Comparative Industrial Relations Between France Germany And Sweden Management Essay

– The European systems of industrial relations exemplified by France, Germany and Sweden are fundamentally similar. Furthermore, the Japanese and U.S. systems of industrial relations are fundamentally different from those found in the three European countries. What is your view of these statements? How do you justify your view?

Table of Content

Introduction 3

Main Body

Systems of Industrial Relations in France, Germany and Sweden 4

Labour Market 5

Trade Union 6

Employers’ Association 7

Collective Bargaining 8

Employee Participation and Works Councils 10

Government and Regulation 11

Compare Systems of Industrial Relations between France, Germany and Sweden and in the United States and Japan 12

Labour Market 12

Trade Union 14

Employers’ Association 15

Collective Bargaining 16

Employee Participation and Works Councils 16

Government and Regulation 17

Conclusion 17

References 20

Introduction

Industrial relations generally involve employment relations related issues in the past and present and how the changes happened. It is dynamic and changing all the time (Salamon, 1994, p.3). According to Dunlop (1958), systems of industrial relations include three main actors and their representations. The three actors are employers and their representatives, employees and their representatives and the government. Within these three parties, there is collective bargaining which is usually conducted between trade union and employers associations; and in some countries government can directly interfere collective bargaining while some cannot. Government’s roles in systems of industrial relations are very significant. Dunlop also mentioned that there are factors which can affect the three parties’ relations, and these factors are market of labour force and power of parties. Industrial relations systems involve varieties of institutional structures beyond just employer-employee relationship (Hyman, 2000). Because different countries have their own unique ways of development, systems of industrial relations should be different among countries. However, from a macro point of view, it is claimed that there is a European systems of industrial relations. The creation of European Works Councils and the social partners’ agreement of 1991 are evidence of European industrial relations systems (Jensen et al, as cited in Hyman).

In this essay, I will analyse the European industrial relations systems which demonstrate by France, Germany and Sweden which have some similarities, but differ a lot. This essay also addresses the issue that systems of industrial relations in Japan and the United States are fundamentally different from those found in the three European countries.

This essay argues the following: in the three European countries, there are some similarities on aspects of labour market, employers’ association’s structure, high coverage of collective bargaining and the decentralised bargaining level. However, they differ a lot because the difference of trade union confederation, union density, reason of high coverage of collective bargaining and decentralised bargaining level, works councils and government intervention. There are huge differences between these European countries as a whole and Japan and the United States. They are different in terms of labour market, trade unions, employers’ associations, collective bargaining, employee participation and works councils, and government intervention and regulations.

In order to explain the above arguments, the essay concludes two main sections. In section one, I will explain the general European background for the three countries, followed by the systems of industrial relations in the three European countries. In section two, I will analyse differences between the three European countries as a whole and Japan and the United States. Within each section, the analysis is based on labour market, trade unions, employers’ associations, collective bargaining, employee participation and works councils, and government intervention and regulations.

Main Body

Systems of Industrial Relations in France, Germany and Sweden

Firstly, there is one thing to be notice, and that is both these three countries are operating under a common community-the European Union. Within this European Union framework, they have some common regulation and organisations. For example, the “Maastricht Treaty on Monetary Union” and European Works Councils Directive of 1994″ are breakthroughs of European industrial relations systems (Streeck, 1998, p443-445). Through Maastricht Treaty, member states began to have their European single currency which they can benefit a lot, such as a more stable currency, low costs of trade and European identity (Europa.eu, 2010). For the European Works Councils, they need to meet at least once a year to share information and consultation on issues such as economic and social development (Schulten, 1996). There is even a transnational employers association in Europe.

Although there is a common framework for European countries, there are some similarities in the systems of industrial relations in France, Germany and Sweden; but they differ a lot. This is probably because of path dependency, countries develop towards different directions based on their own situation. I will analyse it from the aspects of labour market, trade unions, employers associations, collective bargaining and employee participation, and government’ roles and regulations.

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Labour Market

From the table below, we can see that unemployment rates of 2005 in France and Germany were quite similar and both are around 10%, while Sweden remained relatively low, at only 5.60%. The working time in these three countries are similar, around 40 hours per week.

Unemployment rate (2005)

Working time (weekly hours)

France

10.10%

38.3

Germany

10.60%

39.9

Sweden

5.60%

40

Source: unemployment rate-Indexmundi; working time-eurofound

Trade Unions

About trade union confederation, according to Bean (1994), France, Germany and Sweden represent three different types of confederation. For France, confederation is considered as “political unionism” (p.20) because confederations are based on political affiliations and there are five main confederations in France. For example, CGT and CFDT affiliate with communist and socialist party separately (Labbe, 1994). Because the five confederations are not for specific industries or occupational groups, there are competitions among those five confederations (Freyssinet, 2003). The second type of confederation is the single dominant confederation (DGB) represented by Germany. Since there is only one confederation, confederation competition is not existed in Germany. The third type of confederation is confederations organised by occupational groups which is found in Sweden. There are confederations for blue collar workers, white collar workers and professional/ academic groups (Carley, 2002). This occupational division of confederations kind of follow the early union formation which was unions “organised all workers, skilled and unskilled, who worked with a given material” (Bean, 1994, p. 27).

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Union density also differs a lot through these three countries. The union density is 9.1%, 29.7% and 79% for France, Germany and Sweden separately (1999 Eurostat Labour Force Survey, as cited in Carley, 2002). What is worth notice is that although union density in France is very low, the mobilisation of French unions is quite high compared with its union membership (Gallie, 1980).

Employers’ Associations

Employers’ association is an organisation which is similar with trade union confederation, except that it is in favour of employers instead of employees. Employers’ associations’ structure is similar in these three countries. They all have a peak employers’ association which in France is SAF (SN), in Germany is BDA and in Sweden is CNPF (MEDEF); and those peak organisations cover their own entire countries in terms of geography and industries (Bean, 1994). In all the three countries, the peak employers’ associations do not conduct collective agreements and the member organisations that conduct collective bargaining and conclude collective agreements (Traxler, 2003; Wallerstein, et al, 1997). It is the sectoral employers’ organisations that have collective bargaining roles (Carley, 2002). However, the power of these peak organisations, control over member firms and the strength of affiliates are different for France, Germany and Sweden. As you can see from the table below (as cited in Traxler, 1999), for France, the peak organisations’ power is above average; the control over member firms is average, and the affiliates are weak. For Germany, both peak organisation’s power and control over member firms are weak while the affiliates are strong. For Sweden, peak organisation’s power, control over member firms and the affiliates are all extremely strong. Although employers’ associations in Sweden are very powerful, the membership is in low level compared with membership in France and Germany (Traxler, 2000)

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Collective Bargaining

Country

Collective bargaining coverage (%)

Key level of collective bargaining

France

93

Industry – towards company negotiations

Sweden

90

Industry

Germany

64

Industry

(Source: Worker representation in Europe. Labour Research Department and ETUI-REHS: 2007, as cited in worker-participation.eu)

As you can see from the table above, all the three countries have high coverage of collective bargaining. Both France and Sweden have high collective bargaining coverage which is above 80%. As discussed before, union density in Sweden is very high. So, we can say that the high coverage of collective bargaining is associated with high union density in Sweden. France has a high coverage of collective bargaining (but a low union density) is mainly because its government. Government in France encourages collective bargaining and provides some legislation for that (Bean, 1994, p.76). In Germany, compared with its collective bargaining coverage, its union density is relatively low; it is employers’ associations that ensure the coverage of collective bargaining is high (Waddington, 2009).

The table also illustrate that the level of bargaining in the three European countries is at industry level. However, there is a trend of decentralisation of collective bargaining in these three countries. For France, it is the state that tries to drive collective bargaining downwards and there are legal frameworks to encourage bargaining at lower levels (Goetschy and Jobert, 1993, p.162). It is even towards company negotiations now. In Germany, there are agreed forms of opening clauses that allow decentralisation happens (Katz, 1993, p.7). Sweden moves from single framework agreement to industrial bargaining with more flexibility and bargaining leverage (Katz, 1993, p.5). For wage bargaining, Germany and Sweden mainly rely on sectoral level, while company level is the key bargaining level for France (Carley, 2002).

In general, it can be concluded that collective bargaining is conducted mainly at industry level in those three countries; and the bargaining depends on state/ legislation, employers’ associations or union organisations for France, Germany and Sweden separately.

Employee Participation and Works Councils

The ways which employee participation and works councils operate in these three countries are different, but with some similarities as well. In Sweden, because most employees are union members (high union density), there is no works councils at workplace separately from trade unions to represent employees and it is trade unions and shop stewards that have similar roles of works councils in other countries (Hammarstrom, 1993). Works councils are available in both Germany and France, and works councils for both countries are in statutory form (Goetschy and Jobert, 1993; Fuerstenberg, 1993). In Germany, the participation system is considered as “harmony of interest between management and labour”. (Bean, 1994, p.167). In France, works councils have rights to be informed and consulted about general management of the firm, especially on issues related to employees; however, they seldom have decision-making power (Goetschy and Jobert, 1993, p. 158). For Germany, expect the rights to information and consultation, works councils also have the right of co-determination, such as on personnel selection and training; and for consultation right, worker representatives can also have some influence on outcome (Fuerstenberg, 1993, p. 186-87). For both France and Germany, work councils elected by employees which may or may not from trade unions lists (Carley, 2002). However, it is the dual system in Germany which is there is a formal separation between institution of workplace participation (works councils) and institutions engaged in collective bargaining (trade unions) (Hassel, 1999). For France, both collective bargaining and institutions of workplace participation (works councils) involve trade unions and trade unions have a formal presence within the workplace (Treu, et al, 1993).

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Government and Regulation

Within these three countries, states play different roles on collective bargaining. In Germany, there is a very important constitutional principle about collective agreement-Tarifautonomie; it is about the state cannot directly interfere in the negotiation arrangement conducted by the employers’ associations and the trade unions; and parties conduct collective agreements are independent (Burgess and Symon, 2005). In contrast to Germany, state intervention is very important in France, and the French state plays some direct role in collective bargaining (Bean, 1994, p.155). The French government always tries to encourage conversation between employers’ associations and trade unions (Bean, 1994, p.76). The Swedish state is special because almost every economic and social policy issue is discussed between three parties-state, labour and business (Pontusson, 1991; Waddington, 2009). Compared with the other two countries, welfare provision in Sweden is huge with great public expenditure (Castles and McKinlay, 1979).

Compare Systems of Industrial Relations between France, Germany and Sweden and in the United States and Japan

From the analysis above, it can be seen that there few similarities among the three European countries-France, Germany and Sweden. However, when compare those countries with the United States and Japan, they are often considered as ‘Europe’ and become quite similar. The Japanese and U.S. systems of industrial relations are different from those found in the three European countries. I will also analyse it in terms of labour market, trade unions, employers associations, collective bargaining and employee participation, and government’ roles and regulations.

Labour Market

Unemployment Rate

France

Germany

Sweden

Japan

U.S.

2005

10.1%

10.6%

5.6%

4.7%

5.5%

2006

9.9

11.7

5.8

4.4

5.1

2007

8.7

7.1

5.6

4.1

4.8

2008

7.9

9.0

6.1

3.8

4.6

Source: Indexmundi.com

Nickell (1997) once argued that there is no relationship between European’s rigid job market and the relatively high unemployment rate. However, from the table above, we can see that compared with these European countries, the Unites States which has a more flexible job market has relatively low level of unemployment rate from 2005 to 2008. Japan also has a low unemployment rate.

European countries

Japan

U.S.

Maximum working time/week (by law)

France/ Germany48 hours

Sweden40 hours

40 hours (but usually extension )

No statutory maximum working week (but must receive overtime pay if exceed 40 hours)

Average weekly hours by full-time workers (in 2001)

France 35.7hours

Germany 37.7hours

Sweden38.8hours

__

42.8 hours

Minimum period of paid annual leave (by law)

France 25 days

Germany 20days

Sweden 25 days

20 days

No statutory annual leave entitlement

Actual annual work hours (in 2000)

France 1589 hs

Germany 1525 hs

1970 hs

1986 hs

Source: EIRO; Carley, 2004, eurofound

From the table above, we can conclude that compared with the three European countries, Japan and the United States generally work more and have less holiday time. It is also argued that Japanese and American workers are more tolerant and tend to accept overtime and irregular working time; and therefore European workers are considered in lower “work ethic” (Streeck, 1992, p.312).

The characteristic and economic aspects of labour market between the three European countries and Japan and USA are also different. According to Streeck (1992), there are two distinction of labour market between European countries and the other two countries. The first one is the skilled level of labour. Labour in European countries is identified as high-skill workers, and they also have relatively high wages and social benefits. The high-skill workers have a strong relation with training schemes in European countries. This also illustrates the difference between LMEs (USA) and CMEs (France, Germany, Sweden and Japan). The apprenticeship system in USA is not strong and has “no institutionalised links with the general education system”; while the apprenticeship system is better in CMEs, and especially in Germany which has new apprenticeship programmes in both manufacturing and service sectors (Bosch and Charest, 2008, p.429). Bosch and Charest also mentioned that vocational training programmes have minor roles in USA while in Germany, employers, trade unions and government drive occupational training together (p.433). Japanese workers tend to be trained on-the-job (Hashimoto, 1979). Japanese workers’ skills are also in high level but with low transportability which is the second distinction Streeck mentioned. Labour can be easily transportable in European countries and USA but in Japan, labour is “firm-specific” (p.311); and the low transportability of Japanese workers is mainly due to lifetime employment (Hashimoto, 1979).

Trade Unions

As mentioned above, Germany has a single dominant confederation (DGB), and this is similar with the United States because it has unified confederal arrangements (AFO-CIO) (Carley, 2004). A noticeable feature of U.S. unionisation is “business unionism” which focuses on economic aspects of the members and collective bargaining instead of concerning social reorganisation and political activities; and it has “little direct connections with political parties” (Bean, 1994, p.21). For Japan, it is similar with France because its two main confederations are based on political affiliations (Rengo links with left party and Zenroren links with further left party) (Kuwahara, 1993). One similar trend for those five countries is the decrease on number of trade unions and the merging of trade unions (Carley, 2004). Generally speaking, trade union density is declining in all the five countries; trade union density in Japan and USA is lower than the average of it is in those three European countries, but higher than it is in France (see the table below).

Country

1999

2000

2001

2002

2003

2004

2005

2006

2007

France

8.4

8.3

8.2

8.4

8.2

8

8

7.9

7.8

Germany

25.3

24.6

23.7

23.5

23

22.2

21.6

20.7

19.9

Sweden

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80.6

79.1

78

78

78

77.3

76.5

75.1

70.8

Japan

22.2

21.5

20.9

20.3

19.7

19.3

18.8

18.3

18.3

U.S.

13.4

12.8

12.8

12.6

12.4

12

12

11.5

11.6

Source: OECD.Statistics

Employers’ Associations

As mentioned above, all the three European countries have their own national peak employers’ associations and the subsections of the peak associations conduct collective bargaining. Japan also has a national employers’ association-the Japan Federation of Employers’ Associations (Nikkeriren) which does not engage in collective bargaining and collective bargaining is usually conducted at company level (Bamber and Lansbury, 1993). But, Nikkeriren do have formal conversation with the government and trade unions; although Nikkeriren cannot force companies to follow its guidelines, its member associations play a behind role which influence member companies (Carley, 2004). However, this is not the case in the United States. Employers’ organisations are less important in USA and no national employers’ confederations have ever been engaged in collective bargaining (Wheeler, 1993).

Collective Bargaining

Country

Coverage of collective bargaining

Level of collective bargaining

France

93%

Industry

Germany

67%

Industry

Sweden

90%

Industry

Japan

20%

Company

U.S.

15%

Company

Source: Eurostat Labour Force Survey 2002

From the table, we can see that the coverage of collective bargaining in both Japan and USA are very low compared with the three European countries. As mentioned before, France, Germany and Sweden have high bargaining coverage depend on the government, employers’ association and high union density separately. For Japan and USA, the low bargaining coverage matches their low union density (Carley, 2004).

The table also demonstrates the level of collective bargaining. For the three European countries, collective bargaining conducts mainly at industry level, whereas for Japan and USA, it happens at company level.

It is noticeable that USA employers tend to oppose to unions since mid-1970s, and employers’ opposition to collective bargaining is more spread in USA than in other countries (Bamber and Lansbury, 1993). In Japan, both unions and employers’ organisations satisfy with company bargaining because firms rely mainly on internal market and employees tend to stay in the same company (Kuwahara, 1993).

Employee Participation and Works Councils

While in France and Germany, there is legislation for exchanging information and cooperation negotiations between employers and employees; by law, Swedish trade unions have the rights of information, consultation and co-determination; both USA and Japan, there is no legislation for works councils and employee participation, but Japan does have a high level of employee-management cooperation (Carley, 2004).

Government and Regulation

Because USA is a typical country of LMEs, government intervention is relatively less compared with it is in CMEs. In France, Germany, Sweden and Japan, there are clear legislations that support collective bargaining, but legislative support of collective bargaining in USA is very limited (Bean, 1994, p.124-26).

For new forms of work, such as part-time work and temporary agency workers, European countries tend to regulate them with legislation; USA leaves them unregulated; and Japan is in between (Carley, 2004).

Compared with Japan and USA , European countries provide high level of basic social rights for employees; and European industrial relations also provide “publicly guaranteed status to strong, independent unions both in the industrial and the political arena” (Streeck, 1992, p.314).

Conclusion

The systems of industrial relations are mainly about the three actors which are employers and their representatives, employees and their representatives and the state. When looking at systems of industrial relations in France, Germany and Sweden as a whole as European countries and comparing them with systems in Japan and the United States, it is believed that the three European countries are similar while fundamentally different from Japan and the United States. However, when compare the three countries separately, they have many differences. Trade union confederations in France, Germany and Sweden are under three different systems-political affiliations, single dominant confederation and divided by occupational groups separately. The high coverage of collective bargaining mainly depends on government, employers’ associations and high union density in France, Germany and Sweden. Sweden has a single channel system and has not works councils at workplaces while works councils are available in France and Germany; and in Germany, trade unions and works councils are separated from each other by law, but this is not the case in France; French trade unions involve in collective bargaining and have formal presence in workplace.

For labour market, Japan and the United States tend to have lower unemployment rate than it is in European countries; those European countries’ workers work less and have more holidays compared with Japan and the United States; labour in European countries with wider range of training programmes is in high-skill level while in low-skill level in the United States; Japanese workers are also well trained, but the transportability in low compared with it is in European countries and the United States. Trade unions in European countries concern with social issues and have some relations with political activities, whereas focus on economic issues and has little relations with political activities. National employers’ associations are available in Japan and the three European countries, but absent in the United States. Legislative support of collective bargaining is placed in European countries and Japan (CMEs), but limited in the United States (LMEs).

Both union density and the coverage of collective bargaining are high in the three European countries while low in Japan and the United States. The bargaining level in European countries is mainly at industrial level, but at company level for Japan and the United States. When there is no legislation on works councils in Japan and the U.S., it is available in European countries. European employees enjoy higher social rights than employees in Japan and the United States.

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