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Varieties of Capitalism and EuropeanizationNational Response Strategies to the Single European Market$

Georg Menz

Print publication date: 2008

Print ISBN-13: 9780199551033

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780199551033.001.0001

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(p.201) Appendix A Industrial Relations in Western Europe

(p.201) Appendix A Industrial Relations in Western Europe

Source:
Varieties of Capitalism and Europeanization
Publisher:
Oxford University Press

Austria

The main Austrian union federation ÖGB is subdivided into sixteen sector-specific and nine regional branches. The employer association WK is even further differentiated with more than 130 sectoral subdivisions and nine regional branches. Both associations remain highly centralized (Traxler 1998). Although subdivisions conduct the annual rounds of wage bargaining, the umbrella organization coordinates and controls wage policies. Within the subdivisions, every company enjoys parity in voting power, i.e. the principle ‘one company, one vote’ applies. The WK acts as an interest association, a think tank, and an employer association. Given the preponderance of small businesses in the Austrian economy, the think tank of the association of larger industry (VÖI, renamed to IV—Industriellenvereinigung) is not particularly influential.

The union effectively controls its affiliates by maintaining thorough control over finances, personnel decisions and legal status. Membership dues are collected by the central ÖGB and then redistributed to affiliates. The ÖGB appoints a large share of its sectoral subdivisions' personnel (Traxler 1999). Finally, these subdivisions do not possess legal standing of their own and engage in bargaining under the authority and the guidelines of the umbrella organization.

Industrial relations in the private sector unfold in a sphere in which social partners enjoy a relatively high degree of autonomy from state intervention. They are bound by the 1919 Labor Contract Act (Arbeitsvertragsgesetz—ArbVG). This act establishes works councils in companies with more than five employees. The council is informed on all major management decisions affecting employees, yet actual co-determination (Mitbestimmung) is limited to personnel and social issues, and thus considerably more limited than in Germany. Unlike Germany, works councils are de facto controlled by the unions, with up to 90 percent of its representatives being union members (Traxler 1998: 244 ff.). This law also mandates that only associations—hence unions and employers—are permitted to engage in collective bargaining. Closed and union shop arrangements are outlawed. Collective bargaining results in commonly agreed wage brackets (Tarifverträge) and related agreements on benefits, including overtime and night pay, safety and health regulations, and so on. Since wage agreements are binding for all constituents, there is a slight incentive for employees to ‘free ride’ and not to join the union. Union membership is not mandatory, but contributions to labor's think tank BAK are. WK membership is mandatory for employers, hence, all companies are bound by collective wages. This offers the advantage of equal conditions of competition and avoids ruinous wage spirals. However, traditionally there have been company-level (p.202) wage agreements, which may and often have exceeded sectoral minima. Three bargaining levels exist: macro, encompassing the entire economy, micro, focusing on one sector, and meso, comprising only one company. Lower-level agreements may exceed but never undercut higher-level agreements. In sum, industrial relations in Austria are thus characterized by relatively decentralized bargaining within the framework of bargaining among two key interest associations that are both highly centralized, unitary, quasi-monopolized, and formally nonideological.

France

The French state displays a paternalistic and often patronizing attitude towards societal groups (Keeler 1987; Wilson 1987; Labbé 1996). While closely intertwined with business, the feeble trade unions have rarely been regarded serious partners for negotiation. Instead, the government acts on labor's behalf as a sort of ersatz union. Major legislative initiatives leading to labor-friendly innovations in labor law or social policy emerge whenever the government is either composed of left-wing parties (the Popular Front of 1936, Mitterrand's 1981 Auroux Laws) or when it is under nonparliamentary pressure from the Left and/or the populace (1945 after the liberation, 1968 during mass demonstrations against de Gaulle, after the 1995 refus by refraining from certain policy steps) (Goetschy 1998).

While in many ways France combines political, economic, and cultural elements of both Northern and Southern Europe, the structure of French industrial relations is decidedly Southern European. The relations professionnelles are highly antagonistic and confrontational; employers are patriarchal and often unwilling to negotiate with unions, which are militant and easily resort to industrial action. Trade unions do not pretend to be ideologically neutral as in Germany, but neither are they as close to the ideological orbit of a political party as in Austria or Scandinavia. Betraying their original anarchist roots, unions attempt to keep some distance to the state as well. Although legalized in 1884, not until 1936 could unions engage in collective bargaining and only since 1968 are they permitted to have representatives at the company level. Unlike the two German-speaking countries and the Netherlands, the French union movement's history (Mouriaux 1993, 1994; Labbé 1996) follows the opposite direction, moving from a unitary movement toward ideological division. The main six French unions CGT, CGT-FO, CFTC, CFDT, CGC, and the FEN have broken away from one common branch. The CGT (Conféderation Générale du Travail—General Labor Confederation) was once this common root branch, with an affinity to anarcho-syndicalism, radical anticapitalism and confrontational activist-led strikes and demonstrations to overcome capitalism or at least, failing that, improve the condition of the working class. Traditionally the largest union, the CGT still generally rejects collective bargaining and only very recently has begun to sign wage agreements at all, and only at the company level. A fraction of the CGT split off in 1947–8 in protest over the growing dominance of the Communist Party and formed the CGT-FO (Force Ouvrière—Workers' Force). (p.203) Despite its eclectic and often contradictory ideological composition it has played an important role in wage negotiations. Christian union CFTC (Confédération Française des travailleurs chrétiens—French Confederation of Christian Workers) emerged in 1919, a more accommadationist and conservative union, engaging in wage bargaining and eschewing revolutionary rhetoric in favor of Christian values. In 1964 a reformist branch split off, forming the CFDT (Confédération française démocratique du travail—French Democratic Confederation of Labor), which grew to become the numerically most important French union.1 Because of its willingness to engage in collective bargaining, it is arguably the politically most important.

Finally, the numerically smallest union is the salaried employees cadre union CFE-CGC (Confédération française de l'encadrement—Confédération générale des cadres—French Confederation of Managerial Staff—General Confederation of Managerial Staff) formed in 1944 and focusing exclusively on highly skilled white-collar employees.

The French union movement is ideologically divided, fragmented, internally incoherent, and predominantly concentrated within the shrinking public sector. It is also experiencing an even more pronounced and rapid decline in membership than in the rest of Western Europe (Mouriaux 1993; Ebbinghaus and Visser 2000), only partially attributable to structural shifts in the economy. A particular French problem is the union movement's lack of political influence that makes it unattractive to its clientele. Between 1976 and 1994 union membership decreased from 4.93 million total members to 2 million in absolute figures, or from 20 percent of the workforce to less than ten (Bibes and Mouriaux 1990; Jefferys 1996; Hancké 1997). Compared to other Rhineland and Scandinavian countries, the labor movement is more activist, confrontational, and virulent on the one hand, but also in stronger decline and feeble, particularly outside the rapidly shrinking public sector. While French unions are generally highly centralized and hierarchical, they often cannot effectively control the rank and file. Internal cohesion is very low. This incapacity to control grassroots activists and suppress wildcat strikes commenced by them or nonunionized workers coupled with the union movement's weakness in sheer numbers renders it an unattractive negotiation partner for business. The CFDT has recently endeavored on a more cooperation-oriented approach with the state and the employers, being particularly willing to cooperate in the refondation sociale. Although its membership has consequently increased according to its own figures (EIRO 2004), some skepticism about the viability of this strategy seems appropriate.

(p.204) On the employers' side, companies are organized in the unitary CNPF (Conseil national du patronat française—National Council of French Employers), recently renamed to Medef (Mouvement des entreprises françaises—Movement of French Companies). Originally founded in 1919 and resurrrected in 1945, it is subdivided into eighty-four sectoral affiliates as well as regional subdivisions. CNPF/Medef had traditionally issued recommendations for wage negotiations, but has retired from this practice in the wake of the growing importance of company level bargaining. In fact, collective bargaining never occurs at the national level. This might be a reflection of the power relation between very powerful sectoral associations and a financially dependent umbrella organization. Medef often appears more as an interest association, lobbying group, and think tank than as an employer association, even though it combines all of these roles (Bunel 1997; Hancké 1997). It is much more influential politically and more attractive even to SMEs than the CGPME (Confédération Générale du Patronat des Petits et Moyennes Entreprises—General Confederation of Employers in SMEs).

The state plays a strong role in French industrial relations. Not only does it act as an ersatz union through occasional bouts of legislative initiatives, as mentioned previously, labor conditions are also highly legalistic, regulated through the encyclopedic Labor Law (Code du Travail). While the social partners are consulted on certain legislative measures regarding labor and social policy, these consultations are in no way binding. The state feels under absolutely no obligation to consider them binding. Since the beginning of collective bargaining in France in 1936, the state generally does not intervene directly into collective bargaining. Yet it does determine unilaterally the national minimum wage (SMIC—salaire minimum industrielle de croissance), created in 1958, which then becomes legally binding for all employees employed directly by French companies. It may also, based on the initiative of either the Ministry of Labor or one of the social partners, extend (extension) a collectively agreed framework of sectoral minimum wages (grite), based on level of qualification to cover all companies within either a certain sector or a certain region. The Ministry of Labor may also declare the grite generally binding for related professional sectors, a process known as enlargissement (Goetschy 1999: 358 ff.).

In sum, French industrial relations are characterized by antagonistic relations between militant, yet relatively weak unions, a traditionally paternalistic patronat, and a highly interventionist state, occasionally acting as an ‘ersatz union’. The state creates the arenas in which bargaining takes place through legislative measures. It intervenes into wage-setting through the minimum wage and by declaring wage accords universally applicable. It draws unions into consultative bodies at the national level and has strengthened their position at the company level. Yet unions remain fragmented, and have undergone a massive decline in membership. Furthermore, since 1945, but especially since the 1960s, civil servants have become enmeshed with managers in the private sector, opening up broad avenues for potent informal business influence on economic policymaking as has become recently apparent.

(p.205) Germany

Traditionally, German industrial relations are characterized by highly institutionalized and legally embedded (verrechtlicht) interaction between representatives of labor and business, with government playing a supervisory, yet noninterventionist role.

A noteworthy aspect is co-determination (Mitbestimmung) of workers in managerial decisions. Workers' representatives compose one-third of the delegates on the company's supervisory board in companies with more than 500 employees, while parity of representation is mandated in companies with more than 2,000 employees, in accordance with the 1951 Co-Determination Act (Mitbestimmungsgesetz), amended in 1976. The second component of the dual structure of workers' interest representation is the 1952 Works Constitution Act (Betriebsverfassungsgesetz). In companies with more than five employees, these workers must be represented at the workplace level through works councils (Betriebsräte), which negotiates with management at the macro level concerning issue-areas such as personnel decisions and safety and health regulations. While German works councils have more rights than do their Austrian counterparts, unions are not as well represented among its members2 as in Austria, commanding only about 80 percent of seats (Jakobi et al. 1998: 211), as opposed to 90 percent in Austria.

Representatives of the 12 sectoral subdivisions of the unions and the 32 sectoral subdivisions of the employers' organizations come together to determine wages in annual rounds of collective bargaining. This is sometimes done alternatively at the regional level, as in the metal industry, but never at the national level (Katzenstein 1987). Traditionally, the company level has also played a negligible role, though this may start to change (Heinisch 2000), as major companies, notably Siemens and VW, negotiate separate agreements that may diverge significantly and in turn have spill-over effects. Commonly, the metal union IG Metall and the corresponding employers organization Gesamtmetall in the southwestern state of Baden-Württhemberg set the national precedent for consequent rounds of wage bargaining in other sectors.3 Government agencies intervene only in cases of dispute, in which case an arbitration court (Schiedsgericht) becomes involved which attempts to prod both sides to settle on a compromise solution. As a general principle, however, the autonomy of employers and unions to settle on wage levels (Tarifautonomie) is being upheld and respected by the state a laid down in the 1949 Collective Agreement Act (TVG—Tarifvertragsgesetz) and Article 9 III of the Basic Law. These rounds of collective bargaining, in the course of which wage brackets (Tarifverträge) and (p.206) other work-related benefits are being established, carry significant weight because their results cover approximately 80 percent of all German employees. Union membership in Germany is a mere 32.2 percent of the work force or 9.35 million (Jacobi et al. 1998: 201). Resulting from the emphasis on sectoral and regional bargaining, sectoral unions are much more powerful than the umbrella association DGB (Markovits 1986; Thelen 1991). However, the BDA does issue wage recommendations to its members and attempts to coordinate their policy more actively. Yet in both associations, the sectoral metal groups are the strongest, with Gesamtmetall disposing of substantial funds used to supply member companies in cases of strike (Jacobi et al. 1998: 205).

Unions and employer association influence extends beyond their actual clientele because they negotiate the sector-specific comprehensive wage agreements (Tarifverträge). Although only a small fraction were declared legally binding—most of them in the construction industry—most employers find it in their interests to adhere to the negotiated terms, especially since the ‘decisions of collective bargainers actually follow the labor market’ (Jacobi et al. 1998: 217) and usually constitute compromise solutions.4

The Netherlands, Belgium, and Luxembourg

The three Benelux countries are characterized by a peculiar mixture of French étatisme and German neocorporatism. Generally, the three come closer to the German model, given the relatively powerful union movements. However, state intervention into the economy in general and collective bargaining in particular (or at least the threat thereof) are common features both of the Netherlands and Luxemburg. Belgian industrial relations are highly legalistic. The Belgian government has restrained the room for maneuver left to the social partners and has placed them ‘under house arrest’ (Vilrokx 1998) in the 1990s. This brings Belgium (p.207) somewhat closer to the French rather than the German model. All three countries have small, open economies that host a number of powerful multinational corporations alongside a numerically predominantly Mittelstand. Given the economic, political, and cultural implications of being situated in the borderland region between France and Germany, all three countries are traditionally ardent supporters of trade liberalization. Since the 1980s, the Netherlands in particular have also shifted towards a very pronouncedly liberal position in terms of the role of the state in the economy, more restrictive and ‘enabling’ social and welfare policies (Visser and Hemerijck 1998).

In all three Benelux countries, the union movements are divided into a Socialist and a Catholic branch, along with additional subdivisions that vary by country. In the Netherlands, the CNV (Christian National Workers' Federation—Christelijk Nationaal Vakverbond) and the FNV (Federation of Dutch Trade Unions—Federatie Nederlandse Vakbeweging) coexist.5 The Catholic General Christian Trade Union ACV/CSC (Algemeen Christlijk Vakverbond/Confédération des Syndicats Chrétiens) and the Socialist General Belgian Trade Union Federation ABVV/FGTB (Algemeen Belgisch Vakverbond/Fédération Générale du Travail de Belgique) compete in Belgium.6 Tiny Luxembourg has both the originally socialist Independent Trade Union Confederation of Luxembourg OGB-L (Onofhängege Gewerkschaftsbond Lëtzebuerg) and the Luxemburg Confederation of Christian Trade Unions LCGB (Lëtzebuerger Chrëstleche Gewerkschaftsbond).7 While unions organize around 50 percent of the work force in Luxembourg and 60 percent in Belgium, this figure only stands at 25 percent in the Netherlands.

Employers, by contrast, enjoy a relatively high degree of organizational coverage, yet were traditionally hampered by an internal division and even organizational atomization in the Netherlands and a continuing linguistic cleavage in Belgium. This trend has recently been reversed in the Netherlands, following the famous 1982 Wassenaar Agreement. The two major employer association NCW and VNO merged, creating the Federation of Dutch Employers VNO-NCW (Vereniging van (p.208) Nederlandse Ondernemers—Nederlands Christelijke Werkgeversverbond). Collective agreements can be extended by the Ministry of Labor to cover all employees in the economy which are not bound by any company-level agreement under the terms of the 1937 Law on Extension and Nullification of Collective Agreements (interview NIMinLabSocAff 2000). The 1927 Law on Collective Agreements renders such agreements legally binding on member firms of signatory employer association. Thus, as in Germany, companies have to pay their employees the wages specified in this agreement regardless of whether or not these are union members or not, thereby posing a similar free riding incentive as in Germany.

In Belgium, there is likewise little internal rivalry. The main Federation of Belgian Enterprises VBO/FEB (Verbond van Belgische Ondernemingen/Fédération des Entreprises de Belgique) is subdivided into 36 sectoral associations.

In Luxembourg, the main Federation of Luxemburg Industrialists FEDIL (Fédération des Industriels Luxembourgeois) organizes most employers (Tunsch 1998).

For collective bargaining, the sectoral level is the most important arena in all three countries. In Luxemburg and Belgium industrial relations are legalistic. Thus, the Luxembourg Ministry of Labor can declare universally applicable a sectoral collective bargaining agreement as set forth in the 1965 law on collective agreement while in Belgium agreements by the National Labor Council (Nationale Arbeidraad/Conseil National du Travail), which commonly cover topics such as working time, wages, holiday regulations, are commonly declared legally binding and thus royal decrees by the Ministry of Labor.

The Nordic Countries: Sweden, Norway, Denmark, Finland

The Nordic countries Sweden, Norway, Denmark, and Finland have been commonly considered highly neocorporatist. This characterization is based on the traditionally high degree of coverage by unions and employers, peak level negotiations, and high levels of autonomy from the state in wage bargaining. Unlike the Benelux countries, which have certain common features but differ significantly on a number of dimensions, it was accurate to speak of one Nordic model in different varieties until the 1980s, characterized by Social Democratic hegemony, an activist ‘decommodifying social policy’, a substantial public sector and frequent government intervention into the economy, and powerful trade unions. However, recent developments complicate or even eradicate this traditional sketch of the Scandinavian model—a decentralization of wage negotiations and the exit of employers from neocorporatist associations in Sweden (Pontusson 1997; Dolvik and Martin 1997; Kjellberg 1998; Due et al. 1995), less pronounced in Denmark, coupled with an embrace of more liberal economic policy under the conservative governments of Sweden and Denmark in the 1980s and early 1990s, and EMU-induced cuts in social spending and privatization programs all seem to point towards a move away from the classic Scandinavian model towards something resembling more the German model. While Norway and Finland seemed to follow the Swedish flirt with (p.209) neoliberalism in the 1980s, Norway has since moved back towards classic Social Democracy coupled with statist elements, no doubt helped along by substantial oil revenues.

While the Nordic countries have successfully transformed themselves from being producers of agricultural commodities to filling sophisticated industrial (niche) markets, Finland proved somewhat of a laggard. This shift was helped along by the ‘Nordic model’, which grew out of ‘peace accords’ between unitary employers and unions in the 1930s to promote economic and political stability and escape tendencies towards socialist or fascist totalitarianism present in other European countries at the time (Katzenstein 1985).

It operated on the basis of the following factors: a relative power parity between employers and unions, Social Democratic hegemony, unitary and highly centralized unions and employer association with a high degree of coverage, particular union strength not least derived from the administration of retirement funds, pivotal agreements at the national level acting as umbrellas for more specific sectoral and company-level agreements, a ‘high trust’ environment among the social partners, and a commitment to wage equality across sectors correlated with a universalistic welfare state aimed at ‘decommodifying labor’ (Esping-Andersen 1990). It is important to note that Tarifautonomie existed de facto but certainly not de jure in Sweden and Denmark. In fact, because of SAF's more confrontational attitude in bargaining, state mediation and arbitration has actually increased over time in Sweden. State intervention in wage bargaining and macroeconomic policy formulation more broadly was and is not uncommon in Norway and Finland, either.

The organizational structure of unions and employers varies little prima facie: unitary secular union movements, (Landsorganisationen—LO in Sweden, Landsorganisasjonen i Norge—LO in Norway, Landsorganisationen i Danmark—LO in Denmark, and Suomen Ammattiliitojen Keskusjärjestö—SAK in Finland) and their respective sectoral subdivisions face the employers association (SAF—Svenska Arbeidsgivarföreningen in Sweden, NHO—Nærignslivets Hovedorganisasjon in Norway, DA—Dansk Arbejdsgiverforening in Denmark, and TT—Teollisuus ja Työnantajat in Finland).

Despite the many similarities, differences amongst the various systems exist and will be briefly discussed. This analysis is all the more pertinent as recent developments have undermined the relative unitary character of the Nordic countries' systems of industrial relations and macroeconomic governance.

Sweden—and more recently Finland as well—is host to a number of important multinational corporations, while always a small open economy, has grown increasingly liberal in its domestic macroeconomic policies. It was not least due to the growing pressure of these large internationally active companies that wage bargaining became more decentralized and liberalized with many observers proclaiming the death of the ‘Swedish model’ (Pontusson 1997). However, other factors played a role as well: LO faced growing competition from white-collar unions TCO and SACO (Kjellberg 1998: 78), and wage increases were effectively decoupled from productivity growth causing inflation and rendered international competitiveness (p.210) more difficult. The employers became increasingly more neoliberal in the 1980s, withdrawing first from central-level bargaining and subsequently from all neocorporatist institutions. In receding from a self-regulatory modus vivendi based on what I call gentlemen's agreements—resting and being nurtured by on the high trust environment and relative power equality among social partners—the SAF involuntarily opened the path for more government intervention in the 1990s leading to a series of wage freezes, wage decrees and, ironically, culminating in a short-lived revival of tripartism in the form of the 1990–3 government commission on wage mediation (Rehnberg Commission). The SAF continues to push for a decentralization of wage bargaining as a means to break union power. Meanwhile, the Swedish trade union movement is suffering severe attrition, internal separation and division between blue-collar and white-collar employees, none of which is counter-balanced by a slightly increasing tendency of the state to prod the social partners into wage agreements by threatening intervention or offering mediation (Dolvik and Martin 1997: 304 ff.).

In Denmark, a trend towards decentralization in wage bargaining and a more and Knudsen neoliberal policy direction seemed discernible as early as the early 1980s (Lind and Knudsen 1998) in a political economy and a system of industrial relations very similar to Sweden. However, it seems as though these developments have had little lasting impact. Membership in unions (90 percent of workforce) and in employer association (50 percent) remains high (Danish Ministry of Labour 1991). In fact, state interventionism seems to recede and the essentially voluntarist model of industrial relations with de facto Tarifautonomie is thus still predominant in Denmark (Lind and Knudsen 1998). The Danish model thus remains more constant than is true of Sweden.

In Norway, after a brief flirt with neoliberalism and a consequent shift away from concertation at the national level in the mid-1980s, more recent developments point into the opposite direction. Indeed, state interventionism has reappeared in the governance of the Norwegian political economy. Undoubtedly the economic difficulties experienced in the 1980s helped provide a conducive climate to the government's initiative to revive tripartism in the form of a national level Solidarity Alternative, giving birth to a Employment Commission in 1992 (Dølvik and Martin 1997) to discuss steps to curtail inflationary wage growth. Norwegian tripartite neocorporatism coupled with substantial state interventionism into the economy has thus actually experienced a revival in the 1990s. It must be realized that this development hinged on three factors, some of which somewhat idiosyncratic: First, a perceived failure of ‘market-led’ wage determination and a more general association between neoliberal experiments and economic problems, providing fertile intellectual ground for state interventionism. Second, Norway has a long history of state interventionism in the political economy and industrial relations more specifically. The state is thus relatively powerful vis-à-vis trade unions and employers. Third, revived concertation occurred under the impression of the need for austerity measures and wage moderation. Norway as a de facto EU and de jure EEA member was preparing for full EU membership in 1995, which (p.211) necessitated adjustment to the Maastricht criteria. Membership was only prevented by the negative popular referendum.

In Finland, national level tripartite concertation on macroeconomic issues has a long history. Social pacts have been used as a successful tool in dealing with the challenges involved in shifting from a predominantly agricultural economy to the predominance of the tertiary sector, losing the most important trading partner with the disintegration of the Soviet Union in 1991, and meeting the criteria for membership in the EU and the EMU in 1995 and 1999 respectively. Such tripartite agreements have permitted for a downward shift of wage bargaining to lower levels of negotiation (Kauppinen 1998), yet discussions on major policy issues continue to be held at the national level. One might thus regard Finland as yet another case of the survival of organized capitalism and neocorporatist institutions, which had to cope with the external economic pressures of EU membership and the Maastricht criteria, and a very different external environment.

Notes:

(1) According to 1994 figures, union membership in total figures is down to 2 million from 4.93 million in 1976. CFDT (500,000) is ahead of the CGT (480,000), the FO (400,000), the FEN (250,000), the CGC (200,000) and the CFTC (170,000). In 1976, the top three positions were as follows: CGT, FO, CFDT (Jefferys 1996). By 2003, the overall ranking had not changed, however, both the CGT and especially the CFDT had claimed to have recruited new members, bringing the CFDT up to 889,000 (EIRO 2004; http://www.eiro.eurofound.eu.int/2004/03/update/tn0403105u.html).

(2) 21.9 percent of works councils members are nonunionists.

(3) Baden-Würthemberg is home to the headquarters and substantial production facilities of Bosch, Porsche, and Daimler-Benz (since 1998 Daimler-Chrysler). Since this region and this sector is thus particularly export-oriented, business considers crucial wage regulation in this sector. However, in 1999 the employers in the southwest metal sector publicly announced that their settlement would no longer ‘send a signal’ (Stumpfe, quoted in Heinisch 2000).

(4) Wage agreements can be declared generally binding or ‘universally applicable’ (allgemeinverbindlich) by the Ministry of Labor. However, the procedure is notably different from the French extension: According to Article 5 of the TVG the Ministry of Labor and Social Affairs may declare an agreement universally applicable if and only if the simple majority of a commission at the Ministry composed of three representatives of the employers (the BDA and two other sectoral associations, but never from the sector concerned) and three of the union (the DGB and two other sectoral associations, again not from the sector itself) known as the Tarifausschuss has agreed. Of 51,500 agreements in Germany, only 498 were declared universally applicable as of October 2000. In the construction sector, a general framework on labor conditions (not implying wage levels!) had been declared generally applicable as of February 3, 1981, one on sectoral education as 29 January 1987, and one for sectoral social funds on December 20, 1999 (BAS 2000: 3, 16). The question of universal applicability became a crucial one in attempts to devise a national response strategy because any minimum wage for posted workers had to jump through this institutional loop, otherwise it could have been struck down as discriminatory by the ECJ, since it would have applied to foreign companies only, but not to their German counterparts. This point will be discussed in more detail in Chapter 3.

(5) These two are the numerically most important (membership figures stood at 1,226,000 and 355,000 respectively in 2003; EIRO 2004). The FNV has abandoned its socialist roots, which, in combination with a general decrease of the religious and ideological cleavages in Holland, has rendered it the most important union. However, there is also the white collar union VHP with 160,560 and the General Union Federation AVC with 104,885 members. In the construction sector, there is also the so-called Black Corps of Workers Zwarte Vakverbond, a specific sectoral union.

(6) Unlike Holland, the Christian union in Belgium is numerically more important, boasting 1,201,000 members versus 1,637,000 members respectively in 2003. Note that there is also a smaller liberal union, the General Confederation of Liberal Trade Unions (Algemene Centrale der Libeale Vakverbonden van Belgie/Confédération Générale des Syndicats Libéraux de Belgique), which united 223,000 members in 2003. Unlike the two larger unions, this latter one has been more successful in resisting the trend towards a disintegration along linguistic cleavages (EIRO 2004).

(7) In addition, there is a separate union for private sector white collar employees, the FEP/FITC and a Neutral Trade Union of Luxembourg NGL (Neutral Gewerkschaft Lëtzebuerg) that organizes individual crafts unions (EIRO 2004).