Published on Jobs and Development

Less is more for unions in Central and Eastern Europe

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In the great majority of Central and Eastern Europe economies, trade union membership declined sharply after the economic transition. Today’s levels of union coverage are far below those observed at the beginning of the 1990s (see figure 1 below). These trends mirror the overall pattern of de-unionization observed in advanced economies. This is led by the expansion of the service sector and flexible employment, over manufacturing and traditional, permanent jobs where the trade unions are more represented. However, unionization in CEE is now lower than in most western European countries.

Figure 1: Changes in unionization (%), mid -1990s – 2013, CEE and Western Europe countries.
Source: ICTWSS database (Visser 2013). 

Less numerous, but stronger?
Trade union membership and coverage by collective agreements have been declining gradually in CEE since the middle 1990s. But these lower levels of union presence do not necessarily imply a weakening of their influence over wage-bargaining institutions. Arguably, it was the EU accession in 2004 and preceding institutional adjustment, which strengthened other parts of the institutional framework that determined wages in these countries. In turn, this enhanced the unions’ wage bargaining power.

There is evidence that firm- and industry-level agreements that led to wage premia in CEE countries increased after the EU entry. These agreements were negotiated by trade unions with employers or employer associations. In other words, the less numerous union members became, the more effective they were in negotiating their objectives, especially with regard to wages of workers covered by collective agreements.

Where could the enhanced union power come from?
The process of EU integration meant stronger engagement with social partners in the regulatory adjustment of CEE’s labour markets. These included, among other, active involvement in the Open Method of Coordination, a process of discussion and practice exchange, through which the EU tries to influence the member states’ employment and social policies. This required policy-makers in these countries to engage in extensive consultation with the social partners about the draft guidelines and their annual assessment by the European Commission. This in turn indirectly increased trade unions’ levels of policy engagement and policy-making know-how. It likely improved their bargaining power.

Moreover, shortly after EU accession, CEE countries implemented the 2002 Directive on Information and Consultation of Employees relating to work councils. Although the work councils initially played a rather marginal role in the EU’s social dialogue, they are likely to have indirectly contributed to unions’ empowerment. Some other changes in the CEE labour market regulations also led to similar developments in unions' ability to negotiate and coordinate. These included increasing the power of labour inspections and changes in laws and enforcement mechanisms related to the minimum wage, where again, the role of trade unions increased.

Policy implications: where are the unions heading?
The changing nature of industrial relations in Europe brings about questions on the future role of social dialogue. Trade unions – in particular in the CEE - are still commonly seen as obstacles to labour market flexibility and impediments to economic growth and job creation. However, for macroeconomic governance and wage setting, the dialogue with social partners needs to be reinforced. This will help determine the further cost–competitiveness of CEE economies and their future growth. Trade unions may also play an important role in tackling the income inequalities that have arisen.


Iga Magda

Vice President of the Management Board at the Institute for Structural Research (IBS, Warsaw) and Assistant Professor at the Warsaw School of Economics.

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