Collective Bargaining in the Shadow of Labour Migration – the Case of Danish Construction

What happens to a collective bargaining system when a pre-dominantly home market oriented sector like construction suddenly becomes exposed to fierce international competition? Experiences from construction in Germany and the UK suggests that the collective agreements will come under serious pressure and potentially might collapse.

However, after ten years with increasing numbers of foreign companies, individual labour migrants and posting of workers from Central and Eastern Europe, collective bargaining coverage remains high and the institutional setup virtually unchanged in the Danish construction sector. However, the dynamics of negotiating renewals of the collective agreements have changed significantly as ‘social dumping’ has become a main theme in negotiations paving the way for numerous new stipulations and rulings aiming at sheltering the sector against ‘social dumping’ and ‘unfair’ competition. At the same time it has become clear that initiatives combatting ‘social dumping’ has been decisive for the bargaining parties ability to reach agreements. This has created a new dynamic in the bargaining process crowding out other issues on the bargaining agenda.

This paper is a micro-sociological study of how dominant employers’ associations and trade unions in Danish construction have reacted towards the significant inflow of migrant workers and foreign companies often undercutting the collective agreements. Empirically the analysis builds on interviews with representatives of the bargaining organisations (employers and trade unions) as well studies of agreements reached in bargaining rounds since 2007. We find that over consecutive rounds of collective bargaining employers and trade unions in construction have agreed to introduce new regulation primarily aimed at monitoring and controlling the migrant workers and foreign companies. However, a number of dilemmas are evident: Firstly, the bargaining system is not intact because migrant workers and foreign companies have been successfully included in the bargaining system, on the contrary, only a minority of migrant workers are organized and few foreign companies are member of an employers’ association. Secondly, the new rules on ‘social dumping’ are creating tensions within trade unions as well as internally among employers. Thirdly, over time it seems to be increasingly difficult for the bargaining parties to reach agreements on ‘social dumping’ issues.

Theoretically the paper will depart from Streeck and Thelen (2005) and their delineation of four modal types of institutional change; displacement, layering, drift and conversion. In our case we see an institution (a bargaining system) that remains basically unchanged, however, existing rules are changed, new ones introduced, the dynamics of the bargaining process has changed fairly radically and the bargaining parties seem to try to protect their bargaining systems from outside interference. We will discuss how we can understand these changes based on the four modal types.