Outsourcing the pressure on the Nordic Collective Bargaining Model

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Outsourcing the pressure on the Nordic
Collective Bargaining Model

• Elsinore, 23. June 2009
• Steen E. Navrbjerg
• Ph.D., Associate professor
• FAOS
• Employment Relations Research Centre
• Dept. of Sociology
• University of Copenhagen
• www.faos.dk

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FAOS Employment Relations Research Centre

• Dept. of Sociology, University of Copenhagen
• Financed by the social partners
• Central research interest The collective
  bargaining system

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Steen E. Navrbjerg

• SME-research since 1990
• 1998 Show steward survey
• Ph.D. 1999 Decentralisation and HRM five
  case-studies
• 2001-2004 Co-determination and co-influence in
  the public sector
• 2004 The collective agreements in the private
  sector 1912-2004
• 2007 EU-directives implementation in DK
• 2007? Employment practices in MNCs
• 2008 Hedge funds and private equities and
  labour relations
• All in all more than 400 interviews in private
  and public enterprises

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Agenda

• The Danish (Scandinavian) Model characteristics
  and the history
• Phases in Danish collective bargaining system
• Outsourcing and the IR-system
• IR an obsolete theoretical framework?

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The Economists Rankings of Nations
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The Economists Rankings of Nations
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The Danish Model the history

• The September Compromise of 1899 (following 19
  weeks of conflict) institutionalised the
  conflicts
• Secured the workers right to organise and
  establish collective representation
• Secured the management prerogative
• A reciprocal recognition

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The Danish Model the history

• The September Compromise 1899
• Stipulated a peace obligation as long as the
  collective agreements are running
• Stipulated obligations to give notice on eventual
  conflicts in relation to renewal of agreements
• Established the right to expand a conflict based
  on the notice procedure for industrial action to
  other industries
• Establishes the responsibility of conflict at a
  collective bargaining party (1910)

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The Industrial Relations Model

• The State
• Employers Trade Unions

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The Industrial Relations Model- the legislative
version

• The State
• Employers Trade Unions

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The Industrial Relations Model- the liberal
model

• The State
• Employers Trade Unions

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The Industrial Relations Model- the socialist
model

• The State
• Employers Trade
• Unions

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The Industrial Relations Model - the Nordic
version

• The State
• Employers Trade Unions

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The Danish Model

• Denmark
• The collective agreements regulate the major part
  of labour market related issues
• The labour market parties (the social partners)
  are consulted in law-making processes
• Many other countries
• Legislation dominates the labour market regulation

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The Danish Model

• A consensus model
• - meaning shared understanding of the bargaining
  schedule when renewing the agreements
• - meaning a constant fine tuning and adjustment
  of collective agreement over 100 years
• - but a delicate balance, which can be disturbed
  with major consequences

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Phases in the Danish bargaining system

• From centralised regulation (1930-1980)
• to centralised decentralisation (1980-2000s)
• to multi-level regulation (2000s onwards)

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Centralised decentralisation (1980- 2000s)

• The collective agreement provide the framework
• but detailed decisions on wages and working
  conditions are taken on work place level
• ? flexibility needed at local level (freedom)
• ? high-trust needed at local level
• ? a certain degree of common centrally
  controlled fundamental rights
• ? A high level of trust and social capital is a
  prerequisite for centralised decentralisation

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Presently Multilevel regulation

• Multi-level regulation by the end of 1990s and
  onwards
• ? puts pressure on fine tuned national collective
  bargaining models
• Pressure from above
• EU-regulation (directives)
• State intervention
• Pressure from below
• Quest for flexibilization
• Quest for personalized work designs

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The trendStill more mobile labour and capital

• Labour and capital less grounded
• The free movement of labour (however less than
  expected)
• The free movement of capital (more than
  expected?)
• ? capital moves where ever labour is
• - cheapest
• - least regulated (?)
• - best
• - most stabil
• ? benchmarking of national labour
  market/IR-systems

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Company level challengesThe background for
outsourcing

• Still more transparent (labour) markets
• Still more flow of investments over borders (FDI)
• Still faster transfer of technology
• The fall of the Iron Curtain
• Still more fierce competition on
• - the price of labour
• - the price of investing in foreign countries
• Outsourcing a still more present option

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Three waves in outsourcing

• 1970-80s
• End of the 1990s
• 2005 - now

• First wave
• Low skilled blue collar work
• Second wave
• Service functions
• Third wave
• Research Development

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Outsourcing and company level industrial
relations

• From an closed to an open system
• Before
• employers, employees and the local labour market
• Now
• - employers, employees, local labour market and
  the world wide labour market

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Company level industrial relations Outsourcing
a part of negotiations

• Outsourcing at many companies
• Part of negotiations
• 1. phase A source for fear
• 2. phase A fact of life ? climbing up the skill
  ladder

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Company level industrial relations Outsourcing
a fact of life

• Up through the 1990s, we ducked our heads
  whenever the word outsourcing came up. ()
  Today, we have growth and prosperity. If we had
  clung on to the old system, we wouldnt have had
  a job now.
• Shop steward, Alfa Laval

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Company level industrial relations From
defensive to offensive outsourcing

• Defensive outsourcing
• Bad and ad hoc management
• Outsourcing as part of negotiations
• First step over the edge?
• Offensive outsourcing
• Well prepared management
• Outsourcing in the cooperation committee
• A new division of labour ? home labour gets
  better jobs

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Industrial relations and outsourcing

• Why is outsourcing an accepted fact of life?
• Moving up the skill ladder
• ? but who are the loosers?
• 2. High level of trust/social capital at
  enterprise level
• 3. The system of flexicurity

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Flexicurity - a balance of social protection
and labour market flexibility

• Over the last 1½ decade achieving a new balance
  within the framework of the collective bargaining
  system

Scope of bargaining New issues on the
bargaining agenda
Flexicurity
Dept of bargaining decentralisation
of bargaining competencies
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Flexicurity - a balance of social protection
and labour market flexibility
The main axis of the flexicurity model
Flexible labour market
The qualification effect of the LMP
Active LMP
Generous welfare schemes
Motivational effect of Labour Market Policies
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Outsourcing undermining centralised
decentralisation?

• Trust/social capital a fundamental preequisite of
  decentralisation
• Outsourcing potentially moves the power balance
  between employers and employees
• The IR-system is decisive for how big a damages
  outsourcing entail on national IR-systems

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Outsourcing undemining centralised
decentralisation?

• If management use outsourcing recurrently as a
  threat
• then the collective bargaining negotiations
  might direct towards more centralisation and less
  flexibility
• ? the survival of the flexicurity model?

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Outsourcing and back in?

• Main reasons for outsourcing
• Low labour costs
• Deregulation
• Stability
• Quality, skills
• Main surprises (Nordic cases)
• Low skill level/ low autonomy
• Low quality (intitally)
• High control, investment in middel management
• Possible back-sourcing

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Summing up

• Mobile labour and capital
• ? new IR balance at company level
• ? new IR balance centralisation/decentralisation
• ? possible threat to the flexicurity model?
• ? Decisive if management locally use outsourcing
  as a part of negotiations

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The Industrial Relations Model- in research

• The IR-model
• based on collective relations
• ? but the world is still more individualised?
• Best at describing industrial sectors (car
  plants)
• ? but is special issues in the white collar
  sector ignored?
• A closed, national model ? not incorporating
  influence recent changes in globalisation has
• An obsolete model???

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The Employment Relations Model- in research

• Main actors
•  
• The employer ? The employee
• Secondary actors
• The State
• Employers Organisations
• Trade Unions, employees organisations