Trade union renewal through local partnerships for skill formation

Unions and governance networks

In this article, we follow the line of thinking suggested by Fichter and Greer (2004), Huzzard (2004) and others that imply that partnership may be a pathway to union renewal. However, we add to this that partnerships can also include a wider range of actors such as municipalities, regional authorities, training institutions, etc.

On the basis of contributions from the governance literature, we can elaborate that unions can play a role in so-called local governance networks. Such networks may be decentralised, corporatist committees with formal decision-making competencies with regard to policy implementation (Bell and Hindmoor, 2009; Damgaard and Torfing, 2010). However, they could also be self-grown partnerships in which stakeholders try to overcome the institutional and organisational fragmentation of the public sector that is the consequence of more than 30 years of public management reform (Rhodes, 1997; Sørensen and Torfing, 2007).

Rhodes (1997), and Sørensen and Torfing (2007), as well as more recent contributions (e.g. Hood and Dixon, 2015), suggest that while many of the administrative reforms in the public sector have sought to decentralise authority and institutionalise market dynamics in order to make government better and more effective, a number of unintended results have occurred, such as an excessive focus on contractual objectives and a massive loss of inter-organisational coordination. The consequence is a fragmented public sector where the one hand is often unaware of what the other hand is doing. A bottom-up response to this fragmentation is the formation and institutionalisation of new forums that reconnect public agencies with societal stakeholders and fill out the massive coordination deficit (Rhodes, 1997: 55).

The governance (and corporatism) perspectives contribute to our framework that partnerships can be broader than just bilateral union-management relationships. However, more interestingly, we get the notion that such partnerships may sometimes be formed bottom-up in attempts to make up for the shortcomings caused by new public management (NPM). In that sense, we may think of governance as a countermeasure to government failure; a perspective that is reinforced if we consider things from a political economy perspective.

Unions, skills and local policies for economic development

Over the last three decades – an era we can describe as characterised by globalisation and liberalisation – central governments have been stripped of many of their instruments for economic intervention. Supranational institutions, such as the European Union’s single market, ban policies that could protect or subsidise domestic industries, and the increasingly unhindered movement of large-scale capital across borders puts pressure on governments to cut taxes and remove obstacles for lowering labour costs (Crouch, 2007). Furthermore, since the global and financial crisis that resulted in excessive debt problems in a number of EU Member States, European governments have been subject to a strict regime of macroeconomic management that reinforces restrictions on the use of fiscal policy. Parallel to this, the financial markets’ new awareness of countries’ general economic performance tends to produce incentives for marketisation and retrenchment rather than investments in infrastructure, welfare and education (Grauwe and Yi, 2013).

When cities and regions can no longer rely on state protection or positive state intervention, and when they on top of that could be facing cutbacks to state-financed welfare programmes, initiatives developed at the local level become increasingly important for economic growth and job creation. Initiatives that can spur local economic development include the production of local collective competition goods, which are facilities, knowledge or services that directly or indirectly improve the competitiveness of firms based in the local business district. Concrete examples of local collective competition goods include infrastructure, marketing or improved logistical services that are provided to the local firms for free or at very low cost (Trigilia, 1991).

In this article, however, we want to emphasise the significance of labour market services, such as access to skilled labour and training programmes for staff. In the literature, there are a number of studies that attract attention to regions that have based their economic success on the existence of inter-firm networks and a shared skill base and process of learning (see Crouch et al., 2004: 166, for an overview). The success formula seems to be the combination of competition, cooperation and proximity. Firms that produce similar items are naturally competitors, but if they gather in the same industrial district, they can share facilities, bring down transaction costs and stimulate specialisation by exchanging knowledge. A key element in this process is of course the production of advanced skills by a training institution that has specialised in servicing the firms in the local business district (Crouch et al., 2004: 169).

Coming back to the theme of union renewal, our argument is that many unions have resources and capacities that enable them to play a role in the production of local collective competition goods, especially with regard to labour market services and training. Thus, unions can help underpin local firms that face competition from MNCs and weakened support from the public sector, and, in doing so, they may be able to promote better working conditions and decent wages, and address the interests of workers displaced due to restructuring (Stuart and Wallis, 2007).

One capacity unions have is the overview of labour supply and funding for retraining of workers. Due to their membership registers and links to union departments in other regions, unions often have an overview of the labour force that outmatches decentralised public employment agencies, and due to the establishing of training funds in collective agreements, unions and workers have their own means of funding of training. This means that they can recruit the right workers and provide them with the right skills at the right time for companies (Trampusch, 2007; Johnston et al., 2012).

Another element is craft expertise. The raison d’être of unions is to improve wages and other working conditions for the working class (Hyman, 2001), but often neglected is the fact that many unions also function quite like a modern guild system that upholds craft traditions and seeks to develop and nourish a specific trade (Crouch, 1982; Scheuer, 1986). The knowledge base possessed by unions can be used to complement firms’ production systems and refine vocational training programmes (Kristensen and Rocha, 2014).

Last, but not least, besides contacts to the firms in the local business district, unions often have relational ties to local governments, educational institutions, etc. This means that unions are in a favourable position to be the facilitator of local networks and coordinate activities that aim at skills development for the local industry (Kristensen and Rocha, 2012: 461).

Offshore case

The first case is about a union-based network situated in the city of Esbjerg, the metropolis of the Danish maritime transport and offshore industry. The network connects the local division of the United Federation of Danish Workers (3F) ¹ with local manpower firms, Esbjerg Job Centre and West Denmark’s Vocational Training Centre (AMU). The network was initiated around the turn of the millennium when energy production and the offshore industry in the North Sea was booming. At that time, the port of Esbjerg was acquired by Esbjerg Municipality and modernised to facilitate maintenance, repair and decommissioning of large oil rigs and drilling platforms. ² The repair of oil rigs and platforms (whether taking place onshore or offshore in the North Sea) soon developed into a huge business, attracting several subcontracting firms. The oil rigs and platforms are owned and operated by large energy companies (e.g. DONG Energy, Maersk Oil), but the repair projects are typically outsourced to subcontractors that have specialised in delivering various types of services (manpower) to the energy companies.

The repair and maintenance projects involve several hundred workers. Normally, work is organised in rotation shifts, meaning that workers are offshore 14 days or more successively. Most of the work is hard labour, including the building of scaffolds (around the platforms), surface treatment, pipe lagging, etc. The physical environment is tough, but the work is well paid and is attractive to certain segments of male workers coming from all over Europe.

The network was formed when the union approached the subcontracting firms in order to regulate pay, working time and other standards at the repair sites. In return for union coverage, some of the firms asked for assistance with regard to the recruitment and training of workers, and soon a fruitful partnership developed. 3F organises both unskilled and skilled workers in the construction sector, such as carpenters and bricklayers, and has strong ties to the unions that organise workers within plumbing, piping and painting, that is, 3F is dealing with many of the professions that can most easily be retrained for offshore repair work. Moreover, through the unemployment insurance fund and other union departments around the country, 3F always has a very detailed overview of the labour force and they receive information about ongoing redundancies. Due to these capacities, the union could offer invaluable help to the manpower firms with regard to spotting possible candidates for offshore work and do so in a timely manner so that the necessary training and safety approval could be arranged before the start-up of the repair projects.

As the partnership between 3F and the manpower firms became increasingly institutionalised, the recruitment procedures were also refined to cover the more personal competencies that are important in adapting to the working environment in the offshore industry. Among other things, people’s safety attitudes are extremely important. Workers must always act according to safety procedures and they have to abide by a zero alcohol and drugs tolerance. In order to do well working in shifts at the repair sites in almost all kinds of weather conditions and with heavy equipment, workers also have to have physical and mental strength. And given that work is done in teams often consisting of different nationalities, language skills and the ability to fraternise with people from other cultures are also essential. ³ While formal qualifications are easy to document, peoples’ personal skills cannot be uncovered by checking the membership register alone; thus, as part of the recruitment process, the union – in cooperation with the local vocational training centre – has developed procedures that test the candidates’ more personal attributes, including their physical and mental tolerance.

Shipyard case

While the context of the offshore case is one of economic prosperity and demands for labour, the context of the shipyard case is economic crisis and plant closure. The Lindø Shipyard was the last of the large Danish shipyards to close down, thereby ending a longstanding era of large-scale shipbuilding in Denmark. ⁴ Owned by the Maersk Group, Lindø built carriers and big container vessels and was the workplace of close to 2500 workers when the closure was announced in 2009. In addition to this, the closure also affected many local subcontractors that delivered services or mechanical components to the yard.

The partnership that was formed shortly after the announcement of the closure of Lindø consisted of two municipalities, the Region of Southern Denmark (RSD), Danish Industry (DI), and three trade unions representing the yard workers, including 3F, Danish Metalworkers Union (Metal) and the Danish Association of Professional Technicians (TL). All parties were motivated by the fact that the yard closing – without any additional measures taken – would produce a massive unemployment crisis for the region; a crisis that would probably spill over to the regional economy and entail severe budgetary liabilities for the municipalities.

Against this background, the partners applied for funding from the EGF ⁵ – an EU fund designed to provide support for workers made redundant due to structural changes. The Lindø partners received approximately €14m, the hitherto largest grant in the history of the EGF, and organised a large qualification and retraining project that ran from May 2011 to October 2013.

The retraining project consisted of three phases. A first, mandatory phase lasted four weeks during which the yard workers received guidance and counselling and were screened for dyslexia and work-related disorders. For all the redundant workers who subsequently chose to participate in the project, an individual readjustment plan was made that described the composition of courses they would thereafter go through.

Phase two was the actual training phase, which lasted from a few weeks to over a year. The training could include ordinary education, vocational training or both. The only requirement was that the training courses fell into the framework of a regional growth plan that was developed by the project partners in close cooperation with research institutes. The growth plan focused on four different industries (the energy sector, welfare technology, robotics industry and construction) that were all expected to provide good employment opportunities in the future.

The third phase of the project was a 10-week individual coaching phase where the workers received assistance with regard to job searching and job interviews. In the third phase, some workers were also offered shorter work internships in local companies.

When the EGF-funded Lindø project ended in the autumn of 2013, close to 60 per cent of the workers who had participated in the project were employed again. Some 30 per cent were still on unemployment benefits or social assistance. Four per cent had chosen to participate in further training. A small number of workers – typically those above the age of 60 – had retired from the labour market. Among those in work, 23 per cent were employed in the manufacturing industry – many of them in firms established in the old dockyard areas that were modernised after the closing of Lindø. ⁶ The construction sector, the offshore industry, the private service and the public health sectors also took a large share of the Lindø workers (Odense Kommune et al., 2014).

Craft expertise and knowledge of the labour market

As we have already stated, the purpose of the network that was formed by manpower firms and a local branch of 3F in Esbjerg was to recruit and train workers for offshore repair projects. What the trade union carried into this partnership was, first of all, a strong expertise in the professional and social aspects of working life in the offshore business. When the offshore industry started growing in Esbjerg, 3F was already cooperating with energy companies in the Norwegian sector of the North Sea. Through these relationships, the union had built up expertise about the offshore sector’s specific labour demands. As the partnership in Esbjerg gradually became institutionalised, the union simultaneously learned about the types of craft that adapted most easily to the offshore industry. In particular, the partners had good experiences with carpenters, bricklayers and metalworkers who easily adjusted to tasks such as building scaffolds or the handling and insulating of pipes. From ordinary construction sites, these workers are used to different scaffolds and have experience with working at heights. Another group that also converted quite smoothly to offshore work was that of fishermen:

People that come here, for instance fishermen, they don’t give us any problems […] they’re used to being away from home. And they’re used to pitch into the work. (Representative from 3F Esbjerg)

In the shipyard case, we also found data confirming that unions’ labour market expertise can be an asset. As part of the training project funded by the EGF, the partners completed a growth plan that indicated in which sectors of the regional economy future labour supply problems could be expected. To obtain valid and useful input for the growth plan, the partners first addressed the employer organisation DI and a range of local firms. However, these efforts were mostly fruitless. The local firms that were contacted were not very willing to cooperate.

The growth plan was instead completed by means of analyses from the RSD’s regional development department and input from research institutes. However, the trade unions also provided important information in this process. This was actually reported by most of our interviewees. The interviewees emphasised the significance of the trade unions’ organisations that stretch across municipality borders and onto the factory floors and construction sites:

The unions have their fingers on the pulse. Not necessarily in all work places but often they have good channels that pick up signals. They hear from their network what company managers are discussing – where might there be some possibilities […] this information goes into the process [of developing the growth plan] via the union representatives in the working group. (Representative from Kerteminde Municipality)

Bargaining capacity

A key feature in union work is collective bargaining and lobbying. Unions’ bargaining capacity is a ‘sword of justice’ for workers, but this sword can also be an advantage to firms and other actors when they stand side by side with unions.

From the offshore case, we can highlight an example of this by focusing on how 3F assists the manpower firms in raising funds for the safety and emergency training that workers need in order to get into the offshore labour market. As mentioned earlier, the offshore oil and gas industry in the Danish sector of the North Sea is composed of a few energy companies and half a dozen subcontractors that have specialised in delivering services to the energy companies. Due to tough competition between these subcontractors and the uncertainties regarding when the repair projects can start up, the manpower firms are generally unwilling to invest in training themselves. Moreover, the firms often poach workers from each other, so there is a great risk that the returns from investments in training made by one firm will profit another.

The general answer to firms’ inclination to underinvest in skills is publicly financed training. However, under the framework of Danish active labour market policy (ALMP), the funding for retraining of unemployed workers is incumbent on the municipalities. The Danish public employment system (PES), including the financing of activation, was decentralised in 2007, and since that time the use of training has nosedived (Jørgensen, 2009). The municipalities focus first and foremost on short-term activation measures and they generally try to keep activation costs as low as possible (Larsen, 2013a). Most of the Danish job centres are only willing to finance education if it comes with a signed employment guarantee – something the firms in the offshore industry simply will not give due to the many uncertainties in the business.

The lack of financing of training is a barrier that 3F constantly tries to break down. The offshore industry can potentially employ a great number of the union’s members, especially workers coming from the construction sector or manufacturing. Yet, without the necessary training, the offshore sector is out of their reach; instead, the jobs are likely to go to workers from eastern or southern Europe. Therefore, 3F has a strong incentive to assist the manpower firms in persuading the municipalities to finance training activities without having to provide them with employment guarantees, and the union is quite successful in doing so. Nowadays, the job centre in Esbjerg is part of the offshore network and assists the union and the manpower firms in the recruitment process, including financing of training. However, the vast majority of the rest of the Danish job centres still needs to be pressured to make this kind of investment:

The only way to get out there [offshore] is by helicopter and to do that you need offshore safety training. It costs 15,000 – 20,000 [Danish Kroner] […] that’s the kind of thing we cooperate with 3F about. We’ve done that for several years now […] if we didn’t have that relationship to the job centre, 3F and AMU, we couldn’t keep this business running. It would be impossible that things would go so smoothly. Our experience is…if we have to provide an employment guarantee to a job centre elsewhere […] I can’t do that, because I have no idea when my customer is ready. (Representative from manpower firm)

Social capital

In recent years, there has been increasing focus by economists and political scientists on the importance of social capital for the proper functioning of societies. Societies with low levels of social capital lose their social cohesion and disintegrate (Larsen, 2013b). Social capital is, among other things, defined as norms that encourage people to cooperate and high levels of personalised and institutional trust (Putnam, 1993). While this article is a contribution to the literature on trade union renewal and partnership, we introduce the discussion about social trust because our case study demonstrated that this was actually one of the major assets that the unions brought into the partnerships. This manifested itself in the personal relationships inside the partnerships but even more so in the process of motivating workers to train.

In the offshore case, we learned that the manpower firms are from time to time contacted directly by unemployed workers who are interested in the offshore industry. However, instead of referring them to the job centre, the firms refer them to the union. The firms’ experiences are that many blue-collar workers have an aversion towards the PES. They become anxious when talking to case workers in the job centres and are discouraged. Even though the unions also have tasks in relation to controlling the unemployed, our interviews indicate that many workers have more faith in the rank-and-file employees in the union compared to the case workers in the PES:

Don’t misunderstand me in relation to the job centre, but if people that are used to working with their hands go there, and are to fill out a lot of forms and sit down in front of some woman they’ve never seen before, that scares some of them! […] I’d rather have 3F […] it’s easier for people to sit there and say what’s on their mind. (Representative from manpower firm)

During 2010, a series of rallies was arranged on one of the factory floors at the shipyard. The purpose was to inform the workers about the opportunities that the EGF project could offer them. However, at the first rallies, the workers showed no interest at all. It was as though they had not really acknowledged that the Lindø era was over. Odense and Kerteminde Municipalities also opened an on-site job centre at the shipyard, but very few of the workers took advantage of this facility.

When the union people took over the stage at the rallies, the attitudes of the workers started to change. Many were still sceptical, but the workers could more easily relate to the events and their consequences when they were face-to-face with union people. The unions were more successful in making the workers realise that the shipbuilding era was over, and they were able to make people understand that in order to stay in the labour market, the inescapable route was through training and education. In a focus-group interview with representatives from RSD and Jobcenter Odense, the following statement was made:

We established a job centre on-site […] but the employees we had placed there from the beginning…nobody visited them […] their [the yard workers’] response was ‘you can’t help us. You don’t know shit about anything’ […] then they [the unions] joined in afterwards, but they definitely ‘filled the shoes out’ […] the Metal people are very trade-oriented and have had a very strong unionised culture at the shipyard, and then they had an ambassador who said: ‘Okay, shipbuilding in Denmark is over, we have to do something else now, but let’s face that with a positive mind and see if we can get something out of that.’ (Representative from RSD)