Collective bargaining coverage (2000 and 2016)
(% of employees covered by a collective agreement)
A continuous decrease in bargaining coverage
The coverage of collective bargaining is an indicator of the extent to which terms and conditions for workers are set by collective negotiations between trade unions and employers. It therefore measures the regulatory capacity of collective bargaining. Figure 4.7, which is based on OECD data, shows the long-term trend from 2000 to 2016. The percentages indicate the share of employees per country who are covered by a collective agreement. Collective bargaining coverage is influenced by a multitude of factors, a crucial one being the level at which bargaining takes place. Figure 4.7 illustrates that collective bargaining coverage is high and fairly stable in countries with multi-employer bargaining structures, where collective bargaining mainly takes place at sectoral or, in some cases such as Belgium and until recently Finland, even at cross-sectoral level. By contrast, the lowest coverage and the deepest drop in coverage can be found in countries with single-employer bargaining arrangements. This applies in particular to some central and eastern European countries where coverage decreased even though it was at a fairly low level already
In addition to the level of bargaining an important factor is the existence of legal extension mechanisms or functional equivalents that ensure that collective agreements also apply to companies which did not sign the agreement or which are not members of the employers’ federation that signed the agreement. As Schulten et al. (2015) illustrate, all the countries with a stable bargaining coverage of 80% or more are countries that make frequent use of the administrative extension of collective agreements or functional equivalents. The only exceptions are Denmark and Sweden, where no legal extension mechanism exists and where high coverage purely rests on the organisational strength of the two bargaining parties. An example of a functional equivalent ensuring high coverage is Italy where there is no legal procedure for the extension of agreements but where high coverage is based on established practice of labour court judgements. According to Treu (2014), this can be seen as a more indirect form of or functional equivalent to extensions. This confirms that there are two principle ways to establish high collective bargaining coverage: first, the ‘Nordic way’ through a high organising density, particularly on the union side, and second, through the comprehensive use of extensions (Schulten et al. 2015).
This is further confirmed when looking at those countries, such as Greece and Portugal, where in the context of the crisis more restrictive criteria for the extension of agreements have been introduced, leading to a dramatic drop in bargaining coverage. In the case of Portugal, Figure 4.7 still shows a high coverage of more than 70%. This, however, refers to the agreements that still exist but may not have been renewed for years and have essentially lost their regulatory capacity. The more telling figure in Portugal therefore is the amount of newly concluded or renewed agreements whose coverage dropped to 10% in 2014 (OECD 2017: 140; Schulten et al. 2015).
This has important political implications. In order to achieve the political objectives of fair wages, wage convergence between CEE countries and western European countries, and a more equal distribution of income, European and national policymakers need to ensure that a majority of workers will be covered by collective agreements. Therefore, instead of supporting its abolition, the European Union should actively promote administrative extension in order to strengthen multi-employer collective bargaining all over Europe.
Change 2000 – 2016
source: ETUI / data: OECD