The Ghent System and Union Membership in Europe, 1970-1996

Abstract

In recent years, a fundamental basis of union strength, membership desity, has diverged dramatically across Europe. While most countries have witnessed stagnation or decline in unionization rates, a few countries have actually experienced steady gains, and achieved virtually full unioization. This article addresses the impact of one often acknowledged, but underemphasized, explanation for this divergence: differences in the way unemployment insurance is provided. Where unemployment insurance is compulsory and administered by the state, union membership typcally declined or stagnated during the last quarter of the twentieth cetury However, where unemployment insurance is voluntary and admiistered by trade unions (the so-called Ghent system), union membership grew quite steadily in the same period. I attribute this close association to the rise of unemployment risks, which has different implications for the decision to join or stay in unions, depending on the way unemploment insurance is funded. In the compulsory system, unions have much less control over the labor market, since they haVe no control over the conditions surrounding receipt of unemployment insurance.