Trade unions in modern political economy and European future

Contacts and dialogues between the European Trade Union Confederation as a social partner and the European Commission as the EU”s executive institution have formed an essential part of the Union’s social market economy. The EU’s and the member states’ trade unions represent an important part of the EU’s successful integration process: it is through labour unions’ engagement the workers can get a strong voice in modern dramatically changing national and the EU’s decision-making.

The article is aimed at increasing presently decreasing role of the labour unions (through 3 scenarios) in European socio-economic integration and European future.

Due to post-pandemic economy’s factors and changes in the European “social market economy’s” model, the labour and trade unions in Europe have underwent dramatic changes. On one side, the unions’ importance in the member states’ growth is evident as the main driving factor in citizens-governments’ coordination process; on another side, the lack of public support (including financial stimuli) drastically reduces the unions’ attractiveness to workers.

Thus, presently, the trade union members in the European states are predominantly concentrated in the public sector, including education, health and other public-civil services, a feature which depicts a rising share of women in labour unions, especially in the Nordic countries. In fact, presently women outnumber men among trade union members in 14 of 31 European continent’s countries. 

The public sector is the union’s stronghold specifically in the central and eastern European countries (CEE), as well as in some western European states like France and the UK. The public sector is followed by the manufacturing sector, with blue-collar workers still playing a substantial, yet declining, role; however, even the private services sector is characterized by low unionisation rates.

The long-term shifts in employment have led to the fact that the middle- and upper-class employees have been actively represented in the European trade unions; workers with open-ended and/or permanent contracts are more likely to be unionised than workers in non-standard forms of employment like part-time work.

Considerable divergence in the EU’s unionisation levels reflects variations in labour market institutions and common conceptions about the union’s membership: both factors have shown a generally continuing trend in the European de-unionisation in the CEE and other EU states. This trend shows that unions are having difficulties in retaining their members and failing in their efforts to ensure that membership keeps pace with increasing changes in labour organizations’ role in socio-economic policies.

 

Note: Main incentive for workers joining unions was underlined in the so-called “Ghent system” (named after the Belgian city where this system was introduced), in which workers joined the unions due to the provision and access to unemployment insurance. This system institutionally embeds trade unions in the labour market and the welfare state regime in a voluntary unemployment insurance system, whereby state-subsidised union-affiliated funds administer unemployment benefits. Unemployment insurance funds, whose membership is voluntary, are still in place in the Nordic countries, i.e. in Denmark, Finland, Iceland and Sweden, while a weaker variant exists in Belgium (in the latter, unions pay out unemployment benefits within a compulsory unemployment insurance system).

 

 Labour unions in modern Europe

Union’s membership in almost all European countries decreased from 40.2 million in 2000 to about 36 million presently, with very small membership in the Baltic States: the disparities are great: with about 5-6 mln members in Italy and Germany, on one sides, and about 25 thousand in Estonia (the lowest in the EU) and 70-80 thousand in Latvia and Lithuania.

A fall in union’s membership occurred in 24 of the 32 European countries, with the decline averaging about 14 percent: the decline is modest in only three countries: Sweden -2 percent, Denmark -3 percent and Switzerland -3 percent; the membership loss in Denmark and Sweden is mainly the result of deliberate policies to weaken the Ghent system.

Overall declining in membership and density rates, in particularly in CEE is due to several factors, e.g. to the “graying” membership and decreasing unions’ revenues, both are difficult remedy substantially. With the loss in membership together with the decrease in unions’ revenues, the unions have to take urgent measures to address the memberships and generational challenges; much will depend on trade unions goals, identities, facilities to deal with modern challenges and the membership dues.  

More in: https://www.etui.org/publications/books/bleak-prospects-mapping-trade-union-membership-in-europe-since-2000

 

While the so-called “unionisation gap” between younger and older workers is not new, fewer young people have joined a union over the past years in European countries. The average age of union members is increasing and is higher than the average age of wage- and salary-earners in general. Simultaneously, while young people generally hold positive views about trade unions, they lack knowledge about their role in society. Hence, the unions’ survival goes hand in hand with the trade unions’ capabilities to attract membership, to satisfy members’ needs and aspirations, as well as bolstering union’s security, own recruitment and organisational unity.  

 

Big losses…

Probably, the biggest worries in de-unionisation and lost in union’s membership close to ten per cent is presently in Germany, with continuing erosion of Germany’s dual system of industrial relations, its ongoing shrinkage of the coverage of collective bargaining and works councils, to name a few. Nevertheless, Germany’s largest union, IG Metall, through combining considerable resources and organising strategies has been able to increase its membership.  

Compared to the first decade of the twenty-first century, trade unions have experienced, on average, a substantial decrease in membership between ten to twenty per cent in the period 2010-2017 in six countries: Poland -13.3%, Cyprus -13.4%, the Netherlands -14.8%, Ireland -15.8%, Portugal -16.5% and Greece -17.4%.

A severe decrease in membership exceeding twenty per cent but below thirty percent has been registered in Croatia -22.0%, Turkey -24.9%, Lithuania -25.4% and Bulgaria -26.4%.

Finally, a massive decrease in union membership has taken place in seven CEE-countries: Czechia -32.1%, Latvia -32.8%, Slovenia -35.2%, Romania -37.0%, Hungary -39.6%, Estonia -43.0% and Slovakia -43.7%. While such decreases were almost inevitable in the CEE countries in the post-millennium decade, given the abandonment of ‘compulsory’ membership in the 1990s – a ‘relict’ of the communist past – this trend has not been reversed but continues today.

However, membership growth is, on average, higher than five per cent in Luxembourg +5.4%, Belgium +6.7% and Malta +7.9%, whereas it is close to ten per cent in Norway +9.6% or even a bit more in Italy +10.7% and Iceland +10.9%.

References to: Kurt Vandaele’s research, in: https://www.etui.org/sites/default/files/19%20Bleak%20prospects%20Kurt%20Vandaele%20Web%20version.pdf 

 

Minimum wage issue

The EU institutions are working with unions and employers to improve, for example, the reconciliation of working and family issues, promoting women’s participation in decision-making, as well as introducing minimum wages in some economic sectors. In order for these issues to be resolved, long and difficult negotiations shall be taken…

The idea of supporting a national minimum wage started in Germany some years ago and started to attractive: already in 2020, the European Commission proposed a directive for adequate minimum wages in the EU states with full respect of national traditions and position of social partners.

The issue is important in two aspects: first, any full time employment shall be remunerated with enough money to make a decent living; second, collective bargaining is crucial because the sides involved need to tailor the minimum wage in line with the local and sectoral economy’s conditions. Hence, the active social dialogue is an important part of the Union’s social market economy both in good and difficult times.

Among over a hundred states worldwide, Switzerland occupies the leading position with its average monthly wage of about $ 6 thousand; second and third are Luxemburg and the US with an average wage of $ 4.014 and $ 3.534, respectively.

In the Baltic States, the leading position is in Estonian workers with an average wage of $ 1.145 (the 35 rank among 106 states globally), followed by Lithuania with $ 837 and Latvia with $783. Neighboring Poland is at the 48th place with an average wage of $723 per month.   

The EU’s eastern neighbors are even further below: Russia occupies the 68th place with $ 402 and Belarus on the 75th place with $ 364.

 

Social dialogue

The pandemic has put the EU’s social fabric to the test: millions of Europeans are worried about the future of their families and their businesses. They see that their jobs and their workplaces are changing rapidly: people in their twenties or thirties have already changed more jobs than their parents in their entire life. Thus, the post-pandemic year of 2021 must be a year of social dialogue; presently, national governments are working on national recovery and resilience plans and in this regard trade unions and social partners should be closely involved and be part of social dimension in recovery.

An important moment of dialogue will come in May 2021 at the Social Summit organised by the Portuguese rotating Council Presidency: it will be the occasion for trade unions, employers, citizens and institutions to decide the perspective type of modern EU’s economy. At the center of discussion is the European Pillar of Social Rights” a set of 20 rights and principles, including the equality of treatment and opportunities for all people, the right to a fair wage, the right to life-long learning, the right to quality health care.

The EU’s action plan to implement the European Pillar of Social Rights includes several principles and practical measures including for example the right to life-long learning for all Europeans. A way to do so could be through “individual learning accounts”: every worker would accumulate during a year a certain number of credits to invest in getting new skills; these accounts already exist in some countries and shall be turned into Europe-wide practice.

 

New forms of work must not become synonyms of a precarious existence, health and safety challenges and inadequate access to social protection: new forms of work must come with equal rights, including low-income professions like deliveries, cleaning, nurses in the hospitals and care homes. All of a sudden, these peoples are called “essential workers”, as they are becoming essential in the post-pandemic economies; and their rights matter!

 

Unions’ challenges 

The unions’ survival depends on how quick they will adapt to modern global and European challenges. Thus, for example, workers of all ages have to learn new technologies or new ways of doing old things; but they have to be aware that their hard work will be rewarded. They want to know that if they study, and innovate, and come up with good ideas, they will get a fair chance to succeed. Besides, they want to know that if they fail, they will get another chance: this is what Europe’s social market economy has always been about with fair opportunities and social protection in times of need.

The EU member states’ economies are changing fast; the unions have to deliver on workers’ expectations in new realities and reflect the speed and scale of expected transformations. To handle these challenges, the unions need a new social rulebook which would focuses on the quality of “future jobs” with new opportunities. New “social rulebook” shall allow hard-working people to improve their standards of living, provide for an adequate social protection to those in need and ensure solidarity between generations. It has to put skills, innovation and social protection on an equal footing: thus, basically, it is about reconciling the social and the market issues in a rapidly changing economy.

For example, the EU states have felt the impact of climate change for years with hot summers and mild winters coped with constant torrential rains, which they never seen before. But during the pandemic some other things changed social attitude to nature: people have been re-discovering the importance of some common goods in their daily life, such as public health and the “natural factors” in environment with clean and green cities.  

The “green transition” has become a must in national growth patterns providing a solid foundation of a healthy economy: investments in clean energy e.g. create twice as many jobs as investment in the old fossil fuels, which is good for the environment, good for the economy and good for people’s health. Trade unions are leading the work to make this green transition a just transition: e.g. unions in Spain reached an engagement between coal-mine workers and companies, so that when coal mines close workers are being trained on new jobs.

But green innovation must be rewarded, incentivized and that all workers can benefit from the green transition: those in innovative green companies and workers in other economy sectors.

 

The Union’s incentives

The Commission in its new political priorities has made three main priorities: a) to turn the member states economies towards global challenges, mainly put the UN Sustainable Development Goals, SDGs at the centre of the European Semester; b) providing adequate social protection to EU citizens during the pandemic, and c) working for a green, digital and fair recovery through the new NextGenerationEU financial facility.

As to the European Semester and the Sustainable Development Goals, the EU states have been coordinating their economic policies through the European Semester for about a decade. The Semester was created as a tool to coordinate public spending and reforms in the states; in 2020, the EU, for the first time, put SDGs at the centre of the European Semester. Presently, the Semester is structured around four dimensions: environmental sustainability, productivity, fairness, and macroeconomic stability.

The EU institutions discuss with the member states their plans to advance SDGs in their economic policies through focusing public investments in cutting CO2 emissions, reducing inequalities, promoting quality education and health care, etc.

 

The EU proposed, in March 2020, the European initiative to support national schemes of short-time work, so-called “SURE”; the European Commission is now raising money on financial markets through social bonds to support the states’ national programmes for short-time work. SURE is now providing € 90 billion in 18 countries, to help employees, employers and also the self-employed. At the start of the pandemic crisis, about 42 million European workers benefited from income-support measures: in this way the EU took responsibility and delivered social protection to millions of Europeans; the SURE program was an immediate EU’s reaction to the emergency. The Union’s recovery and resilience plan, so-called NextGenerationEU, is even more ambitious: with € 750 billion in investment and support the states can begin building their recovery’s economies; such recovery shall be green, digital and fair

Just one example from the construction sector, which was badly hit by the crisis, the so-called “renovation wave” with the main goal to make buildings more energy-efficient. Buildings account for 40 percent of emissions and they waste most of the energy that they consume; so by refurbishing and retrofitting the old houses the energy performance can be improved while preserving cultural heritage in the states.

The NextGenerationEU program will encourage house owners to renovate their properties, but also incentivize the use of innovative materials and new technologies for new buildings. As a consequence, construction workers will need to learn more about green technologies and materials; the NextGenerationEU will also invest in giving workers the skills they need to navigate the green and the digital transition.

The new “Pact for Skills” is also important as it offers cooperation among the trade unions, but also with employers, chambers of commerce and employment agencies, so that as many workers as possible have the skills they need to succeed in an evolving labour market. In this way the green and the digital transition will benefit not only young professionals in innovative businesses but workers of all ages, across all sectors in all EU states.

References to: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_21_404/ February 3, 2021

 

Conclusion

There are at least three possible scenarios for the labour unions in order to remedy a declining unions’ role in modern society: the first one is take into consideration the “ageing unions”, the process which is heading (slowly) towards extinction backed by current broad socio-economic trends. This would imply an almost union-free future, and the ultimate loss of the relevance of trade unions as an organised form of collective voice and representation.  

Second scenario emphasises the dual structure of labour market and the unions: the latter being relatively unattractive to “outsiders” and mainly representing the interests and needs of the “insiders”. In this scenario, unions hold on to their strong positions, i.e. connections to the public sector, and are largely reluctant to workers from industries in the non-standard forms of employment. Union responses to processes of labour market segmentation and fragmentation are, however, much dependent on their governance structures and strategies towards promoting inclusive solidarity and on labour market institutions promoting collective bargaining.  

A third scenario reflects the emerging trend that the current union’s forms might be substituted by other types of collective representation, either through new employers’ initiatives, or by the grassroots’ actions; interesting moves appeared where grass-root initiatives co-exist with longstanding trade unions, with each of them having their own member’s representation. Third scenario highlights unions as either “learning organisations”, ‘re-empowerment” facilities and/or “renewal” unions. This means that current unions have the potential to reverse present membership trends and remain a countervailing power in both the labour market and society.

 

Continuing de-unionisation trend makes it necessary for unions to turn more successful small-scale, local initiatives into large-scale revitalization unions, where growing occupations and industries would make labour unions into entities more adequate to present circumstances.

A broad strategic vision of the unions’ future of trade unions includes their changing role in a modern European states’ multi-faceted transitions with renewed power resources, altered union’s representation and membership, which would lead to a revitalised union’s movement in perspective.

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