Making sense of employer collectivism – The case of Danish wage bargaining under recession

Abstract

This conceptual paper argues that preferences of employers for collective action cannot be reduced to rational actors making decisions based on market structures or institutional logics. Both markets and institutions are inherently ambiguous and employers therefore have to settle for plausiblerather than accuraterational strategies among many alternatives through so-called sensemaking. Sensemaking refers to the process by which employers continuously make sense of their competitive environment by building causal stories of competitive advantages. The paper therefore tries to provide a better understanding of how preferences for collectivism are formed, sustained and potentially changed by identifying dominant and competing stories that either reinforce or challenge preferences for collectivism. Hereby, the paper fills a theoretical, empirical and methodological void in studies that allude to the ambiguous role of markets and institutions but do not study how actors deal with this ambiguity. The sensemaking concept is illustrated with an analysis of wage bargaining in Denmark during the recent recession when Danish labour cost competitiveness was in a deplorable state. However, unlike countries in similar situations e.g. Finland and Sweden, Danish employers retained coordinated industry-level bargaining system, which makes it an interesting paradox to study from the vantage point of sensemaking.

A typology of employers’ organisations in the United Kingdom

“…It is likely that within coordinated market economies negotiating EOs comprise a larger share of the total population (Martin and Swank, 2012;Ibsen, 2016) EOs and labour unions have been impacted by similar changes such as changing government regulation and the internationalization of the economy (Brandl and Lehr, 2016). However, employment relations research has to a far greater extent focussed on labour unions, neglecting the examination of EOs.…”

Adapting to survive: The case of Danish employers' organisations

“…Consequently, the cost pressures on different companies in different links of the value chain will impinge heavily on the kind of cooperation that companies demand from their EOs. Moreover, Traxler and Brandl () find that export‐oriented countries usually have high degrees of collective bargaining coordination across industries as a way to moderate general wage increases (see also Ibsen, ).…”

Employer Organizations and Labour Immigration Policy in Australia and the United Kingdom: The Power of Political Salience and Social Institutional Legacies

“…Adherents of the Varieties of Capitalism framework claim that employers in some states are more likely to lobby for certain policies because of rational preferences determined by national market institutions. Regardless of whether the emphasis is placed on national or sectoral market institutions, common to these perspectives is a failure to account for situations where employer organization preferences are 'irrational' (Ibsen 2016), in that they do not align with prevailing market institutions. The weakness of industry-wide skills mechanisms increases the likelihood of such externalities in liberal market economies, where employers tend to favour market-based solutions (Hall and Soskice 2001;Menz 2009;Wright 2012b).…”

“…While there has been much attention on employer organizations' industrial functions, such as their role in co-ordinating bargaining (Traxler 1999), changing labour market dynamics have diminished their industrial influence (Sheldon and Thornthwaite 1999). Although less applicable to states where employer organizations' regulatory role remains strong (Afonso 2012;Ibsen 2016), the prediction that business desire for greater labour market flexibility would erode employer organizations' traditional industrial functions (Streeck 1987) appears to have come to fruition in the liberal market economies. However, this has galvanized employer organizations' political function to lobby governments for policies facilitating this flexibility (Barry and Wilkinson 2011;Sheldon and Thornthwaite 1999).…”

“…more liberal or more co-ordinated) among different groups of employers, for instance, between employers in trade-exposed versus nontradable sectors (Afonso 2012) or services versus manufacturing (Caviedes 2010). Regardless of whether the emphasis is placed on national or sectoral market institutions, common to these perspectives is a failure to account for situations where employer organization preferences are 'irrational' (Ibsen 2016), in that they do not align with prevailing market institutions. While organizational, political and market institutions can be expected to affect employer organization preferences and influence, this is perhaps less likely in relation to issues where social institutions may cause market logics and membership logics to conflict, such as labour immigration (Boswell 2007).…”