A Note on the Decline of Collective Bargaining Coverage: The Role of Structural Change

Peter Ellguth; Susanne Kohaut

doi:10.1515/jbnst-2017-0163

Article

A Note on the Decline of Collective Bargaining Coverage: The Role of Structural Change

Peter Ellguth and Susanne Kohaut

Published/Copyright: January 15, 2019

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From the journal Jahrbücher für Nationalökonomie und Statistik Volume 239 Issue 1

Abstract

In the last 20 years there is a sharp decline in collective bargaining coverage in Germany. Research on the determinants of collective bargaining shows: subscribing to a sectoral bargaining system depends on several structural factors, like firm size, branch affiliation, owner-ship, firm age and work force composition. Parameter that – at least partly - were subject to considerable changes in the last two decades. With data of the IAB establishment panel we want to determine which part of the decline in collective bargaining coverage is due to structural change. We use a decomposition technique (Fairlie 2005) to break down the differences in coverage between 1998 and 2016. Further-more we take a look at distinct subgroups of establishments (along firm size). Our findings show that there is some influence of structural factors on the decline of collective bargaining coverage in the long run. And there are considerable differences between small and large firms with the decisions of the latter being more dependent on structural change.

Keywords: collective bargaining; decomposition analysis; establishment data; industrial relations

Acknowledgements

The authors thank an anonymous referee and the editors for their helpful comments and suggestions.

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Article note

This article is part of the special issue “Industrial Relations: Worker Codetermination and Collective Wage Bargaining” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at www.degruyter.com/journals/jbnst.

Appendix

Table 3:

Establishment mean characteristics 1998 & 2016.

Basis: privately owned establishments (weighted data)
	establishments with 5 or more emp.		establishments with 5 to 49 emp.		establishments with 50 or more emp.
variables	1998	2016	1998	2016	1998	2016
collective agreement	0.49	0.30	0.48	0.29	0.66	0.44
number of employees Ø	21	25	11	13	172	154
multi-site establishment	0.08	0.11	0.07	0.10	0.24	0.26
individually owned firm/partnership	0.61	0.50	0.63	0.54	0.17	0.08
technical state (very good/good=1)	0.70	0.67	0.70	0.66	0.73	0.72
share of marginal part time	0.17	0.21	0.17	0.22	0.09	0.10
share of fixed-term contracts	0.03	0.04	0.03	0.04	0.04	0.09
share of qualified workers	0.52	0.64	0.51	0.63	0.59	0.69
share of women	0.46	0.48	0.46	0.48	0.35	0.41
settlement density (central erea=1)	0.45	0.42	0.44	0.42	0.49	0.48
young establishment (max. 5 years)	0.11	0.21	0.12	0.22	0.06	0.13
exporting establishment	0.11	0.15	0.10	0.14	0.35	0.31
located in West Germany	0.79	0.80	0.79	0.80	0.79	0.84
works council	0.09	0.08	0.05	0.04	0.61	0.45
mining, electricity, water supply	0.00	0.01	0.00	0.01	0.02	0.02
construction	0.13	0.12	0.13	0.12	0.11	0.06
trade	0.23	0.23	0.24	0.23	0.21	0.20
transport and communication	0.05	0.08	0.05	0.08	0.07	0.11
financial and insurance services	0.00	0.01	0.00	0.01	0.00	0.03
accomodation and food services	0.09	0.09	0.10	0.09	0.04	0.04
education	0.01	0.01	0.01	0.01	0.02	0.02
health and social services	0.10	0.12	0.10	0.12	0.01	0.11
other services	0.14	0.22	0.14	0.22	0.13	0.20
establishments (weighted)	925,670	1,040,241	867,893	950,176	57,757	90,061
observations	4,923	8,893	2,698	5,838	2,225	3,055

Source: IAB Establishment Panel.

Table 4:

Establishment mean characteristics 1998 & 2016.

Basis: privately owned establishments (sample means)
	establishments with 5 or more emp.		establishments with 5 to 49 emp.		establishments with 50 or more emp.
variables	1998	2016	1998	2016	1998	2016
collective agreement	0.55	0.32	0.45	0.27	0.67	0.43
number of employees Ø	243	120	18	18	515	317
multi-site establishment	0.18	0.17	0.11	0.13	0.26	0.26
individually owned firm/partnership	0.32	0.29	0.48	0.41	0.12	0.05
technical state (very good/good=1)	0.72	0.66	0.70	0.64	0.74	0.70
share of marginal part time	0.06	0.12	0.08	0.16	0.03	0.06
share of fixed-term contracts	0.05	0.05	0.04	0.04	0.06	0.08
share of qualified workers	0.64	0.70	0.62	0.69	0.68	0.72
share of women	0.35	0.41	0.37	0.43	0.32	0.37
settlement density (central erea=1)	0.48	0.41	0.44	0.39	0.53	0.45
young establishment (max. 5 years)	0.13	0.15	0.17	0.18	0.08	0.08
exporting establishment	0.23	0.27	0.10	0.20	0.40	0.42
located in West Germany	0.43	0.62	0.39	0.59	0.49	0.68
works council	0.40	0.24	0.10	0.08	0.75	0.56
mining, electricity, water supply	0.02	0.02	0.01	0.02	0.04	0.03
construction	0.18	0.08	0.22	0.10	0.13	0.04
trade	0.15	0.16	0.18	0.18	0.10	0.11
transport and communication	0.05	0.07	0.04	0.07	0.06	0.08
financial and insurance services	0.00	0.02	0.00	0.01	0.00	0.03
accomodation and food services	0.05	0.06	0.06	0.08	0.02	0.02
education	0.02	0.01	0.02	0.01	0.03	0.02
health and social services	0.04	0.10	0.05	0.10	0.02	0.11
other services	0.12	0.16	0.13	0.16	0.11	0.15
observations	4,923	8,893	2,698	5,838	2,225	3,055

Source: IAB Establishment Panel.

Table 5:

Robustness checks with seperate decompositions for West and East Germany.

Basis: privately owned establishments
	West Germany				East Germany
Establishments with … employees	5 to 49		50 or more		5 to 49		50 or more
establishments with cba 1998 (in %)	53.6		69.1		28.8		55.1
establishments with cba 2016 (in %)	31.2		46.0		20.5		36.9
difference (in %-points)	–22.3		–23.2		–8.3		–18.1
explained part (in %-points)	–5.1		–11.4		–4.6		–6.2
unexplained part (in %-points)	–17.3		–11.7		–3.7		–11.9
explained part (in %)	22.7		49.3		55.1		34.2
unexplained part (in %)	77.3		50.7		44.9		65.8
detailed decomposition of the characteristics effect
number of employees (log)	0.012	+++	–0.002		0.000		0.001
multi-site establishment	0.004	++	0.000		0.004	++	0.008+
individually owned firm/partnership	–0.003		0.003		–0.002		–0.001
technical state (very good/good=1)	0.000		0.001		0.000		0.000
share of marginal part time	–0.010	–	–0.006		–0.012		0.001
share of fixed-term contracts	–0.006	––	–0.008		0.000		0.005
share of qualified workers	0.007		–0.011		–0.006		–0.001
share of women	0.002		–0.009	–	–0.001		0.005
settlement density (central erea=1)	0.000		0.000		–0.004		–0.011–
young establishment (max. 5 years)	–0.015	–	–0.025	–––	–0.001		0.000
exporting establishment	–0.011	–––	0.009	+	–0.008	–––	0.002
works council	–0.001		–0.043	–––	–0.001		–0.015–
sector affiliation	–0.033	–––	–0.024		–0.014	––	–0.056–––
Observations 1998	1059		1081		1639		1144
Observations 2016	3439		2083		2399		972
Establishments included in both years	80		72		167		92

Note: Probit modell used for model estimation; standard errors clustered at the establishment level; weighted estimations; +++/++/+ and –––/––/– denote statistical significance at the 1 %, 5 %, and 10 % levels, respectively.
Source: IAB Establishment Panel 1998 & 2016.

Table 6:

Robustness checks with two time frames 1998 & 2007, 2007 & 2016.

Basis: privately owned establishments
	1998 & 2007		1998 & 2007		2007 & 2016		2007 & 2016
Establishments with … employees	5 to 49		50 or more		5 to 49		50 or more
establishments with cba 1998 (in %)	48.3		66.1
establishments with cba 2007 (in %)	35.7		48.4		35.7		48.4
establishments with cba 2016 (in %)					29.1		44.5
difference (in %-points)	–12.6		–17.8		–6.6		–3.9
explained part (in %-points)	–3.1		–8.0		–1.8		–2.3
unexplained part (in %-points)	–9.5		–9.7		–4.8		–1.6
explained part (in %)	24.7		45.3		27.7		58.3
unexplained part (in %)	75.3		54.7		72.3		41.7
detailed decomposition of the characteristics effect
number of employees (log)	0.005	+++	–0.001		0.001	+++	–0.001	–
multi-site establishment	0.004	+++	0.001		0.000	–	0.000
individually owned firm/partnership	–0.001		–0.001		–0.001	––	0.000
technical state (very good/good=1)	0.000		0.002		0.000		–0.001
share of marginal part time	–0.005		–0.005		–0.002	–	0.000
share of fixed-term contracts	–0.005	–––	–0.004		0.000		0.000
share of qualified workers	–0.001		–0.010	––	0.000		–0.001
share of women	0.001		–0.003		0.001		–0.006	–––
settlement density (central erea=1)	0.000		0.001		0.000		0.000
young establishment (max. 5 years)	–0.009	–––	–0.010	–––	–0.005	––	–0.001
exporting establishment	–0.007	–––	0.002		–0.002	–––	0.002	++
works council	–0.001	––	–0.028	–––	0.000		–0.005	–––
sector affiliation	–0.012	–––	–0.023	–	–0.009	–––	–0.009	––
Observations 1998	2698		2225		5699		3467
Observations 2016	5699		3467		5838		3055
Establishments included in both years	644		472		1601		820

Note: Probit modell used for model estimation; weighted estimations; standard errors clustered at the establishment level; +++/++/+ and –––/––/– denote statistical significance at the 1 %, 5 %, and 10 % levels, respectively.
Source: IAB Establishment Panel 1998, 2007 & 2016.

Table 7:

Robustness checks with different firm size thresholds.

Basis: privately owned establishments
		Establishments with … employees
5–19		20 or more			5–99		100 or more
establishments with cba 1998 (in %)	46.7		61.4		48.8		71.8
establishments with cba 2016 (in %)	27.9		38.3		29.7		51.1
difference (in %-points)	–18.8		–23.1		–19.1		–20.7
explained part (in %-points)	–5.5		–10.7		–5.5		–8.4
unexplained part (in %-points)	–13.3		–12.4		–13.6		–12.3
explained part (in %)	29.4		46.4		28.9		40.7
unexplained part (in %)	70.6		53.6		71.1		59.3
detailed decomposition of the characteristics effect
number of employees (log)	0.005	+++	0.000		0.009	+++	–0.002
multi-site establishment	0.004	++	0.002	++	0.004	+++	0.000
individually owned firm/partnership	–0.001		–0.005		–0.002		0.002
technical state (very good/good=1)	0.000		0.000		0.000		0.000
share of marginal part time	–0.008		0.004		–0.006		0.000
share of fixed-term contracts	–0.003	––	–0.013	––	–0.006	–––		–0.009
share of qualified workers	–0.002		–0.006		–0.001		–0.021	–––
share of women	0.001		–0.008		0.001		–0.010	––
settlement density (central erea=1)	0.000		–0.001	–	0.000		–0.001
young establishment (max. 5 years)	–0.017	–––	–0.016	–––	–0.017	–––	–0.003	–
exporting establishment	–0.011	–––	0.002	+++	–0.009	–––	0.003
works council	0.000		–0.023	–––	–0.001	––	–0.024	–––
sector affiliation	–0.025	–––	–0.043	–––	–0.028	–––	–0.018
Observations 1998	1691		3232		3293		1630
Observations 2016	3715		5178		7021		1872
Establishments icluded in both years	151		260		308		103

Note: Probit modell used for model estimation; weighted estimations; standard errors clustered at the establishment level; +++/++/+ and –––/––/– denote statistical significance at the 1 %, 5 %, and 10 % levels, respectively.
Source: IAB Establishment Panel 1998 & 2016.

Table 8:

Robustness checks with firm size dummies.

Basis: privately owned establishments with 50 or more employees
establishments with collective agreement 1998 (in %)	66.1
establishments with collective agreement 2016 (in %)	44.5
difference (in %-points)	–21.7
explained part (in %-points)	–10.2
unexplained part (in %-points)	–11.4
explained part (in %)	47.2
unexplained part (in %)	52.8
detailed decomposition of the characteristics effect
establishment size (6 dummy variables)	0.000
multi-site establishment	0.001
individually owned firm/partnership	–0.001
technical state (very good/good=1)	0.000
share of marginal part time	–0.004
share of fixed-term contracts	–0.006
share of qualified workers	–0.012	––
share of women	–0.006
settlement density (central area=1)	–0.001
young establishment (max. 5 years)	–0.013	–––
exporting establishment	0.003
works council	–0.037	–––
sector affiliation	–0.025	–
Observations 1998	2225
Observations 2016	3055
Establishments included in both years	164

Note: Probit modell used for model estimation; weighted estimations; standard errors clustered at the establishment level; +++/++/+ and –––/––/– denote statistical significance at the 1 %, 5 %, and 10 % levels, respectively.
Source: Establishment Panel 1998 & 2016.

Received: 2017-11-30

Revised: 2018-05-24

Accepted: 2018-08-03

Published Online: 2019-01-15

Published in Print: 2019-01-28

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Articles in the same Issue

https://doi.org/10.1515/jbnst-2017-0163

Keywords for this article

collective bargaining; decomposition analysis; establishment data; industrial relations