Financialisation, shareholder value orientation, and the decline of trade union membership in the EU

Abstract

This article shows that an orientation towards shareholder value and corporate indebtedness at non-financial firms have been negatively associated with union density in the EU over the past 21 years. We argue that the financialisation of non-financial firms makes them prioritise their ‘external (economic) balance’ at the expense of a cooperative ‘internal equilibrium’ model. In other words, corporate financialisation pushes non-financial firms to shift to non-participatory, market-based HR systems that directly undermine the role of trade unions. This study examines this corporate financialisation-induced shift within the EU in the wake of deeper economic integration since 1999 and provides panel data econometric evidence that it has significantly undermined union membership.

‘Human resource management and the worker’: employee voice in management

“…First, financialisation increases the distance between firm owners, managers and workers, resulting in decision-making at the top of the company in which workers’ interest is far from being a key criterion (see Gouzoulis et al, 2024). Those decisions can also be made far from where collective bargaining takes place, leaving little or no space for trade unions to discuss or negotiate (Appelbaum et al, 2013; De Spiegelaere and Vitols, 2024).…”

“…In addition, when it is not the firm’s owners who define its orientation and goals but rather financial intermediaries, managers themselves cannot get a real mandate to implement coherent and long-term human resource policies. Therefore, not only workers, but also middle management lose power (Appelbaum et al, 2013; Gouzoulis et al, 2024). This is correlated with ‘distance’ in Riordan and Kowalski’s (2021) words: ‘ Distance manifests in the growing divide between those who control the material and subjective conditions of work and those who labor.…”

“…Their study demonstrates how company-level mechanisms give or leave more or less room for worker participation. Financialisation, with the pressure that it puts on wages, fosters managerial practices that reduce worker voice: there is no room here to consider employees’ interests, especially in the area of wages (see Gouzoulis et al, 2024). Similarly, network organisations that lead to fragmented workforce organisation provide a context in which employees, de facto, cannot organise their collective voice (see Helfen et al, 2024).…”

“…The rather gloomy picture that we paint needs to be nuanced. While the discipline of HRM and its practices can, through the process of psychologisation described above and discussed by Linhart (2024), combine overhumanisation and dehumanisation, the process of financialisation analysed by Gouzoulis et al (2024) means that new opportunities are emerging that are worth exploring.…”