Trade union power during labour adjustments – comparison of company-level cases

Abstract

German

French

This article discusses local trade union power in labour adjustment processes within the Nordic systems of industrial relations by comparing labour adjustment processes in construction and manufacturing in Finland and Norway. The quality of cooperative relations and the conditions for exchange – through co-decision mechanisms and procedures, as well as rules for temporary lay-offs and dismissal selections – are essential for union influence. Together with production technologies, the organization of work and employee competence, such institutions and regulations interact in influencing union power, providing more influence to the unions in the Norwegian cases than the Finnish ones, while the unions in the manufacturing cases were more influential than those in construction.

Keywords

Union power labour adjustments crisis construction manufacturing

Introduction

Trade unions develop repertoires of collective action in response to the particular political economy in which they are embedded (Lévesque and Murray, 2010: 334). This article studies local trade union power during labour adjustments within the industrial relations systems in Finland and Norway. Labour laws and central collective agreements provide local trade unions with the right to consultation and participation regarding a range of workplace issues (Bruun and von Koskull, 2004; Løken and Stokke, 2009), while they also have a role in local collective bargaining (Sippola, 2012). Still, the employer has the final say regarding labour adjustments and company-level unions have no right to invoke industrial action in such instances (Stokke, 2008). Hence, lack of conflict power may imply that trade union representatives feel that they are being held hostage by the consultation procedures (Brulin, 1995: 198).

A central concern within industrial relations research is whether the impact of institutions on management-union cooperation originates mainly from national, industry (sectoral) or company level (Locke, 1992). Several studies have shown that national regulations influence union-management interaction during restructuring or labour adjustment processes across industries (Edwards, 2004; Edwards et al., 2006; Pulignano, 2011). A study of manufacturing companies in the Nordic countries (Svalund et al., 2013), part of the project on which this article is based, shows how the Norwegian unions, based on stricter dismissal selection rules and preconditions for the use of temporary lay-offs, were more involved and influential than their Finnish counterparts. Within national regulatory systems, industry differences have also been shown to influence the impact of regulations on management-union power relations (Marginson et al., 2003; Marginson et al., 2004: 20; Nergaard and Dølvik, 2011).

This article compares local unions in construction and manufacturing, and asks how unions mobilize power resources to exert influence over adjustment choices and the distribution of savings and burdens in labour adjustments. Examining this question, a two-country/two-industry approach is applied, comparing construction and manufacturing in Finland and Norway. The overall union density in the private sector, as well as within these two industries, is higher in Finland (61 per cent) than in Norway (38 per cent) (Nergaard, 2010: 16), enabling comparison of the impact of national- and industry-level union density on local trade union power. Still, these blue-collar dominated industries are highly unionized relative to other industries within each country; trade union density in manufacturing was 72 per cent in Finland and 57 per cent in Norway, and in construction it was 58 per cent in Finland and 33 per cent in Norway (Nergaard, 2010: 16-17). While the trade union density in construction in Norway is lower than the average in the private sector, the union density increases with company size (Nergaard and Stokke, 2010: 20), and is much higher in large construction companies. Both industries exhibit clear differences in work organization: large construction companies base their production on a number of large one-of-a-kind projects, while manufacturing plants usually mass-produce by way of just-in-time (JIT) organization. Reductions in demand influence production more or less instantly in manufacturing, while in construction they impact mainly future projects, and not necessarily ongoing work. While collective identity and proximity are important prerequisites for collective action among blue-collar workers in manufacturing, workers in construction work at different construction sites and consist of different occupational groups in a mix of in-house employees, agency workers and subcontractors (Philips and Bosch, 2003). Furthermore, seniority can be understood as part of a reward system especially prevalent in industries relying on company-specific skills, such as manufacturing (Engelstad, 1998). Hence, regulations requiring dismissals through seniority may cause more conflict in construction than in manufacturing, as construction relies more on general rather than on company-specific skills among blue-collar workers. Finally, both industries were severely hit by the crisis in 2008, after strong growth in the preceding years (Figure 1). The reductions in production, employment and total working hours were deeper in Finland than in Norway, in both industries. Furthermore, there is a striking difference between Finland and Norway in terms of the relationship between production and employment, especially in construction (Figure 1). The weaker correlation between production and employment in Norway compared to Finland probably reflects the large number of posted workers in Norway prior to the crisis (Andersen et al., 2009).¹

Figure 1.

Changes in production, employment and total working hours, 2005–2011.

Analytical framework

Labour adjustment negotiations in Finland and Norway take place within highly regulated and institutionalized structures, framing local union agency. Both countries and industries have multi-employer bargaining at industry level, complemented by formalized company agreements. The industry-level agreements facilitate or restrict union involvement in day-to-day activities, as well as in adjustment decision-making, and condition the use of adjustment measures. Day-to-day cooperation anchored in regulations and routines for dialogue, information, consultation and negotiations, as well as ways of compromising and resolving conflicts, provide a basis for trust (Brulin, 1995: 198; Stokke, 2002; Walton et al., 1994: part I).

Exchange theory illuminates how knowledgeable actors within long-term reciprocal relationships can exercise power (Emerson, 1962; Hernes, 1975), as it focuses on the actors’ interest in and control over a specific event, here labour adjustments. Labour’s relationship to the employer thus defines union power; the more the employer depends on union consent for achieving their interest, the more potential for union influence. As labour adjustments are embedded in ongoing interactions, norms of reciprocal exchanges over time may be more important for union power than control over single issues (Walton et al., 1994). Furthermore, power entails not just union actions, but also potential actions, having the capacity to achieve something. With knowledgeable actors dependent on each other, power does not need to be actualized to be effective: the threat may suffice (Göhler, 2009: 34). Therefore, both parties may prefer to avoid overt conflicts of interest, anticipating a negative result in any case (Friedrich, 1963).

While mutual dependence in a long-term relationship might provide the union with some power – as in win-lose situations captured by Dahl’s (1957: 203) definition of power, where ‘A has power over B to the extent that he can get B to do something that he would not otherwise do’ – a lack of cooperation and reciprocity might reduce the ability of both parties to adjust to the crisis, resulting in a destructive, lose-lose situation (Seip, 1978). In contrast, with cooperation towards a common good, enabling actors to achieve certain ends and creating solutions otherwise not possible, both parties might gain (Foucault, 1991; Göhler, 2009: 31). Power-dependency relations can therefore result in zero-sum games, be counterproductive or productive.

Facing crisis, the company-level actors choose between different types of adjustment options, some involving the labour market external to the firm, some internal (Table 1).

Table 1.

Industrial actor options, and their regulation, during labour adjustments.

Options	Subtype	Regulated by
External flexibility measures
Reduce the use of subcontractors		Company agreements
Reduce the use of external employees	Discontinue the use of consultants or agency workers	Company agreements
Natural attrition	Selective hiring freeze Total hiring freeze	Employer prerogative
Exits and early retirement – attrition	Voluntary resignations with severance pay	Employment contracts
Exits and early retirement – attrition	Early retirement incentives	State subsidies of early retirement schemes, CA+ employment contracts
Dismissal	Phasing out temporary employees	Depends on length of contracts
Dismissal	Dismissing permanent employees without severance pay	Law or industry-wide CA regulate the selection of employees: Seniority, age etc.
Internal flexibility measures
Temporary adjustments in working hours	Flexible working time arrangements by existing collective agreements	Local CA
	Temporary lay-offs	State/tripartite agreements regulate start-up costs, maximum duration, minimum lay-off time per week
	Cuts in working time and pay	Local CA
Internal re-deployment	Transfer of employees within or between plants or projects	Employee contracts and/or by local CA
Internal re-deployment	Hiring out employees to other companies	Local CA
Permanent changes in pay systems		Local CA

Choosing between these options, unions and employers may have conflicting interests along several dimensions. First, as the employers in both countries are obliged to present facts that substantiate the need for labour adjustments and suggest possible solutions, defining (Goffman, 1959) the actual size and character of the crisis may result in conflicting views. Secondly, the parties may disagree on how the situation ought to be handled. Employers may prefer dismissals, whereas unions aim for other options or, in the case of downsizing, alternatives to dismissals (Dahl and Nesheim, 1998; Glassner et al., 2011).

While unions and employers have common interests in matters such as company survival and productivity, they have opposing interests regarding how to balance adjustments in working conditions, pay and wage costs, job security and distribution of saving and burdens between employers and employees. As already mentioned, controlling something of interest to the employer enables union influence and power: Procedural and substantive laws and regulations may strengthen union influence when requiring local union consent. A systematic dismissal principle, such as one based on seniority, provides local unions with a certain control (Elster, 1992: 42; Svalund et al., 2013). But regulations can also exclude unions, stating, for instance, that dismissals and lay-offs caused by normal economic fluctuations are not to be discussed with unions, as in construction in Finland (see Table 2). Therefore, power may also be exerted in the absence of a negotiation situation, in ‘non-decisions’ (Bachrach and Baratz, 1962). Secondly, the unions’ knowledge about the rules and their ability to define the situation to their advantage, clearly matter. In times of crisis the parties rely on uncertain knowledge about the future, making these skills more critical. Thirdly, collective identities and proximity are important for collective action (Molstad, 1988); hence the local membership rate and members’ support influence the legitimacy and negotiating power of the unions in the company/plant. Finally, the use of networks, unions’ vertical and horizontal ties, has often proved important (Dekocker et al., 2011; Frost, 2000; Lévesque and Murray, 2010). Vertically, unions may obtain information or assistance through ties with industry or national unions. Horizontally, local unions may coordinate with each other, appeal to the local community, the media or public authorities, mobilizing support and influencing company policies (Dekocker et al., 2011).

Table 2.

Procedural and substantive regulations structuring the adjustment process.

Laws and regulations		Construction Norway	Manufacturing Norway	Construction Finland	Manufacturing Finland
Procedural rights	EU law (98/59/EC)*	When dismissing at least 10 employees, the employer is obliged to consult with the worker’s representative as soon as possible, in accordance with a certain procedure, before the decisions are made.
	Legislation	The employer is obliged to discuss the reasons, the effects and the alternatives to the measures under consideration before the decisions are taken. Consensus is not required.**
	Legislation			A certain time has to pass before the consultation process is considered to be completed.
	Basic Agreement	Basic Agreement (LO&NHO): contains no substantial supplementary clauses.		The Dismissal Protection Agreement (2001) (Central Organization of Finnish Trade Unions & the Confederation of Finnish Industries) contains no substantial supplementary clauses.
	Collective Agreement	No substantial supplementary clauses.	No substantial supplementary clauses.	BC and WC: When the reductions are based on normal, industry typical fluctuations neither collective agreement requires union consultation, otherwise they do.	No substantial supplementary clauses.
Substantive regulation	Dismissals
	Legislation	When dismissing for economic reasons the employer has to have a real shortage of work. Workload needs to be decreased substantially. The employer is obliged to transfer the employee to other work, if possible, to avoid dismissal.
	Collective Agreement	No substantial supplementary clauses.	No substantial supplementary clauses.	No substantial supplementary clauses.
	Dismissal selection criteria
	Legislation	Requires avoiding discrimination
	Basic Agreement	Seniority criteria, however deviations possible with due reason		Several criteria
	Collective Agreement	No substantial supplementary clauses.	No substantial supplementary clauses.	BC: No specific instructions or conditions regarding selection criteria. WC: Attention should be paid to the workers’ professional skills, versatility and remaining tasks. The final result should not be based on discrimination on the basis of seniority, sex or social factors.	BC and WC: Skilled employees and those who have partly lost their capacity for work during their service must be the last selected. The number of children or dependents and seniority must also be taken into account.
	Temporary lay-offs
	Legislation Unemployment benefits	The employer is obliged to give an account of the reasons and scale of the lay-offs immediately after the need has come to the employer’s knowledge.
	Legislation Unemployment benefits	Employer paid wages for the first 10 (five) days while the employee lost five (three) days of pay (temporary changes between spring 2009 and summer 2011). During lay-offs the employees receive UB. To be entitled to UB the employee initially had to be temporarily laid-off at least 50% (40%) of normal work hours. Lay-offs were restricted to 30 (52) weeks during an 18-month period (temporary changes made spring 2009, lasting to summer 2011).		Cost free for employers while the employee lost seven days of pay. During lay-offs the employees receive unemployment benefits. To be entitled to UB the employee had to be temporarily laid-off at least 40% of normal work hours, changed during the crisis to 20%. In Finland the unemployment benefit lasting 500 days served as a de facto cap.
	Collective Agreement	BC: Companies are recommended to establish local CA concerning labour leasing between enterprises to avoid dismissals and lay-offs.	No substantial supplementary clauses.	No substantial supplementary clauses.

Note: * Also implemented in Norway. ** Only applied in enterprises with at least 30 employees in Finland. BC=blue collar, WC=white collar.

Research design and methods

This article builds on information from 15 company/plant case studies in manufacturing and construction. Case studies were used to understand the mechanisms and processes, the actors and their perception of union power resources in labour adjustment processes (George and Bennett, 2005). Three cases were conducted in each industry in Finland, and three in construction and six in manufacturing in Norway. Companies that had experienced a substantial reduction in demand and had been through a substantial labour adjustment process were selected (Table 3). The companies had more than 50 employees and high union density among their core employees, ensuring that the management-union relationship had some weight and that the number of workers affected by the adjustments was large enough to gain insight into their distributional effects. By comparing companies with high union density across industries and countries – that is, above average in these industries and countries – differences in local union power caused by differences in union density are removed, enabling a more focused analysis of the impact of national regulations and industry differences.

Table 3.

Case characteristics and the use of union networks.

Cases	MF1	MF2	MF3	CF1	CF2	CF3	MN1	MN2	MN3	MN4	MN5	MN6	CN1	CN2	CN3
Size before downsizing	500–999	200–499	50–199	500–999	50–199	200–499	500–999	200–499	50–199	50–199	200–499	500–999	200–499	200–499	200–499
Percentage reduction in staff	0	15	19	24	12	3	17	24	35	28	63	20	56	19	15
Use of vertical networks	Contacted central union	Contacted central union	Contacted central union	Contacted central union	Contacted central union	Contacted central union	No contact	Contacted central union, who disagreed with shop steward	No contact	Contacted central union	Contacted central union on disagreement	Contacted central union, got no input	BCU: Contacted central union, other shop stewards in other companies WCU: House union	B&WCU: Contacted central union, other shop stewards in other companies	BCU: Contacted central union and group head shop steward WCU: House union
Common consultation process: WCU and BCU?	Yes	Yes	Yes	Yes on corporate level, no on local level	Yes on corporate level, no on local level	Yes	No	No	No	No	No	No	No	Yes	No
Choice of measure: Was union central?	Yes: suggested alternating temporary lay-offs	Yes: when negotiating temporary lay-offs, No: when negotiating dismissals	Yes: when negotiating temporary lay-offs, No: when negotiating dismissals	BCU not important due to regulations. WCU: Yes	BCU not important due to regulations. WCU: No	BCU was active and influenced adjustment plans regardless of the regulation. WCU: No	Yes: enabled a mix of work-time cuts, temporary lay-offs and dismissals	Yes: enabled a mix of work-time cuts, temporary lay-offs and dismissals	Yes: enabled a mix of work-time cuts, temporary lay-offs and dismissals	No: dismissal and temporary lay-offs in sequence	Yes: in discussing use of alternating temporary lay-offs	No: Dismissal and temporary lay-offs in sequence	BCU pushed for cuts in agency workers WCU: No	BCU pushed for cuts in agency workers and hiring out blue- collars to other companies WCU: Little influence, but secured member rights	BCU: No; No agency workers, hiring out blue-collar workers to other companies a common practice WCU: No

Large companies developing, rehabilitating and producing dwellings for private households, private businesses and public customers (offices and such like), were selected in construction. By studying companies with a considerable amount of in-house production and their own blue-collar workers, alongside a high share of white-collar employees, companies that had adjusted their labour demand internally and externally were captured.

In manufacturing, traditional mass production plants relying substantially on international exports and with a sizeable share of blue-collar workers were chosen.² While all the plants used JIT production methods, two of the Norwegian and one of the Finnish cases made products that often were large and time-consuming, providing insight into the significance of such organizational differences.

Information about local adjustment processes and corporate processes was collected through interviews with representatives of site management (HR director and/or the leader of production/division) and the main blue- and white-collar unions involved. Interview data were supplemented by documentation in the form of annual reports, business data, management-union agreements and so on.

Industrial relations and regulatory characteristics

The union density among the core employee groups (blue-collar) in the case companies/plants was high, above 70 per cent. In contrast to the Finnish construction cases, the union density among white-collar workers was fairly low in most manufacturing cases and in one construction case in Norway (CN2).³ The other Norwegian construction cases had white-collar ‘house unions’ with consultation rights, but no collective agreement and no organization outside the corporation.

All employers were organized, except in MF3. During normal times the local unions in all but one company (MF3) cooperated with the employer within different cooperative bodies and were informed about the economic situation and future plans regarding the labour force. The local unions in Norway were more involved in local wage negotiations than in Finland, where wage bargaining takes place mainly at the central level (Sippola, 2012: 55–56). The unions in Norwegian manufacturing were also involved in productivity improvements as this could lead to higher wages. Since productivity was a project-level concern in construction, the unions were less involved.

Procedural and substantive regulations concerning labour adjustments

The number of employees subject to dismissals was pivotal in the negotiations, and if more than nine employees are to receive notice certain regulations take effect (Table 2). However, the collective agreements allow for labour force reductions without holding so-called co-determination consultations during normal, industry-typical fluctuations, reducing regulated union rights when applied (Table 2).

In both countries, temporary lay-offs can be used to reduce working hours in the event of severe production losses (Hijzen and Venn, 2011). The employer is then obliged to consult with the unions before the notice of temporary lay-offs can be issued (Table 2).

Legislation does not lay down any precise dismissal selection rules in either country, except avoiding discrimination. However, in Norway the Basic Agreement between LO and NHO states that seniority shall be applied, but this may be deviated from with good reason. The Dismissal Protection Agreement between the Central Organization of Finnish Trade Unions and the Confederation of Finnish Industries contains guiding principles emphasizing the importance of retaining skilled employees, securing those who had partly lost their capacity to work during service, as well as taking family issues and seniority into consideration.

The selection criteria in case of temporary lay-offs are in accordance with those pertaining to dismissals. The Finnish and Norwegian temporary lay-off schemes differ, influencing their application and the distribution of the resulting burdens. In Norway the initial employer costs are much higher, the maximum duration is longer and the minimum working time reduction each week higher (Table 2).

Union roles and influence in labour adjustments

Construction

Union power was initially framed by regulations. In Norway, the unions had procedural consultation rights regarding means of adjustment. Since normal changes in labour demand were steered outside the cooperative system in Finland, the definition of ‘normal changes’ was important. Despite a more than 15 per cent reduction in industry production, the economic downturn was understood as within the normal for blue-collar workers, both throughout the industry and among the local unions, hence these unions had no formal right to influence the employers’ labour adjustment decisions. By contrast, the rather large man-hour reductions among white-collar workers were understood as untypical by local management and unions. The white-collar unions therefore had procedural consultation rights regarding the adjustments. In CF2, a corporate group decision, consented to by union representatives at group level, was to hold continuous consultations concerning dismissals only. This restricted the scope of the local consultations, since discussing, for instance, temporary lay-offs would require a separate process with a new and separate notice and consultation period, delaying the adjustments.

Discussing labour adjustments

All companies were hit hard by the crisis (Table 3). Fewer new projects reduced the need for future man-hours, while ongoing production was unaffected. The crisis was soon noticeable for both management and unions, since finalizing a project meant deciding what to do with employees without new projects. In the consultations the union representatives relied mainly on their own limited experience, but sought specific information at the central union or from the head shop stewards at headquarters.

The consultations were in general held in an open atmosphere and the discussions were focused on common solutions rather than win-lose bargaining. In such circumstances, knowledge was a power resource. Suggesting solutions in line with union interests, backed up with arguments, could change decisions. Still, the initial phase was not particularly open in one of the Norwegian cases (CN2), where the unions had to push management, referring to regulated rights, to get information and consultations. The late involvement left less room for union manoeuvring since management had already made detailed adjustment plans, which proved difficult to change within a short time span.

In terms of interest, the unions’ main aim in both countries was to keep workers employed, preferring general cost-cutting and discontinuing the use of agency workers and temporary contracts over temporary lay-offs and temporary lay-offs over dismissals. The employers shared the interest in saving employees, but both parties realized that dismissals would be required, in combination with other measures. Still, they sometimes disagreed on the number and distribution of dismissals. In Norway, both management and unions in CN1 felt that the cuts were too large, but they had to comply with group orders demanding huge cuts. In CN3, the blue-collar union was initially presented with tougher cuts than expected. After initial disagreements, studying the economic figures more closely, the union agreed that the future man-hour demand required almost such a cut. Within such discussions, figures and facts structured the possibilities for union disagreement, underlining the important relationship between knowledge and power (Foucault, 1991). In the Finnish cases the white-collar unions generally agreed on the need for cuts in labour costs, including dismissals. In both countries the poor demand situation left the parties with few options. For blue-collar workers, dismissals or full-time temporary lay-offs were the possibility they faced. For white-collar workers, reduced working time was also an option (CF1, CF3). Hence, there was limited room for union manoeuvring.

Nevertheless, the unions applied different strategies to reduce the number of dismissals. All unions made sure that internal redeployments were used. Furthermore, in Finland the union in CF2 suggested more temporary lay-offs instead of dismissals, but the local manager rejected this due to a more pessimistic outlook on the industry’s prospects. Still, the union representative perceived the decision as legitimate, since the manager had genuinely considered other alternatives. This demonstrates how regulations left the unions virtually powerless when the possibilities for union-management exchange on other issues, such as pay, were scarce. In CF3, the chief shop steward heard about the future risk for dismissals before implementation. To avoid especially blue-collar dismissals, he created a training and internal redeployment plan together with local management. Thus, the blue-collar union, due to well-functioning cooperation created room for proactive union influence regardless of the lack of formal co-determination rights.

Regulations, combined with union knowledge, mattered for the choice of labour adjustment means also in the Norwegian cases. The blue-collar unions in CN1 and CN2 wanted to terminate the use of agency workers. While company management agreed with the union, some project managers in the dispersed project organization kept using them for the sake of convenience. Learning this, the unions referred to the collective agreement stating that agency workers should not be used during temporary lay-offs or dismissals, forcing them to stop as soon as possible. Furthermore, instead of temporary lay-offs or dismissals the blue-collar unions in CN2 and CN3 demanded that workers, when possible, be hired out to other construction companies in the region, in accordance with clauses in the central collective agreement.

Distribution of burdens

The distribution of dismissals and temporary lay-offs was important for unions in both countries. In the absence of formalized selection criteria in the Finnish white-collar collective agreements (Table 2) it was difficult for unions to influence choices directly, except in the case of discriminatory selection. They only controlled procedural issues, as the local unions could, in case of offences, delay the adjustment process, while the central union could sue afterwards. This control made management especially thorough regarding formalities.

Furthermore, the unions could gain some influence through arguments. In CF1, the union achieved an equal distribution of burdens between different sections within the company: each section was given a certain savings target, allowing local union representatives and managers to determine the combination of dismissals, early retirements or temporary lay-offs independently. The union also wanted the dismissed to be offered outplacement training, which the employer agreed to, acting in accordance with institutionalized norms in Finland.

In the Norwegian cases the unions wanted dismissal selection to be done according to seniority within each occupation, a principle that was easily justified to members and provided a certain union control. Since seniority and productivity were not necessarily correlated, the employers were concerned about keeping the best skilled, motivated and productive employees. Facing conflicting interests, defining the operational application of the regulation was important. Management used court rulings to back up their contention that the difference in seniority between employees had to be substantial, no fewer than two years. In CN1, the blue-collar union disagreed and since neither party retreated, a number of dismissals were brought up to the industry-level organizations for conflict resolution. They also disagreed, and the conflict almost ended up in court. Eventually, management retreated because another company lost a court trial on a similar dispute. Hence, formal conflict resolution mechanisms at various levels were important power resources for the unions. In CN1 management offered severance pay if employees quit voluntarily. By doing so, the dismissal selection criterion lost some of its relevance as long as enough white- and blue-collar employees chose to quit. Management and the blue-collar union disagreed on the interpretation of seniority also in CN3. Management argued that putting more weight on competence, social skills, motivation and so on would improve the work environment and piece-rate wages for those remaining. The union gave in, but tried later in the negotiations to relate competence as closely as possible to seniority. Thus, procedural issues became, as in the Finnish cases, more central when the regulations were applied less mechanically. The white-collar unions in Norway also wanted a seniority principle to be applied, but the larger variation in tasks and competencies reduced the level of tensions since jobs were often less comparable.

Decisions about temporary lay-offs in the Norwegian cases were mainly in the hands of employers, akin to dismissals in Finland. The blue-collar unions in Norway agreed with management that the lay-offs should be distributed according to seniority on projects, rather than at company level, since this did not disrupt the ongoing projects’ productivity and the group-based piece-rates. Therefore, the wage system steered management and union interest in the same direction. Temporary lay-offs were virtually unused amongst white-collar workers.

Manufacturing

While regulations provided all the local unions with the right to participation in labour adjustment processes, the unions in one Finnish company (MF3) faced limited possibilities for influence, since the employer was unorganized. The final arena for conflict resolution would in this case be the civil court rather than the labour court. As the civil court frames conflicts as between an individual employee and employer instead of between the union and the employer, the union obtained no control. Since the union did not control other issues of interest to the employer, providing power in win-lose situations, it was compelled to promote win-win strategies, suggesting and pushing different kinds of adjustment possibilities. Limited labour adjustment experience reduced the unions’ ability to pursue such strategies effectively and the union representatives resigned; the ultimate decision power was solely the employer’s.

Discussing labour adjustments

The use of just-in-time (JIT) swiftly made the drop in demand evident at the plant floor in both countries. Thus, compared to construction, demand shifts had a much more rapid impact on production and manpower needs, except in MN4 and MN6. The uncertainty of the evolving economic situation made it difficult to create long-term adjustment plans, making combinations of temporary measures and dismissals, sometimes with redeployments (MF2, MF3, MN2, MN4, MN6), more suitable.

The union representatives – at least the blue-collar ones – were experienced and well aware of normal day-to-day rules, regulations and practices, except in MF3. In the Finnish cases MF1 and MF2 some unions also had previous crisis experience, but in all cases the unions still broadened their power resources through horizontal ties, making use of knowledge and support offered by other local unions during joint consultations (Table 3). In MF1 the unions also made plans to achieve equal distribution of burdens between working groups. Furthermore, to improve their knowledge of rules and regulations the unions in MF2 and MF3 used their vertical ties and contacted their central unions. In Norway, the unions had earlier experiences with labour adjustments, but not of the magnitude they were now facing. They contacted their central unions for information, but relied mostly on the knowledge and experience of the local union representatives, as the central union guidance was often too general to be of use in the actual consultations. The consultations were conducted separately for different unions, partly because the white-collar workers in most companies faced few adjustments, were unorganized and few in number. In Finland vertical network ties were used more extensively in manufacturing compared to construction, while in Norway the use of vertical networks was lower in manufacturing than in construction, due to the more specific nature of the issues dealt with.

The unions in both countries agreed with management on the need for labour adjustments and dismissals. The overriding goal for both parties was to maintain as many jobs as possible at the plant, retaining the competence and skills necessary to be productive in the future. Still, there were sometimes conflicting interests as to where to draw the line between temporary reductions in working hours and dismissals. As in construction, the unions wanted to move the burdens on to external workers first, but the size of this group was very limited and had no real effect. Still, as the unions in both countries had collective agreements stating that the use of agency workers should stop before temporary lay-offs or dismissals were discussed, this was an important sign toward their members, showing that their interests were being taken care of.

As JIT organization required flexible working time arrangements, both unions and management wanted to use the pre-existing collectively agreed schemes available in MF1 and MN2. However, this was not sufficient. In Norway the speed of the crisis and the fact that temporary lay-offs initially required that employees were laid off at least 50 per cent of their working hours made both sides in several companies (MN1, MN2, MN3, MN5) interested in finding other short-term solutions. Therefore, to save jobs, the unions engaged in cooperative efforts to adjust working time and pay, enabling win-win solutions rather than forcing the employer into win-lose power games. In MN1, the union negotiated a local ‘crisis’ agreement where wages were cut by 10 per cent, while working time was cut by 20 per cent, sharing the burden between employer and employees. Similar measures were created in the other three companies. The unions were thus essential in enabling joint crisis solutions and building consent among the employees, providing the unions with goodwill in later negotiations.

The unions’ knowledge about production enabled them to take an active part in discussing possible combinations of measures in both countries, allowing them to develop a proactive role during the adjustment process. Overall, the unions were more involved and influential in developing and choosing adjustment measures in manufacturing than in construction. This was especially so for the Norwegian unions facing especially rapid demand shifts (MN1, MN2, MN3, MN5), as these companies had to find immediate short-term solutions requiring active union involvement.

Distribution of burdens

Employers and unions sometimes had diverging interests regarding how to distribute the burdens. All companies in both countries, except MF1, dismissed employees. Even though the blue-collar collective agreement in Finland included a reference to seniority, the criterion of competence was most emphasized, making it hard for the unions to demand a certain selection, except to avoid discrimination. Therefore, the Finnish unions could only control, as in construction, whether the employer followed procedural regulations. Both local and central unions could delay the process in case of procedural wrongdoings, but as the employers anticipated that risk, they carefully complied with the regulations. While dismissal selection was beyond union influence in Finland, it was important in Norway, where the unions wanted a strict application of the seniority principle. Compared to construction the divergence of interest between unions and management was less pronounced, as management most often found that there was a tight relationship between seniority and skills, as most employees gained competence through work experience.

Production contingencies influenced how temporary lay-offs were distributed in the plants, but still left room for union influence regarding distributive justice among the individual workers. While unions in the Finnish cases MF2 and MF3 did not engage in these matters, the union in MF1 managed to convince management to apply alternating temporary lay-offs, combined with training. This offered improved employability and shared the burden of income loss evenly, as all production workers were laid-off for a period, then called back for a period, and then laid-off again. In Norway, the unions discussed and agreed with the employers regarding the use of temporary lay-offs. Also, the union in MN4 pushed for alternating temporary lay-offs, where half of the blue-collar workers were laid-off for one week and the other half the following week, distributing burdens evenly. Such a measure did cost more, as the employer had to pay wages for the five first days for all the employees instead of half of them, and it required more administrative efforts. The union argued that this would benefit the company, avoiding that laid-off employees quit, and the employer went along with the proposal. Thus, by using company-specific knowledge, and advocating it as the best for the plant, the unions won through.

Discussion and concluding remarks

Some similarities in union actions and power across countries and industries, related to the cooperative Nordic system, were found in the case studies presented.

The company’s cooperative traditions, as well as union knowledge regarding labour adjustments, were important for the local union’s ability to exert power. In companies with well-established union-management cooperation the final outcomes were generally more integrative (Walton et al., 1994), with a larger extent of win-win solutions benefiting both parties. The unions with a reciprocal relationship with the employer had more opportunities, repertoires and skills to pursue their strategies. In companies/plants where cooperative traditions were less established, we find, occasionally, as Brulin (1995: 198) points out for Sweden, that the union representatives felt they were ‘held hostage’ by the consultation procedures.

Even though the employer has the final say in labour adjustments within the Nordic cooperative system, the industrial relations system is based on the premise of cooperation and compromise between employers and unions (van den Berg et al., 2000). This study exemplifies how knowledge and mutual power-dependency relations in most instances enabled adjustments in which both parties related to common facts, while being cooperative and constructive. Not aiming for compromises (Dekocker et al., 2011; Golden, 1997) was not an option, partly because it was not ‘the way things are done’ (March and Olsen, 1984), partly because it provided a limited basis for union power. The power resources originated within the cooperative system, not outside it. Even where the union representatives felt that they had limited power, the employers’ actions were highly structured by regulations, such as with regard to the procedural dismissal rules in Finland. The organized system for conflict resolution cements union rights (Stokke, 2002), because the higher level organizations can settle conflicts with the consent of the local parties. The strongest testimony to the importance of the collective dispute regulation system is that, facing an unorganized employer, the unions in MF3 were left virtually powerless. Their grievances could not be solved within the industrial relations system, but required a civil court case.

While there were also similarities within industries between the two countries, there was evidence of industry differences in union power within the two countries. The unions in manufacturing were generally more influential in the labour adjustment processes than in construction, regarding both choice of means and distribution of burdens.

Several issues related to union power resources and management-union dependencies explain this difference. First of all, as a result of differences in production the manufacturing unions’ potential power stemming from their ability to mobilize workers at the shop floor was stronger than in construction. The blue-collar unions in construction controlled only a part of those working at the sites and had to deal with conflicting interests with other blue-collar workers, trying to reduce the use of agency workers or subcontractors. In manufacturing, keeping a good relationship with the strong unions at the site was important for the employers’ long-term interests, more so than in construction, where industrial relations were more fragmented.

Secondly, industry differences in the structure of production – one-of-a-kind projects versus serial production organized through JIT systems – conditioned union power during the negotiations. As changes in demand for new projects could be adjusted over some time in construction, full-time temporary lay-offs and dismissals were the main methods among the building workers. The means were more complex in manufacturing: swift demand shifts prompted combinations of adjustment measures, which made employers more dependent on the unions. With a less reciprocal relationship between unions and management in construction, the unions had fewer power resources to draw on vis-à-vis the employer.

Thirdly, related to these industry differences, regulations and institutional inflexibilities required cooperative solutions that provided possibilities for union influence in manufacturing. This was especially evident in Norway, where the substantive regulations of temporary lay-offs induced cooperative efforts to find alternative ways to adjust labour costs. Making concessions on, for instance, temporary cuts in working time and pay, unions were prepared to reclaim the favour at a later point, showing how reciprocity and reiterated exchange served as a power resource and how norms of fair exchange over time underpinned union power vis-à-vis management (Ellickson, 1991). In construction, the strict seniority rules pertaining to dismissals in Norway did not fit managements’ aims of keeping the most skilled employees, leading to more conflicts than in manufacturing. As the employers were dependent to a lesser extent on the unions in other day-to-day cooperative efforts in construction, the unions had much thinner power resources vis-à-vis the employers.

In contrast to manufacturing, the blue-collar unions in construction in Finland had virtually no such rights, making the difference in union power between construction and manufacturing more significant in Finland. Still, the unions in construction found it acceptable, since these regulations were collectively agreed on a higher level and as such in line with norms of appropriateness (March and Olsen, 1984: 743). Compared to construction, the white-collar workers in manufacturing in Finland gained from the close proximity enabled by the work organization in the plant and their cooperation with the blue-collar unions. The difference in blue-collar consultation and participation rights also explains why vertical network ties were used more extensively in manufacturing.

Altogether, the study found indications of less local union power in Finland compared to Norway across industries, pointing to more general national differences. The result in Svalund et al. (2013) can therefore be extended to other industries. In Finland, union participation was limited to the rights defined in the regulations in both industries, limiting union power to control of procedural issues, while the union involvement was higher in the Norwegian cases, in both industries.

This can be explained by the fact that the rules regarding temporary lay-offs and dismissals were more lenient in both industries in Finland than in Norway, limiting the basis for union power and moving dismissal selection into a non-issue for the Finnish unions (Bachrach and Baratz, 1962). The strict seniority criteria combined with the somewhat inflexible temporary lay-off rules provided the Norwegian unions with power resources to exploit in exchanges, in pure trade-offs and by enabling win-win solutions (working time cuts in manufacturing, hiring out in construction), all influencing the substantive outcomes.

In addition, cooperative relations at company level seemed more deeply anchored in the Norwegian cases, as the more decentralized wage bargaining system in Norway, compared to Finland, contributed to a more pronounced cooperative climate. Through the annual negotiation over wages the shop stewards became more involved in company/plant development, increasing management-union trust and the possibilities for long-time exchanges, as union concessions during labour adjustments could result in future paybacks.

Footnotes

Acknowledgements

Our thanks to Jon Erik Dølvik, Fredrik Engelstad, the Journal’s Editor and the two referees for their challenging and constructive comments.

Funding

The article is part of a larger research project, Nordic models facing crisis: Implications for labour market adjustment and inclusion. The project is headed by Fafo and funded by the Research Council of Norway’s programme on welfare, working life and migration (VAM) [grant number 194372/S20].

Notes

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