The Ghent effect for whom? Mapping the variations of the Ghent effect across different trade unions in Denmark

• Date: 01 November 2014
• DOI: http://doi.org/10.1111/irj.12072
• Author: Laust Høgedahl
• Published date: 01 November 2014

The Ghent effect for whom? Mapping the

variations of the Ghent effect across

different trade unions in Denmark

Laust Høgedahl

ABSTRACT

The presence of an unemployment insurance system based on voluntary membership

in unemployment insurance funds (known as the ‘Ghent system’) and a high union

density has long been known and well documented, and even referred to as a special

‘Ghent effect’. However the Ghent system, especially in the three classic Ghent

countries, Finland, Sweden and Denmark, has come under significant pressure in

recent years, and many researchers are referring to an erosion of the Ghent system as

a recruiting mechanism for trade unions. But prior research aimed at documenting the

Ghent effect seems to disregard variations in how strongly trade unions benefit from

the Ghent system as a recruiting mechanism. Hence, this article sets out to investigate

whether all trade unions equally benefit from a Ghent effect across different sectors

and occupations by studying the Danish case. Unique survey data made it possible to

map Danish wage earners’ reasons for joining or leaving unemployment insurance

funds and trade unions. The article finds that there are great variations among Danish

trade unions in terms of how strongly they are dependent on a Ghent effect as a

recruiting mechanism. We may expect the same variations in the two other Ghent

countries, Sweden and Finland, because the organisation of the Ghent system is

similar in the three Nordic countries. In addition, the article shows that this variation

might help explain why some trade unions are on the rise to the detriment of others.

1 INTRODUCTION

1.1 Mapping the Ghent effect

The unemployment protection system in Denmark, Finland, Sweden, Iceland and

partly in Belgium is rather different from that of other countries. These are the only

(remaining) countries following the so-called Ghent system of unemployment

insurance. This particular system is characterised by voluntary membership (as

opposed to compulsory) in unemployment insurance funds (UIFs) that are recognised

and subsidised by the state and controlled by the labour movement. The Ghent system

has proven to be the driving mechanism behind the high union density of the Ghent

❒Laust Høgedahl is a PhD Fellow at the Department of Political Science, Aalborg University. Corre-

spondence should be addressed to Laust Høgedahl, Department of Political Science, Aalborg University,

Fibigerstræde 1, Aalborg Ø DK-9220, Denmark; email: hogedahl@dps.aau.dk

Industrial Relations Journal 45:6, 469–485

ISSN 0019-8692

© 2014 John Wiley & Sons Ltd

countries and especially in the three classic Ghent countries: Denmark, Sweden and

Finland (Bryson et al., 2011; Ebbinghaus et al., 2011; Mares, 2000; Rothstein, 1992;

Scruggs, 2002). The presence of the Ghent system and a high union density is there-

fore referred to as the Ghent effect. However, the Nordic Ghent systems have come

under significant pressure in recent years, and many researchers are referring to an

erosion of the Ghent system as a recruiting mechanism for trade unions (Böckerman

and Uusitalo, 2006; Kjellberg, 2006; 2011; Lind, 2004; 2009). This is mainly due to the

deterioration of the unemployment benefits provided by the UIFs in terms of cover-

age, eligibility and the right of re-entitlement, making membership in a UIF less

attractive and eroding the UIFs as a recruiting mechanism for their associated trade

unions. Hence, research regarding the Ghent effect has often focused on either ana-

lysing the erosion of the system as a recruiting mechanism (Due and Steen Madsen,

2007; Kjellberg, 2006; 2009; Lind, 2004; 2009; Uusitalo and Bockerman, 2005), or

measuring the Ghent effect compared with other factors known to contribute to a

high union density in cross-national studies (Ebbinghaus et al., 2011; Schnabel and

Wagner, 2003; 2005; Scruggs, 2002; Van Rie et al., 2011; Western, 1994). But do all

trade unions and professional organisations equally benefit from a Ghent effect across

sectors, occupations and branches, or are some unions more dependent on the Ghent

effect as a recruiting mechanism than others? And can such variation help explain why

some trade unions are losing members while others are on the rise when the Ghent

system is being reformed?

During the 2000s, the Liberal-conservative government made small but neverthe-

less pivotal political-institutional changes to the Ghent system in Denmark. The

reforms have not only made the system less attractive by deteriorating the unemploy-

ment benefits, but also created a state of competition among UIFs. This was one of

the consequences of the ‘Liberation of the labour market’ reform implemented in

2002, allowing all UIF to become interdisciplinary, giving rise to ‘yellow’ or ‘alterna-

tive’ unionism in Denmark (for more on the rise of alternative unionism, see Ibsen et

al., 2013). The alternative unions organise members (or customers in their own

terminology) across different trades and professions in both the public and private

sectors, in contrast to the trade-specific, traditional labour movement. The alternative

unions are not, or only in rare cases, involved in any collective actions, but merely

provide a set of individual services in addition to a UIF membership. Their main

instrument of recruitment is a cheap membership due of their trade unions, while the

cost of their UIFs is the same as the traditional UIFs.

The aim of this article is twofold: First, it seeks to present the consequences of the

resent political institutional changes made to the Danish Ghent system. Second, map

and analyse the Ghent effect across different trade unions and professional

organisations. This is possible with unique survey data containing 4,100 respondents

who are representative of the Danish labour force in terms of both union and UIF

membership. The analysis is guided by hypothesis formulated on the basis of review-

ing existing literature regarding the Ghent effect. The first hypothesis emphasises

selective incentives as the driving mechanism behind the Ghent effect. The second

hypothesis is based on a more sociological approach stressing peer pressure and social

custom as an explanatory variable. The third hypothesis is based on a more institu-

tional approach explaining the Ghent effect as a lack of a transparent institutional

separation where employees do not notice the institutional difference between a UIF

and trade union. Hence, we might expect collectively orientated trade unions with

their own UIF associated, and with members with high risk of unemployment to have

470 Laust Høgedahl

© 2014 John Wiley & Sons Ltd