Foreign ownership and intra-firm union density in Germany

Abstract

From a theoretical viewpoint the relationship between foreign ownership and unionization is ambiguous. On the one hand, foreign owners have better opportunities to undermine workers' unionization. On the other hand, workers of foreign-owned firms have an increased demand for the protection provided by unions. Which of the two opposing influences dominates can vary according to moderating circumstances. This study shows that firm size and industry-level bargaining play a moderating role. The relationship between foreign ownership and unionization is negative in larger firms whereas it is positive in smaller firms. Coverage by industry-level collective bargaining makes a positive relationship both stronger and more likely.

Foreign ownership and job insecurity during the recession: The moderating effect of union density in the UK

“…More importantly, our results show the trade union can alleviate the negative impact. This offers an insight on mechanism between the inconclusive relationship observed between MNCs, employment protection legislation and job deduction (Haaland et al, 2003;Wagner and Gelubcke, 2012) and is particular interest among developed economies where union memberships has declined in the last two decades (Jirjahn, 2017). This finding provokes the debate on the role of trade union when there is increased objective job insecurity (Angrave et al, 2017;Wang et al, 2018) and shed lights on the uprising union organizing carried out by workers in MNCs, such as Uber driver and Ryanair pilots strike (BBC news, 10 August 2018)…”

“…The U.K. is of interest for a number of reasons, including being the second largest host economies for inward FDI among developed countries (Jost 2013) and is relatively successful to attack inflow FDI than its EU continental partners due to its lower labour protection compared with its EU counterparts and (Haaland et al,2003;Jirjahn, 2017). With 70% economic activities in Britain are related with the rest of the world, mainly carried out by FoEs (ONS, 2014), makes FoEs more vulnerable to external market shocks.…”

“…FoEs tend to implement new production concepts and management practices in overseas subsidiaries that often involve a substantial reorganization and job loss. The presence of a greater use of stronger performance management regimes at FoEs than DoEs entails the implicit or explicit threat to dismiss in cases of poor performance of staff or under difficult economic conditions (Jirjahn, 2017).…”

“…Whether or not workers can constrain the imposition of compulsory redundancies is subject to their ability to mobilize countervailing power (Kelly, 2012;Olson, 2009). Empirical studies show that well-supported collective bargaining with the threat of collective action (such as overtime bans and strikes) can curb the use of compulsory layoffs in firms with more than 100 employees (Brewster et al, 2015), and this is in addition to the fact that union members equipped with better legal advice can defer MNEs' opportunistic behaviour (Jirjahn, 2017). This latter point is the focus of this study since FoEs tend to be large in the UK and tend to use compulsory redundancies more readily when unions are weak and collective bargaining unavailable.…”

“…Although the decline in union members in Britain has been dramatic over the last three or four decades, from 13 million in 1979 to 6.5 million in 2015, and union members only make up 13.9% of the workforce in the private sector (ONS, 2015), unions remain strong in some sectors and regions and their ability to bargain in the collective interests of their members remains high in some workplaces (Glassner et al, 2011). Large businesses are more likely to be unionized (Brewster et al, 2015;Jirjahn, 2017). One main objective of trade unions is the employment security of their members alongside wage increases (Gall, 2003;Pencavel, 1984).…”