Different or Similar?
Analysing systems of industrial relations in France, Germany, Sweden, Japan and US
This essay aims to address two questions, which have been leading to heated debates: (a) Are systems of Industrial relations in three main European countries: France, Germany and Sweden fundamentally similar? (b) Are the Japanese and US systems of industrial relations are fundamentally different from those in the three countries in Europe?
The arguments to the questions can, definitely, also be put into two parts: On the one hand, the industrial relations systems in France, Germany and Sweden are quite similar in many aspects, while some differences can still be found among them. On the other hand, the Japanese and American industrial relations system are apparently different from those of their European counterparts, however, similarities also exist. Furthermore, these two aspects are interacting with each other. That is, the differences between EU and the two non-European countries can highlight the similarities within EU countries. Also, the similarities among EU countries are likely to make the differences between them and the other two non-European countries more prominent. Obviously, it is also the case in the exceptions mentioned above. Throughout the arguments, issues are analysed both with a current view and their trends.
As many of previous studies of industrial relations did, this essay mainly focuses on institutions involved with collective bargaining, arbitration and other forms of job regulations (Bamber, Lansbury and Wailes, 2004). Moreover, some current and future issues relating to HRM, which are the outcomes of the institutional structure and process, are also compared among five involved national industrial relations systems. Undoubtedly, all of these are put into specific economic contexts, which are also taken into account as one of the aspects of industrial relations as 'it (IR) is both an interdisciplinary field and a separate discipline in its own right' (Adams, 1988).T
herefore, this essay comprises 3 main sections: Firstly, economic context, in which some crucial economic indicators such as are displayed and analysed, and two types of markets-coordinated and liberal-are compared. Secondly, institutional structure and process, which consists of employers' association, trade union, collective bargaining, and, the role of state. Finally, outcomes and issues, including pay level, working time, which are crucial parts of collective bargaining, and, industrial conflict, as well as new forms of work.Part I. Economic context
Economic and employment development
As can be seen from the economic and employment indicators in recent years, it is obvious that France, Germany and Sweden usually are of some similarities. However, it is difficult to conclude they are fundamentally different from Japan and the United States, although in some cases the differences virtually exist.
As the most powerful economy, the United States led the index of GDP per capita in 2008, while the other four countries were almost of same level with the lowest 107.9 in France and the highest 120.0 in Sweden, which were all much less than 154.7 in the United States.
In terms of annual average real GDP growth from 2005 to 2008, Sweden occupied the highest position of all five countries, followed by US and two other EU countries. On the other hand, Japan grew in the lowest speed, only 1.275% per annum. However, the span was less than one percent. As for the expected GDP growth data in 2009, due to the global financial crisis, all five countries experienced an economic recession, the most notable reflection is the negative growth in real GDP as expected in 2009 without any exception in these five countries.
The annual average inflation rate during 2005 to 2008 showed the similarity among three European countries, and, differences between EU and non-EU countries. Specifically, Inflation rate experienced relatively close levels in France, Germany and Sweden from 2005 to 2008, while much different from Japan and the United States with the former far lower and the latter much higher.
As for employment context in 2008, the employment rates of all five countries were almost on the same level, with lowest 64.9% in France and highest 74.3% in Sweden. The female employment rates were of similar situation, however lowest occurred in Japan as some cultural and traditional reasons can be expected. On the other hand, the unemployment rates in three EU countries were all above 6%, while Japan and US held relatively lower percentage.Coordinated market and liberal market economy
As two types of capitalism economy, coordinated market economy (CME) and liberal market economy (LME) are exemplified by these five countries. Germany is a typical example of CME, and Sweden and Japan have many characteristics of CME, while France just has some relevant traits. The LME, on the other hand, is exemplified by the United States.
The fundamental difference between CME and LME is the way in which they cope with the problems of coordination among various stakeholders of the economy. In CME, some formal institutions perform a significant function in terms of governing economy and regulating this kind of coordination and firm relationships. While in LMEs, it is market mechanism that solves these problems. Based on this fundamental distinction, some other relevant differences can also be empirically discovered. The contract persuasive degree in LME is very high while in CME is too low. In CME, collective agreement is a legal document and wages are determined by industry level collective bargaining between employers' associations and trade unions. In LME, however, the wages are mainly set by market forces, and the coverage of collective bargaining is extremely low. Difference also occurs in the legal system. In LME, laws and legislations are powerful instruments and play a role as an important supplementation in the market mechanism. Whilst in CME they are not as powerful as in LME, but function jointly with contracts and other institutions.
Since the CME and LME are fundamentally different from each other in many aspects, we can assume that differences between CMEs and LMEs are more or less affected and caused by this fact. Also, the similarities occur among CMEs from our five countries can be deemed as stemming from the same economic system to a certain extent.
Part II. Institutional structure and processEmployers' organisation
Compared with Japan and the United States, the three EU countries seem to be more coherent and comprehensive in terms of institutional coordination with each other in a continental level. BUSINESSEUROPE, the Confederation of European Business, which was the Union of Industrial and Employers' Confederation of Europe (UNICE) prior to 2007, is a European association of industries and employers. There are 40 member federations from 34 countries in BUSINESSEUROPE (Data source: BUSINESSEUROPE), including BDI and BDA from Germany, MEDEF from France and SN from Sweden. BUSINESSEUROPE, alongside by two other social partners: UEAPME, the employers' organisation representing the interests of European crafts, trades and SMEs at EU level, and, CEEP, which represents public employers or providers of services of general interest across Europe, conduct dialogue and negotiations with ETUC.
At national level, situations in three EU countries are significantly similar, while in Japan are somewhat different and in US are of more differences. In France, Germany and Sweden, both intersectoral and sectoral employers' organisations are conducting significant dialogues with unions, with collective bargaining role played by sectoral ones. However, in terms of intersectoral level, there is single umbrella organisation representing both employers' and business/trade interests in France (MEDEF) and Sweden (SN), which is different from the division of them with separate central organisations in Germany (BDI and BDA). On the other hand, Japan's situation in intersectoral level is close to France and Sweden, with single central employers' body (Nippon Keidanren) negotiating significantly with unions. While in sectoral level, almost all bargaining takes place at the level of the individual enterprise. In the United States, employers' bodies have little bargaining or dialogue with unions both in terms of intersectoral and sectoral level, and, similar to Japan, bargaining in US occurs primarily at enterprise or local level.Trade union
Trade unions in the involved five countries show many differences in terms of structure at national level, although the three European countries are cohered at EU level. Furthermore, the trade union density degree varies greatly in the five countries. However, the similarities can be discovered from the trend of union density change.
ETUC, the European Trade Union Confederation, brings together 82 trade union organisations in 36 countries, plus 12 industry-based federations across Europe (Data source: ETUC), including the main confederations in our three involved European countries. Also, there some other social partners at European level, such as CED, CESI and so forth.
At national level, enormous diversity occurs in all the five countries in terms of trade union structure and process. In Germany, there is a single dominant confederation (DGB) consisting of 8 member unions of industrial level, covering over 77% union members in Germany (Data source: DGB). Collective bargaining is conducted at industrial level rather by DGB. Single main confederations (AFL-CLO) also takes place in the United States, with just a few unions excluded. While member unions in AFL-CLO are made up of both industrial and occupational level. On the other hand, multiple confederations model exists in France, Japan and Sweden, while with features relatively in each country. In France, a great number of trade unions are not included in confederations. Situation in Japan is close to that in France, with two main confederations (Rengo and Zenroren) divided on political grounds. In Sweden, there are three main union confederations (LO, TCO and SACO). However, unlike France and Japan, Swedish confederations are not only organised by industrial level (SACO), but also divided by blue- and white-collar respectively (LO and TCO).
As for union density, great differences can also be pointed out easily according to the data during 1999-2007. The high degree of union density only occurred in Sweden in the range of 70% to 80% due to the unemployment insurance in Ghent system, although some union-independent unemployment funds have been set up in recent years, which weakened this union density (Lind, 2009). Whilst other countries were almost no more than 25%, and, France was of the lowest degree, fewer than 10%. However, there is obviously a similar trend, that is, trade union densities in all five involved countries had been declining during the eight-year period, although with small fluctuations in one or two countries.Collective bargaining
The collective bargaining is notably different between EU countries on the one hand, and, Japan and US on the other hand, although within EU countries differences exist as well. Apparently from the data, the differences can be located both in terms of the coverage of collective bargaining and the level at which collective bargaining is conducted. As for the trend of collective bargaining change, there are two opposite but simultaneous trends can be found, which are Europeanisation at EU level among three European countries and decentralisation at national level with Sweden as an exception (Wergin, 2004).
According to table 3, we can see that generally the coverage of collective bargaining in France, Germany and Sweden were notably higher than that in Japan and the United States. Also, the same situation can be seen from table 5. However, comparing three EU countries, difference can also be discovered, that is, the coverage of collective bargaining in France and Sweden were apparently higher than Germany, which can be demonstrated by data in table 3 and table 4.
The levels at which collective bargaining is conducted show the similar situation of the collective bargaining coverage in five countries. Specifically, as we mentioned above, the collective bargaining in Japan and US are generally conducted at company level, while in three EU countries it is common to see industry level collective bargaining,. However, in recent years the situation in Europe has changed. As can be seen from table 4, company level bargaining played an important role in France, and in Sweden even much collective bargaining were left to company negotiations. Only in Germany the industry level collective bargaining still dominated.
The Europeanisation of collective bargaining does not mean collective bargaining occurs directly at continental level, but the institutions such as ETUC and BUSINESSEUROPE, as well as the EU level process has been becoming increasingly influential on individual nations(Wergin, 2004).
At national level, decentralisation is a prominent trend, which can mainly be demonstrated from two perspectives. Firstly, in accordance with table 4, the company level collective bargaining began to appear and played a crucial role in France and Sweden, which is different from the industry level dominant model traditionally. Secondly, after comparing data from table 5, we can summarise that the coverage of collective bargaining in France, Germany, Japan and US decreased year by year. Exception only happened in Sweden where showed an adverse trend in comparison with other countries.
Part III. Outcomes and issuesPay level
The pay level between three EU countries and other two non-EU countries is somewhat different, in particular in terms of labour compensation per employee, while similarities within EU are not so easy to be found out.
In the light of table 6, from 2000 to 2006, Japan was located at the lowest level of labour compensation per employee while the Unites States occupied the highest position. In comparison, France, pay level in Germany and Sweden seemed to be moderate, with in France higher than the other two.
As for the growth of labour compensation per unit, five countries except for Japan experienced an increase more or less every year from 2000 to 2007, while in Japan it declined in consecutive five years from 2001 to 2005. Furthermore, although data fluctuated, in all five countries the general speed of growth of labour compensation per unit was reduced during the 7-year-period.
The working time in France, Germany and Sweden are of an extremely similar situation, no matter in comparison with the rest of Europe or Japan and the United States.
Data on collectively agreed normal weekly working hours are not available from Japan and the United States, while in three involved European countries, there was a similar situation that average collectively agreed weekly working hours were too low, with all at least about 1 hour lower than EU 27 average level and lowest of all Europe in France.
Comparing annual average hours actually worked, we can see employees in three EU countries worked generally for shorter time than their counterparts in Japan and the United States. Also, in France, Germany and Sweden, annual hours actually worked declined every year in the given period, whilst in Japan and the United States some fluctuations occurred during the time although experiencing an overall trend of decrease.
Usually, strikes, the withdrawal by workers of their labour, are the core of analysis of industrial conflicts (Williams and Smith, 2006).
According to table 10 and table 11, Sweden, where is characterised as high union density and high degree of collective bargaining coverage, experienced extremely small numbers of strikes, and almost no strike in 2005. In contrast, in countries of low union density such as France and the Unites States, numbers of workers involved in strikes were enormous. Comparing three European countries, it is hardly to find out any similar situations from the given data.
New forms of work
The sentence like "new forms of work are becoming widely spread in recent years" can usually be seen in newspapers and magazines, however, is the reality developed as we imagine?
As table 10 indicates, part-time employment in three European cases had increased in the given five-year-period from 2003 to 2007, among them data in France and Germany increased year by year while decline took place in Sweden from 2004 to 2006, before the 1% growth in 2007. Part-time employment rate in Japan was relatively stable in the five years with an overall increase trend. By contrast, in the United States there were increasingly less part-time employments.
Almost same trend as in part-time employment can be pointed out in three EU countries in terms of the incidence of temporary employment. Japan and the United States, on the other hand, were of different situations. Specifically, the temporary employment declined by 3% in Japan during 2003 to 2007, while in the United States, although data was only available in 2004, the 4.2% temporary employment rate demonstrated that new forms of work in America was less developed than other four cases.
After comparing involved five cases from three respects, more specific arguments can be concluded.
Within EU countries, similarities are commonly seen, in particular in terms of institutional framework and structure at EU level, such as the European confederations of trade union and employers' association, etc., which brings together members from individual countries.
Comparing EU countries with Japan and the United States, more similarities among three European cases can be reflected by the differences existing between them on the one side, and, Japan and the United States on the other side. In terms of economic context, the inflation rates in EU countries were higher than Japan and lower than US, while the unemployment rates were quite high in EU cases. As for structure and process, apart from similarities generated due to the EU framework, at national level some close situations can also be discovered in France, Germany and Sweden. The employers' association and collective bargaining, for examples, can demonstrate this. What is more, notable differences are easier to be pointed out in collective bargaining between EU and nom-EU cases. In the outcomes and issues, the annual gross pay in EU countries came closer while US and Japan occupied the highest and lowest position relatively. In addition, working time in three EU cases were extremely low even comparing to other EU countries. By contrast, working hours in Japan and US were much higher. Also, the new forms of work in EU cases seemed to be more welcomed than in the United States.
However, we can still see some exceptions. That is to say, there are some differences among EU cases and similarities between EU and non-EU cases. The obvious example of the notion that France, Germany and Sweden are not so similar is the trade union, both in terms of the structure and the density, three EU cases were greatly different from each other. On the other hand, similarities between EU cases and non-EU cases occurred, usually between individual countries, rather than two groups as a whole relatively.
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