Measuring varieties of industrial democracy in Europe

A quantitative analysis

Pablo Sanz, notus-asr
Maria Caprile, notus-asr
Christian Welz, Eurofound
Ricardo Rodriguez, Eurofound

The term industrial democracy can be traced back to the late 19th century. At that time, the term was used in influential publications such as the ‘history of trade unionism’ or ‘industrial democracy’ (Webb and Webb, 1897, 1898) to explain and justify trade unions’ missions and activities in search of social justice within a free market capitalism characterized by harsh working conditions (Kauffman, 2014). Contemporary definitions of industrial democracy have moved away from the industrial democracy approach developed by the Webbs in 1898, which was mainly focused on trade unions and collective bargaining, and tend to use alternative terms, such as voice. While central to most of current approaches to industrial democracy is that employees have the opportunities and the means to have a say in an employer’s decision-making process at different levels, there is a not a consensual definition. Diverse definitions of industrial democracy and related terms such as employee involvement, participation and voice reflect competing theoretical and methodological foundations or ‘frames or references’ (Heery, 2015). This makes complex to delimitate the boundaries of the industrial democracy concept and carry out international comparison of the different forms and outcomes of industrial democracy. Overall, comparative research on industrial democracy is fragmented (González and Martínez Lucio (2016). On the one hand, some approaches have focused on the micro or company level, analysing the characteristics and outcomes of different forms of employee participation at company level (Townsend et al, 2012; Van Gyes 2016; Eurofound, 2015). On the other hand, common industrial relations comparative approaches have focused on the macro level, researching topics such as corporatism, social dialogue and multi-employer collective bargaining (Meardi, 2018; Marginson, 2017; Baccaro and Howell, 2017).

The current paper, which is based on two research projects commissioned by Eurofound, develops a comprehensive definition of industrial democracy which covers both the macro or institutional level and the micro or company level. Industrial democracy is understood as a model of employment relationship governance which rests on shared decision making between management and independent employee representation (Budd, 2004). It encompasses all participation rights of employers and employees. Industrial democracy covers four dimensions: autonomy of social partners in collective bargaining; representation rights at both macro (collective bargaining, social dialogue) and company level (work councils, etc.); participation, understood as mechanisms for involving employees in management decision making at company level; and influence, linked to bargaining power and the relative ability of the two sides of industry to exert influence over the other side in the context of collective bargaining or management decision making. Following this definition, the paper builds, firstly, a composite indicator aiming to map, measure and summarise the most important features of industrial democracy in the 28 EU countries from a static and a dynamic perspective. The computation of the composite indicator is based on the internationally accepted methodology on building composite indicators developed by JRC and the OECD (Nardo et al., 2005). The composite indicator includes annual data for the period 2008-2017 from different European data sources. The selected indicators meet strict conceptual and statistical criteria, in line both with the quality assessment and assurance framework of the European Statistical System, and other quality criteria commonly used in the literature.  In addition, only intelligible indicators which can be interpreted unambiguously, either "positive" or "negative", are included. Secondly, a cluster analysis is conducted in order to map varieties on industrial relations systems in relation to industrial democracy.  In order to cluster countries, additional relevant indicators which cannot be interpreted in terms of either positive or negative, but are relevant for mapping variety, are added. The typology of industrial relation systems is therefore based on industrial democracy performance and relevant characteristics of industrial democracy.

The outcomes of the composite index enable to measure, from a static point of view, country performance in industrial democracy. Dynamic analysis which result from comparing two time periods (2008-2012; 2013-2017), shows a downward divergence trend, illustrating that cross-national differences have been accentuated, deepening previous inequalities concerning the role played by industrial democracy in the governance of employment relationships.

The outcomes of the typology prove to be useful for better understanding diversity in terms of industrial democracy characteristics. Typology outcomes are relevant also because they challenge previous industrial relations’ typologies, providing a more nuanced description of industrial democracy characteristics of countries usually included within the broad category of ‘mixed’ or ‘transitional’ industrial relations models (Viseer, 2009).