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The End of the Ghent System as Trade Union Recruitment Machinery?

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The End of the Ghent System as Trade Union Recruitment Machinery?

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During the past 15 years, membership rates in many unions have been declining in Denmark, Finland and Sweden. Reasons for this decline may be similar to what has happened in other countries - occupational change and neoliberal ideology and policies - but in the three Ghent countries, changes in the unemployment insurance system may also have affected trade union membership losses. The major part of the decline has taken place in a period of low unemployment, which may have reduced the employee incentive to take unemployment insurance, but will increasing unemployment rates mean more trade union members? At least for the LO- and SAK-affiliated trade unions, it seems that trade union independent unemployment funds may be alternatives for workers who take unemployment insurance.
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The end of the Ghent system as trade
union recruitment machinery?irj_543 510..523
Jens Lind
ABSTRACT
During the past 15 years, membership rates in many unions have been declining in
Denmark, Finland and Sweden. Reasons for this decline may be similar to what has
happened in other countries—occupational change and neoliberal ideology and
policies—but in the three Ghent countries, changes in the unemployment insurance
system may also have affected trade union membership losses. The major part of the
decline has taken place in a period of low unemployment, which may have reduced the
employee incentive to take unemployment insurance, but will increasing unemploy-
ment rates mean more trade union members? At least for the LO- and SAK-affiliated
trade unions, it seems that trade union independent unemployment funds may be
alternatives for workers who take unemployment insurance.
INTRODUCTION
In the 1990s, trade union membership rates in Denmark, Finland and Sweden peaked
at around 80 per cent of the labour force. This relatively high membership rate is
mainly due to the system of unemployment insurance. In most countries, unemploy-
ment insurance is mandatory, but in Denmark, Finland and Sweden, unemployment
insurance is voluntary. You can take unemployment insurance by joining an unem-
ployment insurance fund and pay fees. Such unemployment funds are regulated by
the state, but have traditionally been set up, administered and controlled by trade
unions. This so-called Ghent system of unemployment insurance has secured a
narrow relationship between trade unions and unemployment insurance: workers
who wanted to take unemployment insurance have also tended to join trade unions.
In recent years, this tight relationship between membership of the unemployment
insurance and union membership has been weakened because governments have
allowed alternative and union-independent unemployment funds to be set up. Unem-
ployment insurance has been made less attractive compared with other social policy
measures in case of unemployment, and years of diminishing unemployment figures
have also had an impact. In consequence, trade union membership rates have been
decreasing.
This seems to indicate that unions in the three countries may be facing this addi-
tional threat to membership losses in addition to the tendencies known from other
Jens Lind is Associate Professor at the Department of Sociology, Social Work and Organisation at
Aalborg University, Denmark. Correspondence should be addressed to Jens Lind, Aalborg University,
Kroglistraede 7, DK-9220, Aalborg, Denmark; email: jlind@socsci.aau.dk
Industrial Relations Journal 40:6, 510–523
ISSN 0019-8692
© 2009 The Author(s)
Journal compilation © 2009 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St.,
Malden, MA 02148, USA.
countries, such as industrial restructuring, welfare state interventions, individualisa-
tion and globalisation. The Golden Years of ‘free riding’ on welfare state institutional
arrangements (unemployment insurance) as part of social democracy may be gone
forever for the trade unions in the Nordic countries.
The article discusses recent developments in the unemployment insurance and their
possible relationship to trade union membership rates in Denmark. Data and analysis
from Finland and Sweden are also presented. Various findings and theories on trade
union membership development are discussed in the first section, where the main
argument is that unemployment insurance has a certain influence on membership
rates in the Ghent countries. In the second section, the general characteristics of the
Ghent system are presented, and the main changes in the unemployment insurance in
Denmark, Finland and Sweden are discussed. This is followed by an analysis of the
impact of such changes on trade union membership, and various explanations for the
three countries are presented. In the final section, some of the future consequences for
the trade unions are discussed.
TRADE UNION MEMBERSHIP
Trade union membership loss is most frequently explained by changes in the indus-
trial and occupational structure, most clearly illustrated in manufacturing, where the
number of workers is declining, while service sector and ‘knowledge society’ occupa-
tions are on the rise. Combined with this economic change is the weakening of social
democracy and the ideas of a collectivist and solidaristic welfare state and the revival
of liberalist ideas, which not only abandoned Keynesianism and revitalised the less
interventionist strategies of monetarism, but also included an ideological reorienta-
tion putting the individual in focus. In working life, ‘the end of mass production’, with
the ideas of restructuring workplace organisation in terms of ‘new production con-
cepts’, post-Fordism and flexible specialisation were accompanied by a focus on the
individual and his potentials and capacities. Human resource management became
the modus vivendi for personnel policies instead of industrial relations.
Trade unions suffered from such changes. In most countries, membership rates
peaked between 1975 and 1985 (France, Germany, Italy, the Netherlands and the
UK), while unions in other countries were doing well until the mid-1990s (Belgium,
Norway, Denmark, Finland and Sweden) (Ebbinghaus and Visser, 2000; Eironline,
2004). Throughout the 1980s and 1990s, unions searched for new patterns of attract-
ing members by introducing new services and finding new strategies, but the loss of
members, however, has not been curbed.
Most theories of trade union member recruitment reject the notion that becoming
a trade union member is the result of an economically rational choice. Visser, for
example, suggests that reasons for the loss of members must be that the unions do not
deliver the expected services or that they cannot uphold the custom or norm that
assures that workers are willing to share that norm (Visser, 2002). A main reason for
workers to join trade unions is to be better protected against the competition in the
labour market—to sell their labour at the best possible price and obtaining the best
possible conditions at work. As Waddington and Whitston (1997) show, this is still
the main reason for trade union membership, and not the plethora of insurances,
travels and other consumer-related services that were tried to attract members in the
1980s and 1990s.
511Ghent system as trade union recruitment machinery
© 2009 The Author(s)
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It is disputed, however, whether trade union membership actually is an economic
benefit to the worker. If other workers secure favourable conditions, it seems that the
individual worker could benefit from this without being a union member. So: ‘to
attract members, [unions] must persuade workers to ignore their own narrow financial
interest to contribute to a collective project where success or failure depends on the
action of others’ (Friedman, 2008: 59).1The mode of labour market regulation also
affects the propensity to be a union member. In countries where the conditions for the
exchange of labour are mainly regulated by means of collective agreements, trade
unions should have a solid base for recruiting members, while in countries where the
state sets standards for pay and other working conditions, union membership must be
based on other reasons, such as influence on state policies (legislation), ideological
orientations or other features.
Variation in trade union membership rates in European countries, however, does
not entirely depend on the mode of regulation, collective bargaining or legislation. It
also depends on the characteristics of the bargaining system. Multi-employer bargain-
ing and an inclusive bargaining system may further trade union membership (Visser,
1991), but may often result in a growing problem with ‘free riding’. The low level of
multi-employer bargaining, for instance, may be part of the explanation why volun-
tarism in the UK is accompanied by a low union membership rate, while it is much
higher in Nordic countries. Systems with a high degree of state regulation seem also
to vary concerning trade union membership rates. Exceptionally low membership
rates can be found in France and Spain, but around average rates in Portugal and
Italy. So although this dimension may have some potential in explaining membership
rates, it is nevertheless necessary to go into further details to explain the variation.
The difference between the UK and the Nordic countries is not only that collective
bargaining and the organisational structure is much more decentralised in the UK
than in Northern Europe, but also that the three countries with the highest member-
ship rates—Denmark, Finland and Sweden—have a Ghent system, but not Norway.
Since the 1970s, membership rates have been much higher in the Ghent countries than
in Norway: in the mid-1990s, around 80 per cent in the three Ghent countries, and
around 60 per cent in Norway (see Figure 1).
It seems like this special arrangement between the state and the trade unions has a
major impact on trade union membership. Workers tend to become union members
to a higher degree in countries with a Ghent system than in other countries that do not
have a voluntary system of unemployment insurance organised and administered by
the unions. Although there are differences among the Nordic countries regarding the
regulation of the labour market, the four countries share very similar systems and
traditions, so a main reason for lower union membership rates in Norway could very
well be that unemployment insurance is compulsory and solely an affair of the welfare
state, while the unions are deeply involved in unemployment insurance in the Ghent
countries.2
In recent years, this seems to have changed. The relationship between the unions
and unemployment is changing in a way that may weaken the capacities of unions to
recruit members through the unemployment insurance system.
1Friedman actually argues that workers do not join unions from economic rationality: it is more rational
to ‘free ride on the efforts of others’ (Friedman, 2008: 57).
2An attempt to explain the main characteristics and reasons for trade union membership developments in
Norway can be found in Nergaard and Stokke (2007).
512 Jens Lind
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
THE GHENT SYSTEMS
The Ghent unemployment insurance systems vary markedly. The rules of member-
ship, eligibility for unemployment benefits, administration of the system, financing
and the level of unemployment benefits are not the same in the various countries. The
common features, however, are that unemployment insurance is voluntary, and that
the unemployment insurance is organised in unemployment insurance funds set up
and administered in close cooperation with trade unions.3To obtain unemployment
insurance, the worker has to become a member of an unemployment insurance fund.
If you are not a member of an unemployment fund and not eligible for unemployment
benefits, you can receive social benefits, which are lower and means tested and paid by
municipalities.
An unemployment fund is formally an independent organisation (semi-public), and
the legislation on unemployment insurance does not make any reference to trade
unions, so, formally, membership of an unemployment fund has nothing to do with
membership of a trade union. In practice, however, trade unions have set up their
unemployment insurance funds that cover the same occupational area as the trade
union. This means that there is—or traditionally has been—a common occupational
area where specific trade unions organise the workers, conclude collective agreements
with the employers, and set up and control the unemployment insurance fund that
covers this specific area. Furthermore, the unions and the unemployment funds often
share the same buildings and offices, and for many workers it is difficult to distinguish
between the union and the unemployment fund. For many, joining an unemployment
fund is inextricably linked to becoming a member of a union, despite the fact that one
is part of the welfare state’s social services and the other is an interest organisation.
3In some studies, Belgium is included as a Ghent country (the city of Ghent is certainly in Belgium). The
unemployment insurance was made mandatory in Belgium after the Second World War, but the trade
unions play an important role in administrating the system, and this has a significant effect on the trade
union membership rates: Vandaele calls the Belgian system ‘a de facto Ghent system’ (Vandaele, 2006). The
experience from Belgium will not be included in this article.
50
55
60
65
70
75
80
85
90
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Ye a r
Per cent
Sweden
Denmark
Finland
Figure 1: Trade union membership rates in the Ghent countries
Source: http://stats.oecd.org.Index.aspx.
513Ghent system as trade union recruitment machinery
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
Separate membership fees are paid to both the unemployment fund and the trade
union.
Denmark
The unemployment insurance system was established in 1907 after a long debate on
the issue of social assistance to the unemployed (Lind, 1985; Nørgaard, 1997). The
reasons for choosing the Ghent system lay mainly in the fact that it was the cheapest
for the state, as it originally put the highest economic burden on the insured persons.
From the start, it was the most liberal and least solidaristic type of unemployment
insurance, because the risk of unemployment was unequally distributed among the
various trades, and the financing of the system was borne mainly by membership fees
without significant public subsidies. This situation changed profoundly during the
1960s, when the state took on the entire marginal risk of the expenses of increasing
unemployment. Ever since, the state has paid the main part of the expenses, varying
between 50 and 70 per cent, although membership fees and employers’ contributions
until the mid-1990s have been increasing.
In order to be entitled to unemployment benefits, a number of conditions must be
satisfied. These have gradually been tightened since 1979. The main conditions are
now membership of an unemployment fund for at least 12 months, employed full-time
for a total period of 52 weeks within the past three years (for part-time insured
persons the requirement is 34 weeks), and the unemployed person must be available
for work, and be registered as an active job seeker at the public employment service.
Unemployment benefits can be paid during a four-year period, and the levels of
benefits are 90 per cent of the previous earnings, subject, however, to a maximum of
97 per day for five days a week for full-time insured and 64 per day for part-time
insured persons (2009 level). The maximum level means that the unemployment
benefit compensation rate for low-paid workers is 90 per cent, while higher-paid
worker have much lower compensation rates.
Compared with wages, the maximum rate of unemployment benefit compensation
has been decreasing steadily since 1980. Very low-paid workers still receive 90 per cent
of their former income, but for an average paid worker, unemployment benefits
amounted to almost 80 per cent of their former income in 1980 compared with just
over 50 per cent in recent years (LO, 2006). Since 1979 access to unemployment
benefits has been made increasingly restrictive (stricter demands on availability,
shorter periods for entitlement, longer and restricted qualification periods, more
restrictions on membership, etc.). Since 1994, the so-called activation schemes have
been more and more directed into disciplining measures to make it less attractive to be
unemployed (Møller et al., 2008). In addition, the early retirement scheme, which
until 1999 was part of unemployment insurance, has been made less attractive
through longer qualification periods and reduced retirement pay. These cuts in the
early retirement scheme have taken place since the early 1980s, but the most signifi-
cant changes in the scheme were in 1999 and 2006, where the age level for retirement
was postponed, and the retirement pay was reduced. So, the unemployment insurance
has been made still less attractive during the past many years.
This ongoing process has during recent years been combined with measures that
aim at loosening the ties between the trade unions and the unemployment insurance.
The Liberal-Conservative government that took office in November 2001 intended to
establish an unemployment fund independent of trade unions and taking in employ-
514 Jens Lind
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
ees from all industries and professions. This would have been a severe blow to the
existing system, but the government did not succeed in finding a sufficient majority in
Parliament. The government did succeed, however, in passing legislation that allowed
the unemployment insurance funds to recruit members from different trades and
industrial areas. Until 2002, the only unemployment insurance fund—besides
the unemployment fund for self-employed—that did not cover a specific field was the
Christian unemployment fund, which had permission to include members from
the entire labour market. In early 2004, five more (from a total of 33), and in 2008,
12 (from a total of 29), unemployment funds were cross-industry organisations
(Arbejdsdirektoratet, 2004; 2008).
Such cross-industry unemployment funds will eventually have the same effect as a
general state unemployment fund. When the demarcation lines for members of
various unions do not follow similar divisions among the unemployment funds, the
close relationship between union membership and membership of an unemployment
fund will fade away. The unemployment funds are now set up to compete with each
other for members.
Unemployment peaked in 1994 at more than 12 per cent of the labour force. During
the following years it declined steadily—with a slight upturn in 2003–04—to below
2 per cent in 2008. Membership of unemployment funds remained relatively stable at
around 2.2 million members till the late 1990s, where it started to fall to less than 2.1
million in 2008. From 2000 to 2008, the unemployment funds lost 120,000 members
(see Table 1) which amounted to almost 6 per cent. The lowering of the unemploy-
ment rate had a clear impact on the membership of unemployment funds. More and
more people did not insure themselves against unemployment.
The declining membership of unemployment funds in recent years, however, has
mainly taken place among the LO-affiliated unemployment funds, while the indepen-
dent cross-industry unemployment funds have gained members. From 2002 to 2008,
the Akademikernes Centralorganisation (AC)-affiliated unemployment funds had a
membership growth at 18.3 per cent, the Funktionærernes og Tjenestemændenes
Fællesrad (FTF)-affiliated funds remained almost unchanged (0.2 per cent loss), the
LO-affiliated funds lost 19.0 per cent, and the unemployment funds affiliated to
unions outside the main organisations gained 15.4 per cent. Among these gainers, the
absolute high runner was the cross-industry unemployment fund, Danish Wage
Earners (Danske Lønmodtagere), which was established in 2002 as a result of the new
legislation. From zero in 2002, it had over 60,000 members in 2008, and during the last
two years it has increased its membership by 34 per cent.
Table 1: Members of unemployment funds in the Ghent countries (’000s)
1990 1995 2000 2002 2004 2006 2008
Denmark 2,200 2,183 2,164 2,147 2,109 2,061
Finland 1,883 1,922 1,941 1,965 1,968
Sweden 3,556 3,802 3,793 3,789 3,806 3,779 3,400
Sources: Statistikbanken Danmarks Statistik, Arbejdsdirektoratet, Vakuutusvalvontavirasto,
2007, Inspektionen För Arbetslöshetsförsäkringen.
Note: Figures for Denmark are from December, various years; for Finland and Sweden, yearly
average.
515Ghent system as trade union recruitment machinery
© 2009 The Author(s)
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Another perspective on the future of the Ghent system may be derived from the
government’s changes to the administration of the unemployment policy as of
December 2002, when a major reform entitled ‘more at work’ was passed in
parliament. Among the features of the reform that may have had implications for the
propensity to take unemployment insurance is a harmonisation of the measures and
services for the two categories of unemployed, the insured on unemployment benefits
and the uninsured on social benefits. This may be a first step towards the creation of
a unified social system dealing with the unemployed. If such a unified system for
benefits and services for the unemployed is created, it will most likely include the
abolition of the voluntary unemployment insurance system, and this means that the
unemployment insurance funds will either disappear or lose their unique importance
within unemployment insurance. If this path is followed in future reforms of employ-
ment and unemployment policy—the next step is taking place in autumn 2009 when
the job centres are transferred from the state to the municipalities—it will have further
consequences for trade union membership and recruitment.
Sweden and Finland
The political and institutional context of the Swedish and Finnish Ghent systems is
similar to that of Denmark. The unemployment insurance is deeply incorporated in
the so-called active labour market policy, which used to be much more elaborated in
Sweden (the Rehn–Meidner model) than in Denmark and Finland. Like in Denmark,
some major reforms during the 1960s and 1970s (in Sweden in 1973) established the
basic elements of financing and introduced a relatively high level of benefits, which
made the system very attractive for unions for recruiting members (Arbetslöshetskas-
sornas Samorganisation, 2006). The expansion of the insurance funds to include
part-time workers had particular benefits in terms of higher union membership rates
among part-time workers (Kjellberg, 2006). The cuts in the level of benefits began in
1993, where the general maximum level was reduced, and the individual maximum to
be paid to the individual unemployed was reduced from 90 to 80 per cent of former
income, and the access to the unemployment insurance and the conditions for claim-
ing them were tightened during the 1990s, as was the case for Denmark.
Unlike Denmark, where the Danish LO proposes that the unemployment benefits
should not be further reduced, the Swedish LO has demanded that the level of
unemployment benefits should be restored. Only around 50 per cent of the unem-
ployed are entitled to 80 per cent of their former income. The Swedish LO has
proposed that the level of benefits should be increased so that 70 per cent of the
unemployed are paid 80 per cent of their former income (Andersson et al., 2006). The
average compensation rate for unemployment benefits to wages has fallen from 90 per
cent in the early 1990s to below 70 per cent in 2007 (Andersson et al., 2008).
In Sweden, the total number of members of the unemployment insurance funds has
remained almost at the same level since the mid-1990s, but as a proportion of the
labour market it has been declining since 1998, when it stood at 90 per cent, to 85 per
cent in 2005 (Andersson et al., 2006), and in 2006, the unemployment funds started to
lose members—from 3.8 million members in 2006 to 3.4 million in 2007 (IAF, 2009).
The loss of members illustrates a similar pattern as in Denmark: Sveriges Akademik-
ers Centralorganisation (SACO) (the academics) and Tjänstemännens Centralorgani-
sation (TCO) (white-collar workers) are gaining members or remain stable, while the
LO-affiliated unemployment funds are losing members. Most notably, the union-
516 Jens Lind
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
independent unemployment fund, the Alfa-kassa, which was set up in 1998, has been
constantly growing. Among the few unemployment funds that gained members
during the last quarter of 2008, the Alfa-kassa had the strongest growth at almost
3 per cent, while the other funds gaining members increased by around 1 per cent.
LO-affiliated unemployment funds lost up to 2 per cent of their membership.
The declining attractiveness of the unemployment insurance system is also visible in
Sweden. So is the loosening of the relationship between the unions and the unem-
ployment insurance. A union-independent and cross-industry unemployment fund,
the Alfa-kassa was set up in 1998 by the Federation of Unemployment Insurance
Funds. Obviously, this increases the share of persons who are members of an unem-
ployment fund without being a member of a trade union. In 1993, 6 per cent of the
members of the trade union-controlled unemployment funds were not trade union
members. In 2005, this category had increased to 14 per cent. Including the members
of the union-independent unemployment fund, this share of the persons who are
insured against unemployment amounted to 16 per cent. So Kjellberg (2006: 92) may
be right when he argues that the ‘significance of the Ghent system for union recruit-
ment was already eroded by the relatively large share of non-union members affiliated
to union-led unemployment funds’. The union-independent unemployment fund in
Sweden has not resulted in a massive loss of members during the years of economic
growth. Other factors have been more important for union membership decline, but
if the LO-affiliated unemployment funds continue to lose members, and the Alfa-
kassa continues to grow—especially in the coming years of rising unemployment—the
situation may be even worse for the LO.
In Finland, membership of unemployment insurance funds increased steeply from
1992–93 as a result of the crisis, which resulted in unemployment rates at almost 20 per
cent, and this coincided with the establishing of a union-independent unemployment
fund, the Loimaan kassa, in 1992. After some years of decline, the total membership of
unemployment insurance funds has been slightly increasing, but membership of the
union-independent fund increased to around 200,000 members in 2000 or around 8 per
cent of the total membership of unemployment insurance funds (Böckerman and
Uusitalo, 2006), and to 263,000 in December 2007, which is around 13 per cent of total
membership (Vakuutusvalvontavirasto, 2007). In 2008, unemployment was down to 6
per cent, but on the increase at the end of the year (Statistikcentralen).
Like in Sweden and Denmark, there is no formal link in Finland between union
membership and membership of an unemployment insurance fund. In Finland—and
unlike Sweden—very few workers are members of a trade union-affiliated unemploy-
ment fund without being a member of the related trade union (Böckerman and
Uusitalo, 2006: 290). The establishment of the union-independent unemployment
insurance fund may thus have been welcomed by many employees, who otherwise
would not have chosen to become a member of an unemployment insurance fund.
Members of the independent fund are rarely trade union members.
Consequently, the changes in trade union membership reflect the changes in mem-
bership of the affiliated unemployment funds.4Similarly to Denmark and Sweden, the
Finnish unions are organised in three main organisations, the SAK (the Confedera-
tion of Finnish Trade Unions, resembles the Danish and Swedish LO), the STTK,
which resembles the Danish FTF and the Swedish TCO, and AKAVA, which is like
4Böckerman and Uusitalo (2006) directly compare trade union membership with membership of the trade
union-independent unemployment fund, the Loimaan kassa.
517Ghent system as trade union recruitment machinery
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
the Danish AC and the Swedish SACO. The development of membership of these
three main organisations follows the same path as the respective sister organisations
in Denmark and Sweden: SAK has lost members, STTK has remained almost
unchanged, and AKAVA has gained members during the past 15 years or so. This
common pattern may indicate not only that occupational changes are reasons for
trade union membership losses, but also that trade union membership based upon
profession may include another attitude to both union and unemployment fund. A
skilled nurse, for instance, may consider the union and the unemployment fund as
part of the identity of the profession, while an unskilled worker has a looser relation-
ship to the union and the unemployment fund.5
TRADE UNION MEMBERSHIP AND UNEMPLOYMENT INSURANCE IN
THE GHENT COUNTRIES
Comparing trade union membership rates among European countries, it seems
obvious that the unemployment insurance system has a significant influence on trade
union membership. Trade union membership rates in Denmark, Finland and Sweden
are the highest in Europe because they have a Ghent system (Edling et al., 2006).
When trade unions in most other countries lost members, the unions of the Ghent
countries continued to grow (and so did the unions in a few other countries, like
Belgium and Norway). The reason, of course, can be that these countries did not
experience the same occupational structural changes and the same pressure from
neoliberal policies, which presumably weaken trade unionism, as other countries. The
unemployment insurance system, however, must have an important role to play: why
exactly should the Ghent countries have a higher trade union membership rate than
other countries?
The interesting question, which follows from the experience of the past 15 years of
membership losses in the Ghent countries, is: has this recruitment machine changed
since the trade unions have started to lose members in the Ghent countries?
This question has (at least) two answers. The first and most simple is that trade
unions in the Ghent countries are losing members because unemployment has been
declining since the mid-1990s. Employees tend to become members of unemployment
funds when the risk of unemployment is high, and they do not become members (take
insurance) when the risk is lower. So the membership rate of unemployment funds
declines in periods of declining unemployment rates, and, consequently, the member-
ship of trade unions decline too. In other words, when unemployment again starts to
grow, the unions will again achieve membership growth.
The second answer is more complicated, because it must be derived from the
changes in unemployment insurance, and the further questions may be (i) what will
result from the weakening of the tight relationship between trade unions and the
unemployment insurance; and (ii) is there a connection between declining trade union
membership rates and the increasingly restrictive and less attractive unemployment
insurance?
The Finnish study (Böckerman and Uusitalo, 2006) is not hesitant. Their quanti-
tative analysis points clearly to the establishment of the union-independent unem-
ployment insurance fund as a main reason for trade union membership decline:
5Unfortunately, there is no research-based evidence for this difference between general workers’ and
professional workers’ attitudes to unemployment funds.
518 Jens Lind
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
According to our results, about a quarter of this decline can be explained by the changes in the
composition of the labour force or other changes in the labour market. The main reason for the
decline appears to be the emergence of an independent UI fund that provides unemployment insur-
ance without requiring union membership. The independent UI fund erodes the link between the
unemployment insurance and union membership that has supported union density in the Ghent
countries [ibid.: 300].
Other factors have contributed to trade union loss of members, such as structural
changes in the labour market, but neither educational level, the age composition, the
change from manufacturing to service occupations nor the relative decline of the
public sector have such a big impact as the establishment of the union-independent
fund.
Kjellberg’s analysis of the reasons for trade union membership decline in Sweden
reveals a somewhat more differentiated argument (Kjellberg, 2006). He admits that
the Ghent system has had an important role for trade union membership recruit-
ment, but he ascribes the membership decline to a range of other factors, which can
be seen from the fact that trade union density rates among countries without a
Ghent system varies widely—from below 10 per cent in France to around 60 per cent
in Norway. In Sweden, a main reason for high union membership rates is the exist-
ence of a collaborative pattern of industrial relations, where unions can achieve
results vis-à-vis both the employers and the state. The trade unions are the voice of
the workers in society.
According to Kjellberg, in Sweden the decline of trade union membership rates is
not connected to the establishment of a trade union-independent unemployment
fund. The decline started much earlier:
By contrast with Finland, it was not the introduction of an independent fund that led to a higher share
of non-union members in Swedish funds. When the independent Alfa-kassan started in 1998, direct
affiliation to union-run funds was already extensive and dispersed among all categories of workers,
although to a varying degree [Kjellberg, 2006: 97].
An increasing number of persons do not want to be members of a trade union, but
only want be insured against unemployment. And that is the reason underpinning the
observation that one in seven of members of unemployment funds is not a trade union
member. Even in cases where the trade unions offer supplementary insurances to
make up for the cuts in the benefit level, people do not join unions to a higher degree:
It is not only the rising share of non-union members in unemployment funds that is eroding the Swedish
Ghent system. Swedish unemployment insurance is relatively generous, but benefit levels are being
increasingly hollowed-out as the ceiling of the insurance lags behind wage increases. The introduction
of supplementary union-run insurances, which are ‘selective’ by being exclusively for union members,
has not halted the rising share of non-union members in unemployment funds [Kjellberg, 2006: 97].
In Denmark, the decline in trade union membership also began several years before
the Liberal-Conservative government allowed the establishment of unemployment
insurance funds covering the entire labour market. Denmark differs from Finland and
Sweden in that it is possible for all unemployment funds, in principle, to convert into
a cross-industry unemployment fund if they apply for such a certificate, rather than
their being only a single fund that can adopt such a status. Indeed, in Denmark, there
has been a cross-industry unemployment fund for more than 30 years in the form of
the Christian Unemployment Fund. This means that the bonds to the trade unions do
not necessarily completely wither away, but rather are loosened and less plain.
Until now, the Danish trade unions—and their affiliated unemployment funds—
have to some extent succeeded in not entering into this competitive regime. There are
519Ghent system as trade union recruitment machinery
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
still a few non-LO member unions that have obtained this certificate for the general
recruitment of members. These unions are not popular among the other unemploy-
ment funds, nor among the LO trade union leadership. So until now, the Danish
system actually functions in the same way as the Swedish and the Finnish: you can be
a member of an unemployment insurance fund affiliated to a union and be or not be
a union member, or you can join a general unemployment fund with no relationship
to a trade union.
The fact that this initial decline in trade union membership in Denmark started
before the opening up for competition among the unemployment insurance funds
may be ascribed to the ongoing deterioration of the unemployment insurance. Low-
ering benefit level, stricter access to benefits and a less attractive early retirement
scheme, but it may also derive from the changes in the level of unemployment.
A common characteristic for all three countries is that union membership increases
in times of increasing unemployment. This supports the observation that countries
with mandatory unemployment systems experience falling membership rates in times
of rising unemployment while unionisation is boosted in Ghent countries (Lesch,
2004). It seems the opposite is also a valid observation: in Denmark, unemployment
peaked in 1994, and trade union membership rates a couple of years later. In Finland
and Sweden, membership rates and unemployment rates peaked around 1993. So the
lesson may be that in Ghent countries, falling unemployment rates result in trade
union membership decline.
If this is true, it is not the establishment of a union-independent unemploy-
ment insurance fund that is the main reason for membership decline, but simply
falling unemployment. In Finland, the union-independent fund was set up simul-
taneously with the peaking unemployment figures and the beginning of trade union
decline. In Sweden, the Alfa-kassa was established much later than when unem-
ployment peaked and trade union decline started, and the same is the case for
Denmark.
The relationship between trade union membership and the Ghent system is not
one-dimensional. Deterioration of the Ghent system from the trade union perspec-
tive, particularly the weakening of the relationship between unions and the unem-
ployment funds, is not the sole explanation of declining union membership. In the
Ghent countries, unemployment rates are very influential on the propensity to join an
unemployment fund and to join a trade union.
This relationship seems to be confirmed by the results from surveys among
members of Danish LO unions in 1992 and 2002. Unemployment rates in 1992 were
around 12 per cent and around 5 per cent in 2002, and it is quite clear that the fear of
becoming unemployed in 1992 was much higher than in 2002. This may be an
important reason for the significant change in members’ reasons for joining a trade
union: in 1992, 90 per cent of the members agreed that a reason for joining a union
was to become a member of an unemployment insurance fund, while in 2002, only 73
per cent stated this reason (LO, 2005).
Compared with times of high unemployment rates, workers do not fear the risk of
becoming unemployed, and do not emphasise becoming a member of an unemploy-
ment insurance fund and joining a trade union in times of low unemployment rates.
This does not, however, rule out the other factors discussed here. The existence of a
union-independent unemployment fund and the deterioration of the unemployment
insurance may also be factors behind the diminishing unionisation that has taken
place in the three Ghent countries since the beginning of the 1990s.
520 Jens Lind
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
WHAT FUTURE?
The trade unions in the three Ghent countries are worried. In Sweden, trade union
density declined from 85 per cent in 1993 to 74 per cent in 2006, in Finland, from 82
per cent in 1995 to 71 per cent in 2006, and in Denmark, from 82 per cent in 1998 to
77 per cent in 2008. Compared with other European countries, the membership rates
are still very high in the Ghent countries, and the membership decline is modest.
Perhaps anxiety is the principal reaction after a long period during which trade unions
had become accustomed to a steady increase in membership rates. For the unions that
also lose members because of the changing industrial and occupational structure,
however, the loss of members due to changes to the unemployment benefit system is
a serious problem. These unions are typically those that are members of the LO
confederations or the SAK in Finland.
For the unions who operate in the ‘professional’ part of the labour market—the AC
and FTF in Denmark, the STTK and AKAVA in Finland, and the TCO and SACO
in Sweden—there seems to be a slightly different lesson. They have not stopped
gaining members or at least not lost significant numbers. The same can be said about
their affiliated unemployment funds: they are growing or stable. The main reason for
this is, of course, the occupational changes in the labour market6, but an additional
reason may be that ‘professional’ people tend to stay in their union because it gives
them some sort of an identity as a part of their profession. Another reason could be
that the bonds between the union and the unemployment fund are not as tight as they
are—or used to be—among LO- and SAK-affiliated unions and their unemployment
funds.
Perhaps there is good reason for this concern. If the recruitment of new members
and a higher density rate is dependent upon an increase in unemployment, the unions
could just sit back and await higher unemployment rates which are under way in the
present escalating crisis. But after the establishment of the union-independent and
general unemployment funds in Sweden and Finland, and the competitive system in
Denmark, the new wave of persons joining the unemployment funds will not auto-
matically join the unions as they did before. Finland is the prime example of this
situation, and the short periods of increasing unemployment in Sweden and Denmark
2002–04 certainly saw no new member access to the trade unions. Even the trade
union-controlled unemployment insurance funds experienced a continuous loss of
members, while the general funds had an increasing membership.
The experience from the increasing unemployment figures in early 2009 is perhaps
too premature to be interpreted, but the first impression is not promising for the
unions. In Sweden, the unemployment funds have not started to gain members despite
a rapidly growing unemployment rate. Most funds lost members from December 2008
to January 2009, but the Alfa-kassa gained 1 per cent new members. In Denmark, the
first month with a total increase in the membership of unemployment funds were
February 2009, and, like in Sweden, the non-affiliated unemployment funds had a
gain of between 2 and 3 per cent while some of the main LO-affiliated unemployment
funds lost members (Arbejdsdirektoratet, 2009).7
6It is impossible to calculate the trade union membership rate or the rate of membership of unemployment
funds for these categories of unions/unemployment funds, so I cannot estimate if their growth is due to
higher membership rates or occupational changes.
7Comparable figures are not available for Finland.
521Ghent system as trade union recruitment machinery
© 2009 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2009
This could be an indication for future developments: perhaps the conditions for
trade union membership recruitment have changed for good. The unions in the Ghent
countries can no longer rely on the state-subsidised recruitment machinery that
follows from the voluntary unemployment insurance system. Whatever unemploy-
ment rates will be in the future, the LO- and SAK-affiliated unions for many years
ahead will face a declining membership, which eventually will reduce their influence
and power in society.
In the Nordic countries, for many years one of the pillars in building a solidaristic
welfare state was the trade union counterbalancing of the supreme powers of the
employers in the labour market. This has not completely ended yet, but during the
past 20–30 years when the liberalist ideas of market forces as the supreme mode of
regulation have been celebrated, trade unions have increasingly been considered to be
obstacles to the blessings of a ‘free’ market, and eventually governments succeeded in
undermining their power base without attacking them directly. The intention is
perhaps only to weaken them—not to get completely rid of them—but under the
threat of rapidly increasing unemployment figures, weak trade unions will result in
significant reductions in the conditions of labour. Of course, this is probably the
general idea of the centre-right governments.
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