Trade Unions and the Future of Democratic Capitalism

Abstract

In this chapter, I look at trends of union and business organizations and their implications for the future of democratic capitalism. As in earlier assessments, the results concentrated on a steady union decline within much more stable wage bargaining institutions. Given the rapid economic changes of deindustrialization and globalization, business coordination and wage bargaining centralization show remarkably high levels of institutional resilience. However, stability of wage bargaining institutions does not guarantee unionization rates. Wage bargaining centralization or wage bargaining coverage does not prevent unions from declining. Wage bargaining coordination can persist without union strength. Existing institutions have important benefits for employers as well as for unions. Coordination capacities can be exercised through employers’ organizations, bargaining coverage and bargaining centralization, even though trade unions are very weak. Moreover, wage inequality remains greater in countries with decentralized bargaining systems and segmented trade union structures. The trends that are described in this chapter imply that with the decline of unionization labour market institutions have become somewhat less important for economic management and the performance of modern economies. Governments pursue less policy concertation and the impact of institutions on performance has weakened.

Keywords: trade unions, economic institutions, labour markets

JEL Classification: J51