In recent years, a fundamental basis of union strength, membership density, has diverged dramatically across Europe. While most countries have witnessed stagnation or decline in unionization rates, a few countries have actually experienced steady gains, and achieved virtually full unionization. This article addresses the impact of one often acknowledged, but underemphasized, explanation for this divergence: differences in the way unemployment insurance is provided. Where unemployment insurance is compulsory and administered by the state, union membership typically declined or stagnated during the last quarter of the twentieth century. However, where unemployment insurance is voluntary and administered by trade unions (the so-called Ghent system), union membership grew quite steadily in the same period. I attribute this close association to the rise of unemployment risks, which has different implications for the decision to join or stay in unions, depending on the way unemployment insurance is funded. In the compulsory system, unions have much less control over the labor market, since they have no control over the conditions surrounding receipt of unemployment insurance.
1. RECENT CHANGES IN UNION DENSITY
The last two decades have ushered in an era of declining union power, particularly in capitalist democracies (e.g., Huber and Stephens 1998). Manifestations of this decline in power are seen in substantive political-economic setbacks such as the decentralization of collective bargaining, reduced influence in centerleft political parties and "recommodification" in the labor market. Perhaps nowhere is this overall decline in union power more clearly seen than in trends in union membership in Western Europe (OECD 1991).1 A (labor force) weighted average of union density in 12 major postwar European democracies (Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom) demonstrates the dramatic decline. From a peak of around 42 percent in the late 1970s, aggregate density declined ten points to 31 percent in the mid 1990s, a decline of one-quarter.2 Perhaps most ominous is the fact union density in Western Europe was lower in 1995 than it was at any time since 1970.
This aggregate pattern hides variation, however. If we look at union density trends by country, there is indeed a substantial amount of variation. Table 1, which shows national net union density between 1970 and 1996 in 12 Western European countries, suggests considerable divergence in national density trends during the last quarter of the twentieth century. This finding stands in contrast to conventional wisdom, particularly in the Anglo-American countries, that unions are everywhere losing members.
There are three general clusters of countries. In the first cluster-Austria, France, the Netherlands, Switzerland, and the U.K.-net density declined substantially between 1970 and 1996; and decline was quite rapid in the 1980s and 1990s.3 Among these countries, Austria, the Netherlands, and the U.K. have historically had powerful trade union movements. Those in France and Switzerland have been somewhat less powerful. These five countries correspond closely to the image of union decline.4
In a second cluster of countries, unionization levels in 1996 are close to those in 1970. In Italy and Germany density surged in the 1970s, but dropped in the 1980s and 1990s (in the latter country despite an initial boost from reunification).5 In Norway, union density declined slightly in the early 1970s, rebounded in the late 1970s, and has since been relatively stagnant. Though it is hard to say what the future holds, we can at least say that unionization in these countries is consistent with pre-1970s levels, even if lower than their recent peaks.
In the third cluster, there are four countries, Belgium, Denmark, Finland, and Sweden. In these countries, union density trends differ markedly from the other two groups. …