Trade unions in the Nordic countries

Trade unions play a more important role in Nordic politics and economics than they do in most other countries. This is largely a result of their organisational success, which has made them key actors in policymaking as well as in collective bargaining.

2019.02.18 | John Logue

Despite being latterly less popular, Nordic trade union confederations still provide millions of workers with advice and the public with information. Photo: a graph by the Swedish LO showing the percentage of unionisation by work type and gender.

Strength of the trade unions

The Nordic countries continue to have the highest union density in the world. In 2016, of all blue and white-collar workers, membership of trade unions amounted to 52% in Norway, 65% in Finland, 84% in Iceland, 66% in Sweden, and 67% in Denmark. By comparison, between 20 and 30% of employees are generally unionised in most other European Union countries - the exception is Belgium, which has a similar organisational structure to the Nordics - and 10% in the United States. A much larger percentage of employees are covered by collective bargaining agreements, 80-90% in the Nordic countries.

Starting with an agreement in Denmark between employers and employees in 1899, the basic aspects of labour law in the Nordic region have generally been set by collective agreement between unions and employers’ federations, rather than by national parliaments.

This centralised structure of collective bargaining led to the 'deterrence theory of labour relations' in which both sides were so well organised that a general national conflict could not be permitted, at least not for any extended time. It also created an ideal mechanism for a national incomes policy. Both factors encouraged the involvement of the government as a third party in labour negotiations. Thus, centralised bargaining reduced industrial strife and, through the solidaristic wage policy, pushed up the wages of women and the unskilled relative to wages of skilled male workers. While the national bargaining system gave way to sectoral bargaining in most of the Nordic countries in the 1980s and 1990s, the need for co-ordination persists, simply because of the key role of collective bargaining in determining income formation.

Economic and workforce changes since the 1960s have dramatically impacted Nordic trade unions. Deindustrialisation has reduced the importance of the male craft and industrial unions that dominated the labour movement during its first century. The growth of the public and service sectors has been followed by growing white collar unionisation, while rising women’s labour force participation rates have been paralleled by a growing importance of women in union leadership. In 2018, for example, only two of the largest ten Swedish unions were private sector, blue-collar manufacturing unions. Eight were white collar, and six have female majorities. Wanja Lundby-Wedin was elected as the first woman chair of the Swedish LO in 2000 and Liv-Gerd Valla of the Norwegian LO in 2001. Both were from public sector unions. At the beginning of 2019, Lizette Rigsgaard is President of the Danish FH (formerly LO), and women head many branch unions in the Nordic region.

Distinctive to the Nordic regions

Despite failing numbers in trade union membership in the ten years up to 2019, a high level of trade union membership remains a characteristic of the Nordic countries compared to the rest of the world. The difference between the Nordic region and the rest of the industrialised world has mainly occurred since 1960. In that year, union density varied between 34% in Finland and 71% in Sweden when the European norm was generally between 29 and 65% and 24% of American employees were unionised.

The growing difference stems from a decline in union density in the US and UK, driven primarily by government policies under the Reagan and Thatcher administration, as well as a substantial increase in Nordic unionisation at around that time driven by Icelandic and Finnish convergence on the Danish-Norwegian-Swedish norm. The structure of the unemployment benefit compensation system has also played a major role in Denmark, Sweden and Finland. In those three countries, for all practical purposes, you have to be a union member to belong to the unemployment compensation system. As a consequence, union membership tends to rise when unemployment rises, rather than fall, as is the case in the United States, for example.

Employees on boards and health and safety representatives

’Co-determination’ – direct union influence on corporate decision-making – is an integral part of company life in the Nordic countries. This originated in the 1970s when labour unrest, manifested in a wave of wildcat strikes in 1969-70, led Nordic unions, which were historically stronger at the national level than locally, to push for more worker influence in the workplace. This resulted in a dramatic expansion of the role of union locals. Corporate board seats for employee representatives were mandated in Denmark, Norway, and Sweden in 1973 and in Finland in 1991. Additional measures strengthened the positions of safety stewards, and increased individual rights to employment security. Local co-determination in shop, plant, and corporate decision-making was mandated in Sweden in 1976 (Medbestämmandelagen (MBL), Co-determination law) and Finland in 1979.

Local determination meant that:

  • information flows about corporate policy were opened;
  • introduced mandated bargaining on major decisions;
  • provided protections against contracting out; and,
  • substantially strengthened the role of the union local.

The push for direct influence in management decision-making was coupled in Denmark and Sweden with a push for macro-economic co-determination through wage-earner funds. Although the wage earner fund push ultimately failed, co-determination has increased employee and union influence from the shop floor to the boardroom.

Influence on national politics

Union strength has also had an impact on political decision-making. Since the 1930s, unions in Denmark, Norway and Sweden, and since the late 1960s in Finland and late 1980s in Iceland, have played a direct role in the shaping of public policy, especially in labour market and economic issues. This practice, often described as 'democratic corporatism' has integrated unions and employers in making and implementing economic policy. The two labour market partners (as well as the farmers’ organisations) are also involved in formal consultation about other key policy decisions.

The high level of union organisation has influenced the Nordic political party systems. The unions in Denmark, Norway and Sweden were closely associated with the Social Democratic parties historically, and trade union unity became an article of political faith, unlike the divided labour unions of France, Italy, or inter-war Germany. Between the 1930s and 1970s, the unions mobilised the bulk of the Social Democratic vote that led to virtually permanent Social Democratic government. In Iceland and Finland in this period, by contrast, the unions were a battleground between Communists and Social Democrats. It was only after this political division ceased to be so important with the Social Democratic-Communist coalition government collaboration in Finland in 1966 that Finnish unions began to have a role similar to that in Denmark, Norway and Sweden.

The Pioneer monument in central Oslo by Per Palle Storm in 1958 was unveiled by the chairman of the Norwegian LO in 1958. Deputy Mayor Brynjulf ​​Bull can be seen in the foreground. Photo: digitaltmuseum.no (CC BY-NC-ND).

History of trade unions in the Nordic region, 1870 to early 1900s

Union organisation began in 1870-71 in Denmark shortly after the dissolution of the guilds (1862). It was closely associated with the organisation of the Danish Social Democratic party - indeed, the unions and party were intertwined as two wings of the labour movement in Denmark, Norway, and Sweden until the last quarter of the twentieth century. By the middle of the 1880s, Danish craft unions were well-organised in most of the former guild trades; they owed their success in significant measure to control of the craft travel benefit funds, the precursors of unemployment compensation. Union organisation followed in Sweden and Norway, initially along craft lines.

Nordic-wide labour conferences made key organisational decisions, such as establishing city central labour councils (Gothenburg Conference, 1886) and national union federations (Stockholm Conference, 1897). National trade union federations (usually referred to as LO due to derivatives of the Scandinavian-language term Landsorganisationen) were established in Denmark and Sweden in 1898, Norway in 1899, Finland in 1907, and Iceland in 1916. Organisation then followed in unskilled ranks and exploded in Finland, after the general strike in the revolutionary year of 1905, and in Iceland after 1906. When the Socialist International met in Copenhagen in 1910, the Danish hosts could pride themselves on having the strongest unions in the world.

Differences across the region: In the first part of the twentieth century, the union movements in the Nordic countries diverged substantially:

  • Danish union and employers faced off in the ‘Great Lockout’ of 1899, which exhausted both sides and led to the ‘September Agreement’ that established a framework for collective bargaining that endures, with modest amendment, today; the success of the Danish unions in 1899 also solidified a craft union structure that has remained largely unchanged.
  • Swedish unions lost a similar test of strength in 1909, and turned to an industrial unionism (i.e., the organisation of workers by industry, rather than by craft and training). Syndicalists won control of the Norwegian union federation in 1920 and reorganised in industrial unions. Both Norway and Sweden were far more strike- and lockout-prone than Denmark until both employers and unions negotiated basic labour market agreements similar to the Danish September Agreement in 1935 and 1938, respectively, after the Social Democrats came to power.
  • Finnish labour relations were shaped by the revolutions of 1905 and 1917 and unions were temporarily crushed in the aftermath of the Finnish Civil War in 1918. A Finnish basic agreement for the labour market had to wait until 1944, when the Finnish defeat at the hands of the Soviet Union in the Continuation War led to the establishment of a labour relations system similar to that in the rest of the Nordic countries.

Despite these different paths of historical evolution, Nordic industrial relations are set apart by the degree to which national labour ‘law’ has in fact been made by collective agreement. Starting with the Danish September Agreement (1899), the basic aspects of labour law in the Nordic region have been generally set by collective agreement between unions and employers’ associations, rather than by national parliaments. 

In response to the high degree of union organisation, employers also organised. Initially this 'organisational arms race' led to massive conflicts in Denmark in 1899 and Sweden in 1909. Subsequently, however, especially since the negotiations of basic labour market agreements, Nordic unions and employers have increasingly adopted centralised collective bargaining. It is in this forum that issues of wages and terms and conditions of employment are determined for most workers, through a single national framework agreement negotiated by the national trade union federation and the national employers’ federation. 

Tags: trade unions, the Great Lockout, the September Agreement, co-determination, collective agreement, solidaristic wage policy, collective bargaining