NEW REPORT: The role of trade unions in Central and Eastern Europe

A new IZA World of Labor report finds that trade unions in Central and Eastern European (CEE) countries have been improving the labor market outcomes of their members despite low unionization rates and low levels of bargaining coverage

Trade union membership following the economic transition declined sharply in the great majority of Central and Eastern European (CEE) countries. The unionization rates in CEE are now lower than in most Western European economies. Moreover, collective bargaining coverage levels have decreased, and now cover a relatively small share of the workforce. Wage negotiations are largely decentralized, fragmented, and weakly coordinated. Overall, there is a general perception that trade unions are weak and ineffective—and thus irrelevant.

In a new report economist Iga Magda of the Warsaw School of Economics and Institute for Structural Research shows that low levels of union presence observed in the CEE countries do not necessarily imply that unions have no influence and that unions have in fact been improving the labor market outcomes of their members.

Magda cites recent research showing that the wage premiums associated with collective bargaining have increased, and the surviving unions successfully protected their members during the 2008–2009 economic crisis. Unionized workers were less likely than other workers to lose their jobs, or have their wages delayed or suspended. There is also evidence that trade unions helped union members keep their jobs by convincing employers to reduce employees’ working hours or wages in lieu of laying them off.

According to Magda several factors have strengthened Eastern European unions in recent years after a long period of marginalization. These include the EU accession process, a new generation of workers who are less sceptical of the “old” institutions and an emerging international labor solidarity movement, as CEE trade unions are receiving increasing attention and support from their Western counterparts and partners.

Magda argues that the further strengthening of trade unions and collective bargaining could help the CEE to tackle a number of challenges, including: (i) high levels of income inequality; (ii) demographic developments that could lead to labor shortages; and (iii) the growing incidence of non-standard employment. Therefore, policy support for improving the social dialogue and developing better industrial relations would benefit employees, employers, and the government.

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Media Contact:
Please contact Anna von Hahn for more information, to read the report in advance of publication or for author interviews: anna.vonhahn@bloomsbury.com or +44 7852 882 770

Notes for editors:

IZA World of Labor (http://wol.iza.org) is a global, freely available online resource that provides policy makers, academics, journalists, and researchers, with clear, concise and evidence-based knowledge on labor economics issues worldwide.