European Commission 2011; Glassner and Keune 2012;).This is particularly true for the central and eastern European countries were collective bargaining was, in some cases, further weakened during the recent downturn. While the bulk of research was focused on western European countries (hereafter EU-15), changing power constellations between social partners and state actors that underlie collective bargaining and social dialogue in central and eastern European countries (CEECs), hereafter EU-10, have been much less systematically considered. This volume aims at contributing tothe closing of this research gap by presenting developments in industrial relations in the EU-10 against the background of E(M)U accession and the current financial crisis gained from both single country case studies and comparative multi-country (or -sector) studies
This article aims to develop a common theoretical framework to contextualise the single contributions presented in this volume. By drawing on the typology of CEE capitalism by Bohle and Greskovits (2007, 2012), industrial relations regimesin the EU-10 are classified and assumptions about developments in collective bargaining and social dialogue in the current economic conditions are made. As an important caveat, it has to be noted that Bohle’s and Greskovits‘ typology of ‚neoliberal‘, ‚embedded neoliberal‘ and ‚neocorporatist‘ capitalismis conceived as a macro-framework of central eastern European political economies that has to be extendedto allow the classification of industrial relations regimes.
Social partner responses to address the labour market effects of the crisis were shaped by three main factors, that is the depth of the economic crisis, the institutional set-up of industrial relations, and government decisions.Based ona conceptual framework that allows to relate the three sets of factors to the particular type of industrial relations regime, andthe empirical findings gained in the single and multiple country (and/or -sector) studies, this paper aims to shed light on the following research questions:
- How did socio-economic change resulting from the current financial crisis impact upon industrial relations in the EU-10? Of what nature were changes in the procedural terms of bargaining, in particular, with regard to processes of decentralisation and disorganisation of collective bargaining?
- How did differences in the set-up of industrial relations between the EU-10 affect trade unions‘ responsesto recent socio-economic challenges?
The paper is structured as follows: The first section describesthe most important characteristics of industrial relations in the EU-10 by making use of a heuristic typology for labour relations in central and eastern Europe (Bohle and Greskovits 2007 and 2012). Section 2 uncoversnational diversityinindustrial relations in the CEECs. Differences in the access to institutional and membership resources are soughtto explain unions‘ strategic responses to the economic downturn (section 3). The impact of the current crisis on industrial relations is addressed in section 4 by considering country- and/or sector-specific characteristics in terms of the exposedness to the global economic crisis and industrial relations institutions. Furthermore, responses of social partners and policy actors to the crisis are presented in the same section by highlighting variation between the three types of CEEindustrial relations models. Finally, section 5 concludes.
Three types of central and eastern European industrial relations regimes
Industrial relations in Europe are characterised by growing diversity. The EU enlargements in 2004 and 2007 resulted in a further increase of heterogeneity in labour relations and welfare regimes.In the central-western European member states multi-employer bargaining, with the industry level being most important, is predominating. In most continental and northern European countries, collective bargainig is effectively coordinated between bargaining levels while southern Europe bargaining coordination is less effective (e.g. Traxler et al. 2001). Social partner organisations‘ involvement in public policy making is highly institutionalised and regularised. Compared to the ‚old‘ EU countries (with the exception of the UK, Malta and Ireland), industrial relations in the ‚new‘ member states (with the exception of Slovenia) are characterised by weaker organised employers and unions, more fragmented and decentralised bargaining, limited bargaining autonomy of emplyers‘ associations and trade unions, and a strong role of the state in wage policies (e.g. Marginson and Traxler 2005, European Commission 2011).
Although diversity in industrial relations within the CEE region is considerable and equals that between the EU-15 countries, attempts to differentiate between variants of the ‚transitional model‘ of central and eastern European industrial relations (Kohl and Platzer 2007) were made only rarely. Among the attempts to analytically grasp capitalist diversity in eastern Europe, the concept of three types of CEE capitalism (Bohle and Greskovits 2007) seems to be yielding. In contrast to standard ‚Varieties of Capitalism‘ approaches (e.g. Hall and Soskice 2001) the authors highlight, first, the crucial role of the state in creating welfare and industrial relations institutions and, secondly, the international integrationof the regions‘ institutions and their exposure to pressures from international markets, the EU and multinational companies. Bohle and Greskovits (2012) distinguish between three variants of the polical economy of the EU-10 countries (see Table 1). First, the neoliberal type of CEE capitalism (Bulgaria, Estonia, Latvia, Lithuania, Romania)is characterised by a minimalist fiscal policy regime and a residual welfare state, a non-accommodating monetary policy approach and a strong dependence on foreign direct investments (FDIs), and MNCs in low-tech and low-skilled manufacturing and services sectors; secondly,the embedded neoliberal model (the Czech Republic, Hungary, Poland, Slovakia), featuring a segmented welfare regime that provides for targeted welfare services, fiscal austerity and monetary stability (with the exception of Hungary) and a considerable dependence on FDIs and foreign MNCs, in particular in higher-skilled manufacturing sectors such as the automotive industry; and thirdly, the neocorporatist type of a coordinated market economy, represented by Slovenia, characterised by monetary stability and fiscal austerity (however to a lesser degree as in the other EU-10 countries, see Stanojevic and Klaric in this volume) and limited dependence on FDIs and MNCs. Since Bohle’s and Greskovits’ typology represents a macro-framework for variety of CEE capitalism, it has to be adapted to allow the classification of industrial relations in the EU-10. Three dimensions are key in this respect; first, principal bargaining level(s) and coordination between levels; secondly, the role of the government in wage bargaining; and thirdly, trade union strength. Although variation on the three dimensions is sometimes considerable within country-clusters, specific patterns in the configuration of industrial relations between clusters are discernible.
Within the neoliberal cluster of countries collective bargaining is fragmented and takes place predominantly at company level in the Baltic countries. This contrasts to the situation in Romania and Bulgaria where mixed sectoral and firm-level bargaining (with sectoral bargaining being particularly widespread in Romania) is predominating. Another difference concerns trade union strength; while unions in Bulgaria and, even more so, in Romania are able to make use of membership power (both in terms of union density and mobilisation for industrial action) union density rates in the Baltic states are lowest in the EU (see section 2).
Internal variation within the embedded neoliberal group of countries is considerable in terms of principal bargaining levels and coordination; while mixed sectoral and firm-level bargaining is prevailing in the Czech Republic and in Hungary, sectoral bargaining ismore widespread in Slovakia, with freedoms for company bargaining being limited. Constrastingly, bargaining takes place almost exclusively at the company level in Poland. However, in all countries of the embedded neoliberal type trade unions tend to be weak both in terms of union densities and mobilisation power (see section 2 and 3).
Differences within and between country clusters are less striking with regard to the degree of government intervention in wage bargaining (European Commission 2012). In both the neoliberal and the embedded neoliberal groups of countries state intervention is limited. For instance, the government settles price ceilings, tax measures, minimum wages and/or public sector wages that set the pattern for wages in other sectors, or the government provides a framework for the information and consultation of social partners in wage policies. This contrasts to the strong and direct role ofthe state in wage bargaining in Slovenia where the goverment and social partners organisations negotiate central agreements.
A general trend that is observable across all three clusters is the decentralisation of collective bargaining (e.g. European Commission 2010). Bargaining decentralisation was most striking in the neocorporatist industrial relations model of Slovenia, where collective bargaining is most centralised and a shift from economy-wide negotiations to sectoral, and increasingly, enterprise-level bargaining has occurred.
Table 1: Three types of capitalism in central and eastern Europe
Neoliberal model / Embedded neoliberalism / Neocorporatist modelCountries / EE, LT, LV, BG, RO / CZ, SK, HU, PL / SI
Economic and monetary regime / Liberal market economy
Non-accommodating monetary regime,
Fiscal austerity
Strong dependence on FDIs and MNCs in low-tech and (low-skilled) services sectors / Statist or liberal market economy
Non-accommodating monetary regime,
Fiscal austerity (exc. HU),
Considerable dependence on FDIs and MNCs / Coordinated market-economy
Non-accommodating monetary regime,
Fiscal austerity Limited dependence on FDIs and MNCs
Welfare regime / Residual / Segmented / Segmented
Bargaining level(s) and coordination / Fragmented bargaining, mostly at company level (EE, LT, LV)
Mixed sectoral and firm-level bargaining (sectoral bargaining widespread in RO), weak enforceability of sectoral agreements (BG, RO) / Mixed sectoral and firm-level bargaining, weak enforceability of sectoral agreements (CZ, HU)
Sectoral bargaining widespread, limited freedoms for company bargaining (SK)
Fragmented bargaining, mostly at company level (PL) / Mixed sectoral and economy-wide bargaining (non-enforceable central agreements)
Government intervention in wage bargaining / Limited, via price ceilings, indexation, tax measures, minimum wages and/or pattern setting through public sector wages (LT, BG, RO)
Limited, via provision of framework for information and consultation of social partners (EE, LV) / Limited, via price ceilings, indexation, tax measures, minimum wages and/or pattern setting through public sector wages (CZ, SK, HU, PL) / Strong, directvia tripartite bargaining
Trade union strength / Very low union density, low levels of strike activity (EE, LT, LV)
High to medium-levels of union density, high levels of strike activity (RO, BG) / Low union density, low levels of strike activity (CZ, SK, HU, PL) / High union density, high mobilisation power of unions
Sources: Bohle and Greskovits (2007, 2012), European Commission (2012).
Variation in industrial relations between the EU-10
This section aims at shedding some light on differences in collective bargaining systems within the CEE region, considering features such as trade union and employer density, the predominant bargaining level, the degree of bargaining coordination, legal provisions for the extension of collective agreements and their use, and bargaining coverage rates. In addition, strike activity is considered as an indicator for the mobilisation power of unions.
Net union density (measuring membership as proportion of wage earners in employment) in the western European countries, on the average, is higher than in the central and eastern European member states, with Slovenia being the exception (see Figure 1). Since 2000, trade union density has declined throughout the EU (with the exception of Belgium). However, the trend towards dwindling unionisation of employees was more pronounced in the CEECs where, on the average, union density shrunk from below 30 per cent to below 20 per cent between 2000 and 2008. The decline was largest in Lithuania and Slovakia. The causes for the steep deline in union organisation are manifold. In addition to the general trends of de-industrialisation,growing unemployment and extensive migration to western Europe, legal obstacles to the recognition of trade unions, lacking insititutional support of unions in key policy fields such as collective bargaining and the marginalisation of unions in political decision-making are accounting for the weaking of unions‘ organisational power.
Figure 1: Net union densities in the EU-27 countries, averages* EU-10 andEU-15
*average weighted by dependent employment and population
Source: Visser (2011), European Commission (2012).
Likewise, employers are more strongly organised in the EU-15 than in the EU-10(see Figure 2). On the average, almost two thirds of all employees in the western EU countries were working in companies affiliated to an employer organisation while the respective figure was below 40 per cent in the EU-10 in 2008. Organisational strength was most limited in Poland, Lithuania and Estonia in 2008, i.e. around 20 per cent, while Romania, Bulgaria and Slovenia feature density rates between 55 and 60 per cent. Employer density shrunk to the largest extent in Slovenia, where the obligatory membership in the Chamber of Commerce and Industry was abolished in 2006. Factors such as weakly established (bipartite) collective bargaining at the industry and national level and the politicised role of social partner organisations in public policy making have contributed to the withdrawal of employers from collective interest representation in the CEE region.
Figure 2: Employer densities EU-27 countries, averages* EU-10 and EU-15
*average weighted by dependent employment
Sources: European Commission (2004, 2006), Visser (2011), European Commission (2012).
As figure 3 indicates,the scope of collective bargaining, measured as collective bargaining coverage, is, on the average, lower in the new member states than in western Europe. While in the EU-15, on the average, in 2008, 70 per cent of workers are covered by at least one collective agreement, the respective proportion among employees in the EU-10 is around 40 per cent. Bargaining coverage is remakably high, i.e. 90 per cent in Slovenia and 70 per cent in Romania, where collective bargaining is carried out primarily at the industry level (see Table 1). Among the new member states, bagaining coverage shrunk to the largest extent in Slovakia, Bulgaria and Slovenia, i.e. by around 10 percentage points, between 2000 and 2008.
Figure 3: Collective bargaining coverate rates in the EU-27 countries, averages* EU-10 and EU-15
*average weighted by dependent employment
Source: Visser (2011), European Commission (2012).
Trade unions‘ organisational strength (see Figure 1) and mobilising power also varies widely between the EU-10. As Figure 4 indicates, strike activity, measured as days not worked (DNW)-rate, on the average, tends to be lowest in the EU-10 countries than compared with other regions in the EU in the period between 2000 and 2008 (Vandaele 2011). The ‘adjusted’ average (substituting the outliner year by the average over the entire periode) provides a more levelled measure. Despite the lack of data for a number of countries (i.e. Bulgaria, Slovenia and the Czech Republic), variation in trade unions‘ organisational strength can be related to the adapted typology of CEE industrial relations (see Table 1). Accordingly, among the EU-10, in Romania, featuring the highest union density and mobilisation power among the countries of both the neoliberal and the embedded neoliberal cluster, the strike rate was highest. Contrastingly, in Latvia, on the average, no day was lost due to strikes, and for Estonia and Slovakia the respective figures were 1 and 2. In the years of the economic crisis, i.e. 2009 to 2011, no clear pattern of strike activity was observable. On the average (in the countries for which data is available), it receded in Spain and dropped sharply in Denmark, remained stable in Belgium and the UK, and was soaring in Sweden, Ireland and Finland. Among the EU-10, in Hungary five days were lost, on the average in 2009 and 2010, due to industrial action, and in Poland the respective figure was one day. Despite the lack of (recent) data, it is estimated that strike activity was very limited in countries such as the Czech Republic and Slovakia in the 2000s (Myant 2011, Meardi 2012). No DNW were recorded in Estonia and Lithuania.