Tomorrow's Economy

Social partners and the fragmentation of working life

19 December 2016

Employers and trade unions must recognise their mutual interests in responding to the fragmentation of working life

Poul Nielson

In April 2015 I was commissioned to carry out an independent analysis of the challenges confronting the ‘Nordic model’ and to come up with my answers to these. At the end of last month the Council of Ministers for Labour had their first debate on the report, which will be followed up in the coming years.

A key element in the description of the much-praised and envied situation characterising the labour market in the Nordic countries is the relationship and interdependence between the historic building up of our welfare societies and the formation of the stable and mutually recognised roles of employers and trade unions – referred to henceforth as the social partners. They have, in contrast to some other countries, developed a ‘compromise competence’ that enables a productive interplay between the political and legislative process and the social partners.

All this is, however, based on a credible organisational coverage of the social partners, and this is where the present trend towards fragmentation of working life raises some serious problems. Self-employment, Uber, and the extreme subcontracting of IT jobs etc contribute to the erosion of a high level of organisation in the traditional unions and thereby weakens their authority with employers and the state. It is acutely important to understand that this is not just a simple question about whether the unions are old fashioned and unable to catch up with the exiting new developments accelerated by technological progress.

If unbridled fragmentation becomes the name of the game, huge numbers of people will be left without any protection of their rights (pension, vacation, maternity leave, work environment, insurance etc). The highly educated might be able to cope with this, but it must be remembered, that the vast majority will not be in this vulnerable position as a result of a positive choice. This again will create a pressure for the state to secure the situation of this ‘modern proletariat’, and the potential for a productive division of labour between the state and the social partners will be reduced.

Therefore it must be recognised by governments that it is in their interest to contribute to enhance the representativeness of the regular trade union organisations. In practice this means having a look at issues like taxation rules in relation to unemployment funds and trade union subscriptions, etc.

Structural changes have affected the classical situation on the employers’ side, too. Today it is a major challenge to organise enterprises in new sectors where the culture and perhaps also the relationship between owners and employees is different than in industry. On top of this, large corporations – ‘the powerful singles’ – tend to pursue their interests independently of employers’ organisations regardless of whether they are members of them or not. The key observation here is that a weakening of one of the social partners is also a weakening of the other, a weakening of their joint influence generally in the shaping of society – and a weakening of the state’s potential for using them in that endeavor.

A crucial element in all this is the difference in the organisational cultures characterising the two sides on the labour market. Put simply, where the employees’ organisations are extrovert, the employers are introvert. This has not kept them from developing their ‘compromise competence’, but a recognition of a shared challenge is an essential first step in a dialogue about developing an adequate response to the fragmentation of working life.

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