To Extend or Not to Extend: Explaining the Divergent Use of Statutory Bargaining Extensions in the Netherlands and Germany
| Author | Thomas Paster,Dennie Oude Nijhuis,Maximilian Kiecker |
| DOI | http://doi.org/10.1111/bjir.12514 |
| Date | 01 September 2020 |
| Published date | 01 September 2020 |
British Journal of Industrial Relations doi: 10.1111/bjir.12514
58:3 September 2020 0007–1080 pp. 532–557
To Extend or Not to Extend: Explaining
the Divergent Use of Statutory
Bargaining Extensions in the
Netherlands and Germany
Thomas Paster , Dennie Oude Nijhuis
and Maximilian Kiecker
Abstract
Employee coverage by multi-employer bargaining declined since the 1980s
in many countries, but countries dier in the extent of that decline. These
dierences are due, in part, to statutory coverage extension. We analyse
the use of statutory coverage extension in two countries, Germany and
the Netherlands. Agreements are extended frequently in the Netherlands,
where coverage remained stable as a result, but sparingly in Germany, where
coverageeroded. The article shows that dierent employerattitudes are the main
cause of this dierence. These dierences in employer attitudes result from (a)
dierent perceptions of the eects of wage competition by non-organized firms
on organized firms and (b) dierencesin employer views on the appropriateness
of state compulsion.
1. Introduction
In recent decades,collective bargaining has been on the retreat in many OECD
countries. One indicator of this trend is the collective bargaining coverage
rate, that is, the share of employees covered by multi-employer collective
agreements. While coverage has declined substantially in some countries, in
other countries it has remained stable or even increased (cf. Baccaro and
Howell 2017: table 3.3). Among continental European countries, Germany
has experienced the most severe decline in collectivebargaining coverage, from
85 per cent in 1990 to 56 per cent in 2016. In the Netherlands, it increased from
71 per cent to 78.6 per cent during the same period (ILO 2019).
Thomas Paster is at the University of Roskilde. Dennie Oude Nijhuis and Maximilian Kiecker
are at University of Leiden.
C
2019 The Authors.British Journal of Industrial Relations published by John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution License, which permits
use, distributionand reproduction in any medium, provided the original work is properlycited.
To Extend or Not to Extend 533
Forces common to advanced industrial countries drive the erosion of
collective bargaining, in particular the intensification of cost competition in
a globalized economy, the rise of the service economy and union decline (cf.
Baccaro and Howell 2017; Hassel 1999). However, these common forces did
not invariably result in an erosion of collective bargaining coverage, because
in some countries state regulations protectbargaining institutions. One major
form of state support is the extension of multi-employer collective agreements
to non-organized firms (outsiders) by government decree,known as statutory
coverageextension. As a result of coverage extension, bargaining coveragecan
remain high even when employer or union strength declines.
Although extensions often aect only a small share of employees directly,
they stabilize collective bargaining by eliminating incentives for firms to
leave their associations. Several studies have highlighted the importance
of statutory coverage extension for maintaining high levels of collective
bargaining coverage (Traxler et al. 2001:194; Schulten 2012; Schulten et al.
2015; Visser 2018). Yet, we do not know why some countries use extensions
more frequently than others.
In this article, we aim to answer this question by comparing two countries
with very dierent practices of statutory coverage extension, the Netherlands
and Germany. The legal system in both countries allows for the government
to extend multi-employer agreements to non-organized firms; the legal
requirements for extensions are similar in both countries. However, despite
these similar rules, 47 per cent of agreementswere extended in the Netherlands
in 2017, as compared to only 1.6 per cent in Germany (Visser 2018: table 2.1
for the Netherlands,and; Schulten 2018a: figure 3.7 for Germany). Moreover,
the frequency has diverged since the 1990s, with the number of extensions
declining in Germany, but not in the Netherlands. As Kathleen Thelen
has noted: ‘[t]he erosion of collective bargaining in Germany is in large
measure a function of state inaction and incapacity’ (Thelen 2014: 205). Our
analysis of the causes of dierent extension practices in the two countries will
contribute to a better understanding of the conditions for state support for
wage bargaining.
We argue that the main explanatory factor for the dierent frequency of
extensions in these two countries are historically evolved dierences in how
employers’ associations assess this institution. We show that greater employer
support, not dierences in union strength or in government willingness to
extend, is the main reason why agreements are extended more frequently
in the Netherlands. We identify dierences in the way organized employers
perceive (a) wagecompetition by outsiders and (b) state compulsion as the two
main factors that explain their dierent assessment of extensions. We argue
that these dierent attitudes cannot be reduced to dierences in sectoral or
national-level economic structure. Rather, dierences in interest construction
constitute a causal factor in their own right.
After introducing our argument in the following section, we present our
case studies of statutory extension in the Netherlands and Germany. We
look into more detail at the German case because conflicts over the use of
C
2019 The Authors.British Journal of Industrial Relations published by John Wiley & Sons Ltd.
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