The Role of Mediation Institutions in Sweden and Denmark after Centralized Bargaining

Published date01 June 2016
DOIhttp://doi.org/10.1111/bjir.12142
Date01 June 2016
British Journal of Industrial Relations doi: 10.1111/bjir.12142
54:2 June 2016 0007–1080 pp. 285–310
The Role of Mediation Institutions
in Sweden and Denmark after
Centralized Bargaining
Christian Lyhne Ibsen
Abstract
This article comparescoordinated collective bargaining in Sweden and Denmark
after centralized bargaining. Existing theories — power resource and cross-class
alliance theory — seem capable of explaining the transition from centralized
bargaining to pattern bargaining system. However, they do not explain the
internal stability of bargaining coordination once established. This analysis
stresses the role of mediation institutions of both countries for solving collective
action problems in pattern bargaining by pegging other settlements to the
manufacturing labour cost norm. Mediation capabilities, however, dier, which
is reflected in more frequent defections in Sweden than in Denmark and thus
a more unstable bargaining coordination. These dierences have substantive
consequences for bargaining outcomes in the two countries.
1. Introduction
When centralized bargaining ended in Sweden and Denmark, many
pronounced coordinatedegalitarian wage bargaining in deep crisis (e.g. Ahl´
en
1989). Industry-level bargaining with strong unions posed a threat to wage
restraint and full employment as some sheltered industries would be able to
negotiate pay hikes with negative cost-push externalities, inflation and export
decline to follow (Calmfors and Dril 1988; Johnston et al. 2014). With no
encompassing confederation to internalize cost-push pay hikes in centralized
bargaining, there was a risk that wage moderation might be jeopardized
(Olson 1982). Moreover, bargaining at industry level and flexible wage-setting
would increase inequality and workers in low-skilled industries would lose out
due to increased skills premium. The solution chosen in Sweden and Denmark
was pattern bargaining through which manufacturing sets the pattern for the
Christian Lyhne Ibsen is at FAOS — Employment Relations Research Centre, University of
Copenhagen
C
2015 John Wiley& Sons Ltd/London School of Economics. Published by John Wiley & Sons Ltd,
9600 Garsington Road,Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
286 British Journal of Industrial Relations
rest of the labour markethereby inducing wage restraint in sheltered industries
and ensuring coordinated wageincreases through ‘organized decentralization’
(Iversen 1996; Traxler et al. 2008).
The motivation for this article is that the internal stability of bargaining
coordination by pattern bargaining in Sweden and Denmark, once
established, cannot fully be explained by conventional approaches — power
resource theory and cross-class alliance theory. Instead, the article shows
that public mediation institutions solve collective action problems that were
previously resolved by centralization by pegging their settlements to the
bargaining result in manufacturing. The capability to do so diers in the
two countries which explains why Danish pattern bargaining has experienced
significantly less defections than the Swedish case. The analysis shows that
the kinds of unions that are defecting in Sweden have been stripped of
this possibility in Denmark due to the mediation institution. It is moreover
argued that mediation has an independent eect on pattern bargaining
since the designs of these institutions are not the result of constellations of
power resources and alliances. Thus, while important, constellations of power
resources and alliances alone cannot explain why Danish pattern bargaining
is apparently more stable than in Sweden. The analysis thereby re-establishes
the institutionalist argument that certain institutions have an independent
capacity to shape bargaining processes and outcomes.
The analysis is historical-comparative and builds on two data sources.
First, it analyses formal rules for mediation institutions and bargaining
procedures. Second, interviews with key negotiators and mediators together
with historical document analysis are used to uncover the strategies and
processes of pattern bargaining and mediation within formal structures and
procedures. Interviews were conducted with key bargaining actors from
the main private sector industries in the two countries, most notably the
pattern-setting manufacturing sector, and pattern-followers in the transport,
building, retail, private services, finance and construction industries. This was
coupled with interviews with representatives from the union and employer
confederations. Lastly, mediators in both countries were interviewed.In total
60 interviews were conducted. Due to concerns of confidentiality, none of
the interviewees are quoted directly (see Traxler et al. 2008 for a similar
approach). Together the sources provideda comprehensive set of data to build
a contextualized comparative case analysis across time and space (Locke and
Thelen 1995).
Sweden and Denmark are close to optimal for a most-similar case
comparison of industrial relations systems (Stokke 1998). They are both
small open economies with similar business structures that face similar
market challenges and the two countries are for good reasons grouped
together in political economy typologies as they share many important
characteristics; including high union density,voluntarist state traditions, high
bargaining coverage, universal social democratic welfare systems, country
size and cultural backgrounds (Crouch 1993; Esping-Andersen 1990). And
while the social democrats have historically been more dominant in Sweden
C
2015 John Wiley& Sons Ltd/London School of Economics.

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