The labour ministers consider collective agreements' position in the Nordics

So far, support measures have mainly focused on individual employees and companies, who have been able to deduct membership fees from their taxes in several countries, or in the shape of political decisions to make collective agreements universally applicable to cover all businesses within one sector.  

The Fafo report was debated during the Nordic labour ministers’ meeting in Oslo on 22 November. Commissioned by the Norwegian Ministry of Labour and Social Inclusion with support from the Nordic Council of Ministers, the report describes the significant differences between collective agreement systems in the Nordic countries, both in terms of how many are covered and which rules and traditions apply. 

Compared to other countries, collective agreements have high coverage ratios in all of the Nordic countries. But within the Nordics it varies between 90% for the private sector in Iceland, followed by Sweden at 83%, Denmark at 73% and Finland’s 65%. Norway is bottom at 46%. If you count all employees who are covered by collective agreements in Finland, the country nearly comes level with Sweden at 84%, while the number in Norway rises to 57%.  

How trade union density in the Nordics has developed between 1985 and 2018. Source: Nergaard 2018, OECD 2019

Coverage is influenced by trade union membership levels, as well as how many employers are organised. Since 1985, the coverage ratio has decreased by 21 percentage points in Finland, 18 percentage points in Sweden, 15 percentage points in Denmark and 5 percentage points in Norway. 

This means all the Nordic countries are now at approximately the same level – 50 to 65% – which is also high compared to the rest of the world. The numbers have dropped mainly among blue-collar workers, while white-collar workers and academics have maintained their union membership levels.  

“This means that an increasing number of vulnerable workers end up without the protection that the Nordic model offers through collective agreements and higher union membership levels. While inequality is rising among employees, more companies paying low wages while remaining outside of collective agreements represent a threat to serious companies,” says Jon Erik Dølvik. 

What is behind the differences?

So how do you explain the existing differences and what can be done to increase the collective agreement coverage in the private sector? One obvious difference is that unemployment benefits in Norway and Iceland are not linked to trade union membership – they are a state-guaranteed right.

Another difference is that in Norway there is a lower limit which means that at least 10% of a company’s employees must be trade union members before they can demand that their union´s collective agreement can be signed.

Sweden’s high collective agreement coverage, on the other hand, is a result of the fact that companies enjoy a lot of freedom to negotiate changes to legislation so that certain rules do not apply. 

What can be done?

So which tools is the state left with to increase collective agreement coverage ratios? One solution is to make it compulsory for companies bidding for public tenders to follow the collective agreements or in other ways show they can provide qualified labour and follow the rules.

Another solution is to offer state support for skills improvement programmes, but only to companies with collective agreements. Countries that have the possibility to make collective agreements universally applicable, could lower the threshold to do that. Countries which give the social partners the right to negotiate away parts of the legislation could introduce that.

“But one solution which really is not being used yet in the Nordics is to offer tax rebates to workers and companies with collective agreements, for instance by reducing employer fees,” says Jon Erik Dölvik.

“This could also be a way of limiting so-called alternative trade unions, which offer insurance but do not negotiate collective agreements. In Denmark, these types of unions represent 12-13% of all organised employees,” Dølvik pointed out to the Nordic Labour Journal after his presentation during the labour ministers’ meeting.

Governments must think big

He says it is important that governments think big if they want to increase the role of collective agreements in the labour market, and pursue measures that can increase union membership numbers as well as ways of regulating and supporting companies. 

“Offering tax rebates for employers could also increase the number of employees, rather than them resorting to outsourcing certain tasks. It could also incentivise collective agreements for groups who still don’t have one,” says Dølvik.

The Nordic labour ministers were also presented with a status report on the OECD’s survey of how the corona pandemic impacted on the Nordic labour markets. The results will be presented in March in Reykjavik when Iceland has taken over the presidency of the Nordic Council of Ministers. Sweden was in fact next in line for the presidency, but since the country will take on the presidency of the Council of the EU for the first six months of 2023, Iceland offered to take on the Nordic task. 

Iceland’s presidency

The country has presented its presidency program for the Council of Ministers several times, but also introduced it to the labour ministers. 

The programme can be downloaded from norden.org.

“During our year in presidency, we will emphasise close co-operation within the Nordic Region in climate matters, especially in the field of energy transition and just green transition, including in the labour market. The advancement of digital development will also continue, and we will focus on finding ways of making new electronic solutions accessible to everyone who may find it difficult to adopt such innovations,” write Prime Minister Katrin Jakobsdóttir and Minister for Cooperation Guðmundur Ingi Guðbrandsson, in their introduction to the programme.

Both ministers are well-known for their engagement in gender equality issues. The programme says: 

”Strong emphasis has been placed on eliminating the gender wage gap in the Nordic Region. Nevertheless, there is still a wage gap in the region that cannot be explained by any other variable than gender. There are several indications that the skills required for traditional women's jobs have been underestimated regarding wages. Chaired by Iceland, the focus will therefore be on the valuation of jobs and the gender-segregated labour market in the Nordic Region.”