Nordic Labor Law and the Internal Market of the European Community

Article excerpt

A CHANGE IS IN THE AIR for Nordic industrial relations. The Nordic welfare states are at present experiencing considerable financial difficulty. Unemployment rates have increased above all in Sweden and Finland. The non-socialist coalitions in these countries are planning privatization measures and cut-backs in state budgets. The trend towards internationalization, too, will undoubtedly affect the position of the labor movement in Nordic society during the 1990s and beyond. In particular, the institutional framework for internationalization will influence the Nordic labor market system both directly and indirectly. The most important institutional factor is undoubtedly the European Community (EC). Denmark is a member of the EC. Finland, Iceland, Norway, and Sweden have signed the agreement establishing the European Economic Area (EEA) and in all probability will ratify this agreement during 1992. In addition, Finland and Sweden have applied for membership in the EC, and it is not out of the question that Norway will follow suit during 1992.

This article examines the distinctive features of the "Nordic Model" for the regulation of the labor market and the future prospects for this model in an integrated Europe. What challenges to Nordic societies does the internal market of the EC pose? This article deals with that question, omitting Iceland because of its unique labor relations.

THE NORDIC MODEL

The economic and political systems of Denmark, Finland, Norway, and Sweden constitute a relatively uniform model for the regulation of the labor market.(1) When we refer to the labor market, there is justification for speaking of one Nordic Model with special national characteristics in each country.(2) The reason for this lies not only in the relative homogeneity of Nordic societies but also in their systematic and long-standing tradition of cooperation between national authorities and labor market organizations. Consequently, solutions have often been borrowed or copied from neighboring countries at the same time that demands and concessions have been formulated on the basis of joint inter-Nordic discussions. This has been the case despite the fact that the regulation of the labor market has been kept outside the focus of direct Nordic legislative cooperation. What, then, are the common features that permit us to claim that a "Nordic Model" exists? Some important features can be described briefly.

The Nordic labor movement has, practically speaking, unionized all wage-earners in the Nordic countries. With the exception of certain branches, the level of unionization exceeds eighty percent in Denmark, Finland, and Sweden. In these countries, and with some minor exceptions, the unions have a monopoly. In respective sectors of the economy, there is no real rival organization which a dissatisfied member who wishes to leave his or her union might join. When compared with the situation in France, Italy, and some other European countries, the Nordic Model is therefore nonpluralistic and offers no alternatives. The real choice for the wage-earner in the Nordic countries, if any, is between membership and non-membership in the union. In Norway, the situation is somewhat different. The level of unionization is presumably under sixty-five percent, while in some sectors (for example, the oil industry), true rivals to the major Norwegian labor union, "LO," do in fact exist.(3)

From a European perspective, the Nordic labor movement is typified by a high degree of centralization. The central structures of the national unions exercise relatively wide powers and are active in various issues of general interest. Collective agreements are normally made at the federation level. This is the most important decision-making level when it comes to the regulation of the terms of employment and is where policy decisions are made. Local decision-making is clearly subordinate to decision-making bodies on the federation level. …