Small and Medium sized Enterprisesand Business Interest Organisations

in the European Union

A European Studycoordinated bycoordinated by

Prof. Franz TraxlerProf. Franz TraxlerUniverstity of ViennaUniverstity of Vienna

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With the support of:

European Commission

Table of Contents

A. THE ASSOCIATION OF SMALL AND MEDIUM-SIZED ENTERPRISES: THE PROJECT OUTLINE

Franz Traxler, University of Vienna 1

B. THE COUNTRY STUDIES 13

AUSTRIAFranz Traxler, University of Vienna 13

BELGIUMPatrick Kenis, Tilburg University 31

DENMARKCarsten Jørgensen, FAOS Copenhagen 45

FINLANDJuha Hietanen, Helsinki 65

FRANCESabine Saurugger, IEP de Grenoble 82

GERMANYJürgen Grote and Achim Lang, University of Konstanz 99

GREECEAliki Mouriki, National Centre of Social Research, Athens 130

IRELANDEdel Walshe, National University of Ireland, Galway 151

ITALYAlessia Vatta, University of Trieste 167

LUXEMBOURGPatrick Kenis, Tilburg University 191

NETHERLANDSPatrick Kenis, Tilburg University 203

PORTUGALReinhard Naumann, CIES/ISCTE, Lisbon 213

SPAINJoaquim Molins and Rosa Nonell, University of Barcelona 233

SWEDENAnnika Berg, Arbetslivsinstitutet, Stockholm 255

UNITED KINGDOMJustin Greenwood, Robert Gordon University, Aberdeen 270

C. FIRM SIZE, SMEs AND BUSINESS INTEREST ASSOCIATIONS:A EUROPEAN COMPARISON

Franz Traxler, University of Vienna 297

D. APPENDIX: LIST OF ABBREVIATIONS 330

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A. THE ASSOCIATION OF SMALL AND MEDIUM-SIZED ENTERPRISES:THE PROJECT OUTLINE

Franz Traxler, University of Vienna

INTRODUCTION

Information on business interest associations is generally sparse. We have even less knowledge about how firm size affects the representation of business interests and what specific problems SMEs have when it comes to organizing and advancing their interests. This issue is all the more important, since SMEs (defined as companies employing less than 250 employees) constitute the vast majority of the business community. In the EU-15 on aggregate, 99.8 percent of all companies are SMEs, with a share of 66.4 percent in total employment.This project focuses on the impact of firm size on the representation of business interests and the specific problems of SMEs in the course of interest representation.

The key questions of this project are as follows:- What are the factors that stimulate or impede the formation of separate associations for

SMEs (i.e. associations which are specialized in representing the interests of SMEs and which are briefly designated as ASMEs here)?

- How are the interests of SMEs processed ? One the one hand, this refers to the role ASMEs have in the systems of social dialogue and public policy-making as well as in providing services to SMEs. On the other hand, the question is how the special interests of SMEs are processed in countries where ASMEs do not exist.

Organizing and representing SMEs always happens in relation to other actors and in response to a given context. Understanding and explaining the (non)association of SMEs thus requires studying not only the ASMEs as such but also these conditional factors. This altogether includes:(1) a country's economic structure;(2) the legal framework and its practical implications;(3) the systems of social dialogue and public policy-making;(4) the associational system of business and its actors;(5) cultural factors.

The following sections will elaborate the hypotheses related to the above four clusters of factors.

1. The Economic Structure

A country's economic structure may influence the associational system of business. In terms of economic structure the number of companies by firm size as well as employment patterns by firm size are most relevant. One can put forward two hypotheses: First, ASMEs are likely to develop in countries having a relatively high proportion of SMEs in terms of companies and/or employment. Second, there may also be a strong incentive to form ASMEs, if the proportion of very large firms is above average, since they will dominate all business associations (BIAs) which are open to any firm size.

2. The Legal and administrative Framework and its Practical Implications

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The legal and administrative framework sets important conditions for setting up associations on the one hand, and for representing interests on the other hand. This may favour or inhibit BIAs.Organizational privileges favor the formation of BIAs. They may take manifold forms. The following are most important from a comparative perspective.

- Legally-based obligatory membership (i.e. statutory provisions which oblige all potential members of an association to be a member).

- De facto obligatory membership: This is mainly based on compulsory payment of dues or levies formally imposed on all firms within an association's domain. Extension of the validity of a multi-employer collective agreement (i.e. the erga omnes principle) to those firms which are not members of the signatory employer association offers a means of prescribing such dues and charges: such collective agreements contain provisions for special dues and charges on employers which are then generalized by extension, obliging also unaffiliated firms to pay the charges. Although the main goal of such charges is the provision of collective goods (e.g. vocational training, health and safety care), part of them is usually used by the signatory associations for financing their staff. Such forms of extension-based, de facto obligatory memberhip exist in several European countries (e.g. Belgium, the Netherlands and Spain).

- Public subsidies for associations: They may be given by the state to the BIAs either without obliging them to anything or in exchange for certain services or public policy functions which the association then performs on behalf of the state. Formally, the latter may take the form of a contract with government.

Representational privileges formally equip BIAs (or certain categories of them) with special rights of interest representation. Important examples are the right to conclude collective agreements or the right to be consulted by the government in matters of legislation.Notably, such privileges may discriminate between BIAs, and these discriminating effect may be either intended or unintended. We are especially interested in discriminating effects which positively or negatively affect the ASMEs. For instance, a positive, unintended effect on ASMEs may result from legally-based obligatory membership, since this enforces the SMEs to associate. Due to the low voluntary propensity of SMEs to do so (see above) this increases the associational strength of SMEs. Likewise, special industrial policy programs designed to foster the development of SMEs may induce the formation of ASMEs, if these programs are to be implemented by BIAs. In this respect, it is worth noting that SMEs are targeted by numerous specific policies such as national state-aid schemes, Community programs for research and development, the Regional Funds and financial intervention in favor of venture capital funds and guarantees for loans to SMEs (European Commission 2002).An unintended, negative effect on ASMEs may ensue from the legal provisions for granting the right to conclude collective agreements. In some countries the right to conclude collective agreements is bound to certain criteria of representativeness (i.e. a certain level of density in terms of companies and/or employees). Again for the reason of the lower propensity of SMEs to associate, this may de facto inhibit the formation of ASMEs.

3. The System of Social Dialogue and Public Policy Making

The rise and power of BIAs also depends on the strategy of their interlocutors (i.e. the unions and governments). Generally, ASMEs will hardly be formed, if the unions and/or the governments prefer dealing with general (i.e. unspecified) BIAs.1 Aside from considerations of representativeness, such a preference may also result from the fact that unions and

1 In contrast to representational privileges which follow from formal rules (see above), such preferences are based on customs and practices.

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governments may find it easier to negotiate with BIAs that are dominated by large firms. In the case of unions, this is because the production of large firms is usually less labour-intensive than that of SMEs, such that the former can offer labor more concessions. Governments may be oriented towards large firms and their BIAs, since large firms are more capable of transnational mobility than their smaller counterparts. Hence, the former can more credibly threaten to move their locations to another country, if their demands are not met. Such preferences are most evident in countries where ASMEs (if existing) are excluded from collective bargaining and tri- or bipartite institutions for the social dialogue.However, ASMEs may refuse to participate in the social dialogue, even when they would be welcome. Again, this may have to to with the labor-intensive production of SMEs. This means that labor costs represent a relatively high share in total costs, such that SMEs are less able to make concessions in relation to the unions.One has to take account of two general points when analyzing the integration of BIAs and ASMEs into the social dialogue and (other fields of) public policy. First, their integration may vary with policy fields. Second, their integration may depend on whether and how they have links with the political parties.

4. The Associational System of Business and its Actors

Given the low propensity of SMEs to associate, they will make special efforts to build ASMEs only when they do not see their interests sufficiently represented in the general BIAs. The opportunity of the general BIAs to take account of the interests of SMEs is contingent on their internal structures and procedures. In particular, this opportunity decreases if:

- Voting rights are weighted according to the amount of dues paid, which is in turn linked to such criteria for firm size as employment, the wage sum, sales etc. Under such circumstances, a formalized power differential in favor of the larger firms exists within the general BIAs.

- The general BIAs significantly depend on voluntary support from their company members. Voluntary is any support which exceeds the members' obligations as defined by the association's constitution. Such voluntary support includes financial subsidies (in addition to dues) as well as unpaid labor. Unpaid labor may take manifold forms: member companies may provide office staff or certain services (e.g. running the association's data processing system) to their association, or they may delegate representatives as associational officials. For obvious reasons, large firms are more able to give voluntary support to BIAs than SMEs are, something which translates into a surplus of internal power and influence.

- The general BIAs perform services exclusively related to their member companies in a rather restricted way. Services, as provided by the association, may be restricted in two respects. The first restriction refers to the nature of services (i.e. the number and range of services, their usefulness and quality) itself. Such restriction is manifest if an association clearly concentrates its resources on matters of interest representation, as compared to the provision of services. The second restriction is the commercialization of services. This means that they are not free of charge but sold to the members. Any kind of such restrictions harms SMEs more than larger firms, because the former need services much more than the latter for the above reasons.

Overall, the rise of ASMEs is most likely, if a country's principal general BIA weights voting rights in favor of growing firm size, strongly depends on voluntary member support, centers on representational activities (as compared to services) and has commercialized its services (if there are services offered at all). This is because the general BIAs can hardly take up the special interests of SMEs in such circumstances. Conversely, if the principal general BIA

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rests on equality of voting rights, a low level of unpaid labor and an elaborate range of free services, ASMEs will find it hard to establish themselves. At best they can pursue a niche strategy designed to cover highly special and narrow interests (e.g. in terms of branch coverage, regional affiliations and tasks).A country may also be characterized by a situation that is in between these two extremes. For instance, the principal general BIA may set up a satellite ASME or may pay lower-level ASMEs to become its affiliates, if it itself comes close to the first extreme. The general BIA may do so in order to achieve a high level of representativeness despite its focus on the interests of large firms. Furthermore, the large firms may dominate the interest politics of a general BIA, while the affiliated SMEs get compensation in terms of a broad range of free services.Among the five clusters of factors considered here, the associational system may be relatively dynamic. This is mainly due to growing economic internationalization which intensifies market competition. This puts pressure on the companies to curb costs which in turn induces them to urge their BIAs to economize on resources, in particular to lower the membership dues, reduce staff and even downsize the association's activities. While economizing on resources is likely to be an interest of all member companies, large and small firms again diverge in how this should be implemented. Large firms probably prefer downsizing services, while they want the BIA to concentrate on interest representation, namely on public relations and political lobbying. In contrast to this, SMEs are strongly interested in preserving the provision of services at a level as high as possible. To the extent to which a general BIA is dominated by large firms they will be able to enforce their interests. From a dynamic perspective, economic internationalization thus threatens to cause a change in the functions and structures of general BIAs that significantly curtails their ability to keep the interests of SMEs on board. This development means not only a marginalization of SMEs within such associations but also creates a competitive disadvantage in markets, as the performance of SMEs strongly depends on external services. This implies that economic internationalization might create a growing need for the formation of ASMEs.

5. Cultural Factors

Observed variations across countries can easily be attributed to "cultural" differences. The problem with this reasoning is that culture is a very complex phenomenon that embraces rather differing aspects of economic and social life. In fact, the above factors (2)-(4) may be subsumed under the broad category of culture. If this category remains unspecified, it explains nothing. Hence, we should use it with care. In the context of this project we will reserve it for factors other than (1)-(4). They become important, when (1)-(4) cannot fully explain the (non)existence of ASMEs and their profile. Under these circumstances, the kind of cultural factors that are supposed to matter must be specified. A possible example for such factors is a strong tradition of craft production and artisanal production which is normally based on supportive statutory regulations of access to business activities and/or an institutionalized system of vocational training. Since such tradition buttresses the viability and competitiveness of SMEs, it may also foster ASMEs.

OPERATIONALIZATIONS AND RESEARCH DESIGN

1. SMEs

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According to the definition of the European Commission (1996) SMEs have fewer than 250 employees, and have an annual turnover not exceeding ECU 40 million, or an annual balance-sheet total not exceeding ECU 27 million, and must be independent in terms of ownership. This definition is important because it is used as the criterion for access to Community programs in favor of SMEs, whereas many member states have no general definition and operate often on the basis of definitions related to local practice or particular sectors.For simplicity, we adopt the maximum number of 249 employees as the definitional criterion for SMEs. Notably, we will use this criterion only for statistical purposes. Aside from this, we will refer to how SMEs are defined in the respective countries. In particular, the way in which a country's BIAs and especially the ASMEs define SMEs is of interest and part of our research questions. Such country-related definitions probably differ from the above EC definition which sets a rather high maximum number of employees.

2. BIAs and ASMEs

In any EU member state a multiplicity of BIAs exists the study of which is beyond the capacity of this research project. Hence, we have to operationalize and select the BIAs in a way that makes their study both manageable in empirical respects and relevant in theoretical respects. Accordingly, we have to operationalize the concept of a BIA in terms of its sectoral domain, territorial domain, hierarchical level, and functional domain.

- The sectoral domain: This study concentrates on BIAs whose membership domain is cross-sectoral. By cross-sectoral coverage of the membership domain we understand associations which – according to their formal constitution cover at least three one-digit activities as defined by EU NACE classification.2

- The territorial domain: This study centers on BIAs whose domain is nation-wide ( in contrast to provincial or regional BIAs).

- Hierarchical level: BIAs often build complex pyramids of associations. In such circumstances "lower-level" associations are the member organizations (affiliates) of "higher-order" associations (confederations). This study concentrates on peak-level BIAs. By peak associations, we understand BIAs which are fully independent in the sense that they are not an affiliate (i.e. a subordinate member) of a higher-level BIA. Accordingly, there are two possible categories of peak associations: (1) confederations which are not a subordinate member of another (higher-level) confederation; (2) "direct membership" BIAs which are not a subordinate member of a confederation. The difference between a confederation and a direct membership BIA lies in the fact that the former is an association of association (i.e. has other BIAs as its members), whereas direct membership associations have the companies themselves as members.3

For the purpose of operationalizations, the difference between confederations and direct membership BIAs is not important. The operational criterion here is the status

2 NACE one-digit classification is as follows: A (agriculture, hunting and forestry), B (fishing), C (mining and quarrying), D (manufacturing), E (electricity, gas and water supply), F (construction), G (wholesale and retail trade; repair of motor vehicles, motorcycles and personal household goods), H (hotels and restaurants), I (transport, storage and communication), J (financial intermediation), K (real estate, renting and business activities), L (public administration and defence; compulsory social security), M ( education), N (health and social work), O (other community, social and personal service activities), P ( private households with employed persons). The domain of a BIA may crosscut these one-digit sectors. In this case, a sector can be seen as belonging to the BIA's domain only when its domain covers the majority of the NACE-listed business activities of the respective sector. Cross-sectoral coverage does not rule out the possibility of specifying the membership domain in other respects. For instance, a BIA which limits its membership domain to cooperatives but leaves sectoral activities unspecified is a cross-sectoral association.3 There may also be BIAs which organize both companies and other BIAs.

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of a peak association in the sense of formal independence (i.e. non-affiliation to a higher-level confederation).

- Functional domain: This refers to the representational tasks performed by a BIAs. We differentiate between two main types of representational tasks: (1) the representation of the labor market interests of business; (2) the representation of product market interests. For simplicity, we understand product market interests as interests other than labor market interests. While business has its labor market interests in relation to the employees and the unions, its product market interests emerge as a result of the exchange relations which a certain business group has with other actors (i.e. suppliers and customers) in its product markets. Since these actors may be other companies, the product market interests of a certain business group often emerge in relation to other business groups. Hence, BIAs represent their members' labor market interests in relation to the unions, while they represent product market interests in relation to other business groups and their BIAs. Notably, both labor-market and product-market interests may also be represented in relation to the state. BIAs may specialize in either of these interests. BIAs specialized in labor market interests are called pure employer associations, while BIAs dealing only with product market interests are pure trade associations. BIAs may also be "mixed" associations that represent both labor-market and product-market interests (Schmitter and Streeck 1981). This project includes all three types of BIAs.

As far as the ASMEs are concerned, the same operational definitions apply as outlined above with regard to BIAs in general.Chambers of business (and similar types of public-law organizations) create special problems of operationalization and classification, since they perform fairly differing functions across the EU member states. Since the focus of our project is on interest associations we include chambers only, if their main field of activity is the representation of interests relating to either the labor market or product markets. This means that chambers which are either pure administrative bodies (that implement certain public policy functions on behalf of the state) or pure service organizations (that are specialized in the provision of certain services for their members) are excluded from consideration.

3. Research Design

We will study the formation and activities of BIAs and ASMEs at two analytical levels.- The first level is the "associational system" of business. This system consists of all

BIAs that meet the above definitional criteria: that is, peak associations whose domain is cross-sectoral and national.4 This approach enables us to analyze how the interests of SMEs are inserted into the associational system of business. This system may include one ASME or even more ASMEs which may specify their domain not only by claiming to be the voice of SMEs but also by additional criteria (e.g. by functional domain, type of ownership etc.). Alternatively, any kind of ASME may be absent. In the latter case, it is important to describe whether and how ASMEs exist outside the associational system. For instance, ASMEs may be located only at territorial or provincial level, or they may be narrower in terms of sectoral domains as compared to cross-sectoral coverage as defined above.

4 Note that, in terms of the hierarchical level, the definitional criterion for peak associations is formal independence. Hence, satellite associations which otherwise meet the above definitions must be included here. Satellite associations heavily depend on resources provided by another association, such that the latter can de facto control the former.

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- The second level of analysis refers to the structures and processes of BIAs, in line with what was outlined above with regard to factor (4). It is impossible to do an in-depth analysis of all BIAs belonging to a country's associational system, even when this is limited to the kind of BIAs as defined above. Hence, we will select two associations out of the associational system for this in-depth analysis: (1) the largest BIA within system; and (2) the largest ASME within this system. In either case, size refers to the number of employees working in the member companies of the respective associations. Hence, the largest BIA covers the largest number of employees among all BIAs belonging to the associational system. The largest ASME covers the largest number of employees among all ASMEs belonging to the associational system. There may be countries where the associational system does not include an ASME. In this case the most important ASME outside the associational system (e.g. a certain provincial ASME) should be studied in detail.

In line with our operationalizations, this study concentrates on peak associations. Such peaks which are confederations represent the top of a complex hierarchy of associations. To capture all relevant dimensions, we have to relate some questions also to the levels below peak level in the case of confederations. An example is services (which are rarely provided by the confederations themselves). The need to refer also to the levels below peak level is indicated in the questionnaire. A confederation's affiliates may differ in the focused analytical dimension (e.g the provision of services). In this case, the most common pattern should be reported.Empirically, this project adopts a crossnationally comparative perspective on the EU-15. This comparative design enables the analysis to detect common patterns beyond national peculiarities. For obvious reasons, such common patterns are especially important to a European view of interest representation. Moreover, policy recommendation of European relevance can only be deduced from findings on common patterns.In line with this design, this report consists of two main parts: Part B presents the country studies which offer detailed information about the associational representation of business interests in each member state of the EU-15. The structure of these country studies follows the five factors of interest representation, as outlined above: (1) the economic structure of the country under consideration; (2) the legal framework and its practical implications; (3) the national systems of social dialogue and public policy-making; (4) the associational system of business and its actors; (5) cultural factors. The country reports mainly rest on data which are collected in the course of this project on the basis of a common questionnaire (see below).Part C documents the findings of the crossnationally comparative analysis. When trying to explain the impact of firm size on representing business interests, this analysis concentrates on three issues:

- Demarcation of membership domains;- The tasks and activities of the associations;- Associational resources.

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THE QUESTIONNAIRE

The one-digit numbering of the questionnaire refers to the corresponding hypotheses (i.e. (1) – (5)), as documented above. The hypotheses thus offer the background for understanding the meaning and the analytical relevance of the categories used in the questionnaire.

1. The Country's Economic Structure

Please provide the following figures for 2000 and 2002 (or for the most recent year available), regarding (a) the total economy and (b) the total economy minus agriculture in the broad sense (i.e. NACE A and B) :1.1. total number of companies1.2. total number of establishments1.3. total number of employees1.4. number of companies by firm size*1.5. number of establishments by firm size*1.6. number of employees by firm size*

*Firm size in terms of employees. The conventional classification is: number of employees: 0 1-9 10-49 50-249 250-499 500 and moreIf figures related to this classification are not available, it is important to use a classification that discriminates between firms having employees up to 249 and firms having 250 employees or more, since this marks the divide between SMEs and larger companies (see above).

2. The Legal and Administrative Framework and its Practical Implications

2.1. What forms of organizational and representational privileges (e.g. extension-based de facto obligatory membership) exist ? For the concept of organizational and representational privileges, see section 2 of the hypotheses.2.2. As regards the statutory regulations on the formation of associations, do provisions exist which support or inhibit SMEs when it comes to setting up an association?2.3. What are the legal preconditions for getting the right to conclude collective agreements on behalf of business? Do these preconditions – at least implicitly – create a special incentive for/a special impediment to ASMEs when it comes to applying for the right to conclude collective agreements?2.4. Do special policy programs in favor of SMEs exist? If yes, briefly summarize the goals of these programs. Do BIAs participate in the implementation of these programs?

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3. The System of Social Dialogue and Public Policy Making*

3.1. If several BIAs exist, do the unions have a preference for certain BIAs as an interlocutor, when it comes to conducting general consultations with business and/or collective bargaining? If yes, specify the preferred BIAs and the reasons for the union's preference.3.2. If several BIAs exist, do the governments have a preference for certain BIAs as an interlocutor, when it comes to conducting general consultations with business and/or their integration into public policy making? If yes, specify the preferred BIAs and the reasons for the governments' preference.3.3. Please list all BIAs which are official business representatives on the most important cross-sectoral, nation-wide institution of the social dialogue (which may be tripartite or bipartite). Please specify the name of this institution and explain whether the list of business representatives includes ASMEs. If no ASME is represented on this institution, do ASMEs try to get represented on it? If yes, what actors veto the accession of ASMEs? Why do they do so?3.4. How much are the associations' opportunities to participate in the social dialogue and public policy shaped by the associations' links with political parties? *Especially in large countries the system of social dialogue and public policy making may be differentiated into subsystems of the central state, the provinces and the local state. In this case, please refer to the central state.

4. The Associational System of Business and its Actors

4.1. Please list all BIAs which meet the operational definition according to section III/2 of this paper. This means listing all BIAs whose membership domain is cross-sectoral (i.e. covers at least three one-digit NACE activities) and nation-wide, whose functional domain includes the representation of labor-market and/or product market interests of their members, and which are peak associations (i.e. not affiliated to another BIAs). For the treatment of the chambers, see section III/2 above.4.2. Please provide the following information for each of the BIAs listed according to 4.1:4.2.1. How is the formal membership domain defined? In the case of ASMEs, please also explain how they define SMEs.4.2.2. Is the membership in this BIA voluntary or obligatory?4.2.3. Does this BIA organize (i) only other (lower-level) associations; (ii) only companies; (iii) both associations and companies4.2.4. Is this BIA a (i) pure employer association; (ii) a pure trade association; (iii) a mixed association? See section III/2 for this definition.4.2.5. Is this BIA directly or indirectly (i.e. via its member associations which conclude collective agreements) engaged in matters of collective bargaining?4.2.6. Does this BIA directly or indirectly (i.e. via its member associations) provide services to the member companies? If yes, have the member companies to pay for these services? The latter may also vary with the kind of service and across the member associations. In this case, please refer to the prevailing pattern.4.2.7. Are the voting rights weighted according to criteria of firm size? If yes, specify the relevant criteria. Voting rights may vary with distinct boards and levels of the decision-making process. In this case, please refer to the general assembly and the most important decision-making board of the BIA.4.2.8. Is this BIA a satellite of another BIA? For the definition of satellites, see footnote 4.

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4.3. The formal membership domains of the BIAs listed in 4.1 probably overlap. Does this create competition among distinct BIAs for members? If yes, please specify. If there is no competition despite existing domain overlaps, is this due to informal demarcations of domains? 4.4. As regards the BIAs listed in 4.1, is there a notable tendency towards internal reforms aimed at economizing on resources?

4a. The structure and processes of the largest BIA and the largest ASME

As outlined in section III/3, the term "largest" association refers to the total number of employees working in those companies which are either directly or indirectly (i.e. via the member associations of the focused association) members of the focused association. The largest BIA represents the largest number of employees among the BIAs listed in 4.1. The largest ASME covers the largest number of employees among the ASMEs listed in 4.1. If this list does not include an ASMEs, then the largest ASME that exists in the respective country should be studied. In this case, the data referring to 4.1 – 4.5 must also be collected for the focused ASME, in addition to the following points.4a.1. Please specify what categories of representational activities are performed either directly by the association or indirectly via the association's member associations.4a.1.1. Represents the members' labor market interests vis-à-vis the unions4a.1.2. Represents the members' labor market interests vis-à-vis the state4a.1.3. Represents the members' product market interests in relation to customers4a.1.4. Represents the members' product market interests in relation to suppliers4a.1.5. Represents the members' product market interests in relation to the state4a.1.6. Participates in the formulation and/or implementation of public schemes for vocational training4a.1.7. Participates in the formulation and/or implementation of public schemes designed to aid business4a.1.8. Participates in the formulation and/or implementation of public schemes for the standardization of products and product quality4a.2. What categories of services does the association – either directly or indirectly via its member associations – provide to the member companies? Please specify for each category, whether these services are free of charge rather than charged.4a.2.1. Services related to industrial relations (e.g. advice on the provisions of collective agreements; representation of members in labor court proceedings)4a.2.2. Services related to economic policy programs (e.g. advice on the preconditions for the application for public grants and subsidies)4a.2.3. Services related to exchange relations with suppliers (e.g. information on the quality and availability of raw materials and intermediate goods)4a.2.4. Services related to exchange relations with customers (e.g. information on sales markets, export promotion)4a.2.5 Services related to vocational training4a.2.6 Services related to further training and qualification of company staff4a.2.7 Develops and/or monitors quality standards for the products of the member companies.4a.2.8. What is the focus of the association's activities: interest representation (i.e. 4a.1) or services (i.e. 4a.2)? An association's focus depends on whether its financial resources and staff are allocated mainly to either representation or services.4a.3. Please provide the following data on membership for 2002 or the most recent year available:

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4a.3.1. Aggregate number of companies which are potential members of the associations. The potential members are demarcated by the formal membership domain of the association which in turn includes the domains of all member associations of the focused association (see 4.2.1)4a.3.2. Aggregate number of companies which are either directly members of the association or indirectly members (via membership in the member associations of the focused association) 4a.3.3. Aggregate number of employees which work in companies which are potential members of the association.4a.3.4.Aggregate number of employees which work in companies which are direct or indirect members of the association.4a.3.5. If it is impossible to find reliable data on 4a.3.1 and 4a.3.2, please estimate the association's density ratio in terms of companies (i.e. the number of member companies as a percentage of the number of potential company members)4a.3.6. If it is impossible to find reliable data on 4a.3.3 and 4a.3.4, please estimate the association's density ratio in terms of employees (i.e. the number of employees working in the member companies as a percentage of the number of employees working in potential company members)4a.3.7. How many employees work in the member firms on average (i.e. the average number of employees per member firm)? Please collect or estimate these data for 2002 or the most recent year available. The reference is here to all member firms under the umbrella of the focused BIA/ASME, regardless of whether their membership is direct or indirect (i.e. via affilites to the BIA/ASME).4a.3.8. Please provide data on the number of staff members of the association for 2002 or the most recent year available. In contrast to elected officials (i.e. representatives) of the association, staff members are employees of the associations. In the case of confederations, please list the total number of staff employed by the focused peak and the total number of staff employed altogether by the peak's member associations.4a.4. Has the association undergone internal reforms aimed at economizing on resources since 1990? If yes, please:4a.4.1. summarize the goals, measures and outcomes of these reforms,4a.4.2. describe the driving force behind the reforms and the conflicts of interests among member groups that emerged in the course of the reform initiative.4a.5. Are there channels and mechanisms of intra-associational goal formation which give the SMEs a specific opportunity to articulate their interests (e.g. special subgrouping of SMEs; veto power of SMEs)?4.6. Please provide information on the composition of the annual budget of the focused BIA/ASME (for 2002 or the most recent year available):

- membership dues from firm members….%- membership dues from affiliates….%- income from sales of services….%- voluntary subsidies from members….%- obligatory dues and levies (e.g. dues and levies imposed by collective agreements and

their extension)….%- state subsidies (including contracts with government)….%- other….%

In the case of confederations this question solely refers to the confederation itself. If no precise data are available, please estimate the composition of budget.

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5. Cultural Factors

Are there any cultural factors specific to your country which5.1. have influenced the shape of the associational system of business (4)?5.2. have fostered or inhibited the formation of ASMEs and their representational activities?5.3. As regards the statutory regulation of access to business activities, do provisions exist which make the right to practise a certain business activity subject to a formal qualification gained through vocational training? Do these provisions cover such a wide range of business activities that craft production and artisanal production have an important, special and legally protected status in the economy?

LITERATURE

European Commission (1996) Commission Recommendation 96/280/EC.European Commission (2002):

http://europa.eu.int/comm/enterprise/consultations/sme_definition/Greenwood, J. (1997) Representing Interests in the European Union. Basingstoke:

Macmillan.Schmitter, P.C. and Streeck, W. (1981) "The Organization of Business Interests". IIM/Labour

Market Policy, IIM/LMP81-13 discussion papers. Wissenschaftszentrum Berlin.Traxler, F. (1993) "Business Associations and Labour Unions in Comparison". British

Journal of Sociology 44: 673-91.Traxler, F. (1995) "Two Logics of Collective Action in Industrial Relations?". In C. Crouch

and F. Traxler (eds.), Organized Industrial Relations in Europe: What Future? (Aldershot: Avebury).

Traxler, F. (2000) "Employers and Employer Organisations in Europe: Membership Strength, Density and Representativeness". Industrial Relations Journal 31: 308-16.

Traxler, F., Blaschke, S. and Kittel, B. (2001) National Labour Relations in Internationalized Markets. Oxford: Oxford University Press.

UCL/IST (2001) Institut des sciences du travail, Recherche. http://www.trav.ucl.ac.be/recherche/dg5-part2.html

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B. THE COUNTRY STUDIES

AUSTRIAFranz Traxler, University of Vienna

1 The Economic Structure and Cultural Properties

As in the other EU member states, SMEs prevail in the Austrian economy. Their contribution to the total number of companies and employees, however, is not outstanding by comparative standards. Altogether, Austria's SMEs represented 99.6 percent of all companies and 65.3 percent of the employees in 2001. The comparable figures for the EU-15 were 99.8 percent and 66.4 percent, respectively. As the disaggregation by firm size in greater detail shows, micro firms are less important than in the EU on average, with a share in companies of 85.9 percent (EU-15: 93.2 percent) and in employees of 23.9 percent (EU-15: 34.6 percent). Conversely, small firms and medium-sized firms are more widespread than in the EU as a whole. They account for 11.5 percent and 2.2 percent of the companies, respectively, as compared to the EU-15 (i.e. 5.8 percent and 0.8 percent). Likewise, their share of employees (i.e. 21.7 percent for small firms and 19.7 percent for medium-sized firms) is above average in comparison to the EU-15,where small firms recorded 18.9 percent and medium-sized firms, 12.9 percent in 2001.Over the last years the sector of micro firms proved most dynamic with regard to both the creation of companies and employment (Table 1). While the development of the other categories of SMEs varied more, they altogether expanded more than the group of large companies. From 1995 to 2003 employment of the SMEs increased by 112848 persons (i.e. 8.1 percent) and the number of companies, by 21981 (i.e. 8.1 percent), as compared to an increase of 36077 persons (i.e. 4.6 percent) and 73 companies (i.e. 8.2 percent) in the case of large firms.From an evolutionary perspective, the present importance of Austria's SMEs and their structural profile originate in the country's late industrialization. On the one hand, this has induced the state to deliberately promote the economic and technological development. For this purpose, the chambers of trade were set up in 1848. In contrast to the rest of Europe, the chambers gradually developed into the principal business association of Austria, with the consequence that the interests of SMEs figure prominently in the overall process of advancing business interests. On the other hand, late industrialization has caused the preservation of craft traditions and practices. Although no special legal status has been attributed to SMEs, regulations related to this traditions and practices have backed their survival and performance. They crystallize in Austria's country-wide dual system of supra-plant vocational training. Due to its corporatist profile, vocational training is tied to associational action, as the chambers participate in devising new job categories and adapting old ones, and are also involved in implementing the system. Furthermore, the system is formally linked to business activities. This is because acquisition of the right to practise a certain business activity is traditionally subject to a formal qualification gained through vocational training. Due to the current tendencies of deregulation these preconditions for access to economic activities have been abolished or relaxed in many fields of business. However, they have survived in the area of craft skill (Handwerk), such that manufacturing continues to be divided formally into two segments (Guger et al. 2000). The Trades Code distinguishes manufacturing industry from craft production according to the following characteristics: capital-intensive production; a high degree of mechanization, installed in geographically and organizationally linked premises; standardized mass production; a production process involving a high division of labour and using a larger number of employees; and the organizational separation of management functions from execution, with the head of the enterprise only performing

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management functions. The implication is that craft production shows none or few of these characteristics. In contrast to craft production, no legally-regulated qualification is needed for industrial production. As will be outlined in greater detail below, the associational system of business reflects this formal divide. This, in turn, has structured industrial relations, in particular collective bargaining which is conducted separately for industry and craft. Since the collective agreements for the industry tend to lay down employment terms that are more favourable to the employees than those in craft production, the legal and associational differentiation between industry and craft contributes to a corresponding segmentation of the labour market.

2 The Legal and Administrative Framework for Associational Action

Recognition as an Association

As regards the legal status of interest associations, there is an important distinction between the Chambers on the one hand and voluntary interest associations on the other which are governed by different laws.Chambers are public-law bodies in that they are established by statute law and are based on mandatory membership. Their membership domains, powers and responsibilities, internal structure and financing are laid down by statute. In Austria particular chambers exist for almost all interest groups in the economically active sector (i.e. employers, employees, and also a range of such liberal professions as doctors, lawyers and architects). Both individuals and legal entities falling within the domain of a chamber are all de jure members of that chamber.Chambers enjoy the public-law status because two basic tasks are attributed to them by statute: to represent their members’ interests and to participate in state regulatory functions. Their involvement in state regulatory functions includes participation in both their formulation and implementation. They have the statutory right to be consulted by the public authorities on all issues affecting their members’ interests in broadly defined areas of economic and social policy. In certain matters (e.g. the collection of statistics) they also function as public administrative bodies. These two basic tasks make the chambers a central connecting link between civil society and the state which is modelled on the principle of subsidiarity. The chamber system is thus the institutional expression of the preference for governance by "self-administration", i.e. that the representative bodies of civil society should systematically participate in public functions, such that they can be carried out at a level as close as possible to the interests affected. Since almost all socioeconomic groups are covered by the chamber system, Austria records the most comprehensive system of "corporatist" governance according to comparative analysis (e.g. Siaroff 1999).The three leading chambers are the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKÖ), the Federal Chamber of Labor (Bundesarbeitskammer, BAK), and the chambers of agriculture.By contrast, the legal basis of the voluntary interest associations is the general freedom of association, which implies the principle of the right to organize. The Associations Act (Vereinsgesetz) lays down a general framework for the formation, structure and operation of associations, allowing a relatively large degree of discretionary scope. To set up an association, its proponents are obliged to submit the association’s constitution to the authorities for registration. If the constitution is in line with the general framework as defined by the Association Act, the association must be registered and recognized by the authorities. This means that anybody can form a business interest association, provided that the basic requirements of the Association Act are met.

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From a formal point of view, these recognition regulations do neither discriminate nor support the association of SMEs. De facto, however, they do buttress their associational action as a consequence of the public-law status of the economic chambers (Wirtschaftskammern). As outlined in the introductory chapter, SMEs face more difficulties in forming associations, as crossnational evidence has shown. As all businesses – regardless of their size – are obliged to be a member of the chambers, these differences in the capacity for associational action are overcome by law in the case of Austria.Likewise, the rules on recognition as a party to collective bargaining do not discriminate in terms of firm size. Nevertheless, they have had special effect on SMEs, in combination with their practical implementation. The recognition as a party to collective bargaining is regulated by labor law (i.e. by the Labor Constitution Act). The right to conclude collective agreements is made contingent on certain preconditions specified by this Act. Above all, this means that collective agreements may be concluded only by bodies directly invested with the capacity by the Act or granted recognition on the basis of application and an admission procedure.5 Hence, labor law provides for two forms of recognition that correspond with the distinction between chambers and voluntary associations. Accordingly, the chambers are directly equipped with the capacity to conclude collective agreements in that they automatically possess this capacity ex lege. A special admission procedure is devised to grant the right to conclude collective agreements to associations, for which membership is voluntary. Such unions and employer associations can acquire granted recognition as a bargaining party only when they meet certain preconditions. These preconditions are given if they are independent of the opposing side and if the Federal Arbitration Board (Bundeseinigungsamt), a joint body established within the responsible ministry, has granted them recognition as possessing it by virtue of their extensive occupational and territorial coverage and major economic importance. Individual employers are entitled to conclude collective agreements only by way of a few exceptions listed by law (e.g. legal persons governed by public law, or specifically identified employers such as the Austrian Broadcasting Company. As a consequence of these recognition criteria, Austria’s labor law authorizes only multi-firm (i.e. associational actors) to conclude collective agreements. Neither company unions nor the companies themselves - with the few exceptions specifically identified by law – can acquire the right to bargain. Otherwise put, Austria's labour law generally rules out the possibility of single-employer bargaining.6 This restriction is of practical importance only with regard to the employers, since no company union exists in Austria. Moreover, this importance varies with firm size, since single-employer bargaining would be a feasible option only in the case of large companies.If both a chamber and a voluntary association possess the capacity for collective bargaining on behalf one and the same group, the law gives priority to the voluntary association. As an implication of the higher ability of larger companies to associate, this rule might privilege voluntary employer associations dominated by large firms. In practice, however, the vast majority of voluntary business associations has refrained from engaging in collective bargaining and has left this task to the chambers of business. This means that Austria is one of the few countries, where the chambers of business perform the tasks of both a trade association and an employer association.7

The overall effect of these formal regulations and industrial relations practices is that the SMEs are fully integrated into the associational system of employers, with the consequence

5 In addition, a few other legal persons (such as the public social insurance institutions enjoy this capacity ex lege.6 It should be noted that, de facto, single-employer settlements are possible in that the respective union and its associational employer counterpart may conclude a special collective agreement on behalf of one single company. 7 In Europe, this arrangement only applies to Slovenia, aside from Austria.

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that their influence on the employers' bargaining strategies and the process of collective pay-fixing is considerable.As in other EU member states, SMEs are targeted by numerous specific policies such as national state-aided schemes, Community programs for research and development, the Regional Funds and financial intervention in favour of venture capital funds and guarantees for loans to SMEs (European Commission 2002). Although organized business participates in the administration and implementation of these programs, this does not set a special incentive for SMEs to associate. This is because it is the chambers of business that participate in these programs. Due to legally-based mandatory membership, they do not need other selective incentives for membership. This does not mean that such incentives are pointless. Assisting their members in making applications for public funds certainly improves the chambers' legitimacy, including the principle of compulsory membership.

3 The System of Social Dialogue and Public Policy Making

The social dialogue is a complex phenomenon which includes both negotiation and consultation, when understood in the broad sense. Accordingly, the social dialogue takes place at three levels.The micro level concerns the companies and establishments. This level is regulated by labor law which attributes certain tasks and responsibilities to management and the works council. Seen from the perspective of management, the focus is clearly on consultation, whereas an obligation to negotiate with the works council exists only in case of a few number of issues. Notably, labor law differentiates by firm size insofar as a works council can be established only in establishments with a minimum size of five employees. By comparative standards, this is a rather low threshold which excludes only the very small employers from micro-level social dialogue (Traxler et al. 2001).At the meso (i.e. sectoral) level, negotiations prevail, since the purview of the vast majority of collective agreements is demarcated in sectoral terms. Hence, the statutory recognition procedures, as outlined above, regulate the access to meso-level social dialogue.As regards the macro (i.e. the cross-sectoral) level, one has to differentiate between bipartite and tripartite social dialogue. The bipartite variant involves only the two sides of industry. Since no cross-sectoral collective agreement has been concluded for decades, consultation rather than negotiation characterizes the bipartite dialogue. Put more specifically, joint declarations and policy recommendations for the government are its most visible output. Negotiations between the two sides of industry occur, when the government delegates drafting a regulation to the two sides of industry, implying that the government is willing to enact their joint draft. Such practice, however, has become rare since the late 1980s. Likewise, the tripartite social dialogue rests on consultation rather than on negotiation. In contrast to its counterparts at the micro and meso level, the bipartite as well as the tripartite form of cross-sectoral social dialogue mainly follows informal customs and practices. The exception to this rule are formally established corporatist boards which perform advisory or regulatory functions in certain policy fields such as labour market policies. As a consequence of the predominance of informality, access to the macro-level social dialogue is based on mutual recognition by the relevant actors. In practice, there is a small and exclusive circle of actors which includes the government and the circle of the so-called social partners. This circle is composed of five peak associations that include chambers as well as voluntary associations: the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKÖ), the Federal Chamber of Labour (Bundesarbeitskammer, BAK), the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), the Standing Committee of Presidents of the Chambers of Agriculture (Präsidentenkonferenz der Landwirtschaftskammern, PKLWK), and the Federation of Austrian Industry (Industriellenvereinigung, IV). Originally, the core group

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of social partnership consisted of the peaks of the economic chambers, the chambers of labour, the chambers of agriculture and the union federation. This is because this group met a double symmetry of interest representation. On the one hand, it matched the requirement of inter-class parity, since it covered the most influential associations of employers and employees. On the other hand, it reflected Austria's political pillarization: The economic chambers and the chambers of agriculture are dominated by the conservative party; the chambers of labour and the unions, by the social-democratic party. Meanwhile, the role of the PKLWK has declined, whereas the role of the IV has grown, as a result of economic internationalization and Austria's accession to the EU. In the case of agriculture, this is because the transfer of agricultural policies to Brussels has re-directed the representational activities of the PKLWK. Furthermore, European integration and economic internationalization have magnified the influence of the large companies of the exposed sector which form the backbone of the membership of the IV, as will be outlined in greater detail below. As far as public policy-making in general is concerned, the chambers obtain a legally-privileged position in the course of consultation regarding government decisions, since they have the statutory right to be consulted by the authorities on all issues affecting their members' interests. In the case of the economic chambers, this particularly involves the broadly defined area of economic and social policy. In practice, however, their role in this policy area is not outstanding, as compared to the other associations referred to as the social partners above. Generally, the authorities prefer consulting these four social partners. This fact is also manifested in the composition of legally-based corporatist boards. As a rule, the right to nominate representatives for corporatist boards accrues not only to the chambers but also to the ÖGB. The VÖI, the second voluntary association among the social partners, is also represented on such boards although this is less frequent, compared to the other social partners.When thus giving clear priority to the social partners in matters of negotiations and consultation, the state has attributed a de facto privileged voice in social and economic policy to this circle of associations. As a result, in order to gain support for their particular interests, other, smaller and narrower business associations outside the system of Social Partnership often have to direct their lobbying at the economic chambers rather than at the government.

4 The System of Cross-sectoral Business Associations

Following the definition of cross-sectoral business associations, as documented in the project outline, one finds four associations: the Economic Chamber of Austria (WKÖ), the Federation of Austrian Industry (IV), the Austrian Association of Cooperatives (Österreichischer Genossenschaftsverband, ÖGV), and the Austrian Association of the Raiffeisen Cooperatives (Österreichischer Raiffeisenverband, ÖRV). The ÖRV is a borderline case insofar as this association is a member of the peak organization of agriculture, PKLWK, in addition to the nine Land-level chambers of agriculture. Formally, this indicates a subordination of the ÖRV, which however, does not reflect its actual relations to the PKLWK. This is because the domain of the ÖRV is not confined to agriculture. Furthermore, empirical evidence suggests that the ÖRV has successfully used the PKLWK as a means of channelling its special interests (even those not related to agriculture) into public policy-making (Krammer 1997). Table 2 gives an overview of the four associations.The WKÖ is the peak of the chamber system of business which is based on a two-dimensional organizational structure. One dimension mirrors Austria's territorial differentiation, with Land-level chambers for each of Austria's nine Länder. The second dimension refers to the sectoral composition of its membership domain. There are seven broadly defined divisions for: craft production; manufacturing industry; commerce; banking and insurance; information

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and consulting; transport and communications; and tourism and leisure. Each of these divisions is in turn divided according to subsectors of activity into federal branch subunits. Within each of the nine Land-level chambers there is an analogous differentiation into Land-level divisions and Land-level branch subunits. In all, the WKÖ covers 129 federal branch subunits and more than 1200 Land-level subunits. As already noted, membership in the chambers is mandatory, since every natural or legal person licensed to carry on business falling within the scope of the chambers' domain is obliged to be a member. In terms of representational activities, the WKÖ is a mixed association, dealing with both the product market interests and the labour market interests of their members. In terms of the scope of representational activities, interests covered and membership, the WKÖ is the principal association of business in Austria. This includes industrial relations. For the side of the employers, the WKÖ itself and its subunits traditionally conclude the vast majority of collective agreements. Likewise, the chambers offer their members a multiplicity of services most of which are free of charge. Voting rights of the members are allocated on the basis of one member/one vote.The membership domain of the IV broadly embraces the (manufacturing) industry and related businesses. The IV directly organizes this group, without any internal differentiation by sectors or territory.8 Like the WKÖ, the IV combines the tasks of both a trade association and an employer association. Although the IV possesses the right to conclude collective agreements, in practice it makes no use of this right and thus represents labour market interests vis-à-vis the authorities rather than vis-à-vis the unions. Member services are closely tied to the type of representational tasks performed, and are provided free of charge. In contrast to the WKÖ, voting rights are weighted according to the number of employees working in the member firms, as far as the general assembly of the IV is concerned.9 The ÖGV organizes all cooperatives that are established according to the principles of Schulze-Delitzsch who initiated this type of cooperatives as a self-help for SMEs in the nineteenth century. Today, Schulze-Delitzsch cooperatives operate in commerce, tourism, transport, manufacturing and banking, with a main focus on the latter sector which records more than 50 percent of the total number of employees working in member firms of the ÖGV. All cooperatives complying with the principles of Schulze-Delitzsch are directly organized by the ÖGV. Membership is voluntary. Since the ÖGV is an association that is legally authorized to audit cooperatives, auditing its members is a core task of the ÖGV. Furthermore, a broad range of services, in particular advice on all questions of business administration, is offered. Most of these services are free of charge. The ÖGV also acts as an interest association for its members. Interest representation centres on product market interests, although labour market issues are not absent. In the field of industrial relations, the ÖGV negotiates the collective agreements on behalf of its banks. The voting rights of the banks are weighted10, whereas the one member/one vote principle applies to the other cooperatives. In matters that affect only either of these two groups, each group holds its special assembly, based on the corresponding distribution of votes. In matters of common interests, each group also votes in line with its specific voting procedures. However, to maintain the share of each group in total membership, the votes of the non-banking group must be adjusted accordingly.

8 Regardless of this, Land-level associations of the IV exist which are independent organizations, without formal membership in their national counterpart. As a consequence, an affiliated company normally obtains dual membership in the IV of its Land and in the country-wide IV. 9 According to the constitution, one vote, two votes, three votes, and four votes are allocated to firms counting a maximum number of 100, 400, 700, and 1000 employees, respectively. One additional vote is allotted to each further package of 1000 employees. There is a ceiling in that no member firm can have more than 10 votes.10 A complicated formula referring to a bank's own capital, deposits and contribution to the group's capital formation defines the number of votes. There is an upper limit in that one single bank can obtain no more than 3 percent of the total number of votes.

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The ÖRV is the voice of the Raiffeisen cooperatives which historically developed as a self-help movement for farmers. The main areas in which Raiffeisen cooperatives operate are banking, commerce, and manufacturing. As regards manufacturing, the stronghold of Raiffeisen is food-processing (in particular the dairy industry) due to its historical relations with agriculture. However, nowadays, more than 50 percent of the employees covered under the umbrella of the ÖRV work in the banking sector. In contrast to the ÖGV, the ÖRV is vertically differentiated in that only higher-order (i.e. transregionally operating) cooperatives are its members. In addition, several subsidiaries (established in a legal form other than cooperatives) as well as the Land-level auditing associations are affiliated to the ÖRV. Its main fields of activities resemble those of the ÖGV: The license to audit cooperatives is used with regard to its direct members, while the Land-level associations audit the lower-level cooperatives. Interest representation includes both product-market and labour-market interests. As an employer association, the ÖRV conducts collective bargaining on behalf of several member groups, such as banking and the dairy industry. Like the ÖGV, the ÖRV provides services which relate to all aspects of business activities. Most of them are free. Voting rights are based on the principle one member/one vote. Membership is voluntary. However, as the ÖGV, the ÖRV enjoys a very strong selective incentive for membership that follows from the task of auditing the cooperatives. According to law, cooperatives must periodically be monitored by a special form of auditing. Normally, this is done by associations which are formally authorized to audit cooperatives. As a consequence, the establishment of a cooperative is bound to an application for membership in an auditing association, such as the ÖRV and ÖGV.11 As a result of their domain demarcations, the membership domain of each of the three voluntary associations overlaps with the domain of the WKÖ. Put more succinctly, the domain of the WKÖ embraces almost all member groups formally covered by the three other associations. In contrast to this, the formal domains of the three voluntary associations are defined by a complementary pattern that a priori ensures non-competitive relationships among each other. Due to mandatory membership, the WKÖ is not forced to compete for members with the other associations, whereas each of them has to convince their potential members of the benefits of joining it in addition to their legally pre-determined membership in the WKÖ. The WKÖ is thus the gravity centre of the associational system of business, all the more since the chambers have a key role in public policy-making and collective bargaining, as outlined above. The three voluntary associations have responded to this challenge mainly in two ways:12

First, they have established collaborative relations with the WKÖ in fields of non-rivalling interests for the sake of economizing on resources. For instance, the distinct voluntary associations which altogether cover the banking sector have an agreement with the WKÖ according to which the WKÖ devolves the tasks of its subunits established for the banking sector to these voluntary associations. The ÖGV and ÖRV are parties to this agreement on behalf of their cooperative banks The agreement is advantageous to the WKÖ, since it saves resources. Conversely, the voluntary associations can benefit from the chamber’s legally-established privileges of interest representation. The agreement also implies that one and the same person performs representative functions in the WKÖ and one of its partner associations. Such “dual office-holdings” also link the IV to the WKÖ, since the lists of candidates for the elections of the chambers’ Industry Division, as put forward by the IV, have always been successful. This facilitates cooperation in fields of joint interests and also helps to channel the special interests of the narrower voluntary associations into the chamber

11 If a cooperative's application for membership is rejected by the official auditing associations, then commercial courts to implement the auditing procedure by appointing an auditor for the unaffiliated cooperative. 12 This response to the preponderance of the WKÖ also holds true for the large number of sector-specific voluntary business associations that are beyond the scope of this analysis (Traxler 1986).

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system. A case in point is collective bargaining. Before the bargaining round for the metal industry (whose wage agreements traditionally set the pattern for the rest of the economy) starts, the chamber officials who negotiate these agreements usually have consultations with their IV counterparts.Second, the voluntary associations have specialized in narrower, more particularistic interests, as compared to those represented by the WKÖ which is obliged to pursue a “universalistic” policy-line. The goal formation within the WKÖ follows the principle of subsidiarity and joint interest representation. Accordingly, all interests that affect more than one of its numerous subunits must be aggregated and unified across the subunits involved for the purpose of joint interest representation. Since highly heterogeneous interests are under the encompassing umbrella of the WKÖ, this means that many narrow, group-specific interests are usually transformed and even filtered out in the course of this interest aggregation. This leaves leeway for voluntary associations that concentrate on advancing such narrow interests as represented by each of the three voluntary associations. In the case of the ÖRV and ÖGV specialization by tasks complements specialization by interest representation. With the license to audit cooperatives, these associations perform a task that is not covered by the chambers. This task equips these associations with a powerful selective incentive for membership. Hence, three of the four cross-sectoral associations (i.e. the WKÖ, the ÖGV and the ÖRV) rest on legally-based selective membership incentives. This includes resource endowment. While mandatory membership combines with compulsory dues in the case of the chamber, the ÖRV and the ÖGV receive part of their resources through compulsory reimbursement of auditing, since the member cooperatives have to pay for the auditing procedure.Regardless of these differences, each of the four associations implemented cost-cutting programs during the last years. They were most thoroughgoing in the case of the WKÖ and IV, as will be delineated below. The ÖGV as well as the ÖRV reduced their service activities. This involved only the banks of the ÖGV, leading to a decrease of dues by 15 percent on average, as regards this group of members. The ÖRV (which had 58 staff members in 2004) reduced its staff by 12 percent over the last 10 years.All in all, specialization by interests and/or tasks enables the voluntary associations to accentuate their profile not only in relation to the WKÖ but also among each other. As a consequence, their scope of activities comes close to being mutually exclusive. Needless to say, specialization by tasks and interests mitigates inter-associational competition for members and/or representational tasks, but they do not fully overcome it. This especially holds true for the relationship between the WKÖ and the IV, since their membership domains overlap: The domain of the former is so encompassing, whereas the latter’s demarcation of membership is rather vague.It is important to note that none of the four cross-sectoral business associations is formally specialized in representing SMEs. De facto, however, three associations relate to the SMEs in differing ways. The ÖGV is the voice of those cooperatives which were formed by SMEs. Due to this traditional link, the ÖGV explicitly includes the SMEs in its representational goals, when calling for a relief of its member cooperatives and the SMEs from regulatory and fiscal burdens. Regardless of this, representing the interests of cooperatives is something different from representing the SMEs themselves. The WKÖ has a special relationship to the SMEs as a result of its all-encompassing membership domain. Therefore, virtually all SMEs are under the umbrella of the WKÖ. Moreover, they prevail numerically in the WKÖ, since the vast majority of Austria’s businesses are SMEs. This numerical predominance translates into considerable intra-associational strength, since the chambers’ decision-making process is based on the principle one member/one vote. All this has induced the WKÖ to pay special attention to the interests of SMEs, although it is at the same time the most general business association in terms of tasks and membership. Finally, even the IV is anxious to reject

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prevailing public opinion which regards the IV as the voice of “big business”. Internally, a formal link to SMEs is established insofar as a special committee for this group exists. At any rate, understanding how the interests of SMEs are represented in Austria requires analyzing the WKÖ and IV in greater detail. This is not only for reasons of membership strength. In addition, these two associations stand out in terms of influence, as compared to the other associations, since they both belong to the exclusive circle of social partners.

5 The WKÖ and the IV in Comparison

Membership: Domains, Composition and Figures

The Act on the Economic Chambers (Wirtschaftskammergesetz) obliges every natural and legal person to be a member of the economic chambers, if the business carried on falls within the scope of the following sectors: craft production (Gewerbe and Handwerk); (manufacturing) industry (Industrie) including construction; mining and quarrying; commerce; banking and insurance; transport; telecommunications; radio and television activities; tourism and other services. This membership demarcation includes all types of ownership as well as profit and non-profit organizations. Due to the principle of mandatory membership, the actual number of members is identical with the potential members. It should be noted, however, that membership is formally linked to an operating licence that authorizes the licence holder to carry on a certain type of business. In practice, not all holders make use of their licence and thus belong to the group of "sleeping" members. Furthermore, the subject of the licences, is sometimes narrower than the scope of business carried on by a company, which therefore has more than one licence. When the membership figure is adjusted for sleeping members and multiple licensing, the number of member businesses under the umbrella of the WKÖ in 2001 was 200.945 members, with a total number of 2.222.465 employees. (Statistik Austria).13 The 2002 composition of membership is as follows: craft production, commerce, industry, bank and insurance, information and consulting, transport and communications, tourism and leisure industries each represent 26.4, 33.0, 1.9, 0.3, 16.5, 5.9, 16.0 percent of the WKÖ's (unadjusted) total membership, respectively. Table 3 shows that SMEs, in particular "micro firms" with a maximum of nine employees prevail in the WKÖ. The average number of employees per member firm was 11 in 2001. As a comparison of this Table with the comparative Table on firm size (documented in the introductory chapter) reveals, the WKÖ's membership composition by firm size largely mirrors the composition of the economy as a whole. This is due to the all-encompassing membership domain of the WKÖ.The membership domain of the IV is formally defined as covering the companies of the manufacturing industry, other businesses related to industry and their top executives. What makes a business related to industry remains unspecified. Hence, the domain of the IV is rather open. In practice, industry is the stronghold of membership. Affiliated businesses that are related to the industry usually belong to the group of companies which provide services for the industry sector. In addition, the IV has members from other branches whose special ties with the industry are less evident. This includes enterprises engaged in what is called by the IV as "systematic" commerce (i.e. enterprises that can benefit from economies of scale, such as retail chains), telecommunications companies, power-supply companies and the large banks and insurance companies. In 2002 the IV recorded about 1.200 member companies, with a total number of approximately 425.000 employees. The lion's share of this membership belonged to the industry, with ca. 1.000 member companies (i.e. 83.3 % of all members) and ca. 380.000 employees (i.e. 89.4% of all employees covered). It is impossible to calculate the density ratio of the IV, since its membership domain is not demarcated in operational terms.

13 For the same year, the unadjusted membership totalled 400.938 (WKÖ 2002).

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An estimate, however, can be made with regard its core membership, industry. Its potential membership in industry more or less corresponds with the membership in the Industry Division of the WKÖ. Accordingly, density of the IV in terms of companies and employees is around 21.8 percent and 84.2 percent, respectively.14 The difference in density between companies and employees indicates that a firm's willingness to join the IV increases with its size. As noted above, the IV seeks to avoid the impression of being the representative of the large companies. The IV claims that the majority of its members are SMEs. Accordingly, in the late 1990s the share of member firms employing no more than 100 employees, employing 101 up to 500 employees, and employing more than 500 employees was 49.6 percent, 36.3 percent and 14.1 percent, respectively. Unfortunately, this classification by firm size crosscuts the conventional definition of SMEs (i.e. enterprises with fewer than 250 employees). At any rate, using the above 2002 data on members and employees for calculating the average size of the member companies yields 354 employees per member company. This is above the threshold that designates SMEs.

Tasks and Activities

Table 4 summarizes the scope of representational activities regularly performed by the IV and the WKÖ. Seen from the perspective of the WKÖ, there are overlapping as well as exclusive fields of activity. The state is a primary target of both associations for representing labour-market and product-market interests. The associations, however, differ somewhat in how they advance interests vis-à-vis the state. In comparison to the IV which concentrates on lobbying, the WKÖ is more broadly involved in the formulation and implementation of state policies. A case in point are public schemes to aid business. In contrast to the IV, the WKÖ also participates in the implementation of such schemes. There is also an informal division of labour in terms of the kind of interests represented. While the IV centres on the interests of the industry as a whole, the sectoral interests of the distinct industry branches are left to the sector-specific subunits of the Industry Division of the WKÖ.Areas exclusively covered by the WKÖ are representing interests vis-à-vis the unions, and the participation in and implementation of schemes for vocational training and product standardization. As already noted, the WKÖ and its subunits negotiate the collective agreements on behalf of nearly all sections of Austria's employers. Since labour law gives priority to voluntary associations when it comes to collective bargaining, this is not simply due to the encompassing domain of the WKÖ. Virtually all voluntary associations whose domains overlap with that of the WKÖ have refrained from collective bargaining, such that only a few collective agreements (e.g. for banks and printing) within the WKÖ domain are concluded by voluntary associations. The role of the WKÖ is also essential in all matters of vocational training. The WKÖ participates in defining new vocations as well as in drafting the legally-established curricula of the numerous vocations covered by the public vocational training system. Furthermore, the state has devolved the implementation of important components of the system to the WKÖ. For instance, the WKÖ registers and administers the contracts on apprenticeship, as concluded by the employer and the apprentice, and organizes the examinations for the leaving certificate of the vocations. The WKÖ also participates in matters of standardization mainly via its links with the Austrian Standards Institute which is responsible for the preparation, application and implementation of standards according to Act on Standardization.The range of member services offered by the two associations largely reflects their scope of representational activities (Table 5). This is because services usually follow and relate to the kind of interests represented. In the case of the WKÖ, however, the range of services is more

14 This estimate refers to 2001. To calculate density in terms of employees, the figures on actual membership are for 2002, whereas potential membership is for 2001.

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comprehensive than the scope of interest representation, since the former, in contrast to the latter, includes exchange relations with suppliers and customers. In Austria the state has formally delegated the promotion of foreign trade to the WKÖ, such that this task constitutes one major part of its activities. Accordingly, a wide range of information, advice and business support regarding international trade is provided by a special department of the WKÖ, specialized experts within the Land-level chambers, and by 70 foreign trade offices around the world. The WKÖ also tries to stimulate business connections among its members by providing a platform designed to initiate exchange relations between potential business partners.The WKÖ regards the provision of services as important as interest representation. This is for several reasons. Services help legitimize mandatory membership; they are more needed by smaller companies (which prevail in the chambers) as compared to larger ones. Last but not least, they are a means of compensating the members for the universalistic policy orientation of the WKÖ which subordinates the members' special, group-specific interests to general, cross-sectoral goals. In line with this special emphasis on services, a notable number of the WKÖ staff is specialized in this field of activity. In particular, professionalized services of this kind are offered in the areas of promotion of international trade, further training and qualification. This approach to services differs from that of the IV. Member services provided by the IV are simply the by-product of interest representation. As an IV representative noted, this implies that the amount of dues paid by a member clearly exceeds any possible benefits from services. According to his view there is another problem with services, insofar as they are hardly noticeable for large firms, even when they make use of them: In large companies it is lower-level staff members who usually contact associations for information and advice the outcome of which is then often passed off as their own expertise. The efforts of the IV to attract and integrate members thus concentrate on emphasizing the importance of its representational activities, since the IV itself does not see its services as a convincing reason for membership.This difference in the internal status of services translates into differing modes of financing them. In the case of the IV services are financed by the membership dues and thus free of charge. The WKÖ differentiates between basic services (such as advice on labour law, other regulations, and foreign trade) and special services ( mainly related to the promotion of international trade, further training and qualification of company staff). While the former are gratuitous, the latter are payable.

Human and Financial Resources

Table 6 documents the associations' human resources (in terms of the number of paid staff members) and the composition of their revenues.In 2002 the WKÖ and its Land-level chambers altogether recorded 4615 staff members. About 24 percent of them worked in the WKÖ itself. In the same year the IV had 65 staff members. This figures, however, are not fully comparable, since the Land-level is represented by formally independent "satellite" associations in the case of the IV. The number of staff members of these associations in 2002 totalled 44. Even when they are added to the staff of the IV, its combined human resources are clearly smaller than that of the WKÖ. This can certainly be traced to the larger size of the WKÖ and its broader scope of activities. Closer consideration, however, shows that human resources grow not monotonically but rather degressively with associational size, as the number of staff members per 1000 member companies and per 1000 employees working in the member firms reveals. With 54 staff members per 1000 company members (in comparison to 23 in the case of the WKÖ), the IV is more than twice as well resourced as the WKÖ is. This difference even grows, if one also includes the IV's satellites into the calculation (i.e. 91 staff members per 1000 members).

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Another indicator of the relative endowment with human resources is the number of staff members per 1000 employees employed in member firms. With two staff members per 1000 employees, the WKÖ is somewhat better resourced in this respect than the IV whose comparable figure (with and without its satellites) is zero. This indicator, however, is less important than the first one, since the member companies (in contrast to their employees) are the clients of an association's staff. Given that the associations receive almost all revenues from their members, this difference between the WKÖ and IV in terms of staff per member indicates that the members of the IV pay much higher dues, compared to the dues prescribed by the WKÖ. This, in turn, has to do with the larger size of the companies affiliated to the IV. In addition to these regular dues, voluntary contributions (amounting to 0.5 percent of total revenues) is another source of finance, supplied by the members of the IV. Since none of the two associations is a confederation, there are no dues from affiliated interest organizations. Revenues from sales of services also do not exist in the case of the IV, whereas the WKÖ's amount of sales (i.e. 4.2 percent) is low in relation to the overall importance of its service activities. Both the IV and the WKÖ get income from the state (including EU institutions) in the form of reimbursement for joint activities. This accounts for 0.5 percent and 2.5 percent of total revenues, respectively.Regardless of their differing profiles of activities, the expenditures for interest representation are estimated by both associations to be as high as those for services. As regards the IV which clearly focuses on representational activities, this is surprising. Its explanation for this is that services are very labour-intensive, even when they are provided mainly as by-products of interest representation. Recalling that the number of WKÖ staff per 1000 members is smaller and the range of services, broader than in the case of the IV leads to the conclusion that the WKÖ's resources are rather limited in relation to its tasks, although they look impressive in terms of absolute numbers.

Internal Reforms and Restructuring

As mentioned above, the WKÖ as well as the IV underwent major internal reforms in the early 2000s. These reforms are interrelated, as the driving force behind them was one and the same business group: industry in alliance with large companies from other sectors, namely banking and commerce. They were able to initiate the reform of both associations due to their dual membership and concomitant "dual office-holdings". While the IV is the special association of this business group, there are also close ties with the Industry Division of the WKÖ, since its boards are traditionally dominated by officials nominated by the IV for the chamber elections. The first target of these reform initiatives was the WKÖ which the large companies regard as being biased in favour of the group of smaller companies: The criticism by the large companies is that they have to bear the main burden of financing the WKÖ, whereas its tasks so much focus on services (which they needed less) and its internal goal formation rests on the one member/one vote principle (that weakens their power position in relation to smaller member firms). Against this background the large companies primarily pressed for a reduction of membership dues.In response to this, the new leadership of the WKÖ presented a reform proposal in August 2000. Its key goal was to reduce dues by about 30 percent. This required sustainable efforts to economize on resources, which in turn presuppose thoroughgoing restructuring. The main elements of the restructuring program, as adopted after intensive internal debates in 2001, were as follows (Biach 2001, EIRO 2001, Kreimer 2001, Nausner and Baumann 2001):

- Activities and tasks were more efficiently distributed among the numerous subunits of the WKÖ. Accordingly, the WKÖ now concentrates on representational activities at national and EU level. All services provided by the WKÖ were transferred into the

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remit of the Land-level chambers which also have to represent Land-level interests. While all the Land-level chambers still offer basic services, each of them now specializes in a certain category of sophisticated services (e.g. complex questions of environmental protection) in order to reduce redundancies.

- Sophisticated services (e.g. relating to the promotion of international trade) were made payable.

- The administrative apparatus was made "leaner". This included the reduction of the number of departments, the closure of 10 foreign trade offices and the downsizing of staff by 950 persons.

- Inhouse services were concentrated in a special business unit and modern management techniques were introduced in order to improve planning and controlling.

These measures have proved successful in that they enabled the WKÖ to arrive at a balanced budget and to reduce its membership dues by 29.4 percent on average from 2004 onwards. There is one notable area where these measures deviate from the initial reform concept. Originally, the goal was to reduce the high degree of internal sectoral differentiation by replacing the more than 100 federal branch subunits and their Land-level counterparts with 29 broader units. This met strong resistance from the established subunits for several reasons: the preference for a particularistic interpretation of joint interests; the inequality of resource endowment; traditional rivalries among contiguous sectors which thus refused to merge; and the given purview of the collective agreements which generally follows the domain of the signatory subunits. Regardless of this, the WKÖ continues its efforts to build more encompassing subunits. They now concentrate on merging the administrative apparatus of related subunits which are expected to accept this restructuring due to growing financial restraints imposed upon them.The reform of the IV also began in 2000, somewhat later than that of the WKÖ. Although this process was fostered by the ongoing restructuring of the WKÖ, the initial impulse came from endogenous factors, namely the long-term decline in employment in the industry. This directly affects the IV, as its dues are linked to the number of employees a member company employs.15 The IV shared with the WKÖ the goal to improve its organizational efficiency. In contrast to the WKÖ, however, there was no intention to cut back dues. The main components of the IV reform were:

- A new, project-oriented structure of the administrative apparatus was established instead of the conventional system of a functionally differentiated bureaucracy. This included a reduction of the number of hierarchical levels.

- The staff was pruned by around 20 persons.- Inhouse services were outsourced.

Although the goals and measures of the reforms launched by the WKÖ and IV differ in detail, they were propelled by the very same pressures. Austria's economy has undergone profound changes since the country's accession to the EU. In particular, the companies have become more internationalized and exposed to intensified competition. This has forced them to curb costs and improve their profitability. As a consequence, their relations to interest organizations have changed. They tend to perceive associational membership as a question of costs and benefits now much more than they did in the past, when they were often affiliated out of habit. Hence, the associations have had to face growing demands for economizing on resources.

6 Conclusions

In Austria company size is irrelevant as a formal criterion for demarcating the domain of cross-sectoral business associations. Neither an association explicitly specialized in SMEs is

15 From 1998 to 2002, the number of employees working in IV member firms dwindled by around 5.2 percent.

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established; nor an association claiming that it is the voice of big business exists. Regardless of this, there is a subtle, informal differentiation by firm size, involving the two most influential associations, i.e. the WKÖ and VÖI. Since the membership domain of the WKÖ almost completely includes that of the IV16, this differentiation ensues from distinct profiles regarding not only membership domains but also decision-making procedures and tasks. The interests of SMEs attract special attention by the WKÖ, as a consequence of the combined result of mandatory membership, the encompassing domain and the one member/one vote principle. Mandatory membership overcomes the extraordinary problems of SMEs, when it comes to collective action. In connection with this, the encompassing domain makes the SMEs numerically prevail in the WKÖ. The one member/one vote principle translates this numerical preponderance into remarkable influence and strength in the course of internal goal formation and interest representation. This is not to say that the large companies are weak. In the case of their branch-related interests which are not affected by other business interests, the Industry Division of the WKÖ and its branch subunits are their primary channel of associational action. They can exert strong influence even in matters of general interests which are subject to encompassing interest aggregation in the WKÖ, as their successful initiative to reform the chamber shows. 17 However, the point is that they run the risk of becoming overruled in all areas where the interests of small and large companies clearly conflict. Due to the organizational properties of the WKÖ, the SMEs are structurally favoured in the course of interest representation. The same holds true for services, as a consequence of the elaborate range of service activities which are performed by the chambers free of charge in most cases.The opposite pattern characterizes the IV. Its formal domain focuses on industry which, by statutory definition, constitutes the large-scale segment of manufacturing. While the domain remains rather indeterminate in other respects, the IV actually attracts the large companies from other sectors. Voting rights are weighted according to employment and thus strengthen large firms. Therefore the domain and decision-making procedures structurally favour this business group. In line with this, the average number of employees per member firm is clearly above the threshold of SMEs, as documented above.18 Furthermore, the provision of services by the IV is subordinate to and a by-product of interest representation. This underpins that large firms need services less than SMEs. In addition, the very high density ratio of the IV in terms of employees suggests that large firms can easily associate on a voluntary basis, without special selective incentives that extend the range of by-products of interest representation.As far as the associational system as a whole is concerned, the domains and/or tasks of all cross-sectoral business associations are complementary. In the case of the two most important associations this complementarity obviously relates to firm size. The structure of the IV is well suited to taking up the special interests of the large firms, whereas the structures of the WKÖ are geared to the special interests of SMEs. In matters that do not relate to firm size, the two associations can easily cooperate. The upshot is that the large companies have a special association, while the more general association is the preferred voice of the SMEs. This makes Austria a unique case, since the reverse pattern applies to the other European countries.

16 The exception is the power industry which is not covered by the WKÖ.17 One may argue that the reform serves the interests of the large members of the WKÖ even more than their smaller counterparts, since the scale of relief from dues tends to increase with firm size.18 It is not clear why the IV strictly rejects to be considered the association of the large companies. One explanation may lie in the fact that the IV is the Austrian affiliate of the most encompassing European business association, UNICE, which does not accept compulsory associations (like the WKÖ) as members. This implies that the most inclusive business association of Austria is outside UNICE. At the same time, this situation makes the IV concerned about its representativeness as the voice of Austria in the European context.

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Table 1: Companies and employment* by company size**

Employment   1995 2003*** Change in %1995-2003    %    %

1 to 9 persons Companies 158727 83.4 179132 84.3 12.9  Employme

nt 457904 21.1 497520 21.5 8.710 to 49 persons Companies 26459 13.9 27811 13.1 5.1  Employme

nt 497281 23.0 530619 22.9 6.750 to 249 persons Companies 4340 2.3 4565 2.2 5.2  Employme

nt 432856 20.0 472750 20.4 9.2250 and more persons Companies 895 0.5 968 0.5 8.2  Employme

nt 779376 36.0 815453 35.2 4.6Total Companies 190421 100.0 212475 100.0 11.6  Employme

nt 2167417 100.0 2316342 100.0 6.9

* Employees and self-employed persons** NACE C-K*** Estimates by KMU FORSCHUNG AUSTRIA

Source: Statistik Austria, Hauptverband der Sozialversicherungsträger

Table 2: Austria's cross-sectoral business associations: Basic data (2002)

Association Scope of functions

Membership domain Members Employees covered

Voting rights

WKÖ Mixed All businesses, with the main exception of agriculture and the free professions 200945* 2222565* Unweighted

IV Mixed Manufacturing industry and related businesses

1200 425000 Weighted

ÖRV Mixed Raiffeisen cooperatives

72 47000 Unweighted

ÖGV Mixed Schulze-Delitzsch cooperatives 226 11300

Differentiated by economic sector

* 2001

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Table 3: The WKÖ: Member companies and their employees by firm size (2001)

Size of employment

Member companies Employees coveredAbs. % Abs. %

1-9 169527 84.4 304606 14.910-49 26055 13.0 484117 23.750-249 4434 2.2 449135 22.0250 and more 930 0.5 802248 39.3Total 200946 100.0 2040106 100.0

Source: Statistik Austria; Sonderauswertung der LSE nach der Kammersystematik imAuftrag der WKÖ

Table 4: Representational activities of the IV and WKÖ

Type of activity IV WKÖRepresents:Labour market interests vis-à-vis the unions No YesLabour market interests vis-à-vis the state Yes YesProduct market interests in relation to customers No NoProduct market interests in relation to suppliers No NoProduct market interests in relation to the state Yes Yes

Participates in the formulation of and/or implementation of:Public schemes for vocational training No YesPublic schemes to aid business Yes YesPublic schemes for the standardization of products and product quality No Yes

Main activities are market in italics.

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Table 5: Services provided by the IV and WKÖ

Services related to IV WKÖIndustrial relations Yes YesEconomic policy programs Yes YesExchange relations with supplies No YesExchange relations with customers No YesVocational training No YesFurther training and qualification of company staff Yes YesDeveloping/monitoring quality standards for products No Yes

Table 6: The IV and the WKÖ: Human and financial resources (2002)

IV WKÖHuman resourcesNumber of staff members

Peak levelAssociation as a wholeSatellite associations

–6544

11204615

–Staff members per 1000 member firms 54 (91*) 23Staff members per 1000 employees working in member firms 0 (0*) 2Composition of revenues (as a percentage of total revenues)Membership dues (firm members) 98.0 85.7Membership dues (affiliated associations) 0.0 0.0Voluntary subsidies from members 0.5 0.0Sales of Services 0.0 4.2Obligatory dues and levies 0.0 0.0Revenues from the state (including contracts with government) 0.5 2.5Other 1.0 7.6Total 100.0 100.0

* Including the staff of the satellite associations

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References

Biach, A. (2001) "Wirtschaftskammern erfüllen bis 2004 alle Reformvorgaben". http://www.wk.or.at/dst_SZ_Details.asp?SNID=12062 .

European Commission (2002) http://europa.eu.int/comm/enterprise/consultations/sme_definition/

EIRO (2001) "Chamber of the Economy takes further reform steps", http:// www.eiro.eurofound.eu.int/2001/ 05/inbrief/at0105215n.html .

Guger, A., Runggaldier, U. and Traxler, F. (2000) European Employment and Industrial Relations Glossary: Austria. London and Luxembourg: Sweet and Maxwell and Office for Official Publications of the European Communities.

Krammer, J. (1997) "Interessenorganisationen der Landwirtschaft: Landwirtschaftskammern, Präsidentenkonferenz und Raiffeisenverband", in H. Dachs et al. (eds.) Handbuch des Politischen Systems Österreichs. Die zweite Republik. Wien: Manz.

Kreimer, F. (2001) "Die Novelle zum Wirtschaftskammergesetz 1998 – WKG". Wirtschaftspolitische Blätter 48: 664-671.

Nausner, P. and Baumann, K. (2001) "Die Reform der Wirtschaftskammern als Organisationsreform". Wirtschaftspolitische Blätter 48: 649-663.

Siaroff, A. (1999) "Corporatism in 24 Industrial Democracies: Meaning and Measurement." European Journal of Political Research 36: 175-205.

Statistik Austria, Sonderauswertung der LSE nach der Kammersystematik der WKÖ.Traxler, F. (1986) Interessenverbände der Unternehmer. Frankfurt-New York: Campus.Traxler, F., Kittel, B. and Blaschke, S. (2001) National Labour Relations in Internationalized

Markets. Oxford: Oxford University Press.WKÖ (2002) Mitgliederstatistik der Wirtschaftskammern 2001.

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BELGIUMPatrick Kenis, Tilburg University

1. The Economic Structure and Cultural PropertiesBelgium is a complicated country from a political, cultural and administrative point of view. Belgium has three official languages (Dutch, French and German). On the basis of these linguistic and other differences cultural enrichment as well as conflict characterize Belgium. Over the last few decades it has led to fundamental constitutional reforms resulting in a quasi-federal structure based on the constitutional recognition of the three Communities (the Dutch speaking, the French speaking and the German speaking) and three regions (the Flemish Region, the Walloon Region and the region of Brussels-capital). The three Regions have competence over regional aspects of matters concerning the environment, housing, water policy, economic policy, energy and employment, public works and transport. The administrative tutelage over the provinces (10 in total) and boroughs also falls under the competence of the Regions. The three Communities enjoy autonomy in the regional aspects of cultural, linguistic and “personalized” matters (i.e. matters concerning personal life) and domestic and international cultural cooperation.The presence of two large communities in Belgium has left its marks on all aspects of life. In the Cabinet, the main organ of national executive power, there must be an equal number of Dutch speaking and French speaking ministers. Not only did it leave marks on the national executive level, but equally so on the judicial system, the administrative system and the associational system. The thesis that the “associational system” follows the political and administrative system can certainly be confirmed for the Belgium case. As competences moved from the nation to the federal level, the associational system (which was nationally oriented) became also federalized.To make things even more complicated, it should be mentioned that Belgium has for a long time (and in many respects still is) a pilarised country. The Belgian political system is founded on what is called "pilarisation". The political parties developed emerging from internal rifts in society: the first from religious differences Church/State, the following from regional rifts that brought Walloons and Flemish into opposition and finally from social differences that opposed work and capital, workers and company heads. The political parties that were born of these rifts comprised true entities within Belgian society; many organizations (schools, insurance companies, etc) revolved around each party taking care of the party members as well as their families almost from birth to the day they died. Hence in exchange for their loyalty the members of these organizations had access to jobs, housing or diverse other social advantages. For their part the leaders of the different political movements distributed the positions available within the public administrations equitably. Also the associational system is traditionally divided along these lines. Whereas the language dividing line has become more and more pronounced, the pilarization dividing lines are becoming less and less relevant these days, as we will see below.As can be seen from Table 1 also in Belgium SMEs prevail in terms of number of companies. According to the most recent figures, 99,8% of all companies are SMEs and 69,5% of workforce is employed in SMEs. Belgium equals in its distribution of number of enterprises and number occupied persons by enterprise size almost exactly the European average. The only difference being that in terms of number of enterprises micro enterprises are somewhat more prevalent in Belgium (93,2 percent compared to 92,4% percent in Europe) and small enterprises are somewhat less prevalent in Belgium (5,7 percent compared to 6,5 percent in Europe). As far as the distribution of occupied persons by enterprise size is concerned Belgium follows exactly the European pattern.The prevalence of SMEs in Belgium might explain why, as will be seen, dedicated ASMEs exist in Belgium. This is certainly more trough for the Flemish region, compared to the

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Walloon region. In the Walloon region large enterprises have traditionally (at least until 1970) played a very dominant role. The Walloon association for self-employed persons (UMC) only recently received a much more prominent role. A very important event for UCM was the “Contrat d’Avenir pour la Wallonie”, which was formulated in 1999 and which for the first time emphasis the importance of SMEs for the Walloon economy. Since this time also the association is developing and growing significantly. The situation is somewhat different for the Flemish region. In the Flemish region SMEs have traditionally always had an important role in the economy.

Table 1 Enterprises and employment by company size in Belgium 1996 and 2002*________________________________________________________________________________________________________________________________________________________

Size in terms of persons employed   

1996 2003Change in %1996-2003

 Total number %

Total number %

0 to 9Companies 408.000 93,2

Employment 1.310.000 40,1

10 to 49Companies 25.000 5,7

Employment 535.000 16,4

50 to 249Companies 4.000 0,9

Employment 422.000 12,9

250 and more

Companies 1.000 0,2

Employment 997.000 30,6

TotalCompanies 438.000 100

Employment 3.264.000 100____________________________________________________________________________Source:

- Observatory of European SMEs 2003, No. 7 (SMEs in Europe 2003)- 1996 data will be supplied soon

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2. The Legal and Administrative Framework for Associational ActionIn Belgium there exists no obligatory membership in BIAs. None of the existing BIAs can oblige potential members or any enterprise to become member of an association (the exception being some professional associations like those for doctors or lawyers). Apart from the BIAs there exists a Belgian Chambers of Commerce and Industry (BCCI), which has as its main task to organise the national coordination of the network of local Chambers of Commerce and to represent the network at the federal and international level. Unlike all its neighbouring countries, Belgium has a network of Chambers of Commerce subject to private and not to public law. The fact that the Belgium CCI is an umbrella organization and has a private law status can be explained by historical key events. In 1802 Napoleon re-established the Chambers of Commerce (after they had been dissolved under French Rule in 1791) and in 1815, under Dutch rule, the Chambers of Commerce became an official organization with a public law status. In 1875 the Belgian authorities, accusing it of regional and personal interests, abolished the CCI. As a reaction, businessman all over the country created private associations, which often also were called Chambers of Commerce. This led to the constitution, in 1875, of the “Federation of Chambers of Commerce and Industry Belgium”. The BCCI’s main tasks are the organization of national co-ordination of the local Chambers of commerce (i.e. the quality and coherence of the network), representing the network at a federal and international level and being responsible for the management of delegated technical missions. The local Chambers of Commerce are legally independent organizations providing mainly services to their members and are also involved in political lobbying. Recently a further ‘federalisation’ of the Chambers of Commerce has taken place. The local Chambers of Commerce in the Flemish region (eight in total) and the Flemish Economic Association (Vlaams-economisch verbond, VEV) have merged in the new organization VOKA. This again emphasis that the Chambers of commerce in Belgian is mainly a local form of representation. Consequently, Given the scope of this study the BCII will not be taken into consideration in the remainder of this chapter.In Belgium, business associations can gain legal status either on the basis of the Wet op de beroepsverenigingen – Loi sur les unions professionnelles (31.03.1898) and the Wet op de Vereniging zonder winstoogmerk – Loi sur les ASBL (27.06.1921). Not all associations have, however, taken a legal status (as a reaction also unions have often not taken a legal form; the consequence of which is that they can not prosecuted). This means that anybody can associate business interests, even if the requirements of the Association act are not met. This implies that there are no formal regulations which either discriminate nor support the association of SMEs. There are also no other forms of representation that would thwart the formation of ASMEs. In contrast to other neighbouring countries there are no associations which have a particularly privileged position, e.g. a public status.Also the rules on recognition as a party to collective bargaining do not principally discriminate in terms of firm size. The main discriminating factor with regard to participation in collective bargaining is whether the organization is ‘representative’. The fact that the organization associates small, medium or large sized enterprises does it not make, by definition, more or less representative. The two main organisations representing SMEs in Belgium (the Flemish UNIZO and the Walloon UCM) are both formal partners in the collective agreement negotiations, which take place every second year. Both organizations have the status of being representative organizations. The concept of the representative organization is enshrined in the Collective Agreements and Joint Committees Act of December 5, 1968. Within the meaning of the Act, minor or emerging organizations do not have the right to be parties to a collective agreement. To be representative, an employers' association has to satisfy the following criteria: it must be multi-industry; established at national level; and represented on the National Labour Council and the Central Eeconomic Council. The Act explicitly specifies that the national interprofessional organisations and

34

federations which have been recognized by the Act of March 6, 1964 and which represent the heads of handicraft companies, the small and medium sized commercial enterprises and industry and the self-employed have also to be considered as representative. Since only representative employers' associations have the right to conclude collective agreements, participate in the joint administration of social security, are able to nominate candidates for the labour courts, sit on joint bodies, etc. it is clear that the status of representativeness and hence being presented on the National Labour Council and the Central Economic Council is crucial for having any representational strength within the Belgian system of collective bargaining.Apart from the fact that a company might consider it necessary to influence an association, which has a legally provided “representative” status (independent of the fact of whether particular companies are a member or not) there is another element that could contribute to a de facto obligatory membership of SMEs in Belgium. Collective agreements in Belgium generally are extended to all companies. The government, acting through Royal Decree, can make a collective agreement concluded within a joint body (National Labour Council, Joint Committee or Joint Subcommittee) generally applicable (ergo-omnes principle). A collective agreement, which has been decreed generally applicable, is then binding, on pain of penal sanctions, on all employers and employees who fall within the sphere of activity covered by the agreement. In practice, important use is made of such agreements in Belgium, which cover different aspects of pay and conditions of employment. In this way, collective bargaining governs a great many matters for the vast majority of employees and employers.Consequently, membership in a representative SME can give a company or sector influence on the outcomes of these negotiations. Given the fact, however, that in the case of the Belgium ASMEs not sectoral associations but individual employers are member of the association the question is whether this influence can be effectuated at all. One could even argue that there is a disincentive to join a BIA since the advantages of free-riding could weight more than the advantages of having influence on the outcome of the collective agreements. This might be different in those cases where, in addition to the national agreements, sectoral agreements are negotiated (as happens sometimes).The overall effect of these above mentioned formal regulations and industrial relations practices is that representatives SMEs are fully integrated into the associational system of employers. To what extend individual SMEs have an influence on this representation is difficult to assess.None of the ASMEs in Belgium receives structural funding by the state. They do, however, receive subsidies for the implementation of policies. UMC, for example, receive funding from the Walloon Region for an environmental programme (“Conseil environment”) and for a programme to help starters (“Starters Day”). This implies that these associations have a privileged position with regard to the formulation and implementation of public policies. This is again recently confirmed by the fact that in July 2003 the State has passed on the entire administration of setting up an enterprise to private actors. These “Starter offices” are often (but not exclusively) run by BIAs and financially compensated by the state.Another aspect which might play an important role here is that employer’s associations almost always run a number of services which have a public character. For example, the so-called ‘Social-accounting secretariats’ act as the authorized representative of the employers affiliated to it and carries out the various formalities imposed by social security legislation. To be officially approved by the Minister for Social Affairs, such a secretariat must be linked to a representative organization, be constituted in the form of a non-profit-making association and have a minimum number of member employers. There are at present some forty of them in existence, with a total of over two hundred branch offices. Most Belgian SMEs have joined a licensed Employers' Social-Accounting Secretariat which execute the complete wage and personnel management for their member enterprises (e.g. administrative procedures in the

35

recruitment process, calculation of wages and social security contributions, withholding taxes on wages, undertaking the respective [monthly, quarterly or yearly] declarations etc.). The use of specialized services provided by these Social-Accounting Secretariats is so widespread in Belgium that very few SMEs do this job themselves. Since these secretariats have, by law, to be linked to a representative organization they provide exclusive services to a specific target group and thus also strengthen the membership basis of the representative organizations and thus giving them a representational privilege (e.g. the often mentioned very high degree of union membership in Belgian can be explained by the same phenomena; employees being member of social secretariats for the administration of their social and health benefits).

3. The System of Social Dialogue and Public Policy MakingIn Belgium there is a system of free collective bargaining, although the government, subject to having allowed the social partners the opportunity of negotiating on matters themselves, and to proper observance of a parliamentary procedure (1989 Preservation of the Country's Competitiveness Act), always has the power to intervene in collective bargaining in order to preserve the competitiveness of enterprises. Collective bargaining takes place at several levels. In 1988 the tradition of national multi-industry bargaining was resumed and a central agreement was concluded for the years 1989 and 1990. This and following agreements cover employment and vocational training (education and training for young people and the unemployed who are difficult to place in new jobs, positive action in favour of women, career breaks, stages ([special training opportunities] for young people, in-service courses), bridging pensions, and the older unemployed. The government is usually exerting considerable pressure when the agreements are concluded. At the same time the government can take steps itself to deal with matters on which the social partners are not in accord and which are therefore an obstacle to a central agreement; e.g. special protection for the members of works councils and workplace health and safety committees, and the pension age. All this bears witness to the tripartism in Belgian industrial relations, with the government and social partners as its actors.The central bargaining or concertation is accompanied by bargaining at industry-wide level and at enterprise or company level. The central agreements do not go beyond relatively general provisions; more detailed provisions are filled in at the level of each industry. In recent years there has been a sharp rise in the number of collective agreements concluded at company or enterprise level. Bargaining at company or enterprise level is concerned mainly with new issues such as flexibility and work organization. SMEs have, however, at the level of the firm no legal obligation to install collective bargaining at the company level. Workers representation at the company level is only obligatory in Belgium for companies with more than 50 employees. ASMs in Belgium are very firm on keeping this legislation as it is. Interestingly enough the general BIA (VBO-FEB) has commissioned a report in order to demonstrate that neither employers nor employees see a need for workers representation at the company level for companies with less than 50 employees. Given the pressure regional platforms for negotiating are considered an option now.Although free collective bargaining on employees' pay has been restored, the government still possesses the power to exert pressure by imposing a pay policy under the 1989 Preservation of the Country's Competitiveness Act. In this connection the Central Economic Council is required to issue twice per year a report and an opinion on the competitiveness of Belgian enterprises, which are submitted immediately to the government and the two Chambers of the legislature (the Chamber of Representatives and the Senate). The Council is composed of delegates from the representative employers' associations (among which both the general employer’s association and the associations for SMEs) and trade unions, plus six independent experts. These documents serve as a basis for negotiations between the government and the social partners. Starting from the date on which the government has convened the social

36

partners for negotiations, the latter have a period of one month in which to take measures themselves (in the form of a collective agreement) which restore or preserve competitiveness, or to propose to the government measures which fall within its powers. If the government is of the opinion that competitiveness is still jeopardized, it can submit a reasoned statement to this effect to the Chambers of the legislature. If the latter concur with the government, for a period of two months following the vote in Parliament the government, acting through Royal Decree, can take the measures deemed necessary to preserve or restore competitiveness. In exceptional circumstances (events originating abroad, including dramatic changes in rates of exchange), more rapid intervention is possible. Should the case arise, the Central Economic Council is requested to deliver an emergency opinion and the social partners are convened for emergency negotiations. Where necessary, the social partners then have a maximum period of one month within which to take measures by way of collective agreement. If the government has, nevertheless, still the opinion that competitiveness remains jeopardized, it can submit a reasoned statement to Parliament. If Parliament concurs, for two months following the vote the government, acting through Ministerial Decree, can take the measures necessary to preserve or restore policy on competitiveness. Also the National Labour Council (based on the National Labour Council Act of 29 May 1952) plays an important role in collective bargaining. Traditionally its principle role has always been to advise a Minister or the Houses of Parliament on its own initiative or at the request of these authorities, on general social issues concerning employers and workers and to issue opinion on jurisdictional disputes between joint committees. The Act of 5th December 1968 respecting collective industrial agreements and joint committees, however, considerably enlarged the Council's role by empowering it to conclude collective industrial agreements, which are binding on various branches of activity or all sectors of the economy. Moreover, a collective industrial agreement may be concluded in the National Labour Council for a branch of activity which is not within the competence of an established joint committee or where an established joint committee does not function. Also in the National Labour Council the general employer’s association as well as the associations for SMEs are members. The National Labour Council is considered as “one of the most powerful consultative bodies” in Europe (Beyers et al. 2001: 78).In addition there is the Hoge Raad voor de Zelfstandigen en de Kleine en Middelgrote Ondernemingen--Conseil Supérieur des Indépendants et des PME (High council for independent en small and medium sized enterprises). This is a public consultation body which taks are to advice and represent. The high council groups about 140 national professional and interprofessional organization The s. council acts as the speak of the self-employed, the liberal professions and the SMEs. Advices are addressed to the relevant Minsters and the Minster who is responsible voor SMEs. The council can be consulted by a Minister but has also the right to initiate. Points of view can always be put forward in an independent way. Both UNIZO and UCM are important members of the intersectoral section of the Council.

The membership of both ASMEs in the above councils gives them considerable influence. Also on the regional level comparable institutions exists. For example, the SERV (De Sociaal-ecomische Raad van Vlaanderen) in the Flemish region and the "Conseil economique et social de la Région Wallone” (CESRW) in the Walloon region. Both can be considered the “social parliament” for the regions. UNIZO is one of the representative bodies in the SERV and UCM is represented through the CESRW.Today there seem to be no particular links with political parties for the ASMEs. This was rather different in in the past when especially the Flemish association had a strong link with the Christian democratic party. Today the position of UNIZO towards the government seems not to depend on the parties in power (although as a result of the previous regional elections Kris Peeters, the Chief executive officer of UNIZO, became an “independent” minister of

37

public works and other matters in the newly elected Government which is headed by a Christian Democratic Minister-president).In addition ASMEs are also member of the Board of a large number of public and quasi-public institutions. They are considered by the labour unions and the state as important partners. This is probably traditionally more the case in Flanders compared to Wallonia (where large enterprises have dominated for a long period). Whether this is, however, a bias in dealing with the VBO-FEB and or directly with large enterprises is difficult to assess. Given the fact that the most important collective agreements in Belgian do cover the entire industry and the fact that they are agreed on at the national level we might assume that there is some bias towards the large industry and the national level (but as mentioned above the ASMEs are also represented in these fora). According to the ASMEs unions generally considere VBO-FEB as their main counterpart.

Moreover, given the size of Belgium and the size of the regions informal contacts between the ASMEs and the government and administration are also very common. From the above, it can be concluded that ASMEs are formally as well as factually well integrated in the Belgian system of collective bargaining and public policy making.

4. The System of Cross-sectoral Business associationsFollowing the definition of cross-sectoral nation-wide business associations, as documented in the project outline, one finds two associations, the Federation of Enterprises in Belgium (VBO-FEB) and the CSPO/CENM (an intersectoral association of federations for the health, care, social-cultural and educational sector). Consequently, there is no nation-wide association specifically representing SMEs (such an association existed until 1948 and was then divided in a Walloon and a Flemish organization). There are, however, two regional associations, which represent on the one hand the Walloon SMEs (UCM), and one association, which represents the Flemish SMEs (UNIZO). Both associations are member of the earlier mentioned ‘High council for independent and small and medium sized enterprise’s and even represent the council on the federal level in the Central Economic Council. The High council is, however, not an interest association but a public institution.Formally, UNIZO and UCM represent the interests of SMEs in their respective region, factually they are involved in national interest intermediation since in Belgium there is numerous legislation and policy making at the national level, which constitute opportunities and threats to SMEs.This is also the reason why in what follows both these organizations will be included in the analysis. Consequently, although UNIZO and UCM are regional and not nation-wide organizations they are considered relevant in the analysis of the Belgian case. Moreover, both associations satisfy all other criteria as specified in the project outline: since they are cross sectoral peak associations which have both interest intermediation and the provion of services as their tasks.VBO-FEB (Verbond van Belgische Ondernemingen - Fédération des Entreprises de Belgique) is the national Federation of Enterprises in Belgium (FEB) and is a multisector employers' organization representing small, medium-sized and large companies. The FEB resulted from a merger of the Union of Belgian Industry (FIB/VBN; Union de l'Industrie Belge - Verbond van de Belgische Nijverheid) and the VBNIO (Union of the Belgian non-industrial companies) in 1972.The FEB is active in all areas of interest to business, focusing in particular on economic, social, fiscal and legal questions as well as European and international issues. FEB represents - through some 50 sectoral federations - more than 30,000 small, medium-sized and large companies in a wide range of sectors, ranging from industry to services. FEB works together with Belgium's three regional employers' organizations to devise and promote a consistent message from employers. These regional organizations are: Voka - Vlaams Economisch

38

Verbond (Flanders), Union Wallonne des Entreprises (Wallonia) and Verbond voor Ondernemingen te Brussel/Union des Entreprises de Bruxelles (Brussels). The objectives of FEB are to work towards creating an optimum entrepreneurial environment; to promote the interests of enterprises of all sizes on a federal, European and international level; to boost the coherence of entrepreneurs' message and actions. FEB is mainly organized along a number of functional departments (e.g. economic affairs, social affairs, legal affairs, European affairs, communication and administration). Their main task is to study legislation and policy making in these different areas with respect to the possibilities and consequences for companies. Consequently, the main activities of FEB are collecting and information and interest intermediation. Services to companies are mainly provided by the sectoral associations. Voting rights of the members are allocated on the basis of one member/one vote.The membership domain of CSPO/CENM embrases the social-for-profit sector. This includes health, social welfare, culture and education. Federations organizing companies from these sectors are typically not represented in the FEB. The main objective of CSPO is to advice and influence public policy with regard to measures that allow to flexibly addressing the evolving societal needs. CSPO exists since 1994 and its main activities are the representation of the sector’s interests at the national and European level and responsible for participating in research in order to map the sector’s characteristics and developments. At the regional level two similar but independent association exist which also represent the sectors interest: VCSPO (de Vlaamse Confederatie van Social-Profit Ondernemingen ) and UFENM (l ’Union Francophone des Entreprises Non-Marchandes). VCSPO has been established in 1997 and UFENM has been established in 1998. The three associations are independent but act, given their common agenda, in concert with each other. Since 2002, have the members of CSPO also to be a member of either VCSPO or UFENM. CSPO has been established by 26 federations of the private social-profit sector and now represents 46 federations form the private and public sector. CSPO is an associated member of the National Labour Council (as an associated member) and an observer in the Central Economic Council. The objective of the three associations is to aim for a more structural acknowledgment of the social sector. They aim at being a regular member in the different social dialogue forums; the nomination of a government member specificly responsible for the interests of this sector; the creation of more employment in the sector by reducing social costs for employment; and a change of the NAC-BEL nomenclature which would produce more valid data about the importance of the sector. Moreover, CSPO publishes a newsletter with information about the sector and which is published six times a year. The CSPO has three staff members and a secretariat.The membership domain of UNIZO embraces the Flemish SMEs in Flanders and Brussels. It also indirectly represents those who are member of a liberal profession ( doctors, accountants, brokers, architects, laywers, etc.). Through UNIZO they are affiliated with the Federatie voor Vrije en Intelectuele Beroepen (Federation of Independent and Intellectual Professions), the FVIB. FVIB is also an umbrella organization in which the most important organisations for independent professionals are affiliated. The first national organization of SMEs was etshblished in 1946 (The NCMV, a Christian organization for self-employed) but, only after two years, the Flemish and Walloon members split in two different organizations. In the year 2000 NCMV is renamed as UNIZO in order communicate that it is an ASME, which is open to all self-employed and SMEs. UNIZO is an interprofessional organization for all self-employed, regardless of their profession. UNIZO also maintains strong ties with with SME professional associations. About 80 professional organizations have concluded a joint operating agreement with UNIZO. They come together in the Council of SME Professional Organisations. This sectoral UNIZO advisory council is chaired by the UNIZO chairman. UNIZO has a local branch in most municipalities, led a by a local management of self-employed persons (approximately 423 of them). They give a voice to their members’ local interest in the municipality government and promote an SME friendlier policy. At the same

39

time, they promote networking and solidarity between the local entrepreneurs thorough regular meetings. The local municipality UNIZO branches are coordinated by 24 UNIZO regions. Each region is led by a region management of self-employed people. The regional management forms the link between the local UNIZO branches, the UNIZO national management and the UNIZO General Council. In terms of representational activities, UNIZO is a mixed association, dealing with both the product market interests and the labour market interests of their members. In terms of the scope of representational activities, interests covered and membership, UNIZO is the principal association of Flemish SMEs in Flanders and Brussels. Although the national association VBO-FEB, is also considered by UNIZO as the principal partner for government in concluding collective agreements, UNIZO itself is also a member of the National Labour Council and the Central Economic Council (as well as the Flemish SERV; Sociaal Economische Raad van Vlaanderen) and are thus equally involved in the social dialogue. Voting rights of the members are allocated on the basis of one member/one vote.UCM is the counterpart of UNIZO for the Walloon self-employed. The membership domain of UCM embraces the self-employed in the Walloon region. The members of UCM are persons, i.e. directors of SMEs, self-employed, liberal professionals, etc.). UCM has two associations as associated members, Aplsia (Association professionnelle du libre service indépendant en alimentation) and Apafi (Association professionnelle des agents financiers indépendants de Wallonie et de Bruxelles). It is thus mainly an organization representing the interests of individual entrepreneurs. UCM has 26 offices throughout the Walloon region and Brussels to assist self-employed. UCM has 7 regional offices which together constitute the National Federation. In terms of representational activities UCM is a mixed association, dealing with both the product market interests and the labour market interests of their members. It is active in representing interests of the French speaking self-employed in Belgium and has a seat (together with UNIZO) in the National Labour Council as well as in the Central Economic Council (and is also represented in the Conseil économique et social de la Région wallonne – CESRW). It provides a broad range of services including employment and starter offices and social sectretariates. Voting rights of the members are allocated on the basis of one member/one vote.

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5.1. Membership: Domains, Composition and Figures

Table 5.1 VBO-FEB, UNIZO and UCM: Membership, density of membership anddecision-making

____________________________________________________________________________

VBO-FEB- UNIZO UCM

Membership in terms of lower level associations

Number of potential members (associations)

Number of direct and indirect members (associations)

Density (calculated or estimated)

78-80%

Membership in terms of companies

Number of potential members (companies)

210.000 (independent) + SME

Number of direct and indirect members (companies)

27.000 individuals

Density (calculated or estimated)

75-80%

Membership in terms of employees

Number of potential members (employees)

1,5 to 2,0 million

Number of direct and indirect members (employees)

Density (calculated or estimated)

Size of membership firms

Average number of employees in all membership companies (direct or indirect)

Voting rights

41

How are the voting rights regulated in the direct membership organizations

General meeting with one man one voteIn the general meeting 23 regional and sectoral organizations are represented.

Intra-associational goal formation

Are there channels and mechanisms of intra-organizational goal formation which give SMEs an opportunity the articulate their interests (committees, veto, etc.)

There SME committees within the VBO-FEB

Many consultation meetings on regional level and through decentralised units. When new law is proposed, there are rounds of consultation

Each month there is a meeting of the “l'Union Syndicale des Classes Moyennes” (includes 45 delegates from 7 provinces and 30 sectoral organizations)

____________________________________________________________________________Sources:

- Interviews

…

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5.2. Tasks and activities

Table 5.2 VBO-FEB, UNIZO, UCM: Representational activities

____________________________________________________________________________

Type of activity VBO-FEB

UNIZO UCM

Represents:Labour market interests vis-à-vis the unions

Yes Yes Yes

Labour market interests vis-à-vis the state

Yes Yes Yes

Product market interests in relation to customers

Yes Yes No

Product market interests in relation to suppliers

Yes Yes No

Product market interests in relation to the state

Yes No No

Participates in the formulation of and/or implementation of:Public schemes for vocational training

Yes Yes Yes

Public schemes to aid business Yes Yes YesPublic schemes for the standardization of products and product quality

Yes No No

____________________________________________________________________________

Sources ands Notes:- Interviews- Main activities are market in italics

…

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Table 5.3 VBO-FEB, UNIZO, UCM: Services provided____________________________________________________________________________

Type of activity VBO-FEB

UNIZO UCM

Industrial relations(e.g. advice on the provisions of collective agreements; representation of members in labour court proceedings)

Yes Yes (only advice)

Yes

Economic policy programs(e.g. advice on the preconditions for the application for public grants and subsidies)

Yes Yes Yes

Exchange relations with suppliers(e.g. information on the quality and availability of raw materials and intermediate goods)

No No No

Exchange relations with customers(e.g. information on sales markets, export promotion)

Yes Yes* No

Vocational training Yes Yes** No

Further training and qualification of company staff No No No

Developing/monitoring quality standards for products No No No

____________________________________________________________________________

Sources and notes:- Main activities are market in italics.- * Market research (on the basis of extra fees)- ** On export management, information sessions, new sales techniques, also via

sectoral organizations…

Table 5.4 VBO-FEB, UNIZO, UCM: The division of allocation of resources (financial and staff) among interest representation and services (in percentages)

____________________________________________________________________________

Interest representation ServicesVBO-FEB 75% 25%UNIZO 35% 65%UCM* 33% 67%____________________________________________________________________________

Sources and notes:- * Only as far as the strict associational activities are concerned. Not as far as the

social secretariat etc. are concerned.

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5.3. Human and Financial Resources

Table 5.5 VBO-FEB, UNIZO, UCM: Human and financial resources____________________________________________________________________________

Type of activity VBO-FEB

UNIZO UCM

Human resourcesNumber of staff members

Peak levelAssociation as a wholeSatellite associations

80± 1000

20520

Staff members per 1000 member firmsStaff members per 1000 employees working in member firmsComposition of revenues (as a percentage of total revenues)Membership dues (firm members)

90% 100*

Membership dues (affiliated associations)Voluntary subsidies from membersSales of ServicesObligatory dues and leviesRevenues from the state (including contracts with government)Other 10%**

Total 100%

____________________________________________________________________________Sources and notes:

- Interviews- * Only as far as the strict associational activities are concerned. Not as far as the

social secretariat etc. are concerned.- ** publicity, renting of conference facilities

6. Conclusions

Reference:

Beyers, Jan/Bart Kerremans/Peter Bursens, 2001: Belgium, the Netherlands, andLuxembourg: Diversity among the Benelux Countries. In: Eleanor E. Zeff/Ellen B. Pirro(Hrsg.), The European Union and the Member States. Boulder, CO: Lynne Rienner, 59-88.

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DENMARKCarsten Jørgensen, FAOS, Copenhagen

1. The Economic structureThe small and medium-sized enperprise is the rank and file of the Danish economy. According to the EU statistical limitation that defines an SME to be less than 250 employees, more than 99% of all Danish companies are SME’s. An enterprise with 200 employees is considered as of a substantial size. Only 1,588 or 0.8% of the companies employed more than 100 employees in 2002 (Table 1). This is, unfortunately in this context, also reflected in the official company statistics available. Broken down by firm size the upper borderline is 100+. The micro enterprises have 0-9 employees; small enterprises have 10-49; medium-sized 50-99 and large enterprises have 100 or more employees (Statistics Denmark, Firm Statistics)

The presence and structure of Danish SMEs show the same pattern as other EU-15 countries if we turn to the definition of up to 250 employees. The SMEs represented 99.7% of all companies and 68.8% of the employees in 2001. 90% of the companies had less than 10 employees and cover 78% of the workplaces. According to figures from European Observer for SMEs 2003 the SMEs counted for 99.5% of all companies in Denmark and employed 72.6% of all employees. The average size is 7 persons occupied per SME, or 10 persons per all enterprises.19

The associational structure of Danish SMEs does not follow strictly defined demarcations. The SMEs in the automotive sector, for instance, are divided along two organisations with an arbitrary demarcation of membership domains. For commerce, there exist two SME representative organisations and three employers' associations organise SMEs in building and construction. Although complex, as it shall be seen later there is certain logic in the membership pattern.

Danish SMEs are mainly divided in four areas: minor industry, building, retail and service, which are altogether called ‘trade and minor industry’ (Handwerk und Kleinindustri). SMEs are almost all family owned and the owner typically also works in the company.

The share in the national turnover (GDP) for trade and minor industry around was 12% in 1998. Danish SMEs are not export companies to a greater extent. Only 4.4% was direct export from the whole group. The minor industry enterprises, however, show different figures. Exports accounted for 20% of the turnover. 20

The distribution of employment was between the four trades in 1998: Retail (28.9%); Construction/crafts work (28.5%); Service trades (23.1%); Minor industry (19.5%).

In 1998 trade and minor industries as a whole employed 14% of total employment and 29% of the workplaces.

2. The legal framework of associations

Recognition of associationsThe Danish model of industrial relations has in general preserved its traditionalistic charasteristica:

1. A well organised labour market with strong associations for employees as well as employers.

19 European Observer for SMEs 2002 and 2003, Annex 1: Enterprise statistics by country and size class. 20 Håndværket i tal 2000 (Trade and minor industry in figures covering 1990-1998). Compiled and published by Håndværksrådet (HVR) in May 2000. A new publication is forthcoming early 2005).

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2. Centralised collective bargaining rounds where agreeements, in practice covering the entire Danish labour market, are concluded in syncronised negotiations. A growing decentralisation towards the local level has taken place over the last decades.

3. A consensus-based relationsship between the two sides of industry and a relatively low level of industrial disputes.

4. An agreement-based regulation of practically all relations in the labour market through collective bargaining, i.e. a voluntaristic system with a limited regulation by legislation and involvement by the government. However, there is strong government intervention from time to time, e.g. in the 1970ies.

Membership of labour market organisations is not compulsory. Nor are associations recognised through legislation, apart from the general freedom of association that is laid down in the Danish Constitution from 1849, renewed in 1953. Recognition as an employers’ association with bargaining and representative rights mainly builds on a concept of mutual acceptance of conflicting interests; or in other words on reciprocal recognition. 21 This system stems back to the period more than 100 years ago when the Danish economy and industry structure were completely dominated by small and medium sized enterprises. Industrialisation was still in its earliest phase. In the 1890ies the workers were challenging the employers and owners of the SME’s with many limited strikes moving from one region to another. This induced the employers to associate and regulate wage and working conditions through central negotiations with the trade unions. The outcome was the first collective agreement in Denmark between the association of the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA) and the confederation of trade unions (Landsorganisationen i Danmark, LO) called the September Comprise of 1899, or the ‘constitution of the Danish labour market’. In the agreement employers secured the managerial prerogative, i.e. the right to manage work, and the right to ‘hire and fire’ at will, and the trade unions secured the right to organise themselves and negotiate agreements for an agreed period of time. As long as the agreement was in effect, strikes were forbidden according to the agreement. This was an incentive for employers to join the Danish Employers’ Confederation and membership grew rapidly (see also later). This system has worked ever since with small modifications. In 1960 by the first Basic Agreement, was signed by the confederations, but the differences to the original compromise are not significant.

The system of collective bargaining legitimised the associations. The organisational structure cannot be understood outside the system of collective bargaining. A well functioning bargaining and organisational system of this kind requires strong counterparts. Thereby the system obtains a stabilising effect in itself. The organisations create certain interdependency and the Danish labour market organisations can be said to have lived together in a symbiotic relationsship. The self-legitimation resembles a ‘closed shop’.

DA was for more than half a century dominated by many SME’s associations. The second half of the last century was signified by a concentration of the associations by mergers while at the same time the bargaining competence was moved from DA to the merging associations. This process is called centralised decentralisation.22 In 1961 DA had 255 member associations. Their number fell to 157, 48 and 13 in 1981, 1991 and 2003, respectively. They have all developed into mixed associations. In the same period began the second wave of industrialisation and later the drift from manufacturing to service activities as in other EU countries.23

21 Due et al. (1994), Jensen et. al. (2000)22 Due, et. al (1994) and (1993) and (2000)23 Jensen, Strøby et al (2000) gives a fine analysis of the employers’ associations’ strategical change in this period. Unfortunately not translated to English.

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In line with the EU focus on SME’s, i.e. the ten focal points regarding entrepreneurship and support (the SME charter), the Danish government has set up different inititives aiming at supporting the SME’s possibilities. The social partners at sector level take part in these initiatives, for instance giving advice in connection with entering the European market. Every sector level employers’ association has a considerable number of SME members.

3. The system of social dialogue and public policy makingThe social dialogue in Denmark takes place at three levels: at company level, at sectoral and at cross-sectoral level. Negotiations as well as consultations take place at all levels.

Collective bargaining takes place at sectoral and company level. The sectoral level, which is the most important concerning the conclusion of collective agreements in Denmark, provides a framework agreement, which is further negotiated at company level.

Consultation at workplace level takes place, according to law, in case of transfer of undertakings and the announcement of mass redundancies. The EU directives behind the legislation has also been implemented in the collective agreements. The daily co-operation in the enterprise takes place in the Cooperation Committees (Works Councils) and in the corporate boards, where the employees have a representative, according to law. Cooperation Committees are set up, according to the Basic Agreement between the confederations, in companies with more than 35 employees, but the agreement gives space for other workplaces with less employees to negotiate with a view to set up a committe if so wished by one of the parties. Cooperation committees have equal representation from management and employees. The employees cannot veto management decisions in the committee, but they must be consulted and heard in all-important matters regarding the company, e.g. work organisation, continuing vocational training, restructurings, etc.

Social dialogue at sector level is first and foremost concentrated in negotiations. The collective agreements are concluded at this level. Informal relations between the sector organisations play an important part in the social dialogue at this level, too. Sectoral organisations are also consulted by the government and have seats in numerous councils and committees.

The conferations in the main private sector, DA and the Conferderation of Danish Trade Unions (Landsorganisationen i Danmark, LO) do not directly take part in the collective bargaining. However, they have a coordinating role and they sign the final compromise settlement, reached by the unions and employers’ associations at sectoral level, in the Public Conciliation Service. The confederations still negotiate the Basic Agreement and the Cooperation Agreement. The latest amendment is from beginning of 2004 and regards the EU directive of information and consultation. In 1999 LO and DA signed the so-called ‘Climate Agreement’ prior to the collective bargaining of 2000, in which they agreed to monitor the negotiations and secure peaceful developments in order to avoid a breakdown followed by a major conflict and as in 1998.

Also at this level informal consultations play a part; a phenomenon that could be argued to stem from the absence of strict legislation regarding labour market issues and legislation regarding recognition and associational action.

Labour market policy is a government issue, but the partners at cross-sectoral level have an important saying. Consensus between the confederations has in many cases shaped the final result. They are consulted and heard in the preparatory phase of the legislative work regarding issues at the labour market and they are represented in all important councils and committees, especially when it comes to issues of vocational education and training. The labour market pensions, which are a considerable contribution to the Danish welfare model, were initiated in 1987 by tripartite negotiations between the government, the confederations and representatives from the sectoral organisations. Shortly after the social partners took over

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the preparation and the implementation of the project. In August 1998 the tripartite co-operation was further formalised through the creation of the “Tripartite Forum” (Trepartsforum-statistikudvalget) consisting of all the central organisations among the social partners also including the state and municipial employers. The initiative was taken partly as a consequence of the total breakdown of the collective bargainings in the spring same year with a great conflict as a result. The forum has not really been heard of ever since, and this could be a sign that this is not the place where decisions are really made. The confederations LO and DA belong to the inner circle of the tripartite consultations, and they have often been critisied by the other confederations and central organisations to monopolise the policy making role vis-à-vis the government.

4. The system of cross-sectoral business associations

Taking the number and importance of SMEs in Denmark it goes without saying that in all significant business interest organisations (BIA), i.e. pure employer, pure trade or mixed associations, the vast majority of members are SMEs either via direct or indirect membership in their affiliates. Since this study concentrates on the BIAs that represents the interests of the SMEs it is very tempting to state that they all do. To illustrate the domains of BIAs that represent typical SMEs, a table is set up in the annex. Just to give an idea of the representative pattern (Table 5).

Nevertheless, following the definition of the cross-sectoral peak association and the independent ASME given in the project outline of this study, one finds only two such kinds in Denmark: One confederation and one ASME. The confederation, the largest in the private sector, is the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA). The ASME is the Federation of Small and Medium-sized Enterprises (Håndværksrådet, HVR), whose stronghold of membership are traditional family owned craft man’s firms such as carpenters, plummers, bricklayers, goldmiths, hair dressers, smaller industry shops and repair shops.

The 13 member-BIAs of DA together represent the private sector outside agriculture, fishing and finance. They are all mixed associations. The two most influencial are the Confederation of Danish Industries (Dansk Industri, DI) and the Danish Chamber of Commerce (Handel, Transport og Serviceerhvervene, HTS), which currently together represent 12,000 companies out of the DA’s total membership of around 30,000 companies and account for 66.2% (i.e. DI: 50.1%; HTS 16.1%) of the wage sum24.

DA is the dominating confederation in the private labour labour market. There are two other private-sector employers' associations whose labour market domain is narrower: The Danish Confederation of Employers’ Associations in Agriculture, SALA, and the Danish Employers’ Association for the Financial Sector, FA. They cover around 50-55,000 full-time employees each.

The Danish Employers’ ConfederationThe Danish Employers’ Confederation, DA, was formed 1896 and was one of the parties behind the before mentioned September Compromise of 1899, which still is the basis of the Danish industrial relations model. As early as in 1899 the central position of DA in the collective bargaining system was established in the statutes of the DA. It was stated that no member association could conclude any agreement with trade unions on shortening of working time, pay increases, new minimum

24 Company membership statistics is often measured in total wage sum by the associations rather than number of employees. DA stopped registrating number of employees in 1989.

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wage rates, longer paid holiday and a number of other issues, without the approval of DA. These provisions are still in force.By the end of the 19th century, and for the subsequent approx. hundred years, it was a basic strategic aim of the employers to maintain a centralised collective bargaining system. This strategic aim was caused by the fact that the Danish industrial structure throughout the industrial era was dominated by small and medium sized enterprises. Already in the 1890ies Danish employers, i.e. DA, learned that without strong centralised employers’ associations it was difficult to produce adequate responses to the still more powerful trade unions. Thus, the centralised bargaining on collective agreements was originally introduced as a result of the pressure exerted by DA, but what had originally been an advantage for the employers gradually became a straitjacket.

Internal developments of DADuring the mid 1970ies it became evident that demands from individual employers for a more flexible system of collective bargaining were impossible to handle for the existing employers’ associations. Consequently, rounds of collective bargaining ended in conflict and the government in office interferred in the bargaining process on several occasions.

At the beginning of the 1980ies there was no point in maintaining an organisational structure which could no longer cope with developments on the labour market: the fragmentation of the work force, new branch entities and technological advances were obliterating the demarcation between unskilled and skilled workers, between skilled workers and technicians - and between workers and salaried employees. In 1982 a conservative government took office. Denmark joined the EMS and the automatic cost-of-living-adjustments were abolished. The strategy of the devaluation of the Danish Crown from the 1970ies to absorb rises in costs was no longer possible.

The change in the structure of employers’ associations can be seen as a development where the employers finally try to adopt an organisational structure adjusted to the modern industry. The many and fragmented member associations that continued to exists until the end of the 1980ies, by and large reflected the industrial structure of the beginning of the 20 th century as dominated by SMEs. For long periods of time the external pressure for change had been limited, a fact which can be explained by the de facto centralisation of employers’ interests in DA.

By the end of the 1980ies this led to a radical development in the organisational structure of employers’ associations. The number of associations affiliated to DA, reached its peak in the 1920ies, and remained more or less stable until the beginning of 1960ies (see table 4) Due to mergers the number of associations was reduced to some extent during the 1960ies and the 1970ies. But in one year, from 1989 to 1990, the number was reduced from 150 to 51, and the development continued so that DA by 2000 had 16 affiliates and in 2003/2004 this number was further reduced to 13 affilated associations after the latest mergers of associations in service and in construction (see also below).In 1985 it was decided to decentralise collective bargaining to the sectoral level. DA should no longer be a direct party in negotiating the agreements, and the importance of the sector associations grew accordingly. However, DA maintained an important role in coordinating the collective bargaining. All agreements concluded by the affilated associations still had to be approved by the executive committee of DA before they could come into force.

The most evident consequence of the wave of mergers has been a strengthening of the sectoral employers’ associations. The most important step in this development was taken in 1988 when two large associations representing the metal trades merged: the dominant Metal Industry Employers (Jernets Arbejdsgivere) and the also influencial Industrial Trades Association (Industrifagene). The former covered approx. 36% of DA’s budget and the latter approx. 14%. Shortly after the new association, named the Industrial Employers (Industriens

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Arbejdsgivere) merged with the trade association, the Industrial Council, (Industrirådet), forming a new powerful association, the Confederation of Danish Industries (Dansk Industri, DI). The formation of DI completely changed the balance of power in the structure of employers’ associations. This will be dealt with more detailed later.

Towards a new strategic choice: one enterprise - one association - one agreement

The most significative expression of the shift in employer´s strategy was the DA’s general assembly in May 1989, which adopted a structural reform with great significance for the representation of SMEs. The driving force was the reinforced sectoral level of (mainly export) industry. The main changes can be summerised in six points:

1. A revision of the clause stipulating DA’s goals as to emphasise the significance of internalisation.

2. Single enterprises could no longer be admitted as direct members, but should be affiliated with a member association.

3. Compulsory membership, for enterprises in DA, of one of the 77 local employer associations.

4. A change in the composition of the General Assembly, so that ‘small enterprises’ were no longer guaranteed over-representation, while DA’s local associations were granted representation. (From a system with 514 representatives elected on the basis of the size of their membership dues and 86 elected on the basis of the number of firms represented, to a system with 520 reprensentatives elected on the basis of dues and the approximately 80 chairmen of the local associations, who were now entitled to automatic election).

5. The existing three sections – Industry, Crafts (mainly building and construction) and Commerce – were abolished being replaced by five groups, each representing a DA electoral grouping:

- The Metal Industry Employers and the Industrial Trades Association which were currently being amalgamated to form the Industrial Employers;

- Other industrial employers;

- The employers in building and construction;

- Employers in the retail trade, commerce, consultancy services, hotels and catering, and

- Employers in the wholesale trade, transport, manual services (cleaning, security) etc.

6. A reduction of DA’s economic ressources, to be implemented during the period 1990-1993, by reducing membership dues from 0.35% of the blue-collar wage sum and 0.25% of the white-collar wage sum to 0.25% of the aggregate wage-sum.

The structural reforms led to a process whereby DA’s many small member organisations were merged, so that the number of member organisations the following year, as mentioned above, shrank from 150 to 51.

The first phase of the amalgamation process had been successfully completed with a reduction of two-thirds of the member association, and this led to the adoption a further goal to be achieved via the structural reforms: One enterprise – one association and – one

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collective agreement. Until the end of the 1980ies, it was not unusual for enterprises to cover a multitude of factors through collective agrements, by becoming members of several different employer associations – even in cases where membership of one associaiton could be sufficient, there were usually various collective agreements, one for each group of workers employed in the single enterprise.

Formation of DI

Shortly after the formation of the industrial employers in IA, the association joined the pure trade association, the Industrial Council, and merged into the Confederation of Danish Industries, DI - maybe the most important single event in the development of the employers’ associations since the foundation of DA. Even though the structural reforms were introduced without any directly formulated element of compulsion, the formation of the new dominant organisation covering the industrial sector, both as an employers association and as a trade association, i.e. a mixed association, served as a very powerful incentive to form organisations which would be capable of providing a certain counterbalance to the power struggle between DA and a ‘giant’ member that more or less had taken the role as the former DA. By the beginning of the 1990ies DI represented 50% of the total wage sum paid by DA member associations. This completely changed the pattern of associations in DA and underlined the fact that DI had become the dominant member association. At a more symbolic level this was emphasised as the then managing director of DA left the confederation and became managing director of DI. The new association put pressure on the existing member associations: if they should avoid to be totally dominated by DI they had to merge. Still today, DI is by far the largest member association, even if others in respectively construction and service have merged (see below). As it shall be seen in the following, the formation of DI also had consequences for the Federation of Small and Medium-Sized Enterprises, HVR.

New role of DA: a labour market political confederationThe new powerful employers’ associations at sector level left the employers’ confederation, DA, in a completely new position. Clearly, the sectoral associations had become the key-players in the processes of collective bargaining at national level. With regard to the new situation DI became the prime mover in a process, which gradually led to a reduction of about 40-50% in the financial resources received by DA from the member associations. Subsequently, this led to a radical streamlining and restructuring of DAs internal organisation, and a reformulation of the role of DA.

DA is still supposed to play a role in the coordination in the collective bargaining process, although a reduced and more explicitly defined role. Even DI needs DA in the coordination process in order to secure that the export trades DI represents basically can decide the level for pay increases and costs in general, meaning that to a greater or lesser extent, DA are supposed to control the bargaining process in the other member associations. Some of the smaller member associations have tried to escape the dominance of DI. In 1995 both the employers in the transport and the construction sectors at an early stage in the process of collective bargaining concluded agreements with the trade unions, which went beyond the level DI was aiming for. DI succeeded in having these agreements overruled by the DA, but the damage was done as the level for the following agreements had in fact been established by the two agreements settled in the minor sectors. In the following round of collective bargaining in 1998 it became a key-issue for DI to regain their dominant position.

Paradoxically, it can be argued that the most important ally for the DA has been their counterpart: the trade unions’ confederation, (Landsorganisationen i Danmark) LO. The round of collective bargaining in 1998 ended in a major conflict. DI was vigorously trying to control events, and was eventually blamed for the conflict. But the confederations DA and LO succeeded in playing constructive roles in attempts to end the conflict. However, in the wake

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of these events DA and LO drew up a so-called ‘climate-agreement’ stating guidelines for the round of collective bargaining in 2000 emphasising how the confederations could contribute by coordinating negotiations at sector level. In contrast to 1998, negotiations in 2000 ended fairly quickly and peacefully. The climate-agreement was renewed in 2003 preceding the collective bargaining round in the early months of 2004 and again negotiations ended fairly peacefully. The outcome showed that DA once again had gained some kind of foothold in the collective bargaining system, which had otherwise been dominated by organisations at the sector level for the previous decade.

Membership, structure and current activitiesDA is a peak employers association with no competences regarding trade, and members of DA are business interest associations, mostly mixed associations, covering industry, construction, trade, transport, and the service sector. Enterprises are members of the affiliates of DA, without possibility of obtaining direct membership in DA. During the internal restructurings in the end of the 1980ies, direct members were compelled to join one of DA’s associations. The most recent trend in company membership is that many new enterprises have choosen only to join the trade-interest part of the mixed associations. The influence of this on the aggregate agreement coverage has not yet shown.Apart from the role of coordination the main tasks of DA today is to try to influence Danish labour market policy and policies concerning the labour force, for instance education and continous vocational training.DA itself does not any longer pursue special policies, which are suited to the SMEs. This is left to the member associations. They all have special departments or offices for supporting the policies and needs SMEs, in practice mostly applying to smaller enterprises (>50 employees).

DA’s primary fields of work are thus employment, education and vocational training, working environment, labour law, coordination of collective bargaining, international relations and monitoring labour market developments by collecting statistics about sickness absence, unlawful strikes, unemployment, wage movements, etc. In the current position it could be said that DA has turned from being the employers association entitled with the central bargaining powers to become a professional secretariat, enjoined with the task of co-ordinating and promoting employers’ political interests.

These activities are performed at three main levels. At national level DA represents the employers’ views towards the parliament, the government, the central administration and the employees’ organisations.

At regional level DA have seats in the councils that work on labour market issues and at municipial level in the social co-ordination committees. DA also have seats in a recently constructed body, the Employment Council which is a merger of the National Labour market Council and the Social Council and which is to participate the implementation of the new one-string employment policy. At international level DA brings up the employers’ interests in Bruxelles and take active part in European labour market political initiatives through membership of UNICE.

DA’s source of income consists entirely of membership dues from affiliated business interest associations. DA does have some income from commercial activities; DA owns a conference centre available for renting, it offers a working environment education and runs a publishing house, selling publications concerning rules at the Danish or European labour market. However, these activities do not constitute a significant part of the budget at all. The bulk of DA’s economy stems from the dues that the confederation receives as a percentage of the total the wage sum represented by the firms affiliated to the member associations of DA (in 2003/2004: 0,06% - or DKK 250 billion/ EUR 33.6 billion). Votes and influence of the affiliated associations is reflected by the amount of dues. However, according to the statutes

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the dues of a single association may not exceed 50% of the yearly amount of membership dues.

From its inception DA had a pyramid structure with an indirect electoral system. The general assembly elects the board, which elects the executive committee, which formulates and conducts policies, even if supreme authority was, and is today, vested in the general assembly - currently consisting of 100 delegates. The executive committee consists of relatively few people and meets fairly often. This structure emphasises the centralisation of power in DA, and at the same time indicates how it has been possible for DA to overcome a fragmented membership structure of many and small employers associations with different interests since the beginning of the last century and until the 1980ies.

In the work conducted by the executive committee it is primarily the chairman, and sometimes also the vice-chairman, who via their close contact with the senior executives in DA’s secretariat take the lead in representing the organisation. The secretariat is a professional apparatus led by a management team, which plays a vital role in formulating and implementing the policies of DA. The secretariat’s managing director (or CEO) participates, along with the politically elected chairman of DA, in all negotiations on major issues. It is a special characteristica of DA that throughout its history, it has often been the confederation’s successive managing directors who exerted the dominant influence in DA25. DA supports the member associations in their aim to give the Danish companies the highest degree of freedom of action. Where regulation is necessary, DA strongly supports that it should happen through either single-employer or multi-employer collective agreements and not by interference of the legal system.

Latest sector-organisational developments in DASince 2000 the sector associations have continued the mergers in building and construction, trade, service and commerce, initiated in the 1980ies and 1990ies, which currently have reduced the membership of DA to 13 sector associations, mostly mixed associations The Danish Construction Association (Dansk Byggeri), developed as a result of a merger between the Federation of Danish Building Employers (Byggeriets Arbejdsgiverforening, BYG) and the Danish Contractors’ Association (Dansk Entreprenørforening), is an employers’ organisation for approx. 6.000 companies, comprising about 70.000 workers from contracting and manufacturing companies within the Danish building and construction sector. BYG is a mixed association safeguarding trade as well as employer’s interests. The member companies are composed of major building contractors, small and medium-sized construction enterprises and manufacturers of building components.

Danish Mechanical and Electrical Contractors’ Association (Tecniq) was founded by the Danish Electrical Contractors’ Association (ELFO) and the Danish Plumbing, Heating and Ventilating Contractors’ Association (Dansk VVS) on 1 January 2002. Today, it represents around 3,000 mechanical and electrical contractors in the electricity and the plumbing, heating and ventilating industries – about 1,800 electrical contractors and about 1,200 plumbing, heating and ventilating contractors. The member contractors cover a wide field and, in terms of size, range from the small single proprietorship to big mechanical and electrical contractors with more than 2,000 employees. Their combined turnover amount to more than DKK 30 billion a year and they employ around 40,000. More than 95% of the employees are skilled – an unusually high percentage from an industry point of view.

The association is the fifth-largest trade/employers’ organisation in Denmark, and thus the second largest in the construction industry

25 DA has a staff of 145 full-time employed. Negotiations with LO are led bewteen the CEO of DA and the president of LO.

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In July 2002, after 18 months of preparations, three major service-sector employers' associations all affiliated to DA merged to form a new umbrella organisation entitled commerce, transport and service (Handel, Transport og Serviceerhvervene, HTS). In English, the name of the new association is Danish Chamber of Commerce, although it is not a ‘chamber’ in the genuine, conventional sense. The founding organisations were the Employers' Federation for Trade, Transport and Service (Arbejdsgiverforeningen for Handel, Transport og Service, ATHS), the Chamber of Commerce (Handelskammeret) and the Association of the Hotel, Restaurant and Leisure Industry in Denmark (Hotel-, Restaurant-, og Turisterhvervets Arbejdsgiverforening, HORESTA). The new organisation has a group-like structure, with employer interests and business interests being handled separately. There is some overlap in membership of the two divisions, but many enterprises have chosen only one of them. As mentiond before many new enterprises or companies choose only to join a trade association. HTS is the second-largest affiliate to DA.

The merger seeked to shift the power balance within DA away from industry, and to strengthen the political influence of the service sector. However, the fact that another strong service-sector affiliate, Danish Trade and Commerce (Dansk Handel og Service, DHS) did not participate in the merger has been an impediment to creating a powerful unitary service organisation.

Even if DHS had been a party to the merger, DI - with its 50.1% share of the total wage sum of the companies affiliated to the DA - would have continued to have a considerably larger presence in DA than the service-sector employers which, including DHS, do not represent more than 26% of total DA wage sum.

The Danish Federation of Small and Medium-Sized EnterprisesThe Danish Federation of Small and Medium-Sized Enterprises (Håndværksrådet, HVR) was founded in 1879. HVR is currently the umbrella organisation for 37 sectoral associations and 60 local cross-trade associations. The approximately 22,500 members of HVR operate within small industry, crafts, construction, trade and services. Companies range from family-run companies to companies with around 100 employees. Common to them is that the company's manager and owner is one and the same person, and that the enterprise is often placed under the same roof as the home of the owner. The average size of member enterprises of HVR is six employees. In this respect members of HRV reflects the average size of employees in all SMEs in Denmark, which is seven. The bulk of the enterprises affiliated to the member associations of HVR have less than 20 employees. Only few enterprises are direct member of HRV. The first choice is normally to join a member association of HVR, but a few enterprises that fall outside the scope of one of the normal member associations have been admitted as single members. They number around 800 in all.26

However, HVR has no formal demarcation regarding membership, neither regarding size nor turnover of the enterprise. It could be said, though, that a social, cultural demarcation exists. HVR historically builds on crafts (trade). This means that large building contractors are ‘naturally’ outside the scope of HVR, as are enterprises or retail shops mainly employing unskilled workers. The members of HVR are in service trade (hair stylists, chimney cleaners, window cleaners, etc.) in retail representing a craft; bakers, butchers, goldsmiths; in the building and repair trade (shoemakers, smiths, machinery repair shops and car repair shops) and finally in small manufacturing industries.

HVR is a pure trade association, and does not take part in collective bargaining, but is recognised to have a saying in political matters concerning trade policy, export support and innovation of the smaller companies. The members of HVR are mostly mixed associations, which themselves take part in collective bargaining, either alone or through membership of an 26 Interviews with Economy Manager of HVR Søren Nicolaisen and Deputy Manager Ane Buch

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employers’ interest association (see also later). The domain of HVR falls, as mentioned above, within “Handwerk und Kleinindustrie”, craft and minor industry and provides statistics and information about the developments in the area.27

HVR’s main political activities are lobbying in tax policy, educational policy (vocational training), trade and industrial policy, export policy, and to take part in export supporting activities on behalf of the SMEs. Correspondingly, HVR is consulted by the government in questions concerning trade and industry and export policy. HVR has a seat in the Danish Council for Trade and Industry (Dansk Erhvervsråd) and in the Danish Council for Export, which are both government bodies.

According to the statutes of HVR membership domain includes:- Associations/organisations of companies within craft, trade, service and minor

industry- Cross-industry associations, including craft and industry associations- Small and medium-sized companies, which by the way of their nature, or other

reasons, are not members of an organisation under the umbrella of HVR - Institutions, organisations or persons with connection to craft, trade, service and minor

industry

The board of HVR decides in each case if membership can be granted.

The main specific goals pursued by HVR on behalf of the SMEs are:- Lower tax on work force- Fewer administrative burdens- Easier access to capita- More quality in education and training- A good framework for growth and development- Respect for the culture of the self-employed

Among the achivements during the recent years has been securing a health insurance system for self-employed equal to the system of wage earners.

Organisational developments of HVRAn important historical change that paved the way for the foundation of employers associations as of today was the adoption of the act of freedom of trade (Næringsloven) in 1857. According to the law membership of the traditional craft guilds was no longer compulsery. At the same time a few craft associations, parallel to the guilds, had already been formed - much to the anger of the most conservative guilds. However, the freedom of association had been secured in another important law these years, the Danish Constitution of 1849, that in §28 states the citizens’ right to form associations. With the new act removing compolsery membership of the guilds, the structural background for a diversity of associations was laid. Over the next decades a motley organisational flora covered all regions of Denmark. Without exception the enterprises that joined the associations were SMEs.

In 1879 the first joint organisation was founded, the National Association of Danish Manufacturers and Tradesmen, as the official title in English was (Fællesrepræsentationen for Dansk Industri og Håndværk, in Danish, which directly translated means ‘the Joint Committee of Danish Industry and Trade’28). With the foundation, the crafts had got a

27 HVR employs 40 staff members (2004).28 There is some confusion in Danish as to translate and use the English terms ‘business, industry, trade and craft’. Craft and/or trade are used in the connection of this study to cover ‘håndværk’ which is equivalent to the German ‘Handwerk’.

56

nationwide association as the first profession in Denmark. There goes a direct line from this national ‘association of manufactures and tradesmen’ to the HVR (and indirectly DA) as of today.

The activities of the national joint association, in the following abbrevated to the Joint Committee, were strictly concerned about representing business or trade interests of the members. There were two cathegories of member associations. The first members were the regionally based crossed-trade associations. They would represent the craft, trade and small industry in a region, in a town in the province, or in the capital of Copenhagen. The second member cathegory consists of the associations of the single trades or crafts – bakers, shoemakers, carpenters, bricklayers, etc. This was associations that grew out of the remainings of the traditional guilds. The former would outnumber the latter, but the single trade associations would have a tendency to be larger than the local cross-trade association, and they were also more influencial in the Joint Committee.

Interests as of an employers’ association were not on the agenda of the Joint Committee. However, the step forward of the industrialisation around the end of the 1880ies and into the 1890ies had led to the creation of workers’ trade unions. Among the workers were craftsmen that had not been able to establish their own business after completing their vocational education because of increasing competition and lack of capital.

In 1886 an employers’ association was formed in Copenhagen with the participation of the capital’s large building trade and subcontractors and the iron industry covering nationwide. It was called the Danish Master and Employers Association (the direct forerunner for Dansk Arbejdsgiverforening, and hereinafter called DA) and its purpose was to meet the challenge from the fast developing trade union movement by representing joint employers’ interests viv-a-vis the unions in employers’ associations. DA had close contacts with the Joint Committee; as a matter of fact most of the members were the same. On the other hand there were also differences. Many members of the Joint Committee were not employers in a larger scale, and some employers in the iron industry were not members of the Joint Committee. Two years later in 1898 the board of the Joint Committee approved the statutes of the new association, DA, which in practice were separated from the Joint Committee. The foundation of an independent employers’ association, focussing on wage and working conditions and concluding collective agreements with the unions were the beginning of the separation between the labour market interests from the pure trade interests; a separation that characterised the labour market relations and conditions in Denmark in almost a century. Both associations had a strong representation of SMEs and both had numerous small employers associations among their affiliates.

This structure were more or less unchanged until the 1980ies when a shift of the employers strategy, directed by DA led to a wave of mergers between the member organisations, mentioned above. The favourisation of the large employers’ associations seriously affected the representation of SMEs, whose many associations were merged into the same associations as the large enterprises. The rivalry inside the Joint Committee between industry and craft resulted in the founding of

the Industrial Council in 1910, and the scope of the Joint Committee was further narrowed. With the separations of DA in 1898, and the Industrial Council in 1910, the future work of the Joint Committee remained in maintaining the trade interests of the small crafts and trades in front of the government and the authorities and other trades in Denmark. This role is the same as HVR maintain today.

In 1940, the German occupation of Denmark changed the associations’, and the enterprises’ conditions of manouvering radically. DA took the initiative to establish a council for its craft and trade members, called Håndværksrådet (‘the Crafts’ Council in direct translation’ – Der Handwerksrat in German translation) in order to deal with the supply situation. The Joint Committee saw this as interference within the domain of the Committee, but the parties

57

succeeded in reaching a compromise. The 46 members of the Council were equally shared between the Joint Committee and DA, and for a short time the Council for craft and trade (Håndværksrådet) was the umbrella organisation for DA and the Joint Committee, although it is doubtful that the council had much influence outside its own limited scope. In 1950 the council and the Joint Committee of industry and craft merged under the name of the former, Håndværksrådet, HVR, which is the name the association has carried since.

Changes during the 1980ies – contrast and co-operationMany associations were still member of both DA and HVR, which had been the tradition since the formation of the employers’ association DA outside the Joint Committee. The split-up of the employers association into a trade branch and a labour market vis-a-vis the unions was a characteristica until the beginning of the 1980ies.29

The wave of mergers and strategic alliances between organisations that began during the 1980ies also affected HVR and the relationship between HVR and DA. In a time of changes the two associations had recognised each other’s interests and political demarcation by concluding a borderline agreement. HVR would not interfere with DA’s labour market interests with a view to the trade unions and the government, and DA would not interfere with the trade political interests that HVR performed on behalf of it’s members.This agreement might be said to mostly benefit DA. Firstly, because trade interests had never belonged to DA’s main activities, and secondly due to the strategic changes among the employers’ associations. The new large trade associations emerging from the mergers could take care of their own businesses, and this changed the demands made on the main organisations, which HVR still considered itself to be, partly because most of the building trade and industry belonged to HVR. In 1991 the wave of mergers resulted in the formation of the Federation of Danish Building Employers (Byggeriets Arbejdsgiverforening, BYG), which contained half of the members of HVR within the building trade. Some did not want to enter the new association, among others the painters and the plummers, and it ended in a break. In 1992, the same year as the formation of the large mixed association in industry, DI, BYG broke with HVR. The signifcant changes of this year resulted in a loss of around 10,000 members for HVR. Membership fell to around the current number of 22,500 members.

The raison d’être of HVR had changed. It could no longer define itself as the main organisation for the building trade and industry. The advantage for the remaining members of HVR belonging to other trades was that access to influence became easier. HVR redefined it’s scope of interests as to be the organisation of SMEs solely – which was reflected in HVR’s English title as of today: The Danish Federation of Small and Medium Sized Enterprises.

Membership coverageThe current division and characteristic of membership between HVR and DA is as follows: HVR has its stronghold among smaller mixed employers’ associations whose members are SMEs mainly belonging to micro and small levels (< 50 employees). The domain is crafts and small industry. The largest member is DS Håndværk & Industri (not member of DA) representing 2,500 companies. The chairman of DS H&I is also the chair of HVR at the moment.

DA or more specific DA’s member associations cover all enterprises within the same domain. This means that for at least a part of the enterprises within industry and building HVR and DA’s associations DI and BYG are in direct competition for the same members. This makes it difficult to draw a precise borderline between the organisations’ potential membership. Calculation of coverage must be a qualified estimation.

29 The union structure, it might be added, reflected the same fragmentation in many small unions determined by occupations.

58

The former structure of dual membership mainly divided between a trade and memployers interest association still exist to a certain degree. However, membership pattern is still undergoing change. Some associations are members of both HRV and DA, e.g. the Danish Association of Master Painters (Danske Malermestre). Others are members of HVR and a member association of DA, e.g. Træets Arbejdsgivere, TA (Employers’ association in wood work) that is member of DI to maintain the employers interests and leave it to HVR to represent pure business interests. This is a good example of the demarcation of the associations with regard to organising SMEs. The members of TA are typically SMEs. Their voice would not the loudest within DI’s trade department and thus they benefit much more in this respect by membership of HVR. A third way of dual membership is forming an employers association within DA consisting of core members of HVR. Four trades inside HVR formed in 1997 an employers’ association, Sammenslutningen af Mindre Arbejdsgiverforeninger i Danmark, SAMA, and joined DA with the aim to represent small employers’ associations in the representative bodies of DA. It is formed by Glarmesterlauget i Danmark (glaziers), Danmarks Frisørmesterforening (hair stylists), Foreningen af Auto- og Industrilakerere (auto and industrial painters), and Arbejdsgiverforeningen for Tømmerhandlere i København og Omegn, ATKO (timberyards).

In the latest statistics made by HVR (covering 1998) no employees are recorded in companies with more than 50 employees within ‘craft and minor industry’30. Thus membership density measured as a percentage of organised members of potential members should be concentrated on companies with less than 50 employees even in 2002. The definition of ‘craft and minor industry’ is narrower than NACE codes C-K if compared with Statistics Denmark (see tables xxx), but HVR are not specific on the delimination of the mentioned cathegory.

HVR covers 22,500 companies. Calculated on the basis of all companies within NACE codes C-K (188,770) the density of HVR is 11.9%. If the self-employed with no employees are excluded from the calculation, which gives a total of 82,711, the density is 25.3%. HVR estimates their member companies employ 135,000 persons. Leaving out self-employed results in density of employment of 25.3% (135,000/532,190). HVR furthermore estimates that their members represent a total wage sum of DKK 30 billion (EUR 4 billion).

DA’s member associations cover 30,000 member companies but this number is not broken down by company size. However, companies with less than 50 workers employ 195,100 all together. That yields a density of 36.7%. If the number of workers in the companies is raised to 99, the density increases to 40.6%. DA covers a wage sum of around DKK 210 billion (EUR 28 billion).

The calculations are based on figures from Statistics Denmark covering NACE codes C-K. However, in Denmark the companies in the financial sector, covering NACE code J have their own central association outside the membership domain of neither HVR and DA. The association is the Danish Employers’ Association for the Financial Sector (Finanssektorens Arbejdsgiverforening, FA) and it is normally considered a main organisation, even if the association is not umbrella for lower level associations but only have direct membership.

In order to get a more precise picture of the potential membership of HVR and DA, employees of the financial sector should be withdrawn from the total number of potential members inside NACE codes C-K. This gives the following calculation – also leaving out self-employed with no employees.

The financial sector covers (2002) 1,219 companies with less than 50 employees, together employing 7,332 persons. The financial sector employs a total of 71,700 and is dominated by large companies. The potential number of companies is then reduced to 87,579 and the number of employees to 524,858.

For HVR that yields a density of companies of 25.7% and of employees also 25.7%.

30 Håndværket i tal, 2000, p. 21. New statistics covering the period 1998-2002 is in the making.

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Density of DA is then 37.1%. Including companies with less than 100 employees, and excluding employees in banking, the density of DA thus is 41.3%. Many companies are members are indirectly members of both DA and HVR, and the membership domains of the two associations thus overlap in this respect. It is not possible statistically to state the number of dual membership. However main common characteristica is probably small enterprises within industry, for instance the automotive sector or metal smiths, and building industry.

ConclusionSMEs are traditionally an important component of the Danish economy and its structure. It was the SMEs of the manufacturing sector, which founded the first employers’ peak association, the Danish Employers’ Confederation, DA. Together with the unions under the umbrella of LO, DA established the Danish industrial relations system that has changed only little, as compared to its original shape. The system builds on voluntarism. Freedom of association is connected to the system of mutual recognition of conflicting interest. The relatively high interest of Danish SMEs to be organised in employers’ associations thus has historical roots. Traditionally employers’ associations were divided in a pure trade interets line, and an employers’ interests line taking part in collective bargaing. This system is still significant, although undergoing certain changes since the 1980ies.

SMEs were if not completely dominating then partly dominating the two peak employers’ associations of interest in this study, HVR and DA. In the 1980’ies the traditional organisational pattern changed significantly. A wave of mergers and new strategic alliances altered the relationship between the member associations of the peak employers associations and left them both with deminished influence. Collective bargaining was decentralised among the members of DA, although with DA in a coordinating role. In 1992 the forming of the umbrella association in indutry, DI, covering the entire manufacturing sector and the half of DA’s wage sum, had decisive influence of the employers’ strategy and balance of power, which is still in force. Loosing half of the companies in the stronghold, the building industry to BYG in DA, HVR gave up the position as a main organisation and concentrated on being the umbrella organisation, still representing pure trade interests, for Danish SMEs. The stronghold is among small industry, crafts and repair shops.

The internal development of DA is currently being planned for the period 2005 to 2010. Not much has been informed to the public, but the burdens and duties of DA are certainly at stake. DI probably wants to decrease membership dues to DA and the other members of DA in building and service have mentioned possible further mergers creating umbrella organisations in order to match DI. DA thus seems to face a second round of restructurings in modern times comparable to the most significant changes in the 1980’ies.

ReferencesDue, Jesper; Madsen, Jørgen Steen; Strøby Jensen, Carsten; Kjerulf Petersen, Lars (1994) The Survivel of the Danish Model, DJØFs Forlag Copenhagen.Due, Jesper; Madsen, Jørgen Steen; Strøby Jensen, Carsten (1993) Den danske model, DJØFs Forlag København.Due, Jesper; Madsen, Jørgen Steen; Strøby Jensen, Carsten (2000) ’The September Compromise’: A Strategic Choice by Danish Employers in 1899, in Historical Studies in Industrial Relations, No. 10 Autumn 2000, p. 43-70. Keele University Centre for Industrial Relations.Jensen, Carsten Strøby; Due, Jesper; Madsen, Jørgen Steen; (2000) Arbejdsgiverorganisationer i Danmark, in Carsten Strøby Jensen (ed.) Arbejdsgivere i Norden – en sociologisk analyse af arbejdsgiverorganiseringen i Norge, Sverige, Finland og Danmark, Nordisk Ministerråd København.

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Møller, Jane Vestergaard (2003): SMV’er og iværksættere i tal, Center for Småvirksomhedsforskning, CESFO, Syddansk Universitet, Årsrapport 2002/2003, Kolding.Møller, Jane Vestergaard (2004): SMV’er og iværksættere i tal, Center for Småvirksomhedsforskning, CESFO, Syddansk Universitet, Årsrapport 2003/2004, Kolding,

Danmarks Statistik, Generel Erhvervsstatistik, Firmastatistikken, 2002. København.Dansk Arbejdsgiverforening (2001): Arbejdsmarkedsrapport 2001, DA’s Forlag,

KøbenhavnDansk Arbejdsgiverforening (2002): Arbejdsmarkedsrapport 2002, DA’s Forlag,

KøbenhavnDansk Arbejdsgiverforening (2003): Arbejdsmarkedsrapport 2003, DA’s Forlag,

KøbenhavnDansk Arbejdsgiverforening (2004): Arbejdsmarkedsrapport 2004, DA’s Forlag,

København (selected tables, forthcoming publication)European Commission (2003) Observatory of European SMEs, 2003, no.8,

Enterprise DG.Håndværksrådet (2004): HVR 125, København.Håndværksrådet (2000): Håndværket i tal 2000, KøbenhavnHåndværksrådet (1998): Vedtægter for Håndværksrådet, revideret 12. maj 1998,

København.Håndværksrådet (1979): Håndværksrådet gennem 100 år. København.

Tables

Table 1: Companies and employment by company size, NACE codes C-K Employment 2001

number % 2002

number % 0 pers. Companies

Employment

Work places

99951

-

-

51,9%

-

-

99972

-

-

52,0%

-

-

1– 9 pers. Companies

Employment

Work places

73244

220799

160884

38,0%

16,7%

81,9%

72970

219968

133656

38,0%

16,9%

79,4% 10-19 pers. Companies

Employment

Work places

9947

133766

19193

5,2%

10,1%

9,8%

9741

130872

18800

5,1%

10,1%

11,1%20-49 pers. Companies

Employment

Work places

6136

182908

11125

3,2%

13,8%

5,7%

6087

181350

10923

3,2%

14%

6,5%50-99 Companies

Employment

Work places

1820

124547

3068

0,9%

9,4%

1,6%

1774

121126

2977

0,9%

9,3%

1,8% 100(+) Companies 1609 0,8% 1588 0,8%

61

Employment

Work Places

663030

2136

50,0%

1,1%

645133

2060

49,7%

1,2%Total Companies

Employment

Work Places

192707

1325050

196406

100%

100%

100%

192132

1298449

168416

100%

100%

100%Source: Statistics Denmark.

Table 2: Companies and employment by company size, NACE codes C-K Employment 2001

number % 2002

number % Micro 0–9 pers.

Companies

Employment

Work places

173195

220799

160884

89,9%

16,7%

81,9%

172942

219968

133656

90,0%

16,9%

79,4% Small 10-49 pers.

Companies

Employment

Work places

16083

316674

22261

8,4%

23,9%

15,5%

15828

312222

29723

8,3%

25%

17,6%Medium 50-99

Companies

Employment

Work places

1820

124547

3068

0,9%

9,4%

1,6%

1774

121126

2977

0,9%

9,3%

1,8% Large100(+)

Companies

Employment

Work Places

1609

663030

2136

0,8%

50,0%

1,1%

1588

645133

2060

0,8%

49,7%

1,2%Total Companies

Employment

Work Places

192707

1325050

196406

100%

100%

100%

192132

1298449

168416

100%

100%

100%Source: Statistics Denmark.

Table 3: DA: Employment structure. Firm size, 1,000ies full time employed (2002)31

DA 0-9 10-19 20-49 50-99 100-199 200- TotalManufacturing 5.9 10.2 27.2 29.6 37.4 151.1 265.5Construction 22.2 18.9 24.1 11.5 6.9 23.8 107.3Service 27.1 21.0 38.4 29.2 26.4 135.1 282.0All 55.3 50.1 89.7 70.2 70.7 399.0 654.8Source: DA Labour Market Statistics 2003

Table 4: DA’s development in structure and membership

Year Affiliated associations Single enterprises Member enterprises Workers

1896 5 4 461 4 222

31 These data refer to the composition of DA membership domain.

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1899 36 4 5 272 48 4041901 65 15 7 191 56 8421906 68 30 6 339 64 9951911 112 34 8 304 69 4441916 147 104 9 663 104 7901921 253 225 18 177 116 4821926 229 176 12 548 124 3821931 222 174 12 163 143 7291936 225 193 13 612 184 2271941 238 248 16 250 211 1421946 247 315 20 633 235 1461951 253 326 24 071 331 0431961 255 325 22 072 380 4111966 223 290 22 803 380 4111971 198 206 24 072 365 4001976 178 58 20 581 322 2001981 157 48 22 651 474 4001986 151 45 22 642 519 8001991 48 5 29 913 555 0001993 34 4 28 227 589 0001994 32 0 - -1995 28 0 - -1996 25 0 - -1997 22 0 - 602 0001998 18 0 - 615 0001999 16 0 -2000 16 0 30 0002001 16 02002 15 0 595 0002003 14 0 28 2652004 13 0 Approx 30 000

Source: Strøby et al. 2000 and DA Statistics (Labour Market Report 2003)

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Table 5: Business interest associations representing SME’s. HVR and DA, 2002Association Scope of

functionMembership domain

Members/ companies

Employment Collective Bargaining

% of DA wage sum

HVRDanish Association of Small and Medium- sized Enterprises

ASMEPure Trade Association

SME’s in craft, trade, service and small industries

40 mixed associations/ 60 local associations/22,500 companies1

Approx. 135,000

No

DADanish Employers’ Confederation

ConfederationPure Employer´s

Association

All businesses; except financial sector and free professions.

13 employers’ associations covering 30,000 companies1

Affiliates cover 650,000

No.Only coordinating role

DA totalwage sum: DKK 210 billion)

DIConfederation of Danish Industries

Mixed Manufacturing industry and related businesses.Member of DA

50 trade associations/6,100 companies

NA, but 75% has less than 50 employees, 2% more than 500

Yes 50.1

HTSDanish Chamber of Commerce

Mixed Transport, trade, service, hotel & restaurents. Member of DA

14 mixed associations/6,000 companies in the employers’ association

NA Yes 16.1

BYGDanish Construction Association

Mixed Building and construction and related businesses. Member of DA

6 associated associations/8 trade associations5,800 companies/70,000 employees

3,500 companies with less 6 employees, 47 with more than 100 employees

Yes 9.6

DHSDanish Commerce & Services

Mixed goods and grocery trades, wholesale trade, IT, advertising and communication, business consulting, accountancy, legal services, publishing, the travel industry. Member of DA

42 trade associations/6,000 members/ 25,000 companies

NAMostly SMEs with less than 50 employees.

Yes 9.8

TeqnicDanish Mechanical and Electrical Contractors’ Association

Mixed Plummers and electricians. Member of DA

3,000 companies

40,000Mostly SMEs with less than 50 employees. A few large companies with more than 1000 employees

Yes 4.5

Danske MalermestreDanish Master Painters

Mixed Painters. Member of DA

60 guilds and master associations,

NADKK 1,75 billion in

Yes 0.9

64

1,800 companies

total wage sum

SAMA Association of Small Enterprises

Mixed Glarmestre, Autolakerer,Frisører, tømrerhandlereMember of DA

4 mixed associations/4,430 companies/ 4,775 establishments

NA Yes 0.8

Source: DA Labour Market Statistics, 20031 The companies listed in the column are direct members of the affiliates of DA.

Table 5: Representational activities of the HVR and DAType of activity HVR DA

Represents:

Labour market interests vis-à-vis the unions No Yes

Labour market interests vis-à-vis the state Yes Yes

Product market interests in relation to customers No No

Product market interests in relation to suppliers No No

Product market interests in relation to the state Yes No

Participates in the formulation of and/or implementation of:

Public schemes for vocational training Yes Yes

Public schemes to aid business Yes Yes

Public schemes for the standardization of products and product quality

Yes No

Table 6: Services provided by the HVR and DAServices related to HVR DA

Industrial relations No Yes

Economic policy programs Yes Yes

Exchange relations with supplies No No

Exchange relations with customers No No

Vocational training No* No*

Further training and qualification of company staff Yes Yes

Developing/monitoring quality standards for products Yes No

* Not directly. In practice left to the member associations.

65

FINLANDJuha Hietanen, Ministry of Labour, Helsinki

1. Finland's economic structure and the cultural properties

In Finland, industry produced 26.7% of the total GDP of 135 billion euros in the year 2001. Services covered somewhat over half: public services 17.1%, private commercial services 20.8% and nutritional services 12.2%. In the 1990s, Nokia’s success winged the production of electrotechnical equipment, which has quintupled - and communications equipment, which is now thirteen times higher than before. The entire national economy grew 19% in the same time, except for services, which grew only 13%. Rapid economic growth over the past seven years has increased production to clearly above the level it was at before the recession, at the beginning of the 1990s.The Finnish national economy depends greatly on foreign trade. Exports were responsible for about 40% of the GDP, in other words approximately 50 billion euros, in the year 2000. Over half of the exports went to other EU countries: Germany (13%), Sweden (10%), England (9%) and France (5%). However, one-quarter went to countries outside of Europe, to Asia and the USA. Exports to Russia amounted to 4% of the total exports, whereas the corresponding figure at its highest in the 1980s was 27%.Metal industries cover over a half of the exports, and the share of electronics alone was 32% in 2000. The traditionally important forest industry is responsible for about 10%. The balance of trade has been strongly favourable for over a decade already, and the balance on current account has been showing a surplus since 1944. The national debt was 63 billion euros in the summer of 2001, equal to 47% of the GDP.Finnish imports consist mostly of raw materials needed by the industries, and semifinished goods. The share of capital goods and energy products is a little less than a quarter; the same goes for consumer goods. The trade partners are the same as for exports. Imports from Russia, however, are almost double the exports to it. Both exports and imports increased by one quarter in the year 2000.The country’s integration into Europe deepened in the 1990’s. Finland has been a member of the EU since 1995, and adopted the common currency, the euro, at the beginning of 2002 (Ministry of Labour 2001, 6).

As elsewhere in the EU, Finnish entrepreneurship is dominated by small enterprises. Altogether, Finland’s SMEs represented 99.7 percent of all companies and 60.7 percent of the employees in 2001. As the disaggregation in greater detail shows, micro firms are almost as important as in the EU on average, constituting 92.8 percent (EU-15: 93.2 percent) of total companies but employing a smaller proportion of total personnel (23.7 percent) than elsewhere (EU-15: 34.6). Small and medium-sized companies show quite a similar pattern of spread to that in the EU as a whole. They account for 5.9 percent (small) and 1.0 percent (medium-sized) of the companies, respectively, as compared to the EU-15 (5.8 and 0.8 percent). The share of employees (19.3 percent) for small companies is about the same as in the EU-15, but the figure for medium-sized companies, i.e. 17.3 percent, is slightly greater than the average (EU-15, 18.9 percent for small and 12.9 percent for medium-sized companies) in 2001.32 (Table 1).

According to Statistics Finland, the total of registered companies in 2003 is estimated to be 230 400. The number of companies increased throughout the 1980’s until the year 1990. Then

32 NACE All-NACE A+B

66

the deep depression cut the number until 1994, when it was at its lowest, i.e. 184 931. A partial reason for this development was the structural changes that had already taken place earlier. An example of this was the disappearance of small retailers in the rural areas.

The number of enterprises has taken an upward turn from 1995. The most rapid growth period was between 1995-1998. Old companies were replaced by new, innovative ones with growth potential, as the resources of the economy were allocated towards more productive use than earlier. The growth in the number of companies has accelerated due also to outsourcing of big companies' operations and of some public sector activities (Ministry of Trade and Industry 2004, 3).

Figure 1: Development in number of companies between 1990-2003.

Source: Statistics Finland

The number of enterprises has increased mostly in the private service sector (excluding retail) - for instance in the real estate and business services, in the social and health services, and in other sectors producing personnel services. In the business services, eg. IT services and technical planning services, new companies have been established substantially due to outsourcing (Ministry of Trade and Industry 2004, 4).

The development of employment

The number of employees in companies was 1 298 198 in 2001 33. The number decreased by about 40 000 during 1990-94; after this, the number increased rapidly until 2001. The increase gives indication of the dynamics in the economy after the economic depression of the early 1990’s. The increase was concentrated in the IT sector.

The share of employees in SMEs increased slowly in the 1990’s. Remarkable growth can be seen after 1995, when some 75 percent of new jobs were created in SMEs. Employment has grown due to specialization of production, technological development and extension of the network economy. Growth has taken place mainly in companies in the size category of 20-

33 Modified Nace All- Nace(A+B)

67

249 employees. This indicates that part of the SME increase is statistical, i.e. resulting from outsourcing by bigger companies (Ministry of Trade and Industry 2004,10).

Total entrepreneurial activity (TEA) rate

In this context, it might be interesting to find out the total entrepreneurial activity (TEA) rate in international comparison. The TEA rate for Finland is 6.9%. That is, in Finland in 2003, 6.9% of the adult population is either trying to start a new business or running a new business. Out of the 31 participating countries in GEM (global entrepreneurship monitor), Finland scores fifteenth on the total entrepreneurial activity level. This is an improvement on the relative ranking of the previous year, when Finland scored 28th among the 37 countries participating in GEM 2002.

Finland is among the top-ranking European countries as regards TEA rate. Among the 17 European countries which participated in GEM 200334, Finland was number five. Only Iceland, Ireland, Norway, and Switzerland have a higher total entrepreneurial activity than Finland. The entrepreneurial activity in Finland is higher than that in for example France, Italy, the Netherlands, Belgium, Slovenia, and Sweden (Arenius Pia etc. 2003, 6).

2. The legal and administrative framework and its practical implications

In Finland, it is not compulsory for companies to join any of the employers´ organisations. When there is a freedom of association guaranteed in the Finnish Constitution, there is naturally no limitation of SMEs' right to set up their own association. In order for an employers´ organisation to be a labour market organisation (i.e. being a party to collective bargaining), the purpose of the organisation must be, according to the Collective Agreements Act, to safeguard employers´ interests in labour market issues. In practice, this means that the organisation widely represents companies within a certain branch, and that its member companies have given the organisation an authorization to negotiate binding collective agreements.[What does "widely" mean? Is there a certain minimum level of representativeness set by law or customs to get the right to conclude collective agreements? A: The minimum level of representativeness is not set by law. However, the custom is that the organisations must “truly” represent the employers of the branch. An independent board of judges has to approve every collective agreement and decide the representativeness based on certain criteria eg. how representative both the employer and employees organisations are, continuity of agreement activity etc.)] According to the same Act, an employers´ organisation has an obligation to monitor its member companies to ensure that they follow the terms of the collective agreement. Failure to comply with this obligation will be punished by means of punitive damages i.e. fines according to the Employment Contracts Act.

If a company is not a member of an employers´ organisation, the company may still have to apply a sectoral level collective agreement through an extension mechanism devised to make collective agreements generally applicable (according to the Employment Contracts Act). This means that if a majority of the employees of a branch are working for organised employers and there is a collective agreement concerning this branch, an unorganised employer within that branch has to follow the minimum terms and conditions of employment of that collective agreement (see also below, for this mechanism).

34 The Global Entrepreneurship Monitor (GEM) is a unique, global initiative that explores relationships between entrepreneurship and economic growth. It produces globally comparable data on the entrepreneurial potential of nations, thereby providing an unparallelled source of annually updated data and reference material for economic policymakers intersted in entrepreneuship.

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As regards the statutory regulation of access to business activities, certain provisions exist for doctors and lawyers, for example. Craft and artisanal production do not have any specific role in the legislation.

Policy programmes

Throughout its term (2003-2007), the Government will carry out measures aimed at supporting entrepreneurship, growth and employment, and at reducing unemployment. These will affect education policy, R&D and other growth-inducing areas, tax policy, support for incomes policy settlements, reform of labour policy, and two inter-administrative policy programmes. Of these, the entrepreneurship programme will coordinate Government measures to bolster entrepreneurship, with the main emphasis on promotion of practical projects. The focus of the employment programme will be on reducing structural unemployment and promoting labour supply. All these solutions will be realised within the fiscal policy framework. The Entrepreneurship Policy Programme is part of the Government’s economic and industrial policy. The target is to create a business environment that will enhance the start-up, growth and internationalisation of enterprises. Another aim is to provide enterprises with appropriate conditions for long-term investments and employment. The programme will be implemented in close cooperation with various stakeholders (including business associations). In addition, entrepreneurship and its development as a societal phenomenon will be monitored within the Entrepreneurship Policy Programme. The implementation phase of the programme was started after mid-September 2003 (Government’s Entrepreneurship Policy Programme 2003).

Policy programmes in BIAs

The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) has its own department for SMEs. Main areas of concentration for TT’s SME and entrepreneurship action plan include promotion of entrepreneurship (entrepreneurial education, taxation, bankruptcy and transfer of business), supporting growth promoting business policies (taxation, internationalisation) and networking of companies and utilisation of ICT tools. The Employers' Confederation of Service Industries (Palvelutyönantajat, PT) does not have a separate SME department since most of the members are SMEs and work concentrates on the SMEs’ employers issues. Both associations have participated in the preparation and implementation of the government’s policy programme.

The Federation of Finnish Enterprises (Suomen Yrittäjät, SY) has influenced the Entrepreneurship Policy Programme and has launched its own programme to promote entrepreneurship. The main goals of this programme are focused on: entrepreneur attitude, taxation, lobbying special legislation for small enterprises, tasks related to working life, the structural change in public services, extended freedom of customer choice, promotion of generational and ownership change in enterprises, and the position of entrepreneurs in relation to legislative work and decision-making (The Federation of Finnish Enterprises 2003, 55-56)

3. The System of Social Dialogue and Public Policy Making

Bargaining relations

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Corporatism, or close co-operation between the political system and the labour market organisations, is characteristic of Finnish industrial relations. What this means is that almost all legislation pertaining to working life is drafted as a tripartite co-operative effort of the Government, the employer, and the labour unions.

Collective agreements are minimum agreements in the private sector. Since 1971, there has been a principle of general applicability of collective agreements in effect in Finland. According to that principle, unorganised employers also have to comply with the national agreements that concern the line of business they are in. In 2001, the so-called confirmation procedure for universally binding collective agreements came into use, in which a special commission confirms the general applicability. An agreement is generally applicable if it can be considered representative of the field in question. The criterion of being representative is evaluated and based on statistics that measure the degree of general applicability of the collective agreements, the established bargaining practices in that field, and the density level of the bargaining parties. The goal of the system of general applicability is to guarantee minimum conditions, and this also is taken into consideration (Ministry of Labour 2001, 15).

Three-step collective bargaining

In the course of incomes policy era pursued since 1968, the initial stage of collective bargaining has consisted of incomes policy negotiations between the confederations. The goal of this bargaining has been to establish the guidelines for the conclusion of the collective agreements in each field. If an agreement has been reached in those initial negotiations, the sectoral level agreements have had to conform to the centralised collective agreements concluded by the confederations. However, the precondition has been that the member associations of the confederations have accepted the centralized agreement first. In addition to wage, a wide range of other issues e.g. in social policy and tax reforms are usually negotiated on a tripartite basis. The collective agreements of blue-collar workers and white-collar workers and academic professionals (if there is an agreement) normally relate to their particular sectors, and each sector has normally separate national collective agreements concerning these groups. Seldom, however, there is an agreement for academic professionals. But for example within the technology industry, metal workers, salaried employees and academic professionals each have their own collective agreements. In the 1990s, collective agreements of different sectors have experienced an increase in possibilities of agreeing locally within an enterprise and/or at a single workplace on some matters regarding working conditions (especially working hours), even allowing deviations from the basic conditions of the collective agreement. Collective agreements are usually signed for one or two years at a time (Ministry of Labour 2001, 16).

4. The associational system of business and its actors

In the Finnish system there exist three BIAs, two of these being The Employers’ Confederation of Service Industries (Palvelutyönantajat, PT) and The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT). The majority of members of these BIAs are SMEs, which are represented through branch associations. No association is specialized only on SMEs.

In addition, there exists the Federation of Finnish Enterprises (Suomen Yrittäjät, SY), which represents mostly the interests of unorganised SMEs (i.e. ones not covered by collective agreements) and can be considered as an ASME in this study.

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The agricultural employers are represented by the Federation of Agricultural Employers (Maaseudun Työnantajaliitto, MTL). Its members’ activities include farming and other rural lines of business, nurseries and horticultural centers, park and golf course construction, and fur farming. Its collective agreements cover about 9000 annual employees (2003). Agriculture is not taken into further consideration in this study in line with project definitions.

TT and PT have more of a commonly accepted status as social partners, due to the widely given authorization by their branch associations and member companies to conclude incomes policy agreements covering a wide range of labour market issues in addition to wage bargaining. SY can be considered more as an “outsider”, because its authorization is much more limited; it has, on the contrary, been profiled as criticising the incomes policy agreements, the extension mechanism and rigid labour legislation. Hence, SY prefers more decentralised bargaining. Against this background, the unions prefer TT and PT as interlocutors, because they have an obligation to ensure that their member companies observe the collective agreements. Nevertheless, SY has to follow the collective agreements when these are made generally binding through the extension mechanism.

Due to the above-mentioned connection with the tripartite incomes policy system, it can be said that PT and TT are preferred as interlocutors also by the government. However, the government promotes good industrial relations among all SMEs.

The regional representation of SMEs in SY has fostered the development of the organisation. Especially those micro companies with less than five employees have developed municipal business interests and regional organisations. The role of SY for entrepreneurs has been emphasised by social networks where different interests can meet and be shared among members. Membership fees also play a significant role in preference for SY. The general peak organisations are more expensive to join. However, when the company size exceeds five, membership in TT or PT gains in importance for the SMEs because their interests in influencing collective agreements increase significantly. TT and PT are arguing that SY does not have a wide authorization to supervise the collective agreements due to the fact that limited number of SY´s member associations have given this authorization to SY. This opinion is shared also e.g. the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK).

The associations’ opportunities to participate in social dialogue and public policy are very much contingent on the political parties. The status quo of the Finnish IR system is commonly accepted by the biggest parties, especially by the Social Democratic Party (SDP). However, the biggest and most influential supporter of the status quo is the SAK, which is in close relation to the SDP.

However, some voices in support of the role of SY have been heard from the right wing: the conservative party (Kokoomus), the Centre Party (Keskusta) and the Swedish People’s Party (Ruotsalainen Kansanpuolue).The Centre Party, SDP and the Swedish People’s Party form the present majority government elected for 2003-2007.

Chambers of commerce

The Central Chamber of Commerce of Finland, and 21 chambers of commerce, make up the Finnish chamber of commerce organisation. They aim to advance the joint interests of all

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enterprises, and strive to improve the climate for business - regionally, nationally and in the European Union. The Central Chamber of Commerce of Finland is an expert organization and an interest group, which also fulfils certain statutory functions. It aims to make Finland an attractive corporate location. The Central Chamber of Commerce also influences national competitiveness, Finland’s position in the European Union, and the development of economic relations between Finland and Russia. Finnish chambers of commerce have about 16 800 businesses and organisations as their members.[How many employees does the Central Chamber represent? A:The number of employees is estimated to be about 890.000] In Finland, unlike many central European countries, membership is voluntary.

Most of the members are small or medium-sized enterprises. On the committees of the Chambers of Commerce, companies have an opportunity to influence their business environment. The committees put forward and stress the viewpoint of businesses in connection with proposals for bills concerning trade and industry. The Finnish chambers of commerce are excluded from further consideration in this study, since it is neither the principal nor an ASME. However, the policies of the chambers reflect the interest of SMEs e.g. in liberation of the markets.

4.1. Presentation of BIAs

The Confederation of Finnish Industry and Employers, (Teollisuuden ja Työnantajain Keskusliitto), TT

The membership domain of the Confederation of Finnish Industry and Employers is defined as representing the Finnish industrial and manufacturing companies. Ownership is not an issue, but member companies do operate in Finland. SMEs are not specified in the rules.TT has nearly 5 600 member companies, which employ about 520 000 people (2003). The member companies are organised into 27 branch associations according to their line of business. Concerning the number of employees, 94 percent of all TT member companies employ less than 250 people each. In other words, a clear majority of TT’s member companies are SMEs. Furthermore, the SME representation in TT’s organisation is underlined by the fact that the chairman of TT’s SME Committee also functions as the vice-chairman of TT. The confederation organises both associations and companies (i.e. companies are members of associations affiliated to the confederation. Direct members do not exist). In Finland, freedom of association is guaranteed in the Constitution, therefore there is no obligation for a company to be a member of an employers´ association or central organisation. TT is an organisation that serves, promotes and safeguards the interests of industrial enterprises and businesses in the fields of manufacturing, construction, transport and other businesses closely connected to industry. It represents its members in industrial, labour market and social and trade policy issues. Thus TT is a mixed association.

TT is a labour market organisation (peak-level organisation) and therefore negotiates various general agreements with the employees´ peak organisations. It is also a negotiating party when an incomes policy agreement is negotiated. The confederation’s branch associations will negotiate sectoral level agreements. The services are mainly free of charge, although in some cases when services clearly serve only one company, their costs are charged. Most of the services with fees are provided by organisations financed by TT. On TT's decision-making board, each representative has one vote. The places on the board are distributed between the member associations according to the amount of membership fees each member association

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(association= metal, forest, chemical, foodstuffs, etc.) contributes. Firm size is not a criteria, but the overall weight of a sector is.

Employers' Confederation of Service Industries, (Palvelutyönantajat, PT)

The formal membership domain of PT is defined so that every company that follows the rules and agreements of PT and is a member of a member federation is allowed to join the organisation.[Direct company membership in PT possible? A: No. Companies are always members of some member federation.] The membership in PT is voluntary. PT organises both associations and companies. Due to its character as a peak level association, PT can be considered as a mixed association. In matters of collective bargaining, the organisation is mainly engaged indirectly, but it negotiates the central-level agreements (i.e. incomes policy agreements). It provides services to its member companies both directly and via its member associations. Services are included in the membership fee. Paid service, e.g. in attorney and training issues, is provided through service companies owned by PT. Voting rights are weighted according to the membership fees. These define the number of members in the general assembly and on the board. PT is not dependent on any other organisations' financial resources, but is financed by membership fees.

There is hardly any competition with TT, due to the differences in the sectors represented. However, TT also organizes services closely related to industry. With SY there is more overlap, but due to the differences in the focused interests the companies often belong to both associations (some 4000 member companies of TT and PT are also members of SY).

Reforms aimed at economising on resources

Concerning internal reforms aimed at economising on resources, the Employers' Federation (Suomen Työnantajain Keskusliitto, STK) and Industrial Federation (Teollisuuden Keskusliitto, TKL) merged in the early 1990’s. As a result of the merger, the personnel and membership fees decreased.There is an ongoing tendency towards efficiency. In February 2004, TT and PT decided to merge. This new peak-level organisation, the Confederation Finnish Industries (Elinkeinoelämän Keskusliitto, EK), represents business as a whole (i.e. 15 000 member companies, over 70 per cent of the GDP, over 95 per cent of the exports and covers over 900 000 employees). The activities of the new organisation will start officially at the beginning of 2005, but in practice already in autumn 2004.

The purpose of uniting the organisations is to strengthen the joint pursuit of business interests. The target is to create a better and more competitive environment for Finnish company and business activities. There will be a special focus on representing interests common to all business in Finland, in the EU and in other international forums. In addition, the new organisation aims to improve its services to member associations and companies. This organisation will have about 15 000 member companies, most of which - 12 500 - are companies employing less than 50 employees each. Therefore, special attention will be paid to the needs of small and medium-sized companies.

Another reason for the merger is the need to concert the interests of business in response to the faster-changing business environment and international competition. EK will not be built on either of the founder organisations, signalling the fact that the new peak association will be organised in a new way, seeking efficiency.

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When the administration of the organisation is being organised, the amount of membership fees paid is still open for decisions. Principally each member association has at least one seat on the board. The target is that the seats should represent the structure of the organisation widely and overall, i.e. manufacturing and service industries, and small and medium-sized companies, are to be adequately represented. The voting rights are not clarified yet.

Last but not least, the aim of the merger is to reduce the costs of the new central organisation about by 10 per cent by the end of the year 2005, and by about 25 per cent by the end of the year 2007 in comparison to its predecessors. The membership fees for the year 2005 will be decided on the present grounds; and they will, at the most, be at the same level as they were in the founding organisations in the year 2004 (TT press release 2004). The Federation of Finnish Enterprises, (Suomen Yrittäjät, SY)

The Federation of Finnish Enterprises (Suomen Yrittäjät, SY) can be considered as the biggest independent ASME in Finland. It has some 88 000 member companies as compared to 75 000 members in 1995, employing about 450 000 employees in all. The formal membership is voluntary and not restricted by any means, but any Finnish companies can be members of the 20 regional and 420 local associations distributed throughout the country. The size of the members is not defined in the membership domain, but the association has profiled itself as the voice of SMEs that are unorganised (i.e. companies without the right to deviate from collective agreements). SY has 60 sectoral organisations as members.[Is direct membership of companies in SY possible? A: No.Membership is only possible in member federations.] The organisation is indirectly engaged in collective bargaining through lobbying, and the aim is to become even more involved (at present six member associations are engaged in collective bargaining). The lobbying activity toward achieving this goal is intensive in this respect. Hence, the SY can be considered as a mixed association.The membership services are provided on a large scale. These services are mostly included in the membership fee. The most important services comprise law consultation and information services. Voting rights are not weighted according to the size of the firm, but to the number of members in each regional organisation. The member companies are represented by these at the annual meeting. In order to create better conditions for entrepreneurs, companies often join the regional organisations, because this helps them to become part of the local network. A typical member has less than 5 employees. Competition with PT and TT arises because of a need for or interest in influencing the collective agreements when the company size gets bigger. Then the companies often choose also to join the general peak level organisations. The interest in internal reforms aimed at economising on resources is evaluated in the strategy prepared each year. There is a permanent process of reforms. The members aim that SY would become a acknowledged social partner at the incomes policy table. However, this has not been fulfilled so far due to the question of SY´s limited authorization given by its member associations to negotiate collective agreements.

4.2. The structure and processes of the largest BIA and the largest ASME

TT and SY in comparison

TT and its branch associations represent member companies´ labour market interests vis-à-vis the unions and vis-à-vis the state. It also represents its members´ product market interests in

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relation to the state. This BIA participates in the formulation of public schemes for vocational training and public schemes designed to aid business. It does not represent the members’ product interest in relation to customers. Concerning public schemes, it participates in their formulation and/or implementation for the standardisation of products and product quality in its member associations.These services are mainly conducted by separate organisations with either partial TT financing or TT representation on the board of directors; and in some cases, some services are provided in limited scope by TT’s member federations. The membership fee covers safeguarding and promoting the interests of member companies with regard to various issues. It also covers certain services for the member companies, like information and seminars on current legislative changes and policy issues, and also advisory help for individual member companies on various issues.

Services and advice connected with industrial relations - and specifically with collective agreements - are provided on two levels, by central organisations concerning its agreements, and by branch associations concerning their branch-level agreements. These services are also included in the membership fee. Some of TT’s branch associations provide representation at court proceedings that is included in the membership fee. Concerning services connected with exchange relations with suppliers, some aggregate-level data is produced by the organisation. Some services connected with exchange relations with customers (e.g. information on sales markets, export promotion), and services related to vocational training, are produced by organisations financed by TT. Certain annual training events (e.g. on tax issues, bookkeeping, social costs, etc.) are also organised by TT and member associations. These include also further training and qualification of company staff. Concerning development and monitoring of quality standards for the products of the member companies, some member associations are involved in standardisation work. Overall, TT’s activities are focused both on interest representation and on services to members.

There is a large number of companies employing 1-9 persons which are potential TT members, but most of them are members of SY; their share of total employment, however, is not so great. As stated earlier, the number of member companies in TT is about 5600. The aggregate number of employees in TT is about 520 000. It is impossible to calculate the density ratio. In principle, all enterprises are potential members; but the membership fee, for instance, puts certain limitations on willingness to join the association. There are almost a hundred specialists working at the TT office, the total number of staff being 160. Moreover, there are eight regional TT representatives located in major cities of Finland. TT has an office in Brussels together with PT.

Concerning internal reforms aimed at economising on resources, the Employers' Federation (Suomen Työnantajain Keskusliitto, STK) and Industrial Federation (Teollisuuden Keskusliitto, TKL) merged in the early 1990’s, and presently there is a merger with the service industry going on (see previously). The goals, measures and outcomes of the reforms are centred on more focused and effective interest representation. This is also the driving force behind the reforms, and it is the issue causing the conflict of interests that emerged among member groups during the course of the reform initiative.

Cooperation with other BIAs, and joint action vis-à-vis the state, are the channels and mechanisms of intra-associational goal formation which give the SME members of TT a specific opportunity to articulate their interests. TT’s activities are financed completely by the membership dues from member firms. In addition to this, some minor EU project financing does exist.

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[How are voting rights defined in the member associations of TT? Please indicate the most common pattern, if there are differences across the associations.A: One company has one vote in the decision making.]

SY does not represent labour market interests directly vis-à-vis the unions in the course of collective bargaining. However, as stated earlier, SY does lobby its interests through other channels. In this way, SY represents also the members’ labour market interests vis-à-vis the state. In addition, the organisation does not have a role in representing the members’ product market interests in relation to customers and to the suppliers, but has representational activities in relation to the state. Concerning public schemes, SY represents its members in the fields of vocational training, aid to business, and standardisation of products and product quality.

SY has services related to industrial relations, e.g. advice on the provisions of collective agreements, and law services. Concerning judicial acts, SY provides a free telephone service. Some advice on preconditions for application for public grants and subsidies is provided free. SY does not provide services connected with exchange relations with suppliers. Concerning services connected with exchange relations with customers, SY cooperates with central and local customers, e.g. through custom officials. The organisation visits vocational training institutes to tell about entrepreneurship, and it is represented on the commissions deciding the content of exams. This is done on a free basis. Paid seminars related to further training and qualification of company staff are organised for the members. Developing and monitoring of quality standards for the products of the member companies is carried out using a quality system created for small companies. A charge is made for this system. The focus of the activities is on the lobbying. Besides this, the members want good services. The free and charged services are weighted equally.

The aggregate number of potential members is about 180 000 (note: one entrepreneur might own many companies) - but this has no bearing on membership numbers, which depend on their actual willingness to join SY. The aggregate number of companies which are members of the association either directly or indirectly amounts to 88 000. The aggregate number for employees in member companies amounts to 450 000. The number of potential membership in terms of employees is impossible to give. The number of staff members totals 40 at the peak level and 50 in the regional organisations.

The association has not undergone internal reforms since 1996, when it was established. This was to create better lobbying activities for small companies. Channels and mechanisms of intra-associational goal formation have been established on intranet. The aim is that every member association should be able to get information from the central and regional organisation to help in the running of the local association, 88% of the annual budget comes from member firms and the rest consists of income from sales of services.[How are voting rights defined in the member associations of SY? Please indicate the most common pattern, if there are differences across the associations. A: One company has one vote.]

5. Cultural Factors

In the 19th century, working life was based mainly on agricultural traditions. Those industrial activities that did exist were characterised by patriarchy. The unionisation of the working class began during the last two decades of the 19th century. At the beginning of the 20th

century, labour market development was disjointed. The political problems of the autonomous

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period within the Russian empire hindered the establishment of the labour market, and the civil war in 1918 put a stop to the dawning of negotiation practices. The tense relations between the workers and the employers were alleviated during the winter war of 1939-1940. In 1940, the labour market organisations acknowledged each other as bargaining parties. The number of members in the labour market organisations increased; and the negotiation systems developed at the end of the 1940’s and in the 1950’s, although social and political tension was reflected in the development of the labour market. After World War II, the impact of the Government on labour market activities has been significant. Since the end of the 1960’s, labour market relations have been shaped toward tripartite cooperation. During the last decades of the century, the conflicts between the social partners were alleviated, and the labour market system became an important national institution. Labour market cooperation has been developed into an important basis for welfare state policy. Tripartite cooperation and established labour market relations were a central resource when Finland recovered from the particularly deep depression in the middle of the 1990s, during which the net loss of jobs was approx. 400 000 (Ministry of Labour 2001, 3).

Since 1968, the collective agreements and contracts have most often been based on centralised incomes policy agreements. The employer and employee confederations have bargained at the central level. The actual collective agreements at the sectoral level have then been concluded, applying the general guidelines that have been laid down. The governments have supported moderate agreements by promising employment, social policy and tax reforms. It has also been easier to include provisions favouring low-income employees. Sometimes, union level agreements have been necessary due to the failure to reach the peak-level agreement.

The agreements do not always cover 100% of the field, because single federations may reject an agreement and try to do better on their own. A typical incomes policy agreement covers two years.In recent times, the incomes policy agreements have been considered as an essential stabilising factor contributing to rapid economic growth. Centralised agreements were developed in all crisis situations which emerged due to devaluation and rising inflation before Finland joined the European Union. Shortening of working hours has also required a centralised agreement. Incomes policy is also said to have played a significant role in getting through the economic depression of the 1990’s. On the one hand, the wage and salary earners’ share of the GDP has decreased from the 55.6% that it was in 1990 to the current 45.4% (2003); while on the other hand, capital gains and entrepreneurial incomes have doubled during the same period, being now 28.7%. However, acknowledgeable is that a big structural change in the Finnish business took place in that period. During the depression in 1990s the share of the wages was quite big when demand decreased.

During the 1990s, the earlier many-sided agreements with tax and social reforms advancing wage and salary earners’ interests were replaced by agreements that also took into consideration the operational preconditions of enterprises (Ministry of Labour 2001, 18-19).

The incomes policy can be considered as an influencing factor that helps to explain why the system of business associations is so centralised. Employers, especially in the rapidly growing sectors (eg. the IT industry) have simply gained from the centralised agreements. On the other hand, the SMEs (eg. in the service sector) have suffered from these, due to their slower growth and the concomitant heavier financial burden of having to pay greater pay rises than they can afford. This discrepancy between different sectors has created pressures towards a

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more decentralised system. Hence, the voices of employers demanding more flexibility have become stronger.

According to Kauppinen (1994), the collective bargaining system is usually thought to be a result of employees' demands and struggle for recognition. But it also has benefits for employers. Incomes policy took politics out of the workplaces. It began by reintegrating the trade union movement, after which the Social Democratic Party (SDP) became a guarantor of incomes policy. During the 1980’s, consensus became the order of the day; all were agreed on the advantages of incomes policy as a producer of public good.

At all events, the employers’ strategy changed in the 1990s: it now includes “internal devaluation”, cost cuts, increased flexibility, and improvement of quality. Their tactics include decentralisation. The former government-trade union axis has now given way to a government-employer axis, whose durability depends on the employers’ demands (Kauppinen 1994,325-326).

Further, according to Kauppinen, three scenarios have been possible for the change in the Finnish industrial relations system. I refer here to his vision of the change in the Nordic model, towards more flexibility and decentralisation. This has been realised in the eurozone and in the globalised business environment. This development has had a natural impact on the associational system, through the demands for greater flexibility. The SMEs are getting stronger in this sense. On the other hand, another of his visions, the so-called euro-corporatism, has also come true to some extent. ETUC and UNICE, offices with strong advisory powers, are lobbying in Brussels. The new joint employer organisation Finnish Industries (EK) described earlier will also follow its interests more unitedly in the international field. Even if collective agreements at EU level can be considered at present as utopia, one must look back on the fact that in Europe of the 1950’s and 1960’s, collective agreements were utopia - but now they have become a reality (Kauppinen 1994, 330) .

6. Conclusions

As elsewhere in the EU, Finnish entrepreneurship is dominated by small enterprises, and so the role of SMEs is essential. The company size is irrelevant as a formal criterion for demarcating the domain of cross-sectoral business associations. There exists neither an established association formally specialized in promoting the interests of SMEs, nor an association claiming that it is the voice of big business. However, SY is considered as being de facto the voice of small unorganised SMEs. TT and PT do not compete for members, due to their stabilised domains. As a result of this, it is quite natural that these organisations are now merging. The smaller companies with under five employees often choose to be members of SY, because of its ability to safeguard their interests at the regional level. The lower membership fee also explains why these companies join SY. When the company size gets bigger, however, they prefer to seek membership of TT and PT, due to the widely given authorization for these Confederations to conclude e.g. incomes policy agreements. SY is not considered to have this kind of authorization, but companies employing under five employees attract special attention from SY as a consequence of general validity, i.e. extension of the collective agreements to cover these companies also. This is because as members of SY the companies do not have the same right as others to deviate from the collective agreements (Except those that are also members of TT and PT).[I do not understand this statement. How can a company deviate from the collective agreement? Following your arguments above, I

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thought that an agreement is always binding and the SY members differ from PT and TT members insofar as the former are indirectly bound by extension, while the latter are directly bound.](A: The TT and PT (“officially accepted”) member organisations that conclude collective agreements have some rights to deviate from the agreement concerning eg. working hours in the metal sector. SY members do not necessarily have this right in every case). SY feels that the present social partners should accept it as a full negotiation party, which has not happened so far.

As far as the associational system as a whole is concerned, there is conflict to some extent in the domains and/or tasks of all cross-sectoral business. Between the associations, this conflict obviously relates to the size of the firm. To conclude, the Finnish collective bargaining system works as a watershed in the associational system.

The changes in company structure and employment issues after EU membership have resulted in a stronger foothold for the SMEs. The special policy programmes for promoting entrepreneurship are a clear result of strong lobbying by SY. In the political agenda, the smaller companies have a central role, owing not least to their potential for curing the difficult unemployment situation in the country. As the GEM report shows, the willingness to establish enterprises is quite high in Finland. This may mean that the role of SMEs in the associations will become more important, if the number of enterprises increases as has been the tendency after 1995.

The financial resources and international contacts of TT are well suited to catering for the special interests of the large firms, whereas the structures of SY and PT are geared to the special interests of SMEs. The voices in favour of decentralising the bargaining system have become stronger as the next incomes policy round approaches in 2005. As an result of the merger of TT and PT their bargaining power will be stronger than ever. How the merger will affect the bargaining system and the role of SY remains to be seen.

Table 1: Companies and employment by company size (All - Nace A+B)

EMPLOYMENT 1995 %

2001 %

CHANGE 1995-2001 %

0-9 persons CompaniesEmployment

170417292385

93.635.4

201501308002

92.823.7

18.25.3

10 to 49 persons CompaniesEmployment

9351178434

5.121.6

12878250125

5.919.3

37.740.2

50 to 249 persons CompaniesEmployment

1746177904

1.021.5

2230224593

1.017.3

27.726.2

250 or more persons CompaniesEmployment

496457048

0.321.5

579515478

0.339.7

16.712.8

Total CompaniesEmployment

1820101105771

100.0100.0

2171881298198

100.0100.0

19.317.4

Source: Statistics Finland.

Table 2: Finland’s cross-sectoral business associations

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ASSOCIATION SCOPE OF FUNCTIONS

MEMBERSHIPDOMAIN

MEMBERS EMPLOYEESCOVERED

VOTINGRIGHTS

TT Mixed In practice: Finnish industrial and manufacturing companies.

Not formally defined

5 600 520 000 Differentiated by economic sector

PT Mixed In practice:Finnish serviceCompanies

Not formally defined

9 436 374 628 Differentiated by membership fees

SY Mixed Not formally defined

88 000* 450 000 Differentiatedby the number of members in associations

*Some overlap with TT and PT exists. Source: TT, PT and SY (2003)

Table 3: Representational activities of TT and SY

Type of activity TT SYRepresents:

Labour market interests vis-à-vis the unions Yes NoLabour market interests vis-à-vis the state Yes YesProduct market interests in relation to customers No YesProduct market interests in relation to suppliers No NoProduct market interests in relation to the state Yes Yes

Participates in the formulation of and/or implementation of:

Public schemes for vocational training Yes YesPublic schemes to aid business Yes YesPublic schemes for the standardisation of products and product quality Yes Yes

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Table 4: Services provided by TT and SY

Services related to TT SYIndustrial relations Yes YesEconomic policy programs Yes YesExchange relations with suppliers Yes YesExchange relations with customers Yes YesVocational training Yes YesFurther training and qualification of company staff Yes YesDeveloping/monitoring quality standards for products Yes Yes

Table 5: TT and SY: Human and financial resources

TT SYHuman resources

Number of staff members Peak level Association as a whole

160178

4050

Staff members per 1000 member firms* 32 1

Composition of revenues (as a percentage of total revenues)

Membership dues (member firms) 100% 88%

Membership dues (affiliated associations)

Voluntary subsidies from members

Sales of services 12%

Obligatory dues and levies

Revenues from the state (including contracts with government)

Some minor EU project financing

Some minor EU project financing

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Other

Total 100% 100%

* Exact figure impossible to give

References

Arenius, P., Autio, E., , Kovalainen A. (2003) “Global entrepreneurship monitor, Finland executive summary”.

Central Chamber of Commerce (2004) “The Central Chamber of Commerce - Expert on the Business World”.

Government’s Entrepreneurship Policy Programme (2004) http://www.valtioneuvosto.fi/vn/liston/base.lsp?r=40240&k=en

Industrial Relations (2003), The Ministry of Labour, Helsinki

Kauppinen T. (1994), The transformation of labour relations in Finland. The Ministry of Labour, Helsinki.

Suomen Yrittäjien Yrittäjyysohjelma (2003), The Federation of Finnish Enterprises, Helsinki

Tilastokeskus (Statistics Finland), Yritys- ja toimipaikkarekisteri 1993-2001.

TT press release 12 February 2004, ”Finnish Industries EK, Joint business safeguarding”.

Yrittäjyyskatsaus (Unpublished 2004), The Ministry of Industry and Trade, Helsinki.

Interviews:

Answers received from and interviews conducted with the Central Confederation of Finnish Industry (Teollisuuden ja Työnantajain Keskusliitto, TT) the Federation of Finnish Enterprises (Suomen Yrittäjät, SY) and the Employers´ Confederation of Service Industries (Palvelutyönantajat, PT).

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FRANCESabine Saurugger, IEP de Grenoble

1. Economic Structure and Cultural Properties

In France as in other European countries, small and medium-sized businesses predominate in the economy. In 2002, France was home to 2 496 000 companies in the industrial, commercial and service sectors. Among these, only 2000 had more than 500 employees. France’s SMEs therefore represented 99,9% of all companies and 89% of French employees. Micro-firms accounted for 92,5% of all companies and 24,4% of employees. Small firms and medium-sized firms amounted to 28.5% and 27.7% of all employees, and 6.3% and 0.96% of all companies, respectively. In comparison, in 2000, France posessed 2 415 000 buinesses in the industrial, commercial and service sectors, again with only 2000 having more than 500 employees. France’s SMEs therefore represented 99.98% of all companies and more then 88% of the employees. Micro-firms accounted for 93,18 % of all companies.35 Available figures regarding the creation of firms show that the micro-firms sector proved most dynamic. Between 2000 and 2002, the number of newly established microfirms increased by 1.14 percentage points, whereas firms with 10 employees or more only increased by about 0.66 percentage points (Table 1).

France has a highly distinctive system of economic interest representation. It records five distinct associations representing business interests at cross-sectoral peak level: the Confederation of French enterprises (Mouvement des enterprises de France - MEDEF), the General Confederation of Small and Medium Enterprises (Confédération générale des Petites et Moyennes Entreprises – CGPME), the Assembly of Chambers of Commerce and Industry (Chambres de Commerce et d’Industrie – AFCCI), the Assembly of Chambers of Crafts) (Assemblée permanente des chambers des metiers – APCM) and the Crafts Confederation (Union professionnelle artisanale – UPA). Regardless of this high differentiation at peak level, the representation of sectoral interests in France is still seen as undemocratic (Meny 1986). No central permanent bi- or tripartite negotiations are foreseen. The French government is at the centre of policy formulation and sets the political agenda. French State authorities are generally much less enthusiastic about involving private interests in public policy formulation than their Austrian or German counterparts. The bureaucracy in statist countries such as France regards the influence of interest groups as illegitimate. It has traditionally used its formal consultation process more as a way of gathering information than as an opportunity to incorporate organized interests (Meynaud 1958, Wilson 1987, Suleiman 1976). The French system of interest intermediation is characterised by the importance of personal networks and clientelistic structures which dominate the relation between business interests and French political actors, including administration officials. The fact that the political and administrative elite--and often the business elite--are educated in the same schools (i.e. at Grandes Ecoles such as Conservatoire National des Arts et Métiers, Ecole nationale des Ponts et Chaussées ou Ecole polytechnique) entails close personal relations between actors from different spheres. As Vivien Schmidt characterized the very specific pattern of French interest representation: “For French business (…) personal contacts based on personal relationships or positions of power which are focused on swaying the Prime Minister or, failing that, the ministers of the more technical ministries, are the main means of influencing policy formulation. Also helpful would be the President as long as his party controls the government” (Schmidt 1996, 203). Despite the negative image of sectoral interest representation, we observe a strong link between the government and big business. At the heart of the French system is the informal agreement between French business and the State,

35 Source INSEE -UNEDIC

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which in turn is held together by the shared ideology of a relatively homogeneous national elite. One of the consequences of the highly stratified, elitist and meritocratic French educational system, is that business, administrative and political leaders have mindsets that are shaped by the same mold and thus share numerous assumptions, and beliefs. Although this system is managed by a self-confident elite, with little interest in power sharing, and supported by the State, it also allows the recognition, understanding, and legitimisation of the other stakeholders’s interests. The agreement forged between business and the State is characterised by a recognition of the need for both parties to collaborate in pursuit of economic growth. In the context of economic globalization, this means that the state has to re-define the rules of the “economic competition game” in a way that suits French business. The focus is therefore on the interests of firms rather than on purely defensive positions such as the preservation of jobs. Strong French firms, that the French government generally helps to foster, and whose management is mainly recruited from state-trained public-service institution networked across Europe and beyond, are seen as the foundation for long-term domestic economic prosperity (Maclean, 2002). Small and medium sized enterprises, on the other hand have little influence on the French form of dirigiste economy. While some analysts consider dirigisme as mere powerful rhetorical and mobilising device, rather than a strategy or coherent set of matching policies (Wright, 1997), France is widely assumed to be an example for dirigisme understood as a means of controlling the external environment or of unilaterally defining a distinctive demand-led macroeconomic strategy. This holds true, in particular, for the late 1980s. In this system, business associations exerted very little influence, except for individual firms which enjoyed a special and personal relationship with politicians and senior civil servants in government (Schmidt 1996). However, European integration and economic internationalisation have also influenced the French economic system (Saurugger 2004): Disengagement of the state is likely to lead to an increase in direct negotiations between business and labour. This is often interpreted as a decline of institutionalised, formal and centralised forms of participation in the elaboration of policies, and a move towards more informal and decentralised modes of collective bargaining and policy-making. The weakness of both organized business and labour makes it difficult for any kind of concertation to deliver effective collective agreements. Large firms and business associations do not feel bound by their leading organisations, whereas trade unions are fragmented into competing confederations. In addition, their membership numbers have decreased drastically, which makes for a poor business and labour social partnership, as we will see.

2. The legal and administrative Framework for Associational Action

2.1.Recognition as an Association

Concerning the legal status of interest associations, one must draw an important distinction between the Chambers on the one hand, and voluntary interest associations on the other, which are governed by different laws. Chambers are public legal bodies in the sense that they are established by law and are based on mandatory membership. Their membership domains, powers and responsibilities, as well as internal structure and financing, are laid down by statute. In France, three particular chambers exist: the Chambers of Industry and Commerce (Chambres de l’Industrie et du Commerce - CCI), the Chambers of agriculture (Chambres de l’Agriculture - CA), and the Chambers of crafts (Chambres de Métiers - CM). Chambers enjoy a public-law status because of the two basic tasks which are attributed to them: to represent their members’ interests, and to provide information and services to their members. All businesses – regardeless of their size – must be members of these chambers. The 9 April 1898 law, which constitutes the charter of the Chambers of Commerce and Industry (CCI), defines Chambers as commercial

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and industrial interest organisations for their constituency. The Law gives them the right to provide the government, upon its request, with advice and information regarding industrial and commercial issues; the right to represent their views in order to increase the prosperity of their industry and commerce, and to manage the delivery of necessary services they give to their member firms. Thus, the Chambers establish a close link between the political sphere and the business world. However, contrary to neocorporatist states such as Austria, the French representational system does not allow extensive chamber self-administration. The Chambers have the right to represent their members’ interests and to inform their members. They do not play, however, a central role in the social and economic decision-making processes, as they are bound to give their advice merely upon the government’s request. In contrast, the legal foundation for the voluntary interest associations system is the freedom of association principle, based on the law of 1901 (Loi 1901). This law is essential to understand the French system, as voluntary associations were prohibited in France from 1789 to 1901. An exception to this rule was enacted by the 1884 Waldeck-Rousseau law which allowed the creation of trade unions. After 1901 any interests group could choose one of the two legal forms and they never did so by accident. Therefore, it is possible to find “trade unions” among sectoral employer organisations, such as departmental "trade unions" representing the interests of SMEs that are active in the building industry. By establishing itself as a “trade union”, an employer organisation wishes to be seen, ideologically, as a form of guild. Whereas the main French business association, the MEDEF, has chosen to become an association according to the Law of 1901, a number of business groups, i.e. doctors or farmers, have identified themselves with “trade unions”. As in other countries, the law of 1901 lays down a general framework for the creation, structure and operation of associations. The founders of an association must submit the organisation’s by-laws to the authorities for registration. If these by-laws are in line with the general framework, as defined by the law of 1901, the association can be registered and recognized by the authorities. This means that anybody can form a business interest association, provided that the basic requirements of the law of 1901 are met.Article L133-1 of the employment code regulates the representativeness of trade unions. The term of representativity itself emerged in 1936. It was codified by a circular of the Ministry for employment on 28 May 1945 which defines the criteria for the recognition of representative trade union organisations: the number of declared members, the independence, the recurrence and importance of membership fees, and the patriotic attitude during the second world war. Initially, this text sought to exclude employer organisations established during the Vichy regime. However, in the 1950s, it became evident that employer organisations had to be recognised as representative, and therefore had to comply with the same criteria as trade unions. There is, however, no law, legal regulation or precise criteria defining the representativeness of business organisations. Elections to the Chambers of Commerce and Industry (CCI) give an indication of the representativeness of employers’ organisations, without clearly stating it. The main business associations, in particular the CGPME and the MEDEF, present generally a joint list of candidates36. On the basis of these criteria, it is the government who assigns the label of representativeness to trade unions and employer’s organisations. The French system of social dialogue is complex and multi-layered. It generally takes place on an ad hoc basis in which the relevant recognised actors are invited by the government to participate in the consultation process.

As in other EU member states, SMEs are targeted by a variety of specific policies such as national state-aide schemes, community programmes for research and development, and financial intervention in favour of venture capital funds and loan guarantees for SMEs (European Commission 2002). Whereas the French SMEs employer organisations do not

36 Interview with a representative of MEDEF Isère, July, 8, 2004.

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participate directly in the decision-making process37 in Brussels, other than through the Eurogroup UEAPME, these programmes are of importance for SMEs. They legitimise their activities in showing that the European Union provides funding, supports their activities and does not solely apply the policy-making process to large firms. French Business associations do furthermore implement these programmes such as in the formation sector.

2.2. State-sponsored resource endowment

Data on the financial resources of business associations are generally sparse and incomplete (see also Table 5). However, it is worth noting that business associations (as their union counterparts) can – to a notable extent – rely on supportive state regulation, when it comes to raising funds other than membership fees. In particular, this applies to the chambers which are completely financed by the IATP business tax (Imposition Additionnelle à la Taxe Professionnelle), as outlined above. While the chambers are, by definition, compulsory organizations, even the voluntary representative associations can benefit from compulsory levies on companies.A case in point is the act on the promotion of training. Based on an intersectoral agreement of the social partners38, its application was enlarged by the government in a “negotiated law” (loi négociée) (Mériaux 1999; Bentabet et al. 2002; Dubar 2004). According to this law39, work training of the State is based on concertation, including the coordination between ministerial departments, and the dialogue with the representative organisations of employers and employees on the one hand, and with regional councils on the other. Within this framework, employers have to contribute to the training of their employees, either by delivering this training themselves or by paying a tax (taxe de formation continue) to an institution that is authorized by the State. It is the business associations such as MEDEF, CGPME, CCI, and the large sectoral organizations (i.e. representing the construction industry and the metal industry) which are entitled to collect this tax for the purpose of organizing work training programmes. It also these organisations that manage these taxes by establishing special institutions such as OPCAREG (linked to MEDEF) or AGEFOS-PME (linked to GGPME). This generates revenues for these associations and enables them to pay some permanent staff. As an implication, this arrangement makes them somewhat independent from membership subscriptions. Another legally-based source for resource endowment is a special social insurance fund for businessmen. Both the MEDEF and CGPME draw parts of their financial resources from the management of an employment and social insurance funds for businessmen called “garantie sociale des dirigeants”. To benefit from this insurance, individual employers have to be members of either a sectoral or an interprofessional association and pay an annual fee. This can be considered a major incentive for individual employers to affiliate their firm with an employer’s association (Coulouarn, 2002, p.6).An indirect form of state support for fund raising results from the possibility to extend a multi-employer agreement to employers and employees who are not affiliated to the signatory parties. Statutory extension practices which are pervasive in France (Traxler et al. 2001) empower the bargaining parties to introduce general levies covering any company within their membership domain. In late 2001 UPA and five trade union confederations (i.e. CGT, CFDT, CGT-FO, CFTC and CFE-CGC) signed an agreement on fostering the social dialogue in the craft sector (EIRO 2002a). For this purpose, a contribution of 0.15 percent of paybill was fixed. One component (i.e. 0.08 percent) is distributed equally between the two sides of industry at the cross-sectoral level. The other part (i.e. 0.07 percent) is distributed at the

37 The first European office of CGPME was opened in 2003. 38 9 July 197039 Law 71-515 of 16th July 1971, regularly reformed to extend the number of beneficiaries (1984, 1991, 1993, 2003)

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sectoral level, depending on the arrangements made at this level. While the agreement originally bound only the members of UPA, the Minister of Employment and Solidarity extended the agreement to the whole sector in April 2002 (EIRO 2002b).There is good reason to believe that these forms of state-sponsored resource endowment help the associations to keep their membership subscription rather low and thus contribute to the relatively high level of density, as will be outlined in greater detail below.

2.3. Social dialogue system and public policy making

As in all European countries, there exists an intermediate level of negotiation between the law and individual work contracts: a collective agreement is negotiated and signed between employer associations and unions. More flexible than the law, this level of negotiation adapts the general principles of the law to particular use by a firm or a profession and sector, and accounts for the evolution of production techniques. However, contrary to other countries, collective agreements are not a central element of French industrial relations. The first difficulty is that of representativeness, i.e., the level of recognition of a party in the collective negotiation process. Employees usually do not feel bound by the decisions signed by representative unions (FO, CGT, CFDT, CFTC and CGC). Therefore, it is relatively difficult for unions to make their members comply with collective agreements and enforce social peace during the periods covered by collective agreements. The relationship between employer associations and their members is not very different from that of the unions (Andolfatto and Labbé, 2000). This profound problem has led the State to decree a comprehensive and extremely precise employment law, which curtails the role of collective bargaining. The complex relations between the law and collective agreements make the situation even more difficult. In theory, the law supersedes national conventions which, in turn, are imposed on local agreements. In practice, however, these laws define a rather loose framework that can be adapted under certain conditions. As in other European countries, the social dialogue takes place at three levels.Micro-level: Before the 1980s, most businesses did not conduct collective negotiations, aside from very large enterprises such as Renault or the big nationalized firms. However, from the 1980s onwards, the situation has changed due to a number of reasons: the effects of European integration; the slowdown and stalemate of collective negotiations at the national level since the 1970s; and the January 1982 law which allowed potential deviations from the law regarding the reduction of the work week to 39 hours. Hence, negotiations have increasingly taken place at the level of the individual firms. This situation is also fostered by a intersectoral agreement of October 1995which specified that in the absence of any union section in a firm, negotiations can take place between a employee mandated by one of the national unions and the management of the firm. As a consequence, the number of single-employer agreements (accords d’entreprise) increased significantly (i.e. 1 955 agreements in 1983, as compared to 30 965 agreements in 1999) (Andolfetto and Labbé, 2000). In a certain number of sectors, multi-employer agreements are increasingly dismantled in favour of single-employer agreements. This especially applies to SMEs: more than half of the new single-employer agreements signed in 1998 have occured in firms with less than 50 employees. Firms generally welcome this system, as the "rapport de force" in single enterprises weakens the union’s influence. It must also be underlined that these single-employer agreements cover an increasing number of issues. Whereas negotiations have been limited for a long time to questions such as wages or holidays, new areas such as employment in a broad sense, work flexibility, or working time schedules are increasingly regulated. This development also explains the relative weakness of the CGPME, the main employers association representing small and medium-sized enterprises.

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Meso-level, i.e. sector-level bargaining: Legally established in 1936 and confirmed in 1950, the practise of sectoral bargaining embraces all employment terms and social issues. A sectoral agreement signed by representative organisations is likely to be extended by the ministry of employment to the totality of the sector's employers and employees. Such an extension can be blocked, however, if two unions in the concerned sector oppose this measure by making a formal case in writing (called an “Avis motivé” in French law). The Law of 1982 aims to stimulate sectoral bargaining so as to cover all economic sectors. Sectoral bargaining on wages is made mandatory in each of the country’s approximately one hundred sectors. Some sectors play a pilot role, such as metalworking (approximately 3 million registered employees), chemicals, banking, textiles and wholesale trade. The results of these negotiations influence bargaining in the rest of the economy. Nevertheless, sectoral bargaining is very formal and often leads to poor agreements, with the government being the final decision-maker. Macro-level : The first negotiations at the macro level took place after the general strike of 1936. After the liberation in particular, the social partners participated in the regulation of social policies, namely unemployment insurance schemes, complementary pension funds, training and vocational training. These institutions are managed jointly by the representative employer organisations and unions based on equal representation in joint committees. The macro level thus focuses on unemployment schemes and the management of social security funds. Industrial and commercial employment associations (Association pour l’emploi industriel et commercial –ASSEDIC ) and National Federations for employment in Industry and Commerce (Union nationale pour l’emploi dans l’industrie et le commerce – UNEDIC) are administered jointly by the representative business associations (MEDEF and CGPME) and workers unions (FO, CGT, CFDT, CFTC, CGC). The Central Agency for Social Security organizations (Agence centrale des organismes de sécurité sociale –ACOSS), which is responsible for collecting and redistributing social contributions in the fields of healthcare, work accidents, family and the disabled, is also administered jointly by the two representative business associations and the trade unions. These institutions have nevertheless been weakened for several reasons. First, they are threatened by declining unionization as well as inter-union rivalry. This is particularly the case of the CGT whose sytematic opposition to any governmental decision, has given a referee role to employer associations and created an imbalance of influence in favour of the latter. Second, the economic difficulties have led to endemic crises, regarding primarily unemployment insurance schemes. This has provoked increasing intervention and control by the state. Furthermore, employer associations have threatened to leave the tripartite bodies. In this perspective, one of the most commented actions taken by both the MEDEF and the CGPME was their withdrawal from ACOSS. In the specific case of the social security system, both the MEDEF and the CGPME have objected to the use of the social security fund for co-financing the cost of reducing the firm’s social contributions as they move to a 35-hour week. In 2000, the MEDEF had already withdrawn from the Council of the social security fund (Union nationale des caisses de sécurité sociale -UNCASS) and threatened to cease participating in the UNEDIC unemployment fund. This was to protest against what they labeled excessive State intervention. However, it is important to note that the MEDEF and CGPME’s affiliates, be they sectoral or intersectoral organisations, did not withdraw from any bipartite or tripartite structures during this period. Both MEDEF and CGPME are umbrella organisations which leave significant leeway to their more powerful member associations (Coulouarn, 2004)Macro-level negotiations are not very common in France. They are generally induced by the government in response to a specific problem (such as the 35- hour workweek – la loi Aubry in 1997). Regular meetings are scheduled at a macro-level in the framework of the National Commission for collective negotiations, but they are considered discussion meetings rather

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than real bargaining sessions in the field of collective agreements. At this level, the authorities and MEDEF exert more influence than the unions. The former define the policy agenda, the contents of the negotiations and the goals that must be reached. The informational basis for these decisions is often provided by the business association. Business associations easily find partners among the five main unions that allow them to bypass the others. Finally, the absence of unions in most small and medium-sized enterprises makes the enforcement of collective agreements contingent upon public administration and court decisions. Thus, in France, we observe the pre-eminence of state-politics over bipartite negotiations. Given the volatility of social dialogue in France, in which the government exercises a major influence, it is clear that the associations’ opportunities to participate in the social dialogue and broader areas of public policies largely depend on their links with political parties. Both main employers associations, the MEDEF and the CGPME, have strong institutional and personal links with both conservative parties, UMP (Union pour un mouvement populaire – former RPR) and UDF (Union démocratique de France). During election campaigns, business associations approach these parties, as well as the government, and offer economic expertise (Garrigues, 2002). Since the transformation of the major business association from CNPF (Comité national du patronat français) into MEDEF (Mouvement des enterprises de France) in 1998, vested interests have been supported in an extremely professional way, under the guise of expertise offered to further the growth of the French economy.

3. The system of cross-sectoral business associations (Table 2)

Following the definition of cross-sectoral business associations, as documented in the project outline, one finds five associations in France: the ACFCI, the APCM, the CGPME, the MEDEF, and the UPA. The ACFCI is the national federal body of the French CCI. Every natural or legal person licensed to conduct business within the scope of the chamber’s domain is obliged to become a member in a CCI, except those coming from the farming and crafts sectors. The ACFCI membership is based on 160 departmental Chambers of Commerce and Industry, and 20 regional CCIs. Member voting rights are allocated on one member-one vote basis. Twenty regional Chambers of Commerce and Industry, also members of the ACFCI, are elected by the departmental Chambers. The ACFCI’s services are placed under the responsibility of a Director General. 180 staff members and a large number of related bodies form a vast centre of resources and services for individual CCIs. The ACFCI’s income stems from a certain percentage of the IATP’s receipts from assets and subsidies. There are no ACFCI membership fees. As the umbrella organisation for the 160 departmental and the 20 regional CCIs, the ACFCI and as such fulfils a double mission. First, it perceives itself as the representative of the interests of some 2 million enterprises vis-à-vis French and European official institutions as well as other social partners. The ACFCI has an office in Brussels and very close relations with the French CCIs abroad. Secondly, it participates in consultations with a number of national institutions. It considers itself as an intermediary organisation which promotes the development of the French enterprises and territories. The scope of the AFCI’s service activities, interests and membership, make this organisation the main business association in France. However, neither the ACFCI nor individual CCIs participate in the management of unemployment schemes and social security funds. In this context, the MEDEF, the UPA and the CGPME are the representative business associations. The main activities of the CCIs and the ACFCI lie in the delivery of services. These services cover the sectors of commerce, industry, services, tourism. They also include local and regional economic development, transports and environment, security and sustainable development, vocational and business training, information and communication technologies, innovation, social affairs and law.

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Most of these services are free of charge. Business and vocational training are a central task. The Chambers run a number of French business schools (i.e. Haute Ecole de Commerce - HEC). An annual budget of 900 millions € (i.e. 25% of its total budget) is allocated to the initial professional training and the education of company staff. Each year, the CCI’s train more than 500 000 students, apprentices, employees and unemployed in their 540 establishments. However, when asked to intervene in domains no covered by the services generally offered by the CCIs, some of them may require a financial contribution. As far as representational activities are concerned, the ACFCI is a trade organisation, who focuses on both the market and labor-related issues of its members. However, the ACFCI does not participate in collective bargaining. In this respect, the ACFCI is mainly a service provider for companies. Similar to the ACFCI, the APCM is the national federal body of the French CM. Membership is compulsory for every legal and natural person in the crafts sector.40 Through its commissions and the general Assembly, the APCM tries to unify the different policy proposals stemming from the 106 Chambers of Crafts. Its Assembly consists of the presidents of the 106 Chambers of Crafts. Its general decision-making body is the Bureau whose 12 members are elected by the Assembly. As the ACFCI, the APCM is a body providing mainly services to its members such as economic and legal advice, advice on administrative formalities, training programmes and statistics. It does not participate in the management of unemployment schemes and social security funds. Voting rights are based the principle where one member has one vote. The MEDEF , the main French employer association, is a voluntary organization. The MEDEF is a multi-layered confederation of various sectoral and territorial organisations bringing together companies which comprise more then 10 employees. Whereas this definition is found in MEDEF official documents, the practice is different. Several sectoral and regional associations even include micro-firms among their members. On behalf of its member organisations, the MEDEF conducts surveys and takes any action necessary to represent business interests. The MEDEF is both a trade association and an employer association. With regard to social issues other than wages, the MEDEF may be given a mandate to negotiate and conclude agreements with the unions and the government by its affiliates. Any association which does not wish to be bound by a specific agreement is entitled to opt out. MEDEF directly organizes 87 federations which cover some 600 associations and so-called “trade unions” and 155 regional organisations. There is no direct firm membership at the peak level. Firms can be direct members at the level of sectoral federations (where they share their membership with associations), or at the regional level. The MEDEF represents a total of approximately 750 000 companies with 15 mio. employees from all sectors except agriculture and certain service professions, which are excluded from membership. This structure leads to a situation where a number of companies are members of both, regional organisations and sectoral federations. The MEDEF has the right to conclude collective agreements. The services provided are tied to its representational tasks. The industrial sector is most important within MEDEF's domain. Approximately two thirds of the seats are attributed to federations coming from the industry. The regional MEDEFs are mainly controlled by the federations representing the interests of the metalworking, textile and construction industry. The CGPME is the main French association representing small and medium-sized enterprises. It defines its members as comprising less than 500 employees. Membership is voluntary, and 40 In France, crafts enterprises are defined along two criteria: their registration in the Repertoire des metiers (index of crafts) and their professional training (defined by decree of 1996). Diplomas are delivered by the government (Ministry of education). The over 700 diplomas are debated in 20 Consultative Professional Commissions (Commissions professionnelles consultatives), consisting of employers’ organisations, trade unions and civil servants linked to the Ministry.

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companies are represented by one of the 250 sectoral, regional or departmental federations which are member of the CGPME. For organisational reasons, theses 250 federations are grouped into three sectoral and three regional confederations inside the CGPME: National Confederation of Commercial SMEs (Union nationale des PME du Commerce - UNPMC), National Confederation of industrial SMEs (Union nationale de la petite et moyenne industrie - UNPMI), National Confederation of service SMEs (Union nationale des prestataires des services - UNPS); Regional Confederation of industrial SMEs (Union territoriale de la Petite et Moyenne Industrie- UTPMI), Regional Confederation of Commercial SMEs (Union territoriale des PME du Commerce - UTPMC) and the Regional Confederation of service SMEs (Union territoriale des prestataires de services - UTPS). The CGPME is both a trade union and an employer association. As a representative association, it participates, if solicited by the government, in collective negotiations. As noted above, these negotiations can either be bilateral, i.e. directly between the government and the CGPME, or tripartite. Finally, the UPA (French small scale crafts confederation) consists of three sectoral confederations: the CAPEB (Confédération de l'Artisanat et des Petites Entreprises du Bâtiment – Construction enterprises), CNAMS (Confédération Nationale de l'Artisanat, des Métiers et des Services – Services) and CGAD (Confédération Générale de l'Alimentation en détail - Section Artisanale – Small-scale retail enterprises in the food sector). These three confederations represent 50 sectoral federations and 4500 departmental ”trade unions” or associations. According to its formal membership demarcation, it represents craft firms of less then 15 employees. The national UPA council is the central internal decision-making institution. The three sectoral confederations have the same voting rights. Decisions are made by unanimity. The CAPEB organizes more than 300.000 of approximately 320.000 craft companies of the construction sector. This sector employs 873.000 individuals, including 607.000 employees. The CAPEB is differentiated into 105 departmental unions. It represents 98% of the sector's enterprises, 61% of the employees, 59% of total turnover, 71% of investments, and 61% of total sales. The CNAMS records 37 sector federations, which cover 430.000 enterprises. The CGAD General Confederation of food retailers, represents small-scale food retailers such as butchers, bakers and others.

As we have seen above, the formal membership domains of ACFCI, APCM, MEDEF, CGPME and UPA overlap. The voluntary associations hardly compete with ACFCI or APCM which mainly provide services to their members and are not strongly engaged in representational tasks. Overlapping domains, however, create important tensions and competition among the voluntary three associations. Enterprises or even sectoral associations often hold membership in two or three national confederations. Whereas all three are considered representative by the government, they compete for contacts with trade unions and the media, and for influence on public opinion. The UPA represents very small enterprises, and is therefore rather distinct from the other two. Its increasing importance challenges the position of the CGPME in the French representational system. Regarding the MEDEF and the CGPME, the situation is more complex. Before 1998, when the CNPF was transformed into the MEDEF, this competition was intense. Today however, the CGPME has lost much of its influence.41 As regards exerting influence, the former president of the CGPME said “I ensure behind the scenes that the MEDEF integrates the CGPME’s positions during discussions with the unions or the government”. Observers, however, think that CGPME simply follows MEDEF's position rather than influencing it behind the scene. Thus, the CGPME is under the tutelage of the MEDEF, all the more since a larger number of employers are members of both the MEDEF and the CGPME. Moreover, the federations, of the metalworking sector (Union des industries et métiers de la métallurgie - UIMM), and the

41 A case in point is public attention paid by the media. For instance, the special issue of “Le Monde Economie”, 2 June 2004, on Small and Medium Enterprises in France did not mention CGPME at all.

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construction sector’s (Fédération française du bâtiment- FFB), members of both MEDEF and CGPME are said to dominate the CGPME. All these sectoral associations also act independently from the MEDEF and the CGPME, in order to influence the policy-making process. However, MEDEF stands out in terms of its clear communication strategy, as well as its close contacts with the current conservative government which help to ensure its influence on the sectoral associations. In comparison, the CGPME’s more limited financial and social resources do not enable it to adopt a similar approach. The MEDEF undermines CGPME’s raison d’être, since it has created local networks for managers of small and medium-sized enterprise managers. Moreover, MEDEF has started to sign conventions with local business associations (unions patronales), which were initially members of both the CGPME and the MEDEF. These local business associations have become “MEDEF territoriaux” since 1998 (Coulouarn, 2002). An important measure has been to transform the 155 employer federations of MEDEF (which are local employer sectoral structures, bringing together large and small and medium-sized enterprises) into as many local MEDEFs. The CGPME has not yet found a representational niche between the dynamic MEDEF, which has a significant local presence since 1998, and the UPA which is extremely well established among the very small firms. However, competition does not only exist among but also within the three voluntary associations. Inside the MEDEF, for exemple, two associations such as the Union nationale des enterprises de travail temporaire (National Federation for temporary work – UNET) and the union for temporary work PRMATT compete for the membership of temporary work agencies. The same holds true for the Federation of private hospitals (Fédération intersyndicale des établissements d’hôpitalisation privée - FIEH) and the Union for private hospitals (Union des hôpitaux privés – UPH) (Bunuel, 1997). Furthermore, new sectoral organisations are created, which refuse to join CGPME as well as MEDEF. Examples are the sectoral organisation Comité Richelieu (representing firms active in the field of High Technology), think tanks such as the APM (Association Progrès du Management – Association for the progress in management), ETHIC (Entreprises de taille humaine independents et croissance – Independent small sized enterprises) and the CJD (Centre des jeunes dirigants – Center of Young Managers). These sectoral business associations negotiate directly with the government, bypassing the peak business organisations.

Understanding how the SME’s interests are represented in France requires analysing the MEDEF and the CGPME (notwithstanding the latter's decline in influence). This is because they are the two largest associations which combine interest representation and the provision of services. In comparison, ACFCI is primarily a service organization.

4. The Business Associational System and its Actors

4.1. Membership: Domains, Structure and Numbers In the case of both the MEDEF and CGPME, individual firms cannot directly acquire membership. They must do so through a sectoral or territorial association. Both types of association include members from the industry, commerce and services. As noted above, MEDEF's formal domain demarcation excludes companies with 10 or less employees from membership. Regardless of this, MEDEF wishes to be perceived as more than the representative of large companies. According to its figures, 35% of its members have even less than 10 employees, and 70 % less than 50 employees. Hence, the minimum threshold for membership, as formally set, is rather pointless in practice. One official explanation for this paradox is that the associations representing construction firms cannot comply with this threshold, as most of the French enterprises in this sector employ less than 10 employees.

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Voting rights in the General Assembly are granted, not to individual companies, but to the federations that represent them. Each member has one vote in the General Assembly. Additional votes are attributed by the statutary committee (comité statutaire) to the member organisations on the basis of their membership and dues.42 The 155 regional units of MEDEF have a slightly different structure. Both, sectoral organisations and firms can be their members. The member firms are, however considered rather as sponsors than members with full rights, although a specific representational structure is established for them. The general assemblies have therefore a double structure: the Collège des organisations (College of organisations) where voting rights are weighted according to the affiliates' membership43 and the Collège des enterprises individuelles (College of individual firms) where one firm has one vote. Via its federal and confederal affiliates, the CGPME represents up to 1.500.000 firms employing around 13.000.000 employees (i.e. 89% of all employees in the sectors of industry, commerce and services). Voting rights are weighted. In both sectoral and regional federations they are in general proportional to membership dues. The services provided to member companies, mainly through regional and departmental federations, are free of charge. The CGPME finances training of SME employees through special training programmes, and manages also a special housing fund.

Both the CGPME and the MEDEF only count sectoral federations and not individual firms as direct members. The sectoral associations include both “trade unions” (i.e. sub-sectoral business associations) and firms. Only at the lowest level—(i.e. the sub-sectoral level ) one finds associations which solely organize the firms themselves. Generally, the rule of one firm- one vote prevails in these associations , regarding voting rights in the General Assemblies as well as the Administrative Board. Industry is the membership stronghold of both MEDEF and CGPME.

4.2. Missions and activitiesBoth the CGPME and MEDEF perform representational activities vis-à-vis the State and the unions (Table 3). These activities are clearly overlapping. Despite the CGPME’s specialization in SMEs, it must share areas of activity with the MEDEF. The state is a primary target of both associations even regarding labour market interests. Bilateral contacts with representatives of the political system, in particular the President, the Prime Minister, and various ministers are the preferred means of communication. In addition, the two confederations participate in several corporatist committees which mainly deal with social policy issues. Finally, both the MEDEF and CGPME are particularly active in the field of product regulation and standardisation directly through their members, and indirectly in cooperation with AFNOR (Association française de normalisation)(Quittkat 2002). Overlap of domains and activities gives rise to inter-associational competition. This does not specifically affect the divide between large firms and SMEs. In France, large firms negotiate individually with the government, such that the representational tasks of MEDEF are rather supplementary. Inter-associational competition is primarily over resources. One example is the act on the promotion of training. As mentioned above, MEDEF and CGPME (as well as other associations) are entitled to collect the taxes devised to finance the training programs. Inter-associational competition over related funds results from the fact that the programs are implemented at the regional level (Coulouarn, 2004, p. 16). This means that the higher-level affiliations of the local associations (which implement the taxation of the companies) determine whether and how much a certain peak-level confederation participates in these

42 The membership fee for 2003 is 1.06€ for 10000 of the enterprise’s added value. The minimum fee is 26500 €. 43 One vote for 10 members.

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funds. There is an analogous competition on resources from the "garantie sociale des dirigeants" (see above).Both associations provide a variety of free services to their members (Table 4). In both cases, informing members on political developments is one of the most important services offered, as well as providing statistics and branch-related information. Other services include industrial relations, such as advice on collective agreements, and on economic policy programmes. They also include customer-related services, such as market research, advertising and PR activities. The CGPME, in particular, offers services aimed at furthering training and technical skills, and setting educational standards for members. Individual legal advice is generally a task for the Chambers of Commerce and Industry and their umbrella organization, the ACFCI. As far as international relations are concerned, the MEDEF offers a much wider range of information, advice and business support than the CGPME. Both associations differ in their assessment of the relative importance of specific tasks. Whereas the CGPME insists on its role in providing services to its members, the MEDEF defines itself primarily as an agent of interests representation, with services provided by its member federations. After its reform of 1998, the MEDEF assigned ten groups (GPA) dealing with (i) work relations and social dialogue, (ii) social protection, (iii) education and training, (iv) economic growth, (v) management, (vi) research and innovation, (vii) international issues, (viii) territorial networks, (ix) private law and, finally (x) communication. This indicates that services are subordinate to and a by-product of interest representation. The main exception is legal advice, where the umbrella organisation is very active.The CGPME places special emphasis on providing specific services for smaller companies as opposed to large enterprises. This helps define its profile in contrast to the MEDEF whose resources and management are more suited to a lobbying role. The CGPME often offers its services in cooperation with other institutions which are co-managed by the State, and with business associations such as AGEFOS-PME (which is engaged in professional training programmes and company staff qualification), or FORCE PME (which assists businessmen in the development of their commercial, management and export activities). These collaborative projects are financed by membership fees as well as state subsidies.

4.3. Human and Financial resources

In 2004, the MEDEF had 200 staff members. No data is available for its 87 federations. Its annual budget was 31.1 million €. 20.48 million € came from membership fees, 2.38 million from the sales of services to non-members and interests on assets. 8.24 million € were paid by the state and European programmes for the MEDEF’s activities in different national and European public projects. As far as the CGPME is concerned, no budget data is available since it is considered confidential. In 2004, the CGPME had 30 staff members (Table 5).

4.4. Internal Reforms

The MEDEF (formerly CNPF) has launched a series of internal reforms from the late 1980s onwards (Weber 1991). Seriously plagued by debt in 1987, the CNPF had to borrow money from its federations and implement a restructuring plan that led to an important reduction of its staff members from 227 to 180 members. In 1995, financial problems re-emerged and the CNPF called upon its members to make a large and exceptional contribution. The budget was cut by 13% which indicates a decrease in member confidence since the early 1990s (Bunel, 1997). In 1998, the CNPF was transformed by its charismatic leader, Ernest Antoine Seillière, into the MEDEF, implying a complete restructuring of the organisation. The structure became project-oriented, and communication skills were put at the centre of the organisation’s activities. Opinion formation and communications with the media, the public and the

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authorities became MEDEF’s main objective. Its ten working groups are designed to elaborate action proposals which leads some observers to see the MEDEF as a form of neoliberal economic think tank.From 2003 onwards, however, income from membership fees again decreased as a result of the overall economic recession. Moreover, the construction of a new headquarters building made new savings measures necessary in order to avoid a long-term budgetary deficit. A 2 million € savings plan was implemented in 2004. The MEDEF has reduced its expenditures by 15%. The staff was reduced by approximately 15 persons and in house services were externalised. Membership fees, however, were not reduced.As far as the CGPME is concerned, no reforms were undertaken during the past fifteen years.

5. Conclusion

In France, business interests are aggregated and processed by the MEDEF, CGPME and UPA along two lines of collective action: by sector and territory. In the course of the consultation and decision-making structures of MEDEF and CGPME, members express their interests in the name of the chemical industry, the insurance sector or the textile industry, or on the behalf of such territorial areas as the Ardèche, the Maynenne, or the Somme. The aggregated interests do not necessarily reflect those of the individual enterprises. As regards the aggregation of interests, it seems that the main dividing line is not between big and small enterprises, but rather, between the different sectoral organisations. Voting rights in the peak organisations are generally weighted according to number of members. At the lowest associational level, voting rights are not weighted but organised according to "one firm - one vote". Therefore, voting rights do not give big business more influence then SMEs in the French peak business associations. Big business does not need collective interest representation, and manages to defend its interests individually, due to the special relationship with the French administration and politicians. Therefore, the MEDEF, which according to common wisdom is considered the spokesperson of big industry, devotes no specific structure to the representation of large firms. Due to their large financial and social resources, large companies can influence public debates individually. The MEDEF is regarded today as the main spokesperson for French business, because of its important relations with the media and the political sphere. The CGPME generally tends to follow the MEDEF’s opinions, despite the dismissal of its former president who was considered to be too close of the MEDEF’s official position. Whereas this situation annoys some of its member associations, they continue to stick to CGPME. The main reason for this is the given division of labour between the two confederations. It has become generally accepted that MEDEF concentrates on interest representation, while CGPME focuses on services, rather than on interest representation. This contrast is not as clear cut as it may seem on paper, but a careful analysis of the confederations' rhetoric and discourses leads to this conclusion. Despite this informal division of labour, CGPME faces a number of problems: First, the real service providers in France are the Chambers of Commerce and Industry. Second, the particularism of its powerful member associations often creates difficulties in reaching coherent positions. Finally, UPA also represents micro-companies in a very professional manner. The CGPME must therefore seek an identity between the MEDEF, representing all French business, and the UPA representing micro-companies in the craft sector. The CGPME’s “identity crisis” echoes the French multi-associational business interest intermediation system, where a company takes on multiple memberships in order to cover all its interests by associational action.

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Table 1: Companies and employment* by company size**

Employment   2000 2002 Change in %2000-2002    %    %

0 persons Companies 1 196 500 49,59% 1249000 50.08 4,41 to 9 persons Companies 1 052 000 43.56 1307000 42.42 24,2  Employme

nt 3 813 200 24.58 3841780 24.4 0,710 to 49 persons Companies 139 000 5.76 158000 6.34 13,7  Employme

nt 4 371 300 33.93 4487325 28.5 2,750 to 249 persons Companies 22 900 0.95 24000 0.96 4,8  Employme

nt 4053 697 26.11 4364514 27.72 7,7250 and more persons Companies 4 600 0.13 5000 0.20 8,7  Employme

nt 3 277 503 21.12 3051381 19.38 -6,9Total Companies 2 415000 100.0 2 496 000 100.0 3,4  Employme

nt15 515 700 100.0 15 745

000100.0 1,5

* Employees and self-employed persons** NACE C-I,K,N,O,P

Source: INSEE

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Table 2: France’s cross-sectoral business associations: Basic data (2002)

Association

Scope of functions

Membership domain

Direct members

Companies covered

Employees covered

Voting rights**

ACFCI Trade All businesses, with exception of agriculture and the crafts

180 chambers1 800 000

No figures Unweighted

APMC Trade All crafts businesses 160 chambers 846 000

No figures Unweighted

MEDEF Mixed All businesses, with the main exception of agriculture

87 federations750 000 15 000 000* Weighted

CGPME Mixed Small and Medium Sized enterprises (0-499 employees)

250 federations

1 500 000

13 000 000* Weighted

UPA Mixed Micro-companies in crafts

3 confederations

836 000 No figures Unweighted

* estimated**for details see text

Table 3: Representational activities of the MEDEF and the CGPME

Type of activity MEDEF CGPMERepresents:Labour market interests vis-à-vis the unions Yes YesLabour market interests vis-à-vis the state Yes YesGoods and service market interests in relation to customers No NoGoods and service market interests in relation to suppliers No NoGoods and service market interests in relation to the state Yes Yes

Participates in the formulation of and/or implementation of:Public schemes for vocational training Yes YesPublic schemes to aid business Yes YesPublic schemes for the standardization of products and product quality Yes Yes

Main activities are market in italics.

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Table 4: Services provided by the MEDEF and the CGPME

Services related to MEDEF CGPMEIndustrial relations Yes YesEconomic policy programs Yes YesExchange relations with supplies No NoExchange relations with customers Yes YesVocational training Yes YesFurther training of company staff Yes YesDeveloping/monitoring quality standards for products Yes YesLegal advice Yes Yes

Table 5: The MEDEF and CGPME: Human and financial resources (2002)

MEDEF CGPMEHuman resourcesNumber of staff members

Peak levelAssociation as a wholeSatellite associations

200No dataNo data

30No dataNo data

Staff members per 1000 member firms 0.27 0.02Staff members per 1000 employees working in member firms 0.013 0.002Revenue Sources (as a percentage of total revenues)Membership dues (firm members) none noneMembership dues (affiliated associations) 20.48 mio € No dataVoluntary subsidies from members none No dataServices sales 2.38 mio € No dataObligatory dues and levies No data No dataRevenues from the state (including contracts with the government and the EU)

8.24 mio € No data

Other none No dataTotal 31.10 mio € No data

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GERMANYJürgen Grote and Achim Lang, University of Konstanz

Introduction

Like in other European countries, the share of SMEs in the German economy is considerable. Diversified quality production, as described by Streeck (1991), is essentially provided by this type of firm and belongs to the main cornerstones underlying this country’s success for most of the post-war period. It must come as a surprise, therefore, that so little systematic information is available in terms of economic performance and significance of these firms and about the institutional and organizational framework by which they are governed -- including their interest associations. In our view, this has to do with the fact that the term SME or, for that matter, the German equivalent of Klein- und Mittelunternehmen (KMU), is hardly ever used in public discourse. Politics and the media rather prefer to speak of Mittelstand – an idiosyncratic phenomenon escaping attempts of precise definition and delimitation. Even where the Federal Office for Statistics (Statistisches Bundesamt) has been providing data on company size and on the employment share of different size categories, this is either very outdated - the last head count being of 1987 – or, as mentioned by Germany’s industrial peak association, does not “specify for sector. There are no indicators as to whether a firm pertains to industry, craft, or commerce” (BDI 2003:27). The data presented in this chapter, therefore, is drawn from various sources and is not officially certified in each individual case. This is different for the most significant group within the category of Mittelstand, i.e. craft or German Handwerk. Although hard to describe as a concept, Handwerk can easily be distinguished from the rest of Mittelstand. Its peak association, the Zentralverband des Deutschen Handwerks (ZDH), frequently publishes data on number of firms, employment share and on economic performance. With Handwerk representing the most significant part of Mittelstand and with Mittelstand comprising industrial, commercial and agricultural enterprises, we shall spend quite some efforts to disentangle these two German specialties. We shall treat Mittelstand in terms of a policy domain (Mittelstandspolitik) while referring to Handwerk in terms of a clearly delimited economic sector.

Research desiderata in the realm of associative activities by SMEs are even more pronounced than in the case of basic economic indicators.44 In our view, this must be attributed to the fact that the organizations representing the domain cannot easily be subsumed under either the corporatist or the pluralist variety. The picture emerging appears to be extremely mixed and ranges from private interest governance represented by the system of Handwerk and an extremely fragmented and pluralist set-up in the case of most of the remaining Mittelstand associations. We shall proceed as follows. Firstly, we describe external determinants of associative action, i.e. economic, sector and cultural factors. Secondly, we turn to the legal prescriptions relevant to SMEs and also comment on issues related to social dialogue and public policy-making. In the central section, we finally describe the system of business interest associations. This section is divided into three major parts. The first describes the overall pattern of ASMEs and BIAs and presents relevant data. The second turns to a description of individual ASMEs and BIAs. In the final part, we analyze Germany’s most important ASME, the Zentralverband des Deutschen Handwerks (ZDH).

44 There are a couple of exceptions to this. Wolfgang Streeck (1989) has produced an enlightening analysis of German craft associations. It demonstrates that the system of German Handwerk probably comes closest to the ideal-type of Private Interest Government (PIG) discussed by Schmitter and Streeck in their seminal work of 1985. Thomas Krickhahn (1995) has presented a most encompassing study on German Mittelstand associations. We shall heavily draw from these authors’ work and shall also make use of own research in that area (Grote 1992; 1995; 1999; Grote and Lang 2004).

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External Determinants of Associative Action

The Economic Structure

The structure of German business according to firm size categories is in line with the other EU member states. Small and medium-sized enterprises (SMEs) contribute 99,6% to the total number of companies and 60% to the total amount of employees in 2001. Compared to the EU-15 average, in Germany SMEs play a slightly minor role in terms of number of companies and amount of employees. A closer look reveals that the share of micro firms is below the EU average (Germany: 88,2%; EU: 93,2%), while the share of small enterprises (Germany: 10,2%; EU: 5,8%), of medium-sized companies (Germany: 1,2%; EU: 0,8%) and of large enterprises (Germany: 0,4%; EU: 0,2%) is above the average of the EU-15. A similar pattern can be found when looking at the employment share data by firm size. Again, the share of small firms (Germany: 20,3%; EU: 18,9%) and of large enterprises (Germany: 39,9%; EU: 33,6%) is above the European average, while the share of micro firms (Germany: 28,7%; EU: 34,6%) and of medium-sized enterprises (Germany: 11,1%; EU: 12,9%) is below average.

In a comparative perspective there is no such thing as a common European economic structure and all member states depart to a certain extend from the European average. Nevertheless, there are three country clusters sharing similar patters in their economic structure (see Figure 1): The country profiles reveal high similarities between most of the Scandinavian and the

Central European countries (upper right cluster). The structural profile of the German economy lies within this cluster. Characteristic of these countries is a relatively high share of large enterprises and of employment in these enterprises clearly exceeding the EU-15 average. On the contrary, the share of employment in micro-firms is far below average.

FIGURE 1: Employment shares and enterprise shares by size categories. Country profiles of the EU member states. Metric MDS and hierarchical clustering (average linkage).

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Source: EIM Business & Policy Research

The second, lower right hand side cluster contains a set of smaller countries. These countries exhibit relatively high shares of small, medium-sized and large enterprises and employment exceeding the EU-15 average by far. At the same time, the relevance of micro enterprises for employment is lower than in almost all other EU member states.

The third cluster contains the southern European countries except Greece. Here, micro firms are more in important both in numbers and in terms of and employment, while large enterprises carry relatively little weight compared to the other EU member states.

Historically, the importance of different size classes within the German economy has changed only incrementally. Figure 1 shows the developments of firm size and employment by enterprise size. Changes in percentages are not very pronounced in general. Yet, they reveal a clear trend towards a strengthening of the micro and small firm sector which gained more importance compared to the medium and larger enterprises. In particular, employment in micro and small firms is more widespread than thirty years ago (1970: 37,3; 2001: 48,9) and has overtaken the larger enterprises as the major employers in German economy.

TABLE 1: Companies and employment share* by company size

Size-Class(number of employees)

1970**Size-Class(number of employees)

2001***

% Frequency**** %

1 to 9 Enterprises 88,5 1 to 9 Enterprises 3155 88,2

Employment 21,7 Employment 8579 28,6

10 to 49 Enterprises 9,3 10 to 49 Enterprises 364 10,2

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Dim 1

210-1-2-3

Dim

2

1,5

1,0

,5

0,0

-,5

-1,0

-1,5

UK

S

E

P

NL

LUX

I

IREe

HEL

D

F

FIN

DK

B

A

Employment 15,6 Employment 6090 20,3

50 to 199 Enterprises 1,7 50 to 249 Enterprises 44 1,2

Employment 14,1 Employment 3315 11,1

>= 200 Enterprises 0,6 >= 250 Enterprises 13 0,04

Employment 48,7 Employment 11961 39,9

Total Enterprises 100 Enterprises 3576 100

Employment 100 Employment 29947 100

Source:* Employees and self-employed persons** Weimer 1990*** EIM Business & Policy Research**** in thousands

Note: The percentages 1970 only refer to West Germany.

In contrast to the developments of the enterprise structure of the German economy the shares of establishments by firm size show the opposite trend (see Table 1). Micro firms apart, all size categories exhibit significant increases over the past 100 years. Their share constantly declined from almost 97% in 1895 to 80.4% in 2002. On the other hand, the shares of small and mediums-sized establishments increased steadily. Today, their share is more than six times as high as in 1895.

This clear trend of organizing economic activity in greater units has also left its mark on employment share by establishment size. The importance of micro firms as the basic production unit in Germany has undoubtedly diminished during the last 100 years. Today, only 18,1% of all employees work in micro establishments compared to 54,6% in 1895. On the other hand, larger establishments of 200 employees and beyond have gained in importance and today more than two thirds of the total workforce is employed in these companies.

TABLE 2: Establishments* and employment by establishment size

Size-Class (number of employees)

1895** 1925** 1950** 1970**

Size-Class(number of employees)

2002***

% % % % %

1 to 10Establishment

s96,9 94,5 92,4 85,9 1 to 9 80,4

Employment 54,6 36,7 36,8 22,8 18,1

11 to 50Establishment

s2,5 4,2 6,3 11,1 10 to 49 15,5

Employment 15,8 16,6 20,0 20,8 23,8

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51 to 200Establishment

s0,5 1,0 1,1 2,3 50 to 199 3,3

Employment 14,0 16,6 16,2 19,6 22,9

>= 201Establishment

s0,1 0,3 0,2 0,7 >= 200 0,8

Employment 15,6 30,1 27,0 36,8 35,2

TotalEstablishment

s100 100 100 100 Total 100

Employment 100 100 100 100 100

Source:* Employees and self-employed persons** Stockmann/Kleber 1985*** Bundesanstalt für Arbeit (30.6.2002)

Note: The percentages for 1950 and 1970 only refer to West Germany.

Note that the data presented above exclusively refers to the size of enterprises and establishments and not to their possible legal status or otherwise relevant properties such as, for example, their adherence to industry, craft, commerce or services. As demonstrated in the subsequent sections, size alone is no sufficient criterion in Germany for a firm to become organized. A number of additional indices need to be considered, therefore.

The evolution of the small and medium-sized firm sector and its persisting importance is basically due to the late industrialisation of large parts of the German economy. Until World War II, there existed a dual economic structure including a modern industrial sector and a traditional craft sector whose function was to meet the population’s demands for everyday goods (Lutz 1984). The industrialisation of the consumer goods sector and new technologies of mass production resulted in the craft sector to diminish but by no means in its complete dissolution (see Section 2.2). The reason for the delayed industrialisation of the consumer good sector can be seen in the dominance of the capital goods industry which absorbed the entire mechanical engineering capacity at that time. The promotion of the armaments industry during the German Empire and the Third Reich further strengthened this tendency (Weimer 1990). The victory of the mass production industry after World War II led to a decline in the number of craft enterprises in some areas of the economy but, at the same time, opened up new fields of activity, mainly in the services sector. “Completely new craft industries emerged, which today account for a considerable proportion of the [manufacturing] sector as a whole; e.g. vehicle repair and electrical trade” (Weimer 1990: 112).

Culture: German idiosyncracies

On surface, considering the available statistical material, to foreign observers it must seem as if there were no small and medium-sized enterprises in Germany. The most recent complete survey on enterprise activities for all economic sectors (Unternehmensregister) that distinguishes between different size categories of firms is dated of 1987. Up-to date information on enterprise size is essentially provided by research institutes, consultants, or

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interest associations. This data is often biased following the preferences of these institutes for or against specific definitions of what should and what should not be included under the SME category. Moreover, SME is not widely used as a term in public discourse and hardly any of the five dozens or so SME-related organizations counted by Krickhahn (1995) carries “small and medium-sized” in its name. Size alone does not seem to be sufficient either as a criterion of self-perception or as a label under which associational entrepreneurs would be able to organize potential members. This has to do with a German peculiarity according to which small entrepreneurs are sheltered or otherwise set apart from their larger cousins by definitions that either refer to normative and ideological values or to formal legal prescriptions and regulations.

The most significant normative term habitually used for describing SMEs and their owners is Mittelstand. This category, however, is hard to define empirically since it is not quantifiable with respect to size, turnover or ownership status. Embodying more a social class rather than a specific economic activity, it includes companies of all sectors and branches as well as the liberal professions. At the same time, the most significant legal definition for characterizing SMEs in Germany is Handwerk. Just as Mittelstand, the concept of Handwerk is difficult to translate. As argued by Streeck (1989:62), “most of what is called ‘small business’ in other countries falls in Germany in the legal category of Handwerk. The least awkward equivalent of Handwerker in English is probably ‘artisan’; a close competitor might be ‘independent craftsman’”. The author goes on saying that “difficulties in translation may point to differences not just in perception but in reality, and indeed a case could be made that Handwerk is so peculiarly German that the concept is simply not translatable.” Considering these idiosyncrasies, we treat Handwerk as a proper economic category and, accordingly, present data on the most representative of this category’s association. At the same time, being difficult to measure empirically, we treat Mittelstand in terms of a policy domain rather than an economic category. Although the SME-domain can be politically framed and referred to in terms of Mittelstand, not all Mittelstand firms are SMEs. Likewise, not all Mittelstand associations are ASMEs as defined for the purpose of this project.

2.2.1. Mittelstand

“Firms do not organize according to statistical yardsticks” (Grote 1995:238), be they of domestic or supranational origin. Since it is difficult to build up, maintain and develop identity in a field virtually including the entire economy, reference to cultural values and established norms may help overcoming this organization problem. Mittelstand is precisely that social property used by most interest associations and politicians to increase the appeal of organized collective action and of policies respectively. The problem being that there is hardly any consensus about what is actually meant with this category. “There hardly is a comparable term in economic policy being as enigmatic as Mittelstand” (Gellner 1968:37). Krickhahn (1995:12) has counted almost 200 different definitions and this number is constantly increasing with every new attempt to analytically delimit the boundaries of the domain.

Historically, it have been the affluent strata of the bourgeoisie located somewhere in between the nobility and the proletarian masses which have been accredited the term – “Stand” indeed oscillating in its meaning between rank, status, profession and estate. During the 19th century, it referred to independent commercialists, farmers and artisans. Later on, salaried employees and civil servants were additionally included under this heading. Towards the end of the century, modern industry and free trade began to be perceived as a threat to small-scale producers. Likewise, their concerns were shared by the Bismarck government for which “the possible ‘proletarianization’ of a group which was one of its staunchest allies presented a formidable threat” (Streeck 1989:66). Offering them political and economic

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support “was seen by Bismarck as an ideal opportunity to cultivate a Mittelstand constituency that would for a long time be immune to the lures of social democracy and provide a stable base of support for conservative governments” (ibid.).

Until today, it essentially has remained a question of subjective self-assessment and ideological preferences whether or not one believes to adhere to the domain. At the same time, most policy-makers and interest associations continue to refer to Mittelstand despite the above inconveniences. Most current definitions, however, are subject to arbitrary choice. For example, a distinction could be made between purely quantitative and more qualitative measures. While the former is less of a problem, qualitative definitions easily escape operationalization. Possible candidates are, for instance, (i) legal status (single establishment controlled by an owner-entrepreneur); (ii) organizational form (arms-length control by the owner); (iii) financial assets (capital hold by the entrepreneur; absence of vertically integrated structures within larger compounds) and, finally, (iv) production pattern (absence of serial production and no pronounced division of labour). Taking account of this difficulty, recent reports presented by the BDI (2002; 2003), Germany’s peak association of industry, use “family-owned” as a proxy for Mittelstand (see data in Table A, Appendix). With craft enterprises being excluded from that definition, the report demonstrates that in 2001 some 83.5 per cent of all industrial companies in Germany, i.e. a total of 88.832 (90.431 in 1998), are companies pertaining to the category of Mittelstand. Interestingly, it also emerges that there are 589 Mittelstand firms in 2001 which, by operating the size criterion habitually used in Germany for that category, i.e. less than 500 employees, would not qualify as small and medium sized (639 in 1998). Making use of the EU-definition, i.e. less than 250 employees, this figure would even rise to 1.900.

2.2.2. Handwerk

Entrepreneurs and artisans producing according to "Handwerk" regulations represent the core group of German Mittelstand. Representing a specific mode of production (customized quality products) rather than an ideological concept, Handwerk is above all a legal term. It is by no means an economically marginal group. Only specifically licensed establishments of self-employed individuals are granted the permission to operate under Handwerk rules. These rules are laid down in the Handwerksordnung (HwO), which identifies the criteria by which Handwerk is distinguished from other forms of economic activity, in particular, industry. The most recent version of Appendix A of the HwO45 lists 94 trades and professions in which artisan production may occur. These trades are ordered under seven broad categories: building and construction; metal-working; woodworking; clothing, textile and leather; food processing; health care, cosmetics, chemicals and cleaning; and, finally, glas and ceramics (Pilgrim 1995:6).

TABLE 3: Craft in the narrow sense - enterprises, employment and turnover in the craft sector, 1991-2001

Year No. of enterprises (in 1000)

No. of employees (in 1000)

Turnover(in billion EUR)

craft craft- craft craft- Craft craft-1994 666.8 123.3 6.300 290.4 498.3 13.7

45 See, for the last version of the HwO, the following web-address: http://bundesrecht.juris.de/bundesrecht/hwo.

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1995 672.6 138.6 6.292 297.9 500.1 14.01996 675.1 148.7 6.186 306.7 497.0 14.11997 678.8 159.9 6.067 315.4 499.6 14.31998 686.9 163.6 5.900 323.0 500.9 14.61999 685.5 170.8 5.706 330.0 509.5 14.82000 682.2 176.1 5.523 335.5 505.9 15.12001 673.7 177.0 5.308 340.0 494.2 15.4

Source: ZDH 2003.

The number of trades eligible under Handwerk rules has declined over the past 20 years. Streeck (1989:63), for example, has counted 125 trades in 1989. In addition to the above, Appendix B of the HwO specifies further 57 minor trades (40 in 1989), i.e. craft-related activities (handwerksähnliche Betriebe) for which inclusion is less restrictive but which also come under the broad label of Handwerk. In Table 4 above, data is presented on the development of enterprises and their employment share over the period 1994-2001 for both categories. Compared to the 106.000 or so industrial enterprises active in 2001 (see Table 3), these figures are impressing. While the number of firms operating under craft norms in the strict sense has remained relatively stable over the decade, their employment has increased from 4.5 million to more than 5.3 million. The number of companies pertaining to the category of craft-related activities increased from 123.000 to 177.000 with a workforce of 340.000 in 2001. Together, both types of craft account for 845.147 establishments which employ some 5.6 million people. Although the range of company size classes in Handwerk is very broad, the average firm has a workforce of eight employees with peaks eventually arriving at 500 and beyond. This latter frequently happens, for example, in the case of enterprises of the construction industry which nonetheless qualify for membership in the category and are obliged to register with one of the local chambers (Pilgrim 1995:5). Altogether, this makes the associations which organize craft and craft-related companies at the sub-national level, i.e. the Chambers of Artisans (Handwerkskammern, HWKs) and their national peak association, the Central Association of German artisans (the Zentralverband des Deutschen Handwerks, ZDH), the most representative SME organizations in Germany.

The definition of what exactly qualifies for craft has somewhat changed over the century and it is the courts which decide in the last instance what can be included. The first criterion relates to the mode of production: “The courts have a long tradition of jurisdiction on what does and does not constitute an artisanal mode of production […]. The prevailing opinion at the turn of the century [1800-1900] was that Handwerk, as distinct from the emerging, modern, large-scale ‘Industrie’, was characterized by small site of establishments, active participation of the owner in the process of production, exclusive employment of skilled labour, an absence of both a formal division of labour and machines, customized production for local markets, no formal book-keeping, and no specialized administrative staff” (Streeck 1989:64). Almost each of these criteria was later eroded or abandoned by successive court rulings due to the fact that Handwerk was thought to remain flexible. Today, a number of newly emerging professions, qualifications and forms of innovative production can be found among German Handwerk enterprises due to the recurrent reformulation and up-dating of the HwO46. Maintaining the criteria in a restrictive way would have led to a decoupling of the

46 Eight new professions have been added to the list in 2002. Taking account of the high speed of technological innovation, new regulations are currently in discussion for a number of professions in the area of electronic appliances and telecommunication. Norms for more established professions are equally checked and modified according to the needs of technological developments. Finally, new regulations for management experts responsible for running craft enterprises are being developed under the HwO (ZDH 2003:83-84).

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category from innovation. As shown above, size as well is no longer a distinguishing criterion.

The second rule by which the HwO defines Handwerk as an institution relates to the qualification of both the owners and the employees of artisan firms. Concerning the former, a Handwerk license is identical with the Master certificate. To become a master, an individual has first to serve a three-years apprenticeship (Lehre) including a final examination (Gesellenprüfung). Secondly, as a Geselle, one normally works for several years as a journeyman before registering in a two-years Master course at a special school which then, thirdly, is terminated with the Master examination. The entire curriculum is organized, supervised and controlled by the chambers of artisans (HWKs). To understand the high level of qualification obtained in that system, suffice is to say that the prestigious university degree of Diplom-Ingenieur (graduated engineer) carries the same entitlement to run an artisan business as the Master certificate. Approaching that system from the perspective of the free movement of goods, services and workforces, which should be standard in the EU, one could say that it looks like “one giant conspiracy in restraint of trade, and indeed in a sense it is” (Streeck 1989:66).

The creation of barriers to market entry and of monopolies, however, is not the whole story. Eventual welfare losses resulting from over-regulation are more than upset by the contribution of Handwerk to a stable influx of customized quality goods and services and, secondly, to high-level vocational training. First of all, the long training that master artisans have to undergo and, in particular, the curricula of the Meister-schools, ensure that there is an ample supply of people with exceptionally high skills. In 2001, 34 per cent of all apprenticeship contracts concluded in Germany were in the craft sector (51 per cent in industry and commerce). The number of people trained within the system has slightly increased over the past decade, although the volume of Meister examinations has declined from roughly 45.000 in 1991 to 28.000 in 2001 (ZDH 2003:88). This is an indication of the fact that the chambers are becoming increasingly active on the free, i.e. unregulated market for vocational training which is becoming and ever more important source of their income (interview with HWK-Konstanz, March 2004). Within this unregulated market, the HWKs compete with all sorts of institutions like, for instance, private training agencies, public schools and polytechnics, Volkshochschulen, etc. Secondly, vocational training under the formal HwO regulations supplies the entire economy with skilled workers. Many of the Handwerk apprentices later go to work in large industrial firms where they are more than welcome. As noted by Streeck some 15 years ago, “the role of Handwerk in generating this resource [i.e. high qualifications] is one of the main reasons why this peculiar institution continues to be so firmly established and why it is unlikely to lose its political or cultural legitimacy in the foreseeable future” (Streeck 1989:68).

Looking at Streeck’s claim today, it is indeed astonishing how Handwerk has managed to defend its legal assets not only, as some fifty years ago, vis-á-vis the liberalizing pressure of the allied forces, but also with a view to more recent attempts of depriving the sector of its special status. There have been a number of initiatives in that respect both domestically and at the European level. Some of these were aimed at both types of chambers, i.e. the chambers of the craft sector (HWKs) and the chambers of industry and commerce (IHKs). For example, on initiative of the Social-Democrats, a parliamentary hearing took place in 1996 that aimed at modifying the system of compulsory dues of chamber members. Before 1993, a significant fraction of the income of IHKs was paid by the larger company members. About 52 per cent of the members were exempt of fees due to their smaller size. This practice was changed and made more balanced after 1993, and it is exactly this attempt of equalizing the conditions for subscriptions fees which triggered a lot of critique both among chamber members and some political forces. It resulted in attacks against compulsory membership in general and also led

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to the establishment of a movement among chamber members aiming to break away from this institution. Private associations, it was argued, should assume the tasks of the chambers and a respective draft law was put before Parliament by representatives of the Green Party on 8 November 1996. The document argued that (i) exclusively designed for the immediate post-War situation, the existing law was practically out-dated; (ii) it was incompatible with Art.52 of the EEC Treaty; (iii) organized interest associations had generally lost much of their earlier legitimacy [crisis of the “associational state”]; and finally, (iv) that foreign investors would be hampered by existing regulations. All this was successfully turned down by the chambers which employed a great number of lawyers and other experts to underline the indispensability of a public system with compulsory membership status (see, for example, Kluth 1997).

As regards the legal regulation on Handwerk, a number of further attempts were made to liberalize the category. For example, one initiative in 2002 proposed to grant access to the category to individuals without the required qualifications. Following first recommendations made by the Hartz-Commission on the reform of the labour market which was set up by the country’s red-green coalition government in the same year, the assumption was that facilitating entry for not formally qualified candidates would help the unemployed to establish own enterprises (so-called Ich-AGs, or “Ego Ltd.”) and thus contribute to reducing unemployment figures. The HwO survived these attempts without further modifications. For the time being, the master certificate will remain the essential criterion for entry. The only reforms adopted so far rather concern the administration of the system with its two ramified pillars of chambers (HWKs) and professional associations (guilds or Innungen). It was substantially streamlined and resulted in a decline in the number of district and of other territorial offices especially of the Innungen (see section 5.4).

In more recent times, the highly institutionalized system of German craft also had to suffer the impact of Europeanization when it came under attack by European authorities. Due to pressure exerted by the ZDH and some other professional associations, a previous EU regulation (1999/42/EC) concerning the recognition of foreign certificates and qualifications and the free movement of persons had never been transposed into domestic law in Germany. This resulted in the country being brought before the European Court. The subsequent 5 th

Directive on Craft and the Artisanat has also met strong critique on the part of the ZDH. However, as mentioned by the organization itself, it is likely that the German system for the regulation of craft industries will manage to avoid major modifications in the foreseeable future (ZDH 2003:76). Overall then, it could be said that, once established, institutional inertia is so pronounced in heavily regulated and para-state systems like the one of the HwO, that it is likely to survive all types of external pressure just as it has done for more than a century.

The Legal Framework of Associative Action

The German fundamental law (Grundgesetz or GG) mentions the political parties as actors in the political process which may assist in the formulation of the public opinion. Interest associations are not assigned a special function within the political process but are subsumed as a special case under Article 9 GG which grants the freedom of association (Vereinigungsfreiheit). The underlying intention not to include the interest associations into the fundamental law was the idea of the separation of state and society. The freedom of association was constructed as an individual freedom right that should be protected against state interference (Reutter 2001: 78f). Interest associations are seen as part of the society. Thus the German fundamental law only considers their relation and freedom from the state and not their inclusion within institutions of the state (Grimm 1995: 657).

The Association Acts within the German civil code (Bürgerliches Gesetzbuch or BGB) lay down the basic requirements an interest association has to meet (§§ 21-79 BGB). They define

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the means, the ends and the internal structure of voluntary associations. The main executive bodies are the general assembly (§ 32 BGB) and the governing body (§ 26 BGB). The Association Acts of the BGB that regulate the freedom of association mentioned in the fundamental law do not specify the legal requirements in greater detail but delegates most to private autonomy. The BGB does not regulate or even mention the external relations of voluntary associations and the design of internal structures fall mainly under the responsibilities of the founders and members of an association. As far as the freedom rights of the associations’ members are concerned, the Article 9 of the fundamental law subsumes them under the right to leave an association (Grimm 1995: 657f).

Some aspects of the external relations of voluntary associations to public institutions are normed by the rules of procedures of the ministries and other government agencies and the standing orders of the Bundestag. These procedures regulate the access to these institutions and their advisory committees (Weber 1977: 175-179).

Similar to the Austrian case chambers play a major role in representing business in Germany. Besides the chambers that regulate particular professions, e.g. lawyers, all German enterprises are obliged by law to be member of either the chambers of commerce (Industrie- und Handelskammern) or the crafts chambers (Handwerkskammern). Both chambers are deeply involved in state regulatory functions which have been assigned to them by law. The chambers regulate training and further training, grant certificates and support the public administration in all aspects regarding business interests that fall under their domain.

The legal provisions in the fundamental law, the BGB and the rules of procedure do neither impede nor support the voluntary association of SMEs. The mandatory membership in chambers is a means of overcoming the lower associability of SMEs in Germany.

The system of social dialogue and public policy making

In a comparative perspective the German system of industrial relations has turned out to be highly stable. During the last thirty years the dominant level of collective wage bargaining was the industry level and the collective agreements covered the vast majority of employees within the industry (Traxler et al. 2001: 113-115). Nevertheless collective wage bargaining takes place at regional and branch level where some regions set the pattern which is subsequently extended to the national level (Bispinck 1995: 76f).

The German system of industrial relations is composed of two hierarchically organised actor sets: the peak-level trade union (Deutscher Gewerkschaftsbund or DGB) and its affiliates on the one hand and the peak-level employer association (Bundesvereinigung der Deutschen Arbeitgeberverbände or BDA) and its affiliates on the other hand. The whole system is characterised by the weak position of the peak-level organisations which receive a certain share of the membership fees of their affiliates. Thus the peak-level organisations play a minor role in the collective wage bargaining reducing their function to mainly representational and co-ordination tasks (Reutter 2001:84-86).

As regards the employer associations engaged in collective wage bargaining arrangement, there is no associational differentiation between large enterprises and SMEs. Due to the trade unions’ preference for conducting consultations and bargaining with one single interlocutor there is no incentive for organised business to set up different employer associations according to company size. But “Germany’s BDA and its affiliates have become the target of criticism by ASU, also an association of SMEs, which complains that employer organizations orient their policy too much towards the large firms” (Traxler et al. 2001: 53). Other SME associations adopted an even more radical position by advocating the abolition of any kind of collective wage bargaining (Müller-Jentsch 1993).

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The German political system is always referred to as moderately-to-strongly corporatist (Siaroff 1999) where relevant interest groups have a say in at least sectoral policies (Reutter 2001). In contrast to more corporatist countries like Austria, Germany has not built up an effective macro-economic co-ordination system where the peak-level organisations of capital and labour jointly with the government concert their policies.

In Germany several hundred advisory committees and councils have been set up which mainly co-ordinate policies at the meso-level (Weber 1977, Reutter 2001). Two attempts have been made to extend the practices of meso-level social dialogue to the macro-level:

The change in government 1966 led to a reorientation of economic policy substituting the dominant neo-liberal paradigm by a new Keynesian approach. One of the first measures taken by the new government was the institutionalization of a consultation body where the economic activities should be harmonized and concerted (“Konzertierte Aktion”). The list of participants included also representatives of organised business and labour, among them were the Federation of German Industry (BDI), the Confederation of German Employers' Associations (BDA), the Association of German Chambers of Industry and Commerce (DIHK) and the German Confederation of Craft associations (ZDH) (Zink 1975). The end of the “concerted action” was marked by the leaving of the trade unions in 1977.

In 1996 a new attempt was made under the government of chancellor Kohl to revive the tripartite concertation of economic policy. The so-called “employment pact” (“Bündnis für Arbeit”) was re-established in 1998 by the new Schröder-government and ended in 2003, again due to the leaving of the trade unions which refused to harmonise the wage bargaining process with the monetary and fiscal policy (Zohlnhöfer 2003). This time the macro-level social dialogue included only a few participants, among them were the Federation of German Industry (BDI) and the Confederation of German Employers' Associations (BDA) (Lehmbruch 1999).

In recent years the Federal Ministry of Economics and Labour (Bundesministerium für Wirtschaft und Arbeit) launched several programs in order “to safeguard SMEs' ticket to the future” (http://www.bmwi.de/Navigation/Service/Englisch/small-business-policy.html):

The German initiative for small and medium-sized enterprises (“pro mittelstand”) seeks to improve the condition of founders of new enterprises by lowering the turnover tax for micro firms and excempt them from membership fees for the chambers of industry and commerce as well as the chambers of handicraft during the first years. On 1 January 2004, the Act on Reforms on the Labour Market came into force which relaxed the conditions in the labour market for SMEs. The amendment of the Act on Protection against Unfair Dismissal altered the threshold level of dismissal from five employees up to ten. The Act on Part-Time and Fixed-Term Employment relaxed the conditions for start-ups to conclude temporary work contracts. The initiative is set up as a Co-operation between the Federal Ministry of Economics and Labour and the DIHK.

The initiative “MittelstandPlus” seeks to support SMEs to find experts for board of directors and their advisory committees Again the Federal Ministry of Economics and Labour and the DIHK co-operated in this initiative.

The program “Innovation im Mittelstand” supports the research and development of new products as well as their market entry. Several business interest associations cooperate with Federal Ministry of Economics and Labour, among them is the DIHK.

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The system of business interest associationsThe German system of business interest associations originated in the first half of the 19th

century due to the processes of industrialization. At the beginning there were no more than

business alliances operating at a regional basis. The upcoming labor movement forced many

of them to merge or cooperate in order to broaden their scope of activities (Weber 1977).

The after-world war II period saw the reconstruction of the associational system that followed the path set by the structures and traditions of the German Empire (Ullmann 1988). As early as 1946 more than eighty trade associations were re-established in the British and US zones of occupation. The Allied forces actively supported the revival of organized business in Western-Germany in order to coordinate and reconstruct the post-war economy (Plumpe 2000). Nevertheless, they refused early attempts of building an hierarchically integrated system of trade associations (Simon 1976: 48-51).

In autumn 1949 representatives of several trade associations founded a central peak association, which was subsequently renamed in Bundesverband der Deutschen Industrie or BDI (Federation of German Industry). Business interests in the third sector did not develop a single hierarchical organization but founded several peak associations, which covered important sub-sectors of the German economy. Together with the BDI and other sectoral peaks, these associations jointly established the Council of German Business (Gemeinschaftsausschuss der Deutschen Gewerblichen Wirtschaft) in which the whole range of policy issues including labor relations is discussed (Reutter 2001). Although important in terms of its coverage of the German economy, the Council is nothing but an informal grouping of most relevant peak associations of industry, commerce, craft, services, insurance and banking. No binding decisions can be taken in its meetings. At the same time, concerning SME policies, the Council is not completely irrelevant. For example, in September 2002, for the first time in its history, the Council delivered a memorandum on Mittelstand policies (Mut zu Reformen – für nachhaltiges Wachstum und Beschäftigung) that was signed by all its members and has been widely discussed in the media (ZDH 2003:11).

In what follows, we describe the system of interest associations that are of relevance to small and medium-sized enterprises. We distinguish between two categories. First, the most significant ASMEs and BIAs are analyzed being active in or co-determining political decisions within the policy domain SME (Mittelstandspolitik). Secondly, we turn to proper ASMEs with a sufficiently high degree of representativeness and describe some of their major properties. The three most important German BIAs for the representation of general industrial interests (DIHK, BDI and BDA) shall also be included here. Finally, we select the peak association of craft industries, the ZDH, as the most important and most representative group for SMEs and outline some of its major characteristics.

5.1. ASMEs and BIAs operating in the policy domain SME: The overall pattern

The two chamber systems governed by their peaks ZDH (Zentralverband des Deutschen Handwerks) and DIHK (Deutscher Industrie- und Handelskammertag) and the two peak associations of industrial producers BDI (Bundesverband der Deutschen Industrie) and employers BDA (Bundesvereinigung der Deutschen Unternehmerverbände) are the most influential cross-sectoral peak associations whose domains include small and medium-sized enterprises. This fully applies to the ZDH whose members on average employ some seven to eight employees. Concerning DIHK, BDI and BDA, many if not most of their members are SMEs. Yet, this does not imply that they would choose small firms to be their main clientele in terms of policies adopted.

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TABLE 4: Germany´s most relevant ASMEs and BIAs, basic data (2002)

Scope of functions

InternalSME definition

Membership domain Members

Firm Members(in 1000)

Employees covered(in 1000)

Voting rights

ASU Trade association

< 500 All branches, only family businesses

Firms 6,5 1700 Unweighted

AWM Trade association

< 500 All branches, only SMEs

98 Tradeassociations

100 650 Companies covered by the affiliates

BDA Employer association

< 500 All branches 54 Employerassociations

2000 20000 Employees covered by the affiliates

BDI Trade association

Only industry 34 Trade associations

NA NA Employees covered by the affiliates

BDS-DGV

Trade association

< 500 All branches, only SMEs

firms 80 1360 Companies covered by the affiliates

BVMW Trade association

< 500 All branches, only SMEs

34 TradeAssociations,54.000 direct firm members

150 (including affiliates)

2800 Unweighted

DIHK Trade association

< 500 All branches, except agriculture, craft and the free professions. Obligatory membership

81 regional Chambers of trade and commerce

3600 32000 Unweighted

ZDH Trade and employer association

< 250 Only craft, obligatory membership

55 regional Chambers of handicraft and 43 national professional confederations (Innungen)

850 5648 Unweighted

Apart from this, there is a myriad of further associations claiming to represent the interests of small firms. Compared to either the chambers or the other two associations, most of these groups are relatively insignificant in terms of their membership. There are, however, some few among them having up to 100.000 members and beyond. The most important of these are also included in Table 4 which contains original data drawn from a questionnaire by the authors. We have included these smaller ASMEs because their existence can hardly be neglected in a report on small firms’ interest representation. Much of the following is drawn from a study published by Krickhahn in 1995 and from an own survey conducted for this report.47

Krickhahn (1995) has recently presented information on the entire population of Mittelstand associations in Germany. He differentiates between organizations of general

47 Additional results of this survey can be consulted in the Appendix.

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relevance for decision-making within the policy domain SME on the one hand (“mittelstandsrelevante Organisationen”) and proper ASMEs concerned with the representation of SME interests. Within the first group, there also are associations such as the BDI and the BDA, i.e. the two peaks of producer and employer associations, side by side with groups affiliated to political parties (e.g. the MIT, the Christian Democrat’s Mittelstand organization) and associations of the self-employed, etc. Within the second group, some of the ASMEs only cover a limited number of specific sectors while some others represent the entire category. This distinction made by Krickhahn is quite reasonable given the impressive number and high variety of organizations either being active in the policy domain SME (“Mittelstandspolitik”) and/ or in the business of representing SME interests as an economic category. With respect to the policy domain, we have argued that this variety is likely to result from the subjective perceptions of entrepreneurs mostly embedded within politically conservative traditions (Mittelstand ideology). With respect to the economic category, it results from the fact that there is no single actor capable and willing to organize SMEs irrespective of their sector or political inclination and represent them vis-à-vis larger enterprises and public authorities. None of the five dozen or so smaller ASMEs active in Germany is sector-unspecific in its coverage of potential members. Many organize entrepreneurs with even more specific characteristics including age, sex, and political sympathies. Only the most representative of these will here be described more in detail.

The procedure of boundary specification48 used by Krickhahn starts with a nominalistic technique making use of handbooks and of the 1987 lobbying list of the German Bundestag. Snowball sampling is then used for identifying the most important organizations within the policy domain. This results in a total of 56 organizations 42 of which are proper ASMEs. Some of these latter cover the entire national territory and different sectors while others are limited to specific geographic areas and to one or only a few branches. In a second step, turning to a realist technique of delimiting the boundaries of his sample, Krickhahn further reduces this number by reputation analysis based on responses by leading figures of these organizations themselves. Using specific cut-off values qualifying for inclusion, the author arrives at a total of 19 organizations that are most relevant in the policy domain SME. These also include the BDI and the BDA. For the purpose of this report, and following the definition of an ASME as established in the introduction to this book, we have dropped those associations from that list that only organize firms of one specific sector such as, e.g. commerce, retailing or that represent the interests of entrepreneurs with specific characteristics not of concern to our question (e.g. associations of young entrepreneurs, etc.). Given that the two peak associations of German industrialists and employers result to be very active in the policy domain without actually being ASMEs, we have substituted the less relevant ASMEs described by Krickhahn with the BDI and the BDA. Table C in the Appendix presents relational data on the six most important ASMEs. As can easily been seen, both ZDH and DIHK are attributed the highest relevance by the respondents. Overall, we therefore ended up with the eight associations contained in Table 4. They all meet the select criterion for inclusion, i.e. activity in at least three 3-digit NACE categories. We have then approached these eight associations with a standardized questionnaire asking for specific organizational properties and activities carried out in the domain.

Apart from the information presented in the Appendix, the questionnaire was also interested in patterns of cooperation and competition among these associations. The respective information provided by the respondents has been brought into matrix format and was then submitted to basic network-analytic operations. The result is quite unambiguous. Our sample clearly divides into two clusters that remain completely unconnected among each other. The first cluster is made up of the four most important peaks for producer and employer

48 The term is borrowed from the network-analytic literature.

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interests and industrial and craft enterprises, i.e. BDI, BDA, DIHK and ZDH (see Figure 2), while the second cluster exclusively assembles less relevant ASMEs.

FIGURE 2: Co-operation and competition within and among two clusters of associations

Circles represent general BIAs while squares are proper ASMEs. Undirected lines indicate mutual cooperation and undirected dotted lines indicate mutual competition. Directed lines indicate a competitive relationship that is reported only by one actor but not confirmed by the other. It results that the two clusters are not connected by either type of relation. Strongly cooperating among each other, members of the first cluster (the four peaks) do not choose nor are they being chosen [by] members of the ASME cluster. Their domains do not overlap and their system is hierarchically structured exhibiting a pronounced division of labour (producer versus employer interests, industry and commerce versus craft, etc.). Note that the second pillar of the ZDH system, i.e. the one made up of professional guilds (Innungen), is directly affiliated to the BDA through its central professional association, the BFH (Bundesvereinigung der Fachverbände des Deutschen Handwerks).

At the same time, occupants of the second cluster (the four ASMEs) more or less strongly compete among each other either for membership or for political resources and attention. The guiding role of the four peaks, therefore, seems to be uncontested by the high number of ASMEs active in the domain of which ASU, AWM, BDS-GDV and BVMW represent only a small but significant fraction. In turn, members of Cluster I do not feel to be challenged by the latter neither. In other words, irrespective of whether the first are proper ASMEs or BIAs with a relatively high share of SMEs, the system of peak associations is extremely ordered in terms of coordination, lacking overlaps, division of labour and so forth. At the same time, given that no single association manages to become a major point of reference for SMEs irrespective of their belonging to a specific sector, the system of ASMEs is extremely messy, uncoordinated and competitive.

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ZDH

BDS-DGV

BVMW

ASU

Cluster I

BDI

ZDH

DIHK

BDA

Cluster IIAW

5.2. ASMEs: Case studies

BDS-DGV:

Looking back at a history of more than one hundred years (founding date of predecessor 1891), the BDS (Bundesverband der Selbständigen – Deutscher Gewerbeverband) belongs to the oldest trade associations in Germany. With a total of 12 regional associations which partly combine the smaller Länder, it is present in all 16 federal states and operates a total of about 3.000 local and district offices and associations (authors’ survey, 2004). Its 80.000 member companies have about 1.36 million employees and are present in almost all economic branches except agriculture, fisheries, and mining. The exact share in terms of the numbers of enterprises (1993 data) is as follows: craft and artisan sector (40%), retailing (35%), services (10%), wholesale trade (5%), industry (4%), liberal professions (4%), transport and communication (2%). The BDS-DGV employs some 50 permanent staff (authors’ survey, 2004) which is a drastic reduction compared to the figures for 1993 (150 full-time employees) presented by Krickhahn (1995:159). The key activity of this professional association is the representation of producer interests vis-à-vis the state. It clearly belongs to the relatively small group of more significant Mittelstand organizations and maintains a competitive relationship with most of the other groups operating in this domain, in particular with the BVMW. At the European level, the BDS-DGV is organized in UEAPME, the European Union of Small and Medium-Sized Enterprises.

BVMW:

The Berufsverband mittelständische Wirtschaft was founded in 1975 as a mixed membership association for the representation of general, i.e. sector and territory unspecific interests of small and medium-sized firms. In 1993, the BVMW had a total of 20.000 direct firm members and 34 affiliated smaller associations (Krickhahn 1995). In 2004, the overall number of direct members was 54.000 (BVMW web-page 2004). In total, the association represents 150.000 enterprises with about 2.8 million employees. In terms of company size, some 88 per cent of its members had less than 50 employees. The association is active in virtually all branches whereby the latter’s share in terms of the distribution of its members was as follows in 1993: industry (10%), artisans (20%), wholesale (5%), retailing (15%), liberal professions and services (30%), transport and communication (5%) and others (10%). The BVMW claims to be a peak association and hence is not member of a higher-order association. The representation of interests on the national and European level as well as central services, consultation and administration are furnished by the federal offices in Bonn, Berlin and Brussels having a staff of 25 employees. In addition, there are many collaborators acting on a honorary basis. As resulting from our survey, BVMW competes for members or maintains otherwise competitive relationships with essentially all other SME associations except the four peaks contained in Figure 1. At the European level, the BVMW is organized in the European Confederation of Associations of Small and Medium-Sized Enterprises.

AWM:

The Aktionsgemeinschaft Wirtschaftlicher Mittelstand was founded in 1973 as a trade association essentially representing service sector firms. Today, the association is made up of 98 affiliated branch and professional associations representing a total of approximately 100.000 SMEs plus an additional 540 direct firm and 37 supporting members (AWM Jahresbericht 2002). AWM consists of 26 federal associations, 7 regional associations whose

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national peaks are not members of AWM and a total of 65 regional and district associations whose peaks are members of AWM. The federal office in Berlin is run by four full-time staff while the AWM’s member associations employ an additional 80 full-time collaborators. The association presents itself as the voice of small and medium-sized service enterprises. AWM claims that there are about 650.000 employees working in its member companies out of a total of approximately 5 million employees employed in the service sector (authors’ survey, 2004). It also claims to represent more than 10 per cent of the approximately 850.000 enterprises operating in the service sector. The remaining 15.000 firms are architects, free professions, managers of assurance companies and so forth. It is, therefore, the most representative voluntary association active in that sector. At the European level, the AWM is organized in EUMU, the European Union of Small and Medium-Sized Enterprises.

ASU:

The Arbeitsgemeinschaft Selbständiger Unternehmer is an association of predominantly family-owned Mittelstand companies with a membership of approximately 6.500. ASU member firms on average employ some 200-300 employees. This makes for a total of about 1.7 million people employed and an annual turnover of about 100 billion Euros. Quite large enterprises belonged to its founding members in 1949, for example, Bahlsen, Henkel and Cloppenburg. In terms of the numbers of enterprises, the share of sectors among the association’s members is as follows: manufacturing (33.6%), services (33.4%), commerce (17.9%), construction industry (8.9%) and others (1.3%). The ASU headquarter is in Berlin from where it coordinates the activities of about 45 territorial offices at the district and county level. Of these, about 22 are full-time employees while there are further 200 collaborators working on an honorary basis.

As demonstrated by Figure 1, the main competitors for both influence and members of ASU are the BDS-DGV and the BVMW. ASU does not compete, however, with the peak associations of industry, commerce and the artisan sector. It merely wishes to promote principles of the social market economy and, in particular, the virtues of working self-employed. At the European level, the ASU is organized in the European Group of Owner Managed and Family Enterprises (GEEF).

5.3. BIAs: Case studies

In the German system of business interest associations the “general Mittelstand associations are relatively insignificant in the network of SME-relevant associations. They exhibit a rather fragmented overall pattern of relations. The associational system of Mittelstand is dominated by the [four] peak associations of the German economy” (Krickhahn 1995:320). Of these latter, only the ZDH actually organizes SMEs proper. The remaining three associations are relevant to the extent that they have a very high share of SMEs among their members and also operate specific committees for SME or Mittelstand interests (DIHK and BDI). Alternatively, they may also coordinate collective bargaining for industrial SMEs and craft enterprises (BDA). In general, however, they do not present themselves as ASMEs and can be said to essentially represent the interests of larger enterprises.

Although formally independent, BDI, BDA and DIHK are hosted by the Haus der Deutschen Wirtschaft in Berlin since November 1999. Technical coordination and other internal services within the joint-headquarters that are relevant to the three organizations have been externalized to a facility-management company. Organizational problems and possible synergy effects are frequently discussed among representatives of all three actors. The new headquarters in Berlin which has moved the three peaks much closer to government has also had the effect of improved inter-associational coordination. The headquarter of the craft

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sector’s peak association, the Zentralverband des Deutschen Handwerks (ZDH), which organizes the 55 HWKs and 43 nation-wide professional associations (Innungen) is the Haus des Deutschen Handwerks in Berlin. Almost everything concerning the interests of SMEs in Germany, be it economic regulations, questions of training and vocational training, financial management, industrial relations and so forth is decided by representatives of associations located in one or both of these two sites. Coordination among these four major organizations is further institutionalized through their membership in the Gemeinschaftsausschuss der Deutschen Gewerblichen Wirtschaft (Council of German Business) which cares for the educational, social and economic interests of virtually all branches of the country’s economy.

BDI:

The Bundesverband der Deutschen Industrie represents the interests of 34 affiliated branch and sector associations of manufacturing firms. None of the Mittelstand associations mentioned above is directly affiliated. Among the organization’s thirteen permanent committees49, one is responsible for SMEs (Mittelstandsausschuss). The Berlin headquarters is staffed with about 150 full-time employees. The BDI also hosts some 60-70 traineeships per year and a certain number of trainees are additionally exchanged with the BDA just next door. The 34 sector associations apart, the BDI also has 15 sector-unspecific territorial, i.e. Länder-associations which, however, possess no voice in federal matters (Henneberger 1998). Their main task is external representation of political interests vis-à-vis the Länder governments. Vice versa, just as the IHKs, they are the main points of reference for these governments in all industrial and economic problems related to territory. The association does not provide for up-to-date information concerning its size of membership. The share of SMEs, however, is likely to be very high, i.e. definitely above 90 per cent.

BDA:

The Bundesvereinigung der deutschen Arbeitgeberverbände is Germany’s peak association of employers. It operates under this name since 1951 with its headquarters located in Cologne until 1999. The BDA organises a total of 54 sectoral employer peaks and 14 regional associations. These, in turn, possess more than 1.000 autonomous employers associations among their affiliates. The sectors covered by this peak association practically include the entire economy, i.e. industry (including mining), craft, agriculture, wholesale trade, retailing, private banks and insurance companies, transport, and other activities (§2 of the BDA Statutes as modified in 2002). One of the 54 sector associations is the BFH (Bundesvereinigung der Fachverbände des Deutschen Handwerks), the peak of the second, i.e. the voluntary column of the ZDHs organizational hierarchy. Some authors argue that the BDA’s firm membership density has substantially decreased over the past decades. For example, in 1966 density rates were at about 66 per cent, then declined to 56 per cent in 1984, in order to reach 43 per cent in 1994 (Schroeder 1997:227). The BDA itself (BDA 2003:4) claims to represent some 2 million (i.e., roughly, 75 per cent of) of the 2.7 million enterprises potentially able to join the association (authors’ survey, 2004). These represent more than 80 per cent (20 million) of the people employed in the country’s economy (25 million). The BDA’s main task is interest representation vis-à-vis the state and the unions. The organization itself, however, is no direct

49 The BDI headquarters is internally divided into one presidential office, 13 permanent committees, four foreign offices (Brussels, Washington, Tokyo and London) and further two offices responsible for public relations and internal organizational affairs.

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partner to collective bargaining but coordinates the activities of its affiliate associations through a series of recommendations and guidelines on industrial relations and incomes and social policies. This coordination is extremely important given that associative action needs to be organized on the basis of an extremely pronounced heterogeneity among members of the different affiliate associations.

Similar to the BDI, the BDA consists of two pillars. First, there are branch or sector associations at various territorial levels ranging from the district over the Länder to the federal level. The second pillar is formed by sector-unspecific territorial associations which are merged in a total of 14 Länder associations. The voting rights of the affiliates in the diverse committees and the presidential committee of the BDA are weighted according to the size of employees covered by the 54 affiliate associations. Small and medium-sized companies, of course, are primarily represented through associations such as those for services (BDD), for hotel and restaurant owners (DEHOGA), for health and fitness establishments (DSV), and so forth In general, however, Mittelstand and SME-related problems do not seem to be of particular concern to the association. Its publications, at least, are less explicit in that respect compared to the ones of, for example, the BDI or the DIHK.

DIHK:

The peak association of the German Chambers of Industry and Commerce (DIHK) is the central organisation for 81 chambers. All companies registered in Germany, with the exception of craft and craft-related activities – although there may be overlaps in some specific instances - the free professions and farms, are required by law to join a chamber. Thus, the DIHK speaks for more than three million organized entrepreneurs. They include not only big companies but also retailers and innkeepers. This gives the association considerable political influence. Although officially underlining that it would not represent any specific corporate group, the DIHK actually is a representative of small and medium-sized companies. “The chambers of industry and commerce are the companies themselves” (http://www.dihk.de/, English version). That, in a nutshell, is the role of the 82 chambers. They represent the interests of their members in relation to the local, state and regional authorities and, through the DIHK, the Federal Government and the European Commission. One of its major functions being the representation of German industry abroad, the DIHK operates a total of approximately 120 foreign (Aussenhandelskammern) and other representational offices abroad. In addition, there are further consultancy agencies attached to the system, for example, the IHK-Gesellschaft zur Förderung der Außenwirtschaft und der Unternehmensführung mbH. The German system of industrial chambers employs a total of roughly 7.000 experts responsible for economic, legal, fiscal, environmental and educational questions. A further 250.000 people from its member companies cooperate on an honorary basis.

The state has assigned to the chambers certain tasks which would be its own responsibility if those chambers did not exist. As a result, the chambers today issue certificates of origin and carnets, set vocational training examinations or, a recent innovation, maintain a register of companies who meet specific environmental standards ("eco sites"). They place experts under oath (beeidete Sachverständige), provide advisory opinions for government departments, and are involved in the appointment of arbitrators and the registration of companies. The chambers are public corporations and responsible for their own affairs, yet they are not public authorities. They are business institutions and the principal representatives of all commercial undertakings in their region. They not only perform public functions but assist their members direct as counsellors or mediators in conflicts arising in matters of local, regional and supra-regional importance. All companies pay mandatory subscriptions to their chamber according to their turnover and employment size. One advantage of [mandatory] membership is that the

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chambers represent all branches and companies equally regardless of size, whether it be the corner shop or a multinational corporation. All companies have one vote and equal rights. Although this gives SMEs quite some power within the local chambers, the latter consistently refuse to present themselves in terms of an organization specifically dealing with SME concerns. Their subscriptions keep the chambers financially independent of vested interests and government influence.

With respect to more recent attempts50 to abandon compulsory membership, these are said to reflect populist wishes which would ultimately result in the exact opposite to happen of what has originally be intended: “[…] one very important point is generally overlooked - the exceptional efficiency of this system of corporate self-government. The state certainly would not become leaner if it had to take on the role of the chambers again. Not even the best and most economical public authority could carry out the mandatory tasks of the chambers and guarantee the same price and the same quality. This is because the chambers, unlike the state, can draw upon a vast reservoir of local voluntary business expertise” (DIHK Webpage, English Version, March 2004). Detailed comments on demands for the abolition of compulsory membership are made in DITK (1996) which reports the organization’s answers given during a hearing before Parliament.

5.4 The Zentralverband des Deutschen Handwerks (ZDH)

Although only representing enterprises belonging to the category of craft, the ZDH is the most representative of the organizations treated so far with respect to the interests of SMEs and, hence, needs some special treatment. As we have seen in the section dealing with the HwO (pp.8-12), craft enterprises in Germany “are represented by one of the most complex, most comprehensive and most densely legally regulated systems of interest organizations anywhere in the Western world” (Streeck 1989:69).

The core of the system is the 55 chambers of handicraft (Handwerkskammern, HWKs) representing the 151 trades and craft-related activities at the county level, altogether covering the entire territory of the Federal Republic. The DHKT is the compulsory pillar of the HWK system. The HWKs are public law institutions with compulsory membership and keep the register of the licensed artisans (see section 2.2.2 above) in their territory. Since they make their own budgets and because, at the same time, their decisions require public approval by the Land ministry for economic affairs, they are a mixture of a para-state agency and a voluntary interest association.

FIGURE 3: The structure of Handwerk-organization

50 In reality, these attempts have a longer history as shown in a detailed comparative study of chamber systems in the UK and in other European countries (Forster 1983:97-98).

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Source: Streeck 1989:76

While the compulsory pillar is based on the HWKs, the voluntary pillar is made up of specific professional associations, i.e. the local guilds (Innungen). While membership in the Innungen is voluntary, guilds are equally public law institutions (see Figure 2). There can be no two guilds for the same trade in the same place. There have been a total of 6.379 guilds in 2001. Table 5 below suggests that there has been a significant decline in the number of guilds over the past decade. In part, this is due to organizational restructuring. As documented by the annual report of the ZDH (2003), there have been a certain number of mergers between guilds (Innungen), County offices (Kreishandwerkerschaften, KHS) and Länder-level professional associations (Landesinnungsverband, LIV).

According to Streeck, the decline in the number of guilds over the period 1963-1983 can be traced to adjustments in the structure of local government and administrative reforms during that time. Interviews carried out by us with a couple of local chambers revealed that the continued decline is caused by decreasing willingness of the firms to associate and maintain their membership. The density ratio of between 85 to 99 per cent of eligible firms being affiliated to a guild reported by Streeck some fifteen years ago (1989:70) may not anymore be valid.

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ZDH

BFH DHKT

BIV

LIV

LHV

LFH LHKT

HWK

KHSGuild

Firm

National level

Länder level

Subregional level

Local level

specializedby trade

compulsory membership

voluntary membership

public law status

private law status

tradeunspecific

In any case, craft and craft-related enterprises, by definition, are members of a HWK but can also be affiliates to a guild. These two pillars are connected by an intermediate organization, the County offices (Kreishandwerkerschaften, KHS). As shown in Figure 2, this pattern is replicated at each level of territorial complexity. At the very apex of the two columns, there are two organizations representing the compulsory and the voluntary pillars of the system. These are the Federal Association of the Chambers of Artisans, the DHKT (Deutscher Handwerkskammertag) and the Federal Association of National Guild Associations, the BFH (Bundesvereinigung der Fachverbände des Deutschen Handwerks).

TABLE 5: The organization of craft and of craft-related activities (no. of companies, of chambers, of district chambers and of professional associations), 1991-2002

no. of chambers and professional guilds

no. of craft and of craft-related companies

year HWKs districtchambers

Innungen(guilds)

craft craft related total craft

1991 56 347 7.219 642.234 96.460 738.6941992 56 380 7.451 650.652 101.188 751.8291993 56 381 7.451 658.568 106.838 765.4061994 56 373 7.399 666.793 123.252 790.0451995 56 367 7.272 672.613 138.551 811.1641996 55 365 7.167 675.081 148.707 823.7881997 55 357 6.995 678.829 159.937 838.7661998 55 357 6.857 686.939 163.647 850.5861999 55 357 6.791 685.456 170.823 856.2792000 55 353 6.650 682.151 176.126 858.2772001 55 350 6.379 673.674 177.022 850.6962002 55 n.a. n.a. 668.877 176.270 845.147

Source: ZDH 2003:19

These two finally form a further organization, the Central Association of German Artisans, the ZDH (Zentralverband des Deutschen Handwerks) with some 100 full-time staff. Although, formally, ZDG, DHKT and BFH are separate legal entities, in practise they function as if they were one. The BFH, in a sense, operates as the industrial relations unit of the ZDH while the DHKT cares for subjects such as vocational training and all other subject matters under the jurisdiction of the chambers. To complete the picture, this tripartite structure is repeated at the level of each German Land in form of a Landeshandwerksvertretung (LHV), a Landesvereinigung der Fachverbände des Handwerks (LIV) and, finally, a Landeshandwerkskammertag (LHKT).

Summarizing, one could say that the system is characterized by six complementary organizational functions (see Streeck 1989:75-77): public and private law activities; compulsory and voluntary membership; horizontal and vertical representation; the functions of employer associations and other functions; representation of individual trades and craft as a whole; territorial differentiation of organization (i.e. local, sub-regional, regional and federal).

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Conclusions

When we started approaching the problem of small firm representation in Germany, we came across two peculiarities that were so significant that they could hardly be omitted in this chapter. These were the concepts of Mittelstand and of Handwerk. As we try to show, these concepts have a number of important practical and political implications. Concerning the former, Mittelstand, this concept dominates the entire domain of SME-related policies. The policy domain SME (Mittelstandspolitik) is densely populated by a high number of ASMEs and other organizations and is organized in a strongly fragmented and competitive manner. No single ASME has managed to arise as a central point of reference for the general representation of SME interests irrespective of sector.

On the other hand, the concept of Handwerk translates into practical norms regulating this economic category and into an organizational set-up that is both highly exclusionary and hierarchically ordered. It excludes industrial firms and includes, by way of obligatory membership, all enterprises producing according to artisan rules and run by entrepreneurs having obtained a master certificate.

Regarding Mittelstandspolitik, a relatively small number of ASMEs turned out to dominate that domain. These are, first of all, the three most important peaks for the representation of business interests, i.e. BDI, BDA, and DIHK. We have included them despite the fact that they and, in particular, the two former, are often accused of being the voice of big business and of powerful multinationals. Nevertheless, they organize all SMEs of the industrial sector, run numerous committees for SME interests, and often intervene in favour of SMEs vis-à-vis political authorities both at the national and the supranational level. Regarding craft, there only is one all-encompassing organization, namely the Zentralverband des Deutschen Handwerks (ZDH) which is the peak association of both the local chambers (HWKs) and the local professional associations (guilds or Innungen).

The German associational structure in the SME domain and their separation in two distinct clusters of business interest associations can be explained by refering to the two well know logics of influence and membership (Schmitter/Streeck 1999).The established hierarchical system includes either chambers with compulsory membership (ZDH, DIHK) or encompassing peak associations which represent the entire economy (BDA) or the industrial sector (BDI). Their incorporation into policy formulation and implementation favours a logic of influence often neglecting diverging opinions within their membership. The most significant divide occurring within BDI, BDA and DIHK is that between large corporations and small and medium-sized enterprises. Disappointment on the part of the latter and the relatively loose coupling to the interests of smaller members has given rise to the establishment of an ASME structure outside the corporatist cluster. This new cluster is characterized by high degrees of competition which has so far prevented the establishment of a more encompassing system of SME interest representation. German Handwerk is the exception to this, but only organizes craft enterprises. If there really is an organizational setting coming close to the ideal-typical description of a Private Interest Government, then this certainly is represented by this sector. Whether its legal prescriptions and organizational format will manage to weather the storm of globalization cum Europeanization (Coleman 1997) must remain an open question.

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Appendix

TAB. A: Number of industrial enterprises (mining, manufacturing, construction, water and

energy) and employment category 2001 and 1998

total industry total family-ownedNo. of employees

2001 1998 2001 1998

1 – 19 79.216 82.579 70.428 73.924

20 – 49 6.875 6.097 5.774 5.138

50 – 99 7.520 7.585 5.626 5.873

100 – 249 7.965 5.104

250 – 499 (100 – 499)

2.721 8780 1.311 4.857

500 – 999 1.251 1.200 438 491

>1000 850 853 151 148

Total 106.398 107.094 88.832 90.431

Source: BDI and Ernst & Young, 2003, 2002

TAB. B: Abbreviations

Abbr.

ASUArbeitsgemeinschaft Selbständiger Unternehmer

Association of Self-Employed Entrepreneurs

AWMAktionsgemeinschaft Wirtschaftlicher Mittelstand

Association of Economic Mittelstand

BDABundesvereinigung Deutscher Arbeitgeberverbände

Confederation of German Employers' Associations

BDIBundesverband der Deutschen Industrie

Federation of German Industry

BDS-DGV

Bundesverband der Selbständigen – Deutscher Gewerbeverband

German Association of Self-Employed Professionals

BVMWBundesverband Mittelständische Wirtschaft

Confederation of Economic Mittelstand

DIHKDeutscher Industrie- und Handelskammertag

Association of German Chambers of Industry and Commerce

124

ZDHZentralverband des Deutschen Handwerks

Central Association of German Craft

TAB. C: Structural information on most important ASMEs (1993 data)

Name reputation%

contact%

support%

cooperation%

BVMW 0.7 0.8 1.0 0.0

AWM 5.4 5.6 5.0 5.8

BDS 9.5 4.8 6.0 2.9

ASU 12.2 6.4 7.0 4.3

DIHK 8.2 16.0 12.0 17.4

ZDH 16.3 14.4 11.0 15.9

Source: Krickhahn 1995: 223-224; 253-273. The figures represent the percentages of choices made by 35 associational leaders with respect to the 56 members of the overall sample from which we have drawn our six ASMEs. Since results for these two are based on a different sample composition, the respective figures for both the BDI and BDA are not considered here. Note that, on average, none of the other 50 associations manages to achieve more than about between 1-2 per cent of the choices on the relations measured. This justifies our choice in favour of the six ASMEs included in the table.

TAB.D: Representational activities of Germany´s cross-sectoral business associations

Type of activity AS

U

AWM BDA BDI BDS-

DGV

BVMW DIH

K

ZD

H

Represents:

Labour market interests vis-à-vis the

unions

N N B N N N n.a. I

Labour market interests vis-à-vis the

state

D D B N D D N I

Product market interests in relation to

customers

n.a. I n.a. B I I N N

Product market interests in relation to

suppliers

n.a. I n.a. B N I n.a. n.a

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Product market interests in relation to

the state

n.a. D n.a. B D I B B

Participates in the formulation of and/or

implementation of:

Public schemes for vocational training No Yes Yes Yes No No Yes Yes

Public schemes to aid business No No n.a. Yes Yes No Yes Yes

Public schemes for the standardization

of products and product quality

No No n.a. Yes No Yes n.a. Yes

D: Direct activity;I: Indirect activity via affiliates; B: Both, direct and indirect; N: Neither direct nor indirect.n.a.: no answer

TAB.E: Services provided by Germany´s cross-sectoral business associations

Services related to ASU AWM BDA BDI BDS-DGV

BVMW

DIHK ZDH

Industrial relations Yes-

F*

Yes-

F*

Yes-F No Yes-

C*

No No Yes-F

Economic policy programs Yes-F Yes-F No Yes-F Yes-C Yes-F Yes-F Yes-F

Exchange relations with

supplies

Yes-F Yes-F No Yes-F No No No No

Exchange relations with

customers

Yes-F Yes-F No Yes-F Yes-C Yes-F Yes-F Yes-F

Vocational training Yes-F Yes-F Yes-F Yes-F Yes-C Yes-F Yes-C Yes-F

Further training and

qualification of company staff

Yes-F Yes-F Yes-F Yes-F Yes-C Yes-F Yes-F Yes-F

Developing/monitoring

quality standards for products

Yes-F Yes-F No Yes-F n.a. No No n.a.

F: free, C: charged.n.a.: no answer* not involved in collective wage bargaining

TAB.F: Germany´s cross-sectoral business associations: Human and financial resources (2002)

126

ASU AWM BDA BDI BDS-DGV

BVMW DIHK ZDH

Human resources

Number of staff members* 22 84 ~3000 50 25 ~7000

Staff members per 1000 member

firms

3,39 0,84 1,5 0,63 0,48 1,94

Staff members per 1000 employees working in member firms

0,01 0,13 0,15 0,04 0,02 0,22

Composition of revenues (in

percent)

Membership dues (firm

members)

95,0 10,0 0,0 100,0 100,0 0,0

Membership dues (affiliated

associations)

0,0 70,0 100,0 0,0 0,0 99,5

Voluntary subsidies from

members

0,0 0,0 0,0 0,0 0,0 0,5

Sales of Services 0,0 20,0 0,0 0,0 0,0 0,0

Obligatory dues and levies 0,0 0,0 0,0 0,0 0,0 0,0

Revenues from the state

(including contracts with

government)

0,0 0,0 0,0 0,0 0,0 0,0

Other 5,0 0,0 0,0 0,0 0,0 0,0

Total 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0

* Including the staff of the affiliated associations

127

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GREECEAliki Mouriki, National Centre for Social Research, Athens

1. The socio-economic and cultural background

Greece, along with Italy, has the largest proportion of firms per inhabitant in the EU: 694.4 and 683 firms per 10 000 inhabitants respectively, against 546.4 firms in the EU (Eurostat, 2001). In Greece, there exist over 800 000 SMEs 51, which constitute 99% of all firms (see Table 1). In the manufacturing sector, where SMEs also constitute 99% of firms, they contribute 27% to manufacturing GDP and account for 63.6% of total employment in the sector. In the commercial sector, SMEs constitute 96.5% of firms, they contribute 20% to GDP and account for 14% of total employment (Economic and Social Committee 2003). SMEs, also, amount considerably to the creation of new jobs. The vast majority (95%) of firms are micro-business employing less than 10 employees and are mostly family-run. 52

These micro-firms account for 65.5% of total employment. [National Action Plan of Employment, 2003] Self-employment is very widespread in Greece (41.8% of total employment), as opposed to the EU average (14.6%) (Employment in Europe 2002). On the other hand, firms employing less than 50 employees account for 73.5% of total employment and 59.2% of firms’ revenues (Economic and Social Committee 2001).

Table 1SMEs according to size

2001

micro(0-9)

small(10-49)

medium(50-249)

large(≥250)

total(N)

number of firms

797 000 17 000 2000 1000 817 000

number of employees

1 068 000 319 000 238 000 249 000 1 872 000

Source: Micha van Lin, EIM Business and Policy Research

It is worth pointing out, however, that the viability of newly established firms is very precarious: according to a recent survey carried out by the Federation of Greek Industries (SEV), 7 out of 10 newly established firms close down within 12 months, whilst the number of closures exceeds that of new establishments.

Organised business interests in Greece are differentiated not only according to the type of business activity and the size of firms, but also along political party affiliations. This was more pronounced in the past, when political parties had virtually “colonised” organised interests. 53 Nowadays, the boundaries between political parties and interest groups have become more distinct and business is organised along more autonomous lines. Given that the overwhelming

51 Although in Greece, there are no universally accepted criteria for defining a firm as an SME, for the purpose of this report, we will adopt the definition set out in the EU Recommendation of 6-5-2003, whereby a firm is considered medium-sized if it employs between 50-249 employees, small size if it employs between 10-49 employees and a micro firm if it employs less than 10 employees. However, a more refined definition would be more appropriate to grasp the special category of self-employed entrepreneurs, which, in Greece, are an important business group.52 Owing to inadequate and unreliable data, it is difficult to establish the full extent of business activity in Greece, especially regarding the micro-firms’ sector. See Economic and Social Committee, 2003.53 The term “colonised” is used in Lanza & Lavdas, 2000

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majority of firms are small and micro-firms, the main divide in business representation is between the SMEs, on one hand, and the remaining part of business, on the other.

Major problems facing SMEs in Greece

Despite some undisputable improvements in the business environment over the past few years, SMEs in Greece are still faced with a number of chronic problems that hold up their unrestrained development. The most important of these problems include:

difficult access to outside financing complicated and time-consuming procedures to establish a firm excessive regulation and “red tape”, that create a disproportionate administrative burden on small

firms as compared to larger firms a complicated and unfair taxation system that discriminates against entrepreneurial activities 54

an ineffective public administration unfair competition, exacerbated by regulated markets, illicit trade and the persistence of a number

of “closed professions”, where free access is denied (e.g. lawyers, notaries, accountants, pharmacists, etc.)

a low-skilled workforce (only 1.2% of the adult labour force participates in lifelong learning) excessive non-wage labour costs due to high employers’ social security contributions (43,9% of

the wage bill, one of the highest proportions in the EU) lack of technical support from the state authorities social security problems (low pensions, inadequate coverage, sustainability problems).

Main weaknesses

Moreover, the majority of SMEs suffers from a number of long-standing shortcomings that are responsible for their low competitiveness.

low educational level of entrepreneurs traditional managerial structure, often family-owned business low-risk culture low penetration of information and communication technologies, low access to electronic business

and the digital society very low R&D expenditure and propensity to innovate absence of a partnership approach (networking, corporate social responsibility, etc.) most SMEs lack the human and technical resources that would allow them to reap the full benefits

of the special programmes directed to them through the Community Support Frameworks

Overall, the SMEs operate in a socio-economic context that is greatly improved compared to the recent past: participation of the Greek economy in the EMU and the euro-zone, high growth rates, a stabilised economy, social peace, a modernised public infrastructure, steady influx of EU funding, etc. On the other hand, the Greek economy is still lagging behind in a number of crucial indicators: high public debt, low labour productivity, low international competitiveness 55, declining attraction of foreign investments, an ineffective and overgrown public sector, rigid labour market structures, high unemployment rates (9.3% in 2003), an obsolete educational system, etc. 54 The taxation system in Greece suffers from many inconsistencies, and is unable to restrain extensive tax evasion. On the other hand, the contradictory and short-lived measures taken for its rationalisation, are more adjusted to large firms, than SMEs, that are the backbone of the Greek economy.55 Greece ranks 36th, according to the IMD ranking, and, 43rd in the Davos ranking (see IMD National Competitiveness, Trends overall, 2002 and World Economic Forum: Current Competitiveness Index Ranking, 2001). In the enlarged EU-25, Greece ranks 21st (World Economic Forum, 2004).

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Policy recommendations

A number of policy proposals have occasionally been put forward, by various actors, regarding the SMEs. The most coherent set of proposals originate from the special working group that was set up in autumn 2003 by the Economic and Social Committee, in view of updating an earlier opinion issued in 2001 on the future prospects of the Greek SMEs. The most important recommendations include the following (Economic and Social Committee 2003): establishment of a central political agency, such as the National Council for SMEs, that

will have the capacity to co-ordinate all policies affecting the SMEs and will constitute a permanent social dialogue forum; the operation of the National Competitiveness Council alone cannot provide adequate co-ordination

active participation of the social partners in the design (from the beginning) and the implementation of policies regarding the SMEs;

establishment of a Technology and Design Institute for the SMEs; simplification of the process of starting a business and establishment of one stop shops; need for targeted policies in critical sectors; enhanced participation of the SMEs’ interest associations in the social consultation

process; development of a new entrepreneurial culture, adjusted to the new international

environment; participation in the new economy; alleviation of the excessive bureaucratic burden; access to public procurement policies.

2. The institutional framework and its practical implications

Statutory provisions

The major institutional initiative to regulate the association rights of the SMEs was introduced as late as 1987, with law 1712/1987 on the "modernisation of professional associations of traders, artisans and other professionals", following concerted and long lasting pressures from the SME’s associational movement. Until then, the internal organisation and functioning of employers’ organisations was regulated by a law dating back to 1914, by the civil code provisions on associations, and by other more or less irrelevant laws. 56 The absence of an explicit and coherent institutional framework inhibited the formation of associations and led to a multitude of contradictory and fragmentary provisions that caused unequal treatment of the various organisations. Depending on the organisation, there existed different electoral systems and different membership criteria. These irregularities were cancelled out when the 1987 legislation came into effect. This law introduced uniform regulations for the professional organisations of artisans and traders and imposed the clearing of registers from ghost organisations. Its main provisions stipulated that: (a) only individuals can become members of the professional organisations of traders, artisans and professionals; (b) the autonomy of the organisations is reinforced; (c) a member can belong to up to 2 primary level associations but can only vote once; (d) the proportionate electoral system is introduced, in view of enhancing the democratic functioning of the organisations, and (e) the financial autonomy of professional associations is established (Vassiliou 2001).

56 In fact, until 1982, the associational status was mandatory for all professional organisations.(Moudopoulos 1994).

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Law 1712/87 was not implemented right away. It came into full effect only in 1994, after having incorporated a number of amendments. The most important amendments were introduced in 1992, (law 2081/92); they aimed at curtailing the influence of sectoral federations affiliated to GSEVEE and favoured the establishment of a new confederation of commercial firms. 57 The 1992 amendments were eventually abolished in 1999, by virtue of law 2741/99, that also provides for the financial support of professional associations (i.e. the primary, secondary or tertiary-level organisations representing the traders, artisans and other professionals), through an 8% levy on the annual contributions of the Chambers’ members. According to this provision, 60% of the 8% levy is distributed to the confederal organisation GSEVEE and the remaining 40% to the confederal organisation ESEE. In turn, these two confederations have to give 10% of the amount awarded to them to the Panhellenic Exporters’ Association, and an unspecified part also to their member federations and the primary associations, according to the number of members they have.

Overall, the new legislation was welcomed by the organisations concerned, as it solved long-standing institutional problems of representativity and resource endowment. However, it did not effectively address the problem of the fragmentation of primary associations into a plethora of weak and very small organisations, with limited resources, bargaining power and mobilisation capacity.

The right to conclude collective agreements

The right to conclude collective agreements on behalf of business derives from the provisions of law 1876/1990, which recognized the right of the representative organisations of the social partners to create their own system of collective bargaining. Article 6, in particular, defines the criteria by which union and employers’ organisations are vested with the capacity to conclude a collective labour agreement at all five recognized levels: the national level, the industry-wide (sectoral) level, the occupational level, the local occupational level, and the company-level. Any individual employer with at least 50 employees has the right to sign a collective labour agreement with the most representative union, which can be either the company union or a primary sectoral union. The capacity of an employers’ organisation to sign a collective agreement can be contested by another employers’ organisation, also vested with the capacity to sign a collective agreement, through the same procedure that applies to union organisations: i.e., the contesting party must appeal to a special committee established by law 1264/1982, within 10 days after the document calling for negotiations has been notified to the Labour Inspectorate. The decision taken by the above committee is final.

The recognition system

Labour legislation recognises as representative those bodies that fulfil the relevant legal provisions and are authorised to represent labour or management in a specific sector and to conclude collective agreements.

57 The distinction between commercial federations and the rest introduced in law 2081/1992, constitutes an unfair treatment of the artisans and professionals. Article 9, in fact, provides that at the secondary level, each federation (which can be either occupational or sectoral) must consist of a minimum of 4 commercial associations or 6 artisans’ or professionals’ associations; and at the tertiary level, each confederation must consist of a minimum of either 8 federations representing traders, or 12 federations representing artisans and professionals. Moreover, the representatives of the federations are deprived of the right to elect the governing bodies of the confederation, although they maintain the right to be elected.

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Recognition rules between the social partners organizations are set out in law 1876/90 on “Free collective bargaining”. This law was introduced in 1990 and constituted a major breakthrough in modernizing industrial relations in Greece. The new regulation replaced the old centralized and authoritarian regulatory system that was characterized by pervasive state intervention and legalism. It established decentralized, democratic and voluntary procedures for settling industrial disputes, thus replacing the traditional practice of having recourse to obligatory arbitration and courts’ intervention. The underlying philosophy of law 1876/90 was to encourage the social partners to engage in collective negotiations in view of arriving at a consensus on industrial relations issues.

Recognition criteria

The principle of mutual recognition between the social negotiators applies at all levels of collective bargaining.

So far, despite the low level of union density (25%) and the weak representativity of the major employers’ organizations, which unite an array of heterogeneous forces, traditional actors seem to be retaining their status of social negotiators without being seriously contested by another interested party.

Extension procedures

The extension procedure in Greece is quite widely used. The collective agreements that are concluded between the recognised parties can be extended to all firms, whether they are members of the social partner organisation or not. There are three ways of extending a collective agreement: (a) the Labour Minister, following an opinion issued by the Supreme Labour Council, can extend the agreement to the whole sector (or occupation), if the employers that have signed it employ at least 51% of the workforce employed in that sector (or occupation)(b) a non-signatory union or employers’ organisation that is not bound by a collective agreement (occupational or industry-wide) can unilaterally adhere to one, by making a formal request to the Ministry of Employment for the extension of an agreement signed by another party. (c) an employers’ organisation and a union can jointly request to adhere to a collective agreement that regards their sector, by notifying a private document to the original signatory parties. This document must also be registered at the Labour Ministry authorities.

Special policy programs in favour of SMEs

Since 1977, state policy programs in favour of SMEs have traditionally been implemented by the National Organisation of Small and Medium-sized Handicraft Production Firms (EOMMEX). 58 Following its recent contraction of activities, there is no central institution providing adequate support to SMEs. The establishment of the Centres for the Development of Enterprises and of the Centres of Young Entrepreneurs have, so far, had a limited effect in boosting entrepreneurial activity. The on-going operational programme on Competitiveness 58 EOMMEX is a non-profit public institution supervised by the Ministry of Development. Its Board of Directors (appointed by the Minister of Development) consists of representatives from the SMEs sector of the economy. Its main mission is to provide policy advice to the Ministry of Development on the formulation of a national strategy for the development of SMEs, on the impact of legislation on the SMEs, and on ways of simplifying and improving the business environment. EOMMEX is also charged with implementing the national policies regarding the SMEs, through specific, business support measures, actions and programmes.

includes actions aimed at creating support structures for SMEs. It is mostly the business associations themselves that have created their own structures, lending support to the SMEs.

The confederal employers’ organisations are being increasingly involved in the formulation and implementation of policies regarding the SMEs. However, despite certain policy initiatives undertaken since the Lisbon Council, aimed at increasing the competitiveness of SMEs in Greece as elsewhere in the EU, the situation has only marginally improved. The firms seem unable to take advantage of the new policy instruments and to adjust to the new environment and challenges ahead. 59

3. The social dialogue system and public policy making

At the confederal, cross-sectoral level, the General Confederation of Greek Workers (GSEE) negotiates the National General Collective Labour Agreement signed every one or two years, with the three employers’ organisations, the Federation of Greek Industries (SEV), the General Confederation of Greek Small Business and Trades (GSEVEE) and the National Confederation of Hellenic Commerce (ESEE). These three employers’ organisations conduct joint negotiations with GSEE. Accordingly, the sectoral unions negotiate the industry-wide collective agreements with either the tertiary-level (confederal) employers organisations, or/and the sectoral employers’ federations.

A distinction should be made here between the employers’ organisations with a mandate to negotiate and other business interests associations, which are not recognised as social partners. Such is the case, for example, with the 58 local Chambers of industry, commerce, arts & crafts and professions. [For a detailed account, see section 4.2.]. Hence, the privileged interlocutors of the government, regarding economic policy and industrial relations issues, are SEV, GSEVEE, and ESEE. However, SEV is perhaps the most prestigious business association, with increasing authority and an influential position in policy-making. 60

The institutional reforms introduced over the past 20 years, and in particular during the 1990s,

have given a new impetus to the social dialogue process that was until then largely

underdeveloped and informal. The four social partners’ organisations [i.e. GSEE, SEV,

GSEVEE and ESEE], actively participate in the preparation of reforms on public policy issues

such as social security, labour market flexibility, taxation system, etc. They have the capacity

to nominate their representatives in a wide array of public bodies; thus, they participate in a

large number of institutions, decision-making bodies, ministerial committees, steering

committees, monitoring committees of EU funded programs, etc., the most important of

which are listed below:

the Economic and Social Committee (OKE)

59 Generally speaking, in Greece, the involvement of the social partners’ organisations in the social consultation process is often more formalistic than substantial and qualitative. As a result, their real impact remains limited in significant areas of socio-economic life, such as vocational training, skills’ accreditation, programme implementation, industrial relations, etc. (Economic and Social Committee 2001).60 For a detailed account of the privileged relations of SEV with the parties in power, see Lanza & Lavdas (2000).

The Economic and Social Committee (OKE), is the main social dialogue institution established by law 2232/1994. It is modelled on the EU Economic and Social Committee, which is based on the tripartite organisation of represented interests and is fully independent of the state. OKE plays generally an advisory role and is required to issue a reasoned (but not binding) opinion on every draft law submitted to it on important social and economic issues regarding industrial relations, social security, taxation, regional development, investment policies, exports policies, consumer protection and competition. It can also express an opinion at its own initiative on similar issues. So far, since its establishment in 1994, OKE has issued over 100 opinions. The Economic and Social Committee consists of 48 members, broken down in three distinct groups with 16 members each, the first representing the major employers’ organisations, the second representing workers’ organisations, and the third the other productive classes (farmers, independent professions, local government, consumers). Since the introduction of law 3220/2004, the President of OKE is in turn elected from one of the above three groups for a three-year term.

the National Competitiveness Committee

the National Council for Competitiveness and Growth

the Manpower Employment Organisation (OAED) and its two subsidiary

companies (i.e. the Vocational Training SA and the Employment Observatory SA)

the Mediation and Arbitration Organisation (OMED)

the Employment & Vocational Training Fund (LAEK)

the Hellenic Institute for Health & Safety at Work (ELINYAE)

the Supreme Labour Council

the National Employment Committee

the National Social Protection Committee

the Organisation for Vocational Education and Training (OEEK)

the National System Associating Vocational Education and Training with

Employment (ESSEEKA)

The National Committee for the Definition of Professional Rights

the Competition Committee

the Capital Market Committee

the National Export Council

the Social Security Foundation (IKA)

the National Land Planning Council

the National Centre for Vocational Orientation (EKEP)

the National Organisation of Small and Medium-sized Handicraft Production

Firms (EOMMEX)

The Hellenic Standardisation Organisation (ELOT).

4. The associational system of business and its actors

4.1. Business interests associations in Greece

The demarcation lines between the three confederal [i.e. peak-level] employers’ organisations are quite blurred by traditional standards, since 99% of all firms in Greece are SMEs. However, micro-business and the more labour-intensive SMEs tend to organise in GSEVEE, whilst larger firms and capital-intensive SMEs prefer to be represented by SEV. Finally, commercial firms, irrespective of size, are represented mostly by ESEE. Hence:

(a) SEV is the leading nation-wide business interest association (BIA)(b) GSEVEE is the largest ASME, representing traders, artisans and professionals.(c) ESEE is the second largest confederation representing traders, and the main government interlocutor on commercial sector issues.

Membership in the above associations is low, although their participation in public bodies is very broad. This is true also for the private-sector union confederation GSEE and reflects a paradox, whereby the low representativeness of the social partners’ organisations goes hand in hand with their enhanced status in the social consultation process. It should be stressed, however, that low membership is not the result of an unfavourable institutional framework or industrial relations context, but rather an expression of a particular cultural attitude of entrepreneurs, especially small entrepreneurs, that are reluctant to associate. And this, despite the fact that, owing to their more limited resources, SMEs need more support from business associations in terms of representation and services, than large companies that are more autonomous in pursuing their interests.

Federation of Greek IndustriesSEV

The Federation of Greek Industries (SEV), an independent non-profit association, governed by the provisions of the Civil Code, was established in Athens in 1907. It is the most powerful and influential employers’ organisation, as it includes among its members the most important sectors of the economy, as well as the largest firms. However, the fact that the Greek economy is dominated by small business, has not allowed SEV to claim representation of the industry as a whole. The Federation is sustained by the contributions (dues) paid by its members. Since 1988, following a change in its statute (article 4), SEV can represent the interests not only of manufacturing but also of service firms related to and supporting the development of the manufacturing sector (banks, insurance companies, transport companies, IT companies, etc.). According to its statute, SEV represents firms employing over 50 employees, which are considered medium-sized and large by Greek standards. Although SEV membership increasingly covers a broad spectrum of economic activity (ranging from small entities to large corporations, including privatised public utility companies), it represents in practice the “big” and long-established manufacturing companies.

SEV is a mixed business association. It collectively represents the interests of Greek industry vis-à-vis the state authorities and the other social partner organisations. SEV is directly

engaged in collective bargaining and plays a central role in negotiating the National General Collective Agreement, as well as 67 sectoral and occupational agreements.

The Federation is governed by an Administrative Board (20 members) that is elected by the General Assembly with a two-year mandate. The General Assembly (90 members) is the supreme body, where all members are represented. Staff members include 44 full time employees (professional officers, secretaries, support personnel). The organisation has recently upgraded its infrastructure by refurbishing its headquarters, updating its IT systems, and improving the content and operation of its website.

SEV remains a business organisation, consisting of both associations and firms, but not individuals. The affiliated members (private law legal entities) can be organised at either the sectoral or the regional level. Membership in SEV is voluntary. Each representative (whether an individual firm or a sectoral or regional association and irrespective of the level of annual dues paid to the Federation) has one vote in the General Assembly. According to unofficial but reliable sources, membership consists of approximately 560 private companies, 70 sectoral and 7 regional associations. 61 During 2003, 46 new members were admitted. Although most sectoral business associations are members of SEV, this is true for less than half of the regional associations.

Total number of employees working in the companies that are either directly or indirectly

members of SEV

(a) data on membership for 2004: 560 firms +70 sectoral organisations+7 regional organisations)

(b) number of companies which are potential members of SEV: the formal membership domain includes all firms with over 50 employees in the manufacturing sector, but increasingly also in the service industry, i.e. 3000 firms (see Table 1 in section 1)

(c) number of companies which are directly or indirectly affiliated to SEV: appr. 560 directly affiliated and an unknown number affiliated indirectly through the sectoral and regional organisations

(d) number of employees in (b): 487 000 employees, i.e. 38% of total employment in the firm sector (see Table 1 in section 1)

(e) number of employees in (c): approx. 95 000 employees(f) density ratio in terms of companies/employees: according to unofficial but realistic

estimates, the density ratio is approx. 1 in 5 (20% density), in respect of both companies and employees.

One of the main missions of the organisation is to provide a wide range of services (free of

charge) to its members, relating to the following issues:

(a) industrial relations (collective bargaining, labour disputes, etc,)

(b) economic policy programs (advice for public grants and subsidies)

61 SEV does not make public its membership figures.

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(c) exchange relations with suppliers and customers (information, export promotion): through

the Exports’ forum, the organisation of business missions abroad, participation in

exhibitions, etc.

(d) vocational training and further training of staff

(e) problems facing members: claiming their rights before the state and the EU authorities.

Despite the wide range of services offered, the main focus of activities is on the representation of member interests and the pursuit of SEV's principles, which are devoted to establishing a more favourable business environment. This is illustrated by the large number of policy-making bodies on which SEV is represented (see section3).

SEV participates in the formulation of public schemes for:

(a) vocational training. SEV participates in the National System Associating Vocational Education and Training with Employment (ESSEEKA). It is also a founding member of the Association of Industrial and Professional Training, providing continuous training to technical staff, and of the Athens Laboratory for Business Administration, which offers its students an MBA course.

(b) business aid. SEV actively participates in –and is also the initiator of –the National Council for Competitiveness and Growth, which is responsible for the elaboration of the national strategy on competitiveness.

(c) standardisation of products and product quality. SEV participates in various committees set up by the Hellenic Organisation for Standards (ELOT) charged with issuing standards.

Overall, SEV is represented in 90 committees, board of directors, managerial units, monitoring committees, councils, etc, established to design and implement policies that affect, directly or indirectly, the business environment and the competitiveness of Greek industry.

Confederation of Small and Medium-Sized Enterprises of GreeceGSEVEE

GSEVEE is the tertiary-level 62 association representing the interests of artisans, traders and professionals, and one of the recognised social partner organisations, along with SEV, ESEE, and GSEE. Its membership consists of 69 federations (48 local federations, 20 sectoral federations and one pensioners’ federation) and 1359 associations with 101 883 registered members (entrepreneurs). It was established in 1919 under the name of “Association of Greek Handicrafts” and has gradually evolved into the largest association for the SMEs. GSEVEE is governed by a Board of Directors (51 members) and a Presidium (13 members), elected for a three-year term. The supreme organ is the General Assembly, which consists of the representatives of the member associations. The staff includes 10 full-time employees (excluding those working for the vocational training centre). Recently, GSEVEE has channelled resources towards the improvement of its infrastructure (headquarters,

62 A tertiary organisation is the confederal (i.e. peak-level) organisation, consisting of the various sectoral organisations or federations, which constitute the secondary level of organisation. The federations, in turn, consist of the primary associations, which are the first-level organisations. This three-level system applies to both employers’ and union organisations.

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telecommunications, IT). Its financial means consist of the registration fees, the contributions paid by its members and income earned from property, donations, deeds, etc. 63

GSEVEE is an employers’ organisation that represents the self-employed entrepreneurs (around 330 000 firms), the micro-business (firms employing less than 10 employees), small firms (employing between 10-49 employees), and medium-sized business (firms employing between 50-250 employees). As compared to this formal membership demarcation, however, in practice, it is mostly the self-employed and the micro and small business with up to 50 employees that tend to affiliate to GSEVEE. Larger SMEs (with over 50 employees) usually choose to be represented by SEV, whilst commercial SMEs, alternatively, can be represented by ESEE (see below), although the criteria for choosing one or another of the organisations are often influenced by political considerations rather than a pure business approach. A case in point is the competition between GSEVEE and ESEE for the representation of small commercial firms.

Membership in GSEVEE is on a voluntary basis. According to the provisions of law 1712/1987, only those engaged in an entrepreneurial activity, and in doing so, possessing the formal and substantial qualifications, can become members of the primary organisations.[Is there an analogous link between access to membership and qualification in the case of SEV and ESEE? Or is this link unique to GSEVEE? It is unique to GSEVEE.] A primary association consists exclusively of traders, artisans and professionals as natural persons and not as legal entities. A federation must consist of at least three primary organisations. The General Assembly of the federation elects its representatives for the confederation. The number of representatives is determined by the statutes of the association, and is related to the number of members that voted in the primary associations. Only representatives that are legitimised by the primary associations have the right to vote for the representatives that will participate in the confederal organisation. The seats are distributed proportionally, according to the number of votes.

Voting rights of members are defined according to the principle “one member, one vote”. Decisions in the General Assembly of the associations are taken by the absolute majority of the present members. No voting by authorisation (by proxy) is allowed. 64

GSVEE is directly engaged in collective bargaining. It negotiates and concludes the National General Collective Labour Agreement with the confederal union organisation GSEE and the various sectoral collective agreements with the different workers’ federations. It is worth noting that, in firms employing less than 20 employees, the law forbids the creation of a company union that would be able to negotiate a collective agreement with the employer. As

63 The scarcity of resources is one of the major problems facing organized business, since members’ contributions and mandatory subsidies collected through the local Chambers are inadequate to cover the increasing demand for modern organisational structures, elaborated strategies and specialised services. On the other hand, the confederal organisations are reluctant to charge a fee for the services they provide to their members, as this may be considered a lucrative and gainful activity, which is not consistent with common associational practice. 64 I should be stressed that until 1987, there were no legal provisions regarding the electoral system in the associations. In practice, the system was regulated by the statutes of each association. The absence of a universal legal framework was in fact a source of inequalities, distortions and undemocratic practices that permeated all levels of association. The introduction of the proportionate electoral system as mandatory (law 1712/1987) was in fact the catalyst that introduced democracy into the associational system and consolidated the equality of votes. (Vassiliou, 2001)

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a result, in 98,4% of firms, accounting for 65% of total employment, there is no company-related level union representation. 65

Apart from participating in the policy making institutions mentioned in section 1 (along with the other social partner organisations), GSEVEE is also represented on an array of regional and local committees, Arts & Crafts Chambers, etc.

Services provided by GSEVEE to its members

The services provided to its members are free of charge and cover areas such as:

(a) economic policy programs (advice for public grants and subsidies)

(b) exchange relations with suppliers and customers (information, export promotion)

(c) vocational training and further training for staff: GSEVEE has established its own accredited vocational training centre with 5 local branches, targeted at the employees, the self-employed and employers of small commercial and manufacturing firms

(d) documentation services: GSEVEE is setting up its own portal, in view of providing daily updated information on all issues of interest to its members, and eventually also distant training. Moreover, through its vocational training centre, it conducts studies and research, with special emphasis on skills, innovation and know-how issues.

Representational activities performed by GSEVEE

Representation of interests on labour market and competition issues

The focus of the organisation’s activities is mostly on interest representation.

Total number of employees working in the companies that are either directly or indirectly

members of GSEVEE

According to the organisation’s estimates, 96% of total membership consists of SMEs that

employ less than 10 employees (of which around half are self-employed entrepreneurs),

whilst the remaining 4% consists of SMEs employing between 10-50 employees.

(a) data on membership for 2002: 69 federations and 1359 associations

(b) number of companies which are potential members of GSEVEE: 816 000SMEs (see Table 1)(c) number of companies which are directly or indirectly affiliated to GSEVEE: 101 883 registered members

(d) number of employees in (b): 1 625 000 employees (see Table 1)

65 The employees working in firms with less than 20 employees are covered by the provisions of the National General Collective Labour Agreement.

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(e) number of employees in (c): n.a.

(f) density ratio in terms of companies/employees: 1 in 7 (according to GSEVEE officials); or 1 in 8 (according to the author)

It should be stressed that, for various reasons, membership figures in both employers’ and workers’ organisations are always exaggerated. Also, an important distinction should always be made between the registered members and the voting members (those who are entitled to vote after having paid their fees and contributions).

The organisation participates in the formulation of public schemes for:

(a) vocational training: through its participation in the Organisation for Vocational Education

and Training (OEEK), and in the National System Associating Vocational Education and

Training with Employment (ESSEEKA)

(b) business aid: GSEVEE participates in the National Council for Competitiveness and Growth, which is responsible for the elaboration of the national strategy on competitiveness(c) standardisation of products and product quality: GSVEE does not participate in the Hellenic Standardisation Organisation (ELOT).

National Confederation of Hellenic CommerceESEE

The National Confederation of Hellenic Commerce (ESEE), established in 1994, is a nation-wide confederal organisation representing commercial firms irrespective of size. In practice, however, the Confederation mostly represents small commercial firms employing less than 10 employees. Its official membership domain widely overlaps with that of GSEVEE.

Commercial enterprises cover three sectors of activity: retail trade, wholesale trade, and trade of automobiles & motorbikes. They account for 16% of GDP, 17% of total employment and 45% of all enterprises of the secondary and tertiary sector.

ESEE membership consists of 14 commercial federations and 185 commercial associations, spread all over the country. The affiliated members of the Confederation represent approx. 50 000 commercial enterprises (with an estimated number of 125 000 employees), out of a total of 281 126 commercial enterprises (2000) and an overall employment of 698 000 employees (2003). 66

The Confederation is set to exert its influence on government policies in order to improve the business environment, rationalise the taxation system, minimise bureaucracy and maximise the public sector’s efficiency, increase labour market flexibility and enhance the overall competitiveness of the Greek economy. Its main focus of activities is the representation of its members’ interests. However, it provides a number of services to its members, free of charge.

The main fields of services provided by ESEE to its members include:

66 GSEVEE contends that ESEE has 10 000 to 30 000 members, rather than 50 000.

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(a) vocational training of employees, unemployed and entrepreneurs: the Confederation has established its own, accredited, vocational training structures(b) transfer of know-how and systematic study and documentation of commercial issues(c) the establishment of a web portal that provides up-to-date information to Greek traders and foreign business, and possibilities for cooperation with partners abroad.(d) networking and dissemination of e-commerce.

The ESEE participates as a social partner in the collective bargaining procedures with the General Confederation of Greek Workers (GSEE), leading to the signing of the National General Collective Labour Agreement. It also concludes separate sectoral agreements with the respective secondary-level workers’ federation OIYE. It participates in a number of nation-wide and local policy making institutions, such as: the Economic and Social Committee, the National Committee for Employment, the National Committee for Social Protection, the OAED, the Employment and Vocational Training Fund, the Vocational Education and Training Organisation, the Mediation and Arbitration Organisation, the Hellenic Institute for Health & Safety at Work, the National Competitiveness and Development Council, the Social Security Foundation, the Supreme Labour Council, the National Centre for Vocational Orientation, the Athens Chamber of Commerce and Industry, and a plethora of other institutions and bodies. The Confederation also actively participates in committees established to monitor and absorb the various community funds.

4.2. Chambers of industry, commerce, arts & crafts and professions

The Chambers – “a mandatory, autonomous association of natural and legal persons with business activities”- are a state institution, advising the government on business issues, and a collective expression of the interests of its members. All Chambers are public-law legal entities, run by democratically elected entrepreneurs. The operation of the Chambers – which are independent and self-financed institutions supervised by the Ministry of Development- is regulated by law 2081/1992. This law gave new impetus to the operation of the Chambers, by guaranteeing their administrative and managerial independence. The governing bodies of the chambers (the General Assembly and the Executive Committee) are elected every 4 years. The Chambers are important lobbies but they do not have the status of social partners. The Athens Chamber of Commerce and Industry, for instance, has a membership of approximately 50,000 firms and participates in the Economic and Social Committee (OKE) with one member, but it has no right to negotiate collective agreements.

Membership in the chambers is compulsory. Approximately 820 000 firms of every size are affiliated to the Chambers (trade, manufacturing, handicraft and professional) that are established all over the country. Every prefecture has a multi-sector Chamber, whilst the three largest cities (Athens, Thessalonica and Piraeus) have three different Chambers each: a commerce & industry chamber, an arts & crafts chamber and a professional chamber. Firms belong to the respective Chamber, according to their type of activity.The umbrella organisation of the 58 local Chambers is the Central Association of Hellenic Chambers (KEEE), established in 1980. KEEE is an inter-professional association of entrepreneurs covering all sectors of the economy and expressing the common denominator of business interests. It also represents the 58 Chambers internationally and participates in the Eurochamber, in the Association of Balkan Chambers, and in the Chambers’ Association of the Black Sea Zone. The scope of activities performed by KEEE include: promotion of the interests of the entrepreneurs; intervention in the decision making-process; contribution to the formulation of business strategies and economic policies; mediation between the firms and the

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state; diffusion of information on markets, the legal framework on business activities, collaboration opportunities, funding opportunities, financial tools, community programmes, technology and innovation, etc.

This extended business network consisting of the Central Association of Chambers and the 58 local chambers is mostly addressed to the SMEs, as larger firms usually have their own information networks.

5. Concluding remarks

For many years, the system of interest intermediation in Greece had been marked by strong state interventionism, clientelist politics and weak social consultation structures. Following a transformation process that had gathered momentum in the early 1980s (when the socialists had come to power), interest politics were gradually disentangled from party dependency and state dominance and acquired greater autonomy (Lanza and Lavda 2000).

Over the past 20 years, the institutions and processes of the social dialogue made considerable progress. Likewise, the business associations became more autonomous from the state and thus stronger. To a large degree these advances were triggered off by developments in the EU, namely by the Europeanisation of organised interests. The participation of Greek business interest associations in the European institutions reinforced their bargaining power vis-à-vis the Greek state, boosted their self-confidence and opened up new opportunities for action at the national level, namely through:

the diffusion of knowledge and information the accumulation of experience the modernisation of their organisational structures and their infrastructure, and their increased capacity to express their opinion and participate in the shaping of

developments in the EU (Aranitou 2002).

This rise of organised business in Greece has been described by scholars as an “artificial neo-corporatism”, owing to the fact that it was not caused by a genuine, endogenous expansion of its influence, but rather by "a bottom-down approach", aimed at meeting the increased operational requirements of political management and EU processes (Aranitou 2002).

Although the influence of the social partner organisations has increased considerably and their scope of public policy intervention has expanded, the state remains an important actor in industrial relations issues, despite the formal limitation of its interventionist role. State legislation continues to play an important role in the IR system, including the regulation of the terms and conditions of the social dialogue process (Aranitou 2003).

Notwithstanding the economic weight of SMEs, the representation of the interests of this business group was for a long time mediated by party politics and state intervention. The absence of a coherent and universally accepted institutional framework inhibited the formation of associations and led to the unequal treatment of the various organisations. This has changed considerably and at present, the collective representation bodies of the SMEs are organised according to the democratic rules established in the late 1980s and early 1990s. Moreover, through their participation in the various social consultation fora, they are playing a notable role in the formulation of policies regarding the SMEs and in establishing a more friendly environment for small business.

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However, SMEs have still a long way to go in view of gaining greater control over the allocation of public resources and community funding, in establishing a stable and favourable business environment, and in effectively improving their international competitiveness, especially in an enlarged EU. The business associations representing the interests of SMEs are, hence, faced with the challenge of articulating and mediating their interests in a much more effective way, as compared to given practices. This implies addressing several problems which still burden their associational action: internal divisions and fragmentation, "introverted" attitudes, their particularistic approach to collective issues, their traditional structures and their short-term strategies. Most of all, there is a need to actually develop a culture for social consultation and collective action, and to strengthen even further their autonomy vis-a-vis the omni-present party system and state paternalism.

References

Aranitou, V., (2003), “The strengthening of the employers’ organisations representation and social dialogue”, paper presented at the S. Karagiorgas Conference on Social Change in Contemporary Greece (1980-2001), Athens, mimeo (in Greek)

Aranitou, V. & M. Yiannakourou, (2003), « Social dialog in Greece », contribution to the collective work About Greece, Athens

Aranitou, V., (2002), “The representation of employers’ / business organisations. The national organisations in the dynamic of European integration”, Elliniki Epitheorissi Politikis Epistimis, vol.20, December, pp.87-106 (in Greek)

Economic and Social Committee, (2003), Opinion no. 98, November, Athens (in Greek)

Economic and Social Committee, (2001), Opinion no. 62, November, Athens (in Greek)

Employment in Europe 2002. Recent trends and prospects,( 2003), European Commission, Employment & Social Affairs, Brussels

Gazon,E., Gavroglou, St. P., Mouriki, A., (2001), “Social dialogue and firms’ renewal”, Epitheorissi Ergassiakon Sheseon, vol. 23, July, (in Greek)

Lanza, O. & Lavdas, K., (2000), “The disentanglement of interest politics: business associability, the parties and policy in Italy and Greece”, European Journal of Political Research, vol.37/2, Kluwer Academic Publishers, the Netherlands

Moudopoulos, S., (1994), Employers’ associations and the issues involved in the organisation of liberal trades, Athens – Komotini: Sakkoulas (in Greek)

Mouriki, A., (2002), “Industrial relations and social dialogue in Greece: the difficult itinerary from state paternalism to autonomy”, The Social Portrait of Greece, 2001, National Centre for Social Research, Institute of Social Policy, Athens (in Greek)

Mouriki, A., (1998), “Annual Report on Consultation and Negotiation – Greece”, commissioned by the Institut des Sciences du Travail, Université Catholique de Louvain

National Action Plan of Employment – Greece, (2003), Ministry of Employment & Social Security, Athens

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National Confederation of Hellenic Commerce, (2003), Annual Report on the Greek Commerce, Athens (in Greek)

National Statistics Service of Greece, (2004), Labour Force Survey – 2003, Athens

SEV, (2004), “Actions 2002-2003”, Athens (in Greek)

SEV, (2004), Bulletin, vol.612, January-February, Athens (in Greek)

SEV, (2003), “SEV-On the frontline of enterprises”, Athens, May (in Greek)

SEV, (2003), “With the aim of bringing forward the implementation of the Lisbon strategy. Promoting real convergence”. First report, Athens, February (in Greek)

Traxler, F., (2000), “Employers’ and employees’ organisations in Europe: membership strength, density and representativeness”, Industrial Relations Journal, vol. 31

Vassiliou, St., (2002), “The union movement of SMEs”, Viotechnika Themata, March (in Greek)

Vassiliou, St., (2001), “Legislation on union rights for the traders, artisans and professionals”, Viotehnika Themata, May (in Greek)

Useful websites

www.acci.grwww.acsmi.grwww.eommex.grwww.europa.eu.intwww.eurostat.comwww.fgi.org.grwww.gsee.grwww.gsevee.grwww.statistics.grwww.ucl.trav.ac.bewww.uhcci.gr

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APPENDIX – TABLES

Table IKey employment indicators, Greece

1995, 2000, 2001, 2002

[Employment in Europe 2003]

1995 2000 2001 2002 Total population (000) 10.238 10.321 10.356 10.373 Population aged 15-64 6.772 6.876 6.858 6.765 Total employment (000) 3.820 3.898 3.894 3.914 Population in employment aged 15-64 3.702 3.831 3.802 3.833 Employment rate (% population 15-64) 54,7 55,7 55,4 56.7 Employment rate (% population 15-24) 26,3 27,1 26,0 26.6 Employment rate (% population 25-54) 68,9 70,0 70,1 71.1 Employment rate (% population 55-64) 41,0 38,6 38,0 39.7 FTE employment rate (% population aged 15-64) 54,2 55,3 55,1 56.3 Self-employed (% total employment) 45,8 44,3 43,3 41.8 Part-time employment (total employment) 4,8 4,5 4,0 4.5 Fixed-term contracts (% total employment) 9,4 12,8 12,6 11.2 Employment in Services (% total employment) 55,9 59,1 59,5 60.0 Employment in Industry (% total employment) 24,5 24,1 24,2 23.8 Employment in Agriculture (% total employment) 19,6 16,7 16,3 16.1 Activity rate (% population aged 15-64) 60,4 62,9 62,1 63.1 Activity rate (% population aged 15-24) 37.1 38.5 36.2 36.1 Activity rate (% population aged 25-54) 74.3 77.5 77.2 78.1 Activity rate (% population aged 55-64) 42.4 40.2 39.7 41.4 Total unemployment (000) 386 484 447 435 Unemployment rate (% labour force 15+) 9,2 10,9 10,2 10.0 Youth unemployment rate (% labour force 15-24) 28,5 29,4 28,1 26.4 Long term unemployment rate (% labour force) 4,6 6,1 5,4 5.1 Youth unemployment ratio (% population aged 15-24) 10,5 11,1 10,2 9.6

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Table IIEmployment (of over 15 years of age)in SMEs with less than 10 employees, as a share of total employment in firms

Greece

Source: National Action Plan for Employment – Greece, 2003

Table IIIEmployment (of over 15 years of age)

in SMEs with less than 50 employees, as a share of total employment in firmsGreece

  2nd term (%) Total Men Women

1999 89,6 89,8 89,32000 89,7 89,5 90,02001 89,4 89,3 89,72002 89,0 88,8 89,42003 89,5 89,2 89,9

Source: National Action Plan for Employment – Greece, 2003

  2nd term (%)Total Men Women

1999 66,1 66,4 67,42000 65,8 66,0 65,52001 63,0 63,4 62,52002 63,0 63,3 62,62003 65,5 65,8 65,0

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Table IVConfederal Business Associations – Greece

Basic features, 2003

Association Scope of functions

Membership domain

Members Employees covered

Voting rights

SEV(Federation of

Greek Industries)

Mixed(representation of collective interests and provision of services, free of charge)

Manufacturing businesses and related activities / firms with over 50 empl.

560 companies + 70 sectoral

organisations + 7 regional organisations (1998 data)

95 000(1998 data)

One member, one vote*

GSEVEE(Confederation of Small and

Medium-Sized Enterprises of

Greece)

Mixed(representation

of collective interests and provision of services, free

of charge)

Traders, artisans and

professionals (self-employed

or employing up to 50 employees)

69 federations

+1359 associations

(101 833 registered members)

n.a.

One member, one vote*

ESEE(National

Confederation of Hellenic Commerce)

Mixed(representation

of collective interests and provision of services, free

of charge)

Commercial firms,

irrespective of size (in practice, small firms with

less than 10 empl.)

14 federations +

185 associations

(50 000 registered members)

125 000

One member, one vote*

KEEE (Central Association of Hellenic Chambers)

Representation of local

chambers and provision of

services

Interprofessional association of entrepreneurs, covering trade, manufacturing, handicraft and professional

sectors

820 000 firms

58 local chambers

- One member, one vote

* According to law

Table VServices provided by SEV and GSEVEE

to their members - Greece

SEV GSEVEEIndustrial relations Vocational training Economic policy programs Social consultation Standardization of products and product quality

Exchange relations with suppliers and customers

Documentation Legal support of members

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Table VIVoluntary and compulsory associations

Greece

Name of the organisation Type of the organisationSEV voluntary

GSEVEE voluntaryESEE voluntaryKEEE compulsory

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IRELANDEdel Walshe, National University of Ireland, Galway

INTRODUCTIONThis report forms part of the international cross-country comparison of business interest associations project with a specific focus on small and medium-sized enterprises. This is the Irish report on business interest associations. It provides information on this topic according to the questionnaire outlined in the document: “The Association of Small and Medium-Sized Enterprises” (Traxler 2003). The report comprises of five sections:

1. Irelands economic structure2. The legal and administrative framework and its practical implications3. The system of social dialogue and public policy making4. The associational system of business and its actors5. Cultural factors

For the purposes of the report, secondary research was conducted to obtain general information about the Irish economy and business interest associations. For more specific information on the relevant associations in section four, postal questionnaires were sent to these organisations. The questionnaire was then followed-up with a semi-structured telephone interview in the case of the largest and most important business association and the largest and most important association of small and medium-sized enterprises in Ireland.

1. IRELAND’S ECONOMIC STRUCTUREIreland is a small open economy and is heavily dependent on the international economy in terms of trade and foreign direct investment. Over the past decade it has been one of the fastest growing economies in the OECD. At its peak, in 1999, output alone in the economy increases by 9.8% in real GDP (gross domestic product) terms and 7.8% in real GNP (gross national product) terms (CSO 2000). In addition, employment increased by over 40% in 1990 to 2000, again the fastest growth rate in the OECD. During this period the growth of the Irish economy has increasingly come from the high-tech and internationally traded services sectors such as information and communications technology, software services, pharmaceuticals and medical technologies sectors. Table 1 compares NACE economic sectors by employment size and emphasises the importance of the services sector relative to the traditional agricultural sector in terms of employment.

TABLE 1: Employment by NACE Economic Sector, June-August 2003NACE Sector Total (‘000) % of Total

Agriculture 118.0 6.5Other production industries 304.4 16.7Construction 199.0 10.9Wholesale and retrade 259.9 14.3Hotels & restaurants 124.3 6.8Transport, storage and communications

111.1 6.1

Financial & other business services

230.0 12.6

Public administration & defence 92.4 5.1Education and health 280.6 15.4Other services 101.0 5.6

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Total 1,820.8 100Source: IDA (Industrial Development Agency) Ireland www.idaireland.ie

[Defence is empty. Why not delete it?-defence is part of the public admin and defence row]

TABLE 2: Number of enterprises and persons engaged* in services and industrial production (2001) Source: CSO (2004a, 2004b) * persons engaged relates to proprietors, directors and family members working in the business together with full time and part time employees are included while outside piece-workers are excluded.

**2002 figure: 5,038***2002 figure: 255,066

TABLE 3: Total Labour Force in Employment by yearYear Total labour force in employment2001 1,721,9002002 1,763,9002003 1,793,400Source: CSO (2004c)

SMEs67 in IrelandWithin these sectors, small and medium sized enterprises constitute the majority of enterprises in Ireland (over 90% of Irish enterprises employ 50 people or less). In 2001, 81,000 companies were classified as micro-sized, 11,000 small-sized and 2,000 medium-sized. Employment is distributed evenly between the three segments SMEs with 229,000 people employed in micro-sized enterprises, 212,000 in small-sized and 186,000 in medium-sized enterprises. During the growth period of the Irish economy, the growth of value added in SMEs averaged 8.1% per annum (for the period 1988-1998) (National Competitiveness Council 1999, 1998). This was higher than the growth rate of 7.5% for large firms in Ireland.

TABLE 4: Number of Enterprises and Employment in SME’s (2001)

Very Small (less than 10 employees)

Small(10-49 employees)

Medium(50-249 employees)

Number of Enterprises

81,000 11,000 2,000

67 For the purposes of this study, SMEs are classified as the standardized definition by the European Union.

Number of enterprisesDistribution, services and wholesale 33,048Industrial production 4,870**Total: 37,918

Persons engagedDistribution, services and wholesale 276,045Industrial production 264,198***Total: 540,243

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Employment 229,000 212,000 186,000

Source: National Competitiveness Council (1999, 1998).

With a specific focus on the indigenous sector in Ireland, industrial policy on a micro level has targeted SMEs by providing programs that assist these companies in all aspects of their business as is discussed in section 2.4 below. However on a macro level, in recent years the focus of industrial policy has been on developing networks and local clusters of expertise in particular sectors. This policy includes the development of linkages between large multinational enterprises and indigenous SMEs through the development of supply chains as well as encouraging companies to move up the value chain. These clusters of highly embedded large MNEs and SMEs are perceived as important mechanisms for achieving a competitive advantage in targeted sectors of the economy.

2. THE LEGAL AND ADMINISTRATIVE FRAMEWORK AND ITS PRACTICAL IMPLICATIONS2.1. Organisational and representational privilegesIreland operates on a voluntary system of business interest representation and collective bargaining. Conditions of employment are determined in the main by a process of voluntary bargaining without the intervention of the State. Bargaining can take place at an individual level or at a collective level. The State facilitates the bargaining process by providing a framework and institutions such as the Labour Relations Commission, the Rights Commissioner Service and the Labour Court.

Due to the voluntary nature of the industrial relations system, there are no statutory provisions in Ireland obliging all potential members of an association to be a member. It is also not the case whereby compulsory payment of dues or levies is formally imposed on all firms within an association’s domain. In addition, the large BIAs do not receive state subsidies, however this does not preclude associations from receiving government subsidies either in exchange for certain services or not.

2.2. As regards the statutory regulations on the formation of associations, do provisions exist which support or inhibit SMEs when it comes to setting up an association?

2.3. What are the legal preconditions for getting the right to conclude collective agreements on behalf of business? Do these preconditions- at least implicitly- create a special incentive for/a special impediment to ASMEs when it comes to applying for the right to conclude collective agreements?

The history of collective labour law in Ireland dates back to The Trade Union Act 1871. However, the Acts in the 1940’s and 1970’s provided the most dramatic changes to Irish industrial relations. The Trade Union Act of 1941 introduced the licensing of bodies to carry out collective bargaining negotiations and it declared it a criminal offence for any group to bargain for the fixing of wages or any other conditions of employment unless such body held a ‘negotiation license’ or was an ‘excepted body’. Following this legislation the 1971 Act made certain amendments to the licensing system, most notably introducing the condition that an association must have a minimum of 500 members. Finally, the 1975 Act improved the procedure whereby two or more unions could merge. The principle aim of these past Acts was to reduce the number of trade unions operating in Ireland (Murphy and Roche 1998).

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Presently, the Trade Union Acts 1871-1990 require trade unions and employer associations to be licensed in order to lawfully carry out negotiations for the fixing of wages or other conditions of employment. There were ten licensed employer associations with a total of over 12,000 members at the end of 2001. As a voluntary system of collective bargaining prevails in Ireland business associations, trade unions and agricultural associations are invited to become involved in collective bargaining but have no legal obligation to do so. The largest business association, the Irish Business and Employer’s Confederation (IBEC), is formally nominated to represent employers in collective bargaining. Agreements from collective bargaining can be registered with the Labour Court by any of the parties involved in the bargaining process. The Labour Court will only register the agreement if they conclude that the agreement is satisfactory to all the parties involved in the bargaining process in which case the agreement is legally enforceable. However, unregistered agreements are not legally enforceable.

The statutory regulations for setting up an association for SMEs are the same as for all business interest associations as described above. There are no regulations inhibiting the formation of such an association as the constitution of the state guarantees “the right of the citizens to form associations and unions” (Constitution 1937, Article 40.6.1).

2.4. Do special policy programs in favour of SMEs exist? If yes, summarize the goals of these programs. Do BIAs participate in the implementation of these programs?

Enterprise Ireland is the government agency responsible for the development of the Irish indigenous sector. In addition to assisting client companies build a competitive advantage in their marketplace, the agency aims to bridge the gap between innovation and internationalisation by working with the research community to maximise the benefits of technology innovation. Enterprise Ireland has three strategic priority areas:

Technology Innovation Business Development Internationalisation

Approximately 95% of Enterprise Ireland members are SMEs and therefore the following sample of policies and programs (Enterprise Ireland 2004) implemented by the agency specifically target these companies. BIAs participate in the implementation of these programs.

a. Research Technology and Innovation SchemeThis scheme aims to bring about a substantial increase in the level of high quality R&D in businesses in Ireland. It supports commercially focused, industry led projects in product and process development.It concentrates on high quality, risk intensive R&D projects, which are essential for companies to establish or to maintain their overall competitiveness. Projects can relate to either product or process development and should: be an integral part of the strategic development plans for your company; represent an advance in the level of technical innovation relative to your company's

current products/ processes; be designed to help your company meet market requirements especially in the area of

higher value added products; normally be completed within two years from the date of approval; lead to full commercial exploitation, typically within one year after completion of the

project.

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b. Innovation Management InitiativeThe aim of the Innovation Management Initiative is to increase the number of companies undertaking R&D for the first time and to improve the efficiency and effectiveness of the innovation and R&D process in

those companies already undertaking R&D to achieve value added R&D by capturing the creative potential of employees.

The initiative covers 50% of the course fees for courses such as: Introduction to R&D Management, Introduction to R&D Management (Pilot Action - web based delivery), Certificate in Innovation and R&D Management for the Food & Drinks Industry, Building New Products and R&D Capability, Masters in Technology Management, Masters in Technology Management by distance education, Diploma in Technology Management.

c. Significant R&D projects- tailor made for youUnder this program Enterprise Ireland works with companies on an individual basis regarding R&D related programs that require funding in excess of €3 million over three years. The aim of this program is to encourage significant R&D development among Irish owned companies.

d. Innovation PartnershipsThe Innovation Partnerships Initiative provides financial support to encourage companies to undertake research projects with Irish universities and institutes of technology.It offers companies the opportunity to tap into the research infrastructure of the Irish third-level sector and provides a cost-effective approach to innovative product and process development.

All manufacturing, processing and internationally tradable service companies, with an operating base in the Irish Republic, collaborating with Irish third-level institutions are eligible to participate in this program.

e. newradianeThis program is an initiative funded by the International Fund for Ireland under its Science and Technology Programme  administered jointly, on behalf of the Fund, by Invest Northern Ireland and Enterprise Ireland. The strategic aim of newradiane is to stimulate, promote and support, product and process development partnerships between companies based in the eligible area in Ireland and partner companies in the US, Canada, Australia, New Zealand or another EU member state.  Partnerships between companies North and South of the border are eligible as are joint ventures between companies in Northern Ireland and partners in Great Britain.  The partnerships should be mutually profitable, innovative, technology based and market led. newradiane assists SMEs in Northern Ireland and the six border counties (Cavan, Donegal, Sligo, Leitrim, Louth and Monaghan) to establish the feasibility and, where appropriate, plan and undertake R&D projects with companies in the eligible partner countries. Companies in the manufacturing and internationally traded services sectors are eligible to apply.

f. R&D Awareness Initiative

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This initiative provides technical consultancy to help client companies understand the R&D process, establish the right strategy, identify the right project(s) for the company, develop a project plan and apply for funding. Companies are eligible to apply for this initiative if they spend less than €65,000 per annum on R&D or have not spent great than €130,000 per annum on R&D over the last three years. The aim of this initiative to assist companies win R&D funding for their projects.

g. Intellectual Property Assistance SchemeEnterprise Ireland provides Intellectual Property advice on the protection, development and commercialisation of patentable technology.More specifically, advice is provided on: The use of intellectual property rights (patents, copyright, designs and trademarks); Confidentiality agreements; Licensing (negotiations, royalty rates etc.); Technical development;

The agency also provides financial assistance to companies to help with the cost of patenting.

h. Technology Transfer InitiativeThe TTI is an innovative support structure for small to medium sized companies in the West, Midwest and Southwest regions of Ireland. The initiative is co- funded by three participating Irish universities, Enterprise Ireland under the National Development Plan 2000-2006 and the European Union ERSF. The role of the TTI is to act as a “gateway” for companies by facilitating access to the expertise and resources of the three universities- University College Cork, The National University of Ireland, Galway and University of Limerick.

The TTI’s core aim is to encourage and assist Irish companies to become more innovative and therefore more competitive and profitable. More specifically, the objectives of the initiative are: To develop the capability of indigenous industry in the target regions by harnessing

the resources of the AUA universities.  To make available to Irish companies the combined research resources of the three

participating universities.  To encourage, facilitate and forge lasting links between industry and academia.  To facilitate regional and inter-regional "technology transfer". 

3. THE SYSTEM OF SOCIAL DIALOGUE AND PUBLIC POLICY MAKING3.1. Do the unions have a preference for a certain BIAs as an interlocutor, when it

comes to conducting general consultations with business and/or collective bargaining?

In matters of collective bargaining and general consultations, the Irish Trade Unions do not have any preference for particular business association. The Irish Congress of Trade Unions (ICTU) is the largest trade union in Ireland and is the body nominated to represent all employees in matters of collective bargaining. ICTU consults with any business association that has been nominated to bargain on behalf of employers. At a national level they generally deal with larger business interest associations, such as the Irish Business Employers Confederation (IBEC), Irish Small and Medium Sized Enterprises (ISME), and Chambers of Commerce of Ireland (CCI).

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3.2. Does the government have a preference for certain BIAs as an interlocutor , when it comes to conducting general consultations with business and/or their integration into public policy making?

Nor is it the case that the government has any ‘preference’ for any particular business association. The process of becoming a social partner is as follows: -potential partners must meet the criteria that ‘organisations be national and representative in nature, have the capacity to meet the demands and obligations that arise as part of this participation, and add to the capacity of the Social Partnership process to address issues effectively’ (Department of An Taoiseach 2004). If organisations meet this criteria, they make a formal submission to the government and if they are successful they receive a negotiation license and are invited to become a social partner.[If there were not any kind of preference, then one would expect to see all cross-sectoral business associations to be represented on the institutions of the social dialogue. However, IBEC, CCI and CIF are the preferred partners of government there, whereas ISME is completely excluded (see 3.3). Please explain.]

3.3. Please list all BIAs which are official business representatives on the most important cross-sectoral, nation-wide institution of the social dialogue. Please specify the name of this institution and explain whether the list of business representatives includes ASMEs.

The institutes of social dialogue in Ireland operate under the structure of the National Economic

and Social Development Office (NESDO) which is currently under establishment. These

institutes are the National Economic and Social Council (NESC) and the National

Economic and Social Forum (NESF) and the National Centre for Partnership and

Performance (NCPP) which have been deemed statutory bodies under the National

Economic and Social Development Bill (2002).

The most important cross-sectoral nation-wide institution of the social dialogue is NESC. The council was established in 1973 and deals with overall economic policy. Its main tasks are to advise the Government on the development of the national economy and the achievement of social justice. In addition to advising the Government, the Council provides a forum in which views can be exchanged between people who have a common interest in the development of the economy and in the pursuit of social justice. The Council is representative of the major economic and social interests in society. Up to 1997 the Social Partners represented on the NESC were the Trade Unions, Business and Employer Organisations and Agricultural and Farming Organisations. Since 1998 the Community and Voluntary Sector has representation on the Council. The Government also nominates a number of public servants and independent members to the Council. The specific business interest associations represented on NESC are IBEC, CCI and the Construction Industry Federation (CIF).

The NESF is the second institute within NESDO. The forum was originally set up by the Government in 1993 for the purposes of achieving consensus, on as wide a basis as possible, on major economic and social policy issues. Since 1998, the Forum's work is focused on evaluating the implementation of policies dealing with equality and social inclusion. The main task of the Forum is to monitor and analyse the implementation of specific measures and programs concerned with the achievement of equality and social inclusion. This is done through consideration of reports prepared by teams comprising the

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social partners, with appropriate expertise and representatives of relevant Departments and agencies and its own Secretariat. In addition the Forum may consider policy issues on its own initiative or at the request of the Government. Membership of the Forum, which is the most representative of the social partnership institutions, is drawn from the Oireachtas (TDs and Senators from both Government and Opposition Parties); Employer, Trade Union and Farm Organisations; the Voluntary and Community Sector; and central Government, local Government and Independents. The specific business interest associations represented on NESF are IBEC, SFA, CIF, CCI and the IEA.

The third institute under NESDO is the NCPP. The NCPP was established by the Government to support and drive change in the Irish workplace. The institute’s remit is to enable organisations in the private and public sectors, through partnership, to respond to change, to build capability and to improve performance. The business interest associations represented (IBEC and CIF).

The Partnership ProcessThe transformation of the Irish economy since 1987 can mainly be attributed to the institutional process of social partnership. The first ‘Strategy Report’ produced by NESC in 1986 was as a result of agreement between social partners on how to tackle problems of rising taxes and debt as well as overcoming stagnant economy. This report formed the basis for discussion in the negotiations between the social partners and the government on the new ‘Programme for National Recovery’ (1987-1990). Five other programmes have since followed this one and the partnership process is still the basis upon which the economic and social structure of Ireland is based. While agreement on wage levels in the private and public sectors are the main focus of attention by the media and general public the programmes also include agreement on tax reform, the evolution of welfare payments, trends in health spending, public sector reform, enterprise level partnership and measures to combat social exclusion. In more recent times new institutional mechanisms (e.g. NESDO) have been established to “monitor implementation and ensure ongoing dialogue between government and the social partners on economic and social policy” (O’ Donnell, 2000). Furthermore, there is an attempt to broaden the involvement of different interest groups in society. As well as the traditional interest groups, effort has been made to include the community and voluntary sector, women’s groups, the unemployed and the disabled (O’Donnell, 2000). Recently, The Wheel has been invited as social partner to represent the community and voluntary activity, while the DFI (Disability Federation of Ireland) has been invited to represent the disabled.

In particular, the partnership process has contributed to the Irish economy as follows:- ensuring macroeconomic stability in the 1990s through centralised wage agreements, now supplemented by new employment rights for all workers and benchmarking for the public sector

- Providing a framework for the development of industry policy, mainly through NESC and Forfás (the national policy advisory board to enterprise, trade, science, technology and innovation) and its major delivery agencies, the IDA and Enterprise Ireland.

- Providing a framework of education and skills policy through development of national training system etc

- Providing a framework for the development of research and innovation which is the new

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and biggest challenge for the Irish economy. A recent contribution from the social partners in this regard was the publication of a report called ‘Ahead of the Curve: Ireland’s Place in the Global Economy’ through the Enterprise Strategy Group. It focuses on the economic challenges facing the Irish economy to date.

[Are NESDO, NESF and NCPP formally established (i.e. statutory) bodies? At any rate, you should also refer to the partnership process here, since this is also an institution in the broad sense (i.e. a reiterated practice). In particular, please delineate the role and importance of the partnership process for the overall process of economic and social policy, and inform about the participants in the partnership process (with a special focus on the business associations).]

3.4. How much are the associations’ opportunities to participate in the social dialogue and public policy shaped by the associations’ links with political parties?

Political parties do not obviously shape the associations’ opportunities to participate in social dialogue. Ireland has are no major class based parties. All the associations listed in this study are private organisations and are therefore independent of party politics.

4. THE ASSOCIATIONAL SYSTEM OF BUSINESS AND ITS ACTORS4.1. List of BIAs

IBEC: Irish Business Employers ConfederationIBEC is the largest employer association representing the interests of almost 7000 employers. It was formed on the January 1st 1993 following the merger of the Federation of Irish Employers (FIE) and the Confederation of Irish Industry (CII). IBEC is the umbrella body for Ireland’s leading groups and sectoral associations. Economic affairs, employee conditions, taxation, competition, trade, transport, sectoral matters and environmental issues are some of the wide range of services they provide to members. The association develops and reviews policy on such topics through consultation with their members.

SFA: Small Firms AssociationThe SFA is an affiliate association of IBEC representing the needs of 8,000 small enterprises in Ireland. The SFA provides economic, commercial, employee relations and social affairs advice and assistance. The SFA secures the best deal for small firms by providing dedicated professional support and by offering a wide range of services to members. [How many employees are under the umbrella of the SFA?] It is estimated that SFA represents 160,000 employees nationally.

ISME: Irish Small and Medium-Sized EnterprisesISME was formed in 1993 to guarantee that Small and Medium Enterprises in Ireland have an independent voice. The Association is unconstrained in this mission because it uniquely relies on the resources of its members and not those of big business. ISME negotiates with the Government, financial institutions and public utilities to obtain better conditions for SMEs. It develops specific management training programs to assist owner-managers meet the challenges and opportunities facing them. In addition, the association informs members of new legislation, emerging opportunities and changing business climate applicable to their businesses.

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IMI: Irish Management Institute

Note: Following further investigation, as the IMI does not represent

business interests vis-à-vis the state and/or the unions but just provides

training services for its members it should not be included as a BIA, as

according to your definition in terms of functional domain (p. 10).

IEA: Irish Exporter’s AssociationThe association is a representative body whose mission is the promotion and representation of Irish exporter's interests. Founded in 1951 the association represents the exporter in accessing better services from Government and its agencies and more competitive services from suppliers. The objectives of the association include the promotion of Irish exports and trade in all sectors, the provision of education on all aspects of Irish exports, the promotion and improvement of trade practices in Ireland and the review of government policy and programs affecting export trade in Ireland.

CCI: Chambers of Commerce of IrelandThe CCI is a private organisation founded in 1923 and represents 55 local chambers in cities and towns all over Ireland. Its mission is to stimulate and facilitate the growth and development of the Irish chamber network and to enable the network to effectively promote the long-term development of their locality on behalf of their members. The main activities of the CCI include the representation of the general interests of business, the provision of information, advisory, training, business development, arbitration and/or conciliation services. 90% of the chambers members are SMEs.

4.2. Information on BIAs4.2.1. How is the formal membership domain defined?

IBEC: All companies/organisations based in IrelandSFA: Companies with less than 50 employees in manufacturing, retail, distribution

and servicesISME: SMEs with up to 150 employees and a turnover of up to €10mIEA: Any company involved in international tradeCCI: Local businesses throughout the company

4.2.2. Is the membership in these BIAs voluntary or obligatory? IBEC: Voluntary

SFA: VoluntaryISME: VoluntaryIEA: VoluntaryCCI: Voluntary

4.2.3. Do the BIAs organise (i) only other associations, (ii) only companies or (iii) both associations and companies

IBEC: BothSFA: Only companiesISME: Only companies

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IEA: Only companiesCCI: Only other lower-level associations

4.2.4. Are these BIAs (i) pure employer association, (ii) pure trade associations, or (iii) mixed associations?

IBEC: MixedSFA: Mixed ISME: Mixed IEA: Pure trade associationCCI: Mixed

4.2.5. Are these BIAs directly or indirectly engaged in matters of collective bargaining?

IBEC: YesSFA: YesISME: YesIEA: No – Not applicableCCI: Yes

4.2.6. Do these BIAs directly or indirectly provide services to member companies? If yes, have the member companies to pay for these services?

IBEC: Yes – through membership feeSFA: Yes - through membership feeISME: Yes – through membership feeIEA: Yes – some services included in membership fee, others paid for as extraCCI: Yes – some services included in membership fee, others paid for as extra

4.2.7. Are voting rights weighted according to criteria of firm size? If yes, please specify the relevant criteria?

IBEC: NoSFA: NoISME: NoIEA: NoCCI: Yes - the criteria differs between regional chambers, some based on

employees, others on turnover.Note on voting rights of affiliated associations:IBEC: Voting rights are equally weighted for all members, regardless of whether they are members of IBEC directly or an affiliated association. In order to have voting rights within an affiliated association, an employer has to be a direct member of the affiliated association and not just a member of IBEC as a whole. ISME: ISME does not have any affiliated associations.

4.2.8. Is this BIA a satellite of another BIA? IBEC: No

SFA: No (but affiliate association of IBEC).ISME: NoIEA: NoCCI: No

4.3. Does competition between BIAs exist?

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Competition exists as there are overlaps in the membership domains of the business associations. For example: IBEC and CCI directly compete for members, ISME competes directly with SFA and CCI, SFA directly competes with CCI.

ISME was established in 1993 by SMEs because they wanted to be independent of an association that represents large employers. Although the SFA was in existence at the time it is an affiliate association of IBEC.

4.4. Is there notable tendency towards internal reforms aimed at economising on resources?

IBEC: Not willing to disclose informationSFA: Not willing to disclose informationISME: Yes, generally reforms are in terms of economising on labour within the

association. Presently, they have a ratio of 300 members to every one staff member.

IEA: Not willing to disclose informationCCI: Not willing to disclose information

4a. The structure and processes of the largest BIA and the largest ASMELargest BIA: IBEC (representing 698, 714 employees which work in member companies)Largest ASME: ISME (representing 78,000 employees which work in member companies)

4a.1 Categories of representational activities performed either directly or indirectly (through affiliate associations) by the associationRepresentational activities IBEC ISMERepresentation of your members’ labour market interests vis-à-vis the unions

Yes Yes

Representation of your members’ labour market interests vis-à-vis the state

Yes Yes

Representation of your members’ product market interests in relation to customers

Yes Yes

Representation of your members’ product market interests in relation to suppliers

No Yes

Representation of your members’ product market interests in relation to the state

Yes Yes

Participation in the formulation and/or implementation of public schemes for vocational training

No* No*

Participation in the formulation and/or implementation of public schemes designed to aid business

Yes Yes

Participation in the formulation and/or implementation of public schemes for the standardization of products and product quality

No Yes

*Major social partner organisations (IBEC and ICTU) are involved in the formulation of

training policy through their committees and make policy submissions to Government. IBEC

forms its views on training through its Human Resources and Social Policy Committee. Small

and medium size enterprises are represented by ISME and the SFA. In addition, ICTU and

IBEC, and their affiliate bodies, are providers of their own (as opposed to public) vocational

training, particularly for those in employment. Note: This is contrary to the postal

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questionnaire where both associations indicated that they were not involved in the formulation

and/or implementation of public schemes for vocational training.

[Is there no participation in vocational training because public schemes do not exist?]

4a.2 Categories of services provided either directly or indirectly (through affiliate associations) by the association. Are these services free of charge or include in membership fee?Services IBEC ISMEServices related to industrial relations (e.g. advice on the provisions of collective agreements; representations of members in labour court proceedings)

Yes- included in fee

Yes- included in fee

Services related to economic policy programs (e.g. advice on the preconditions for the application of public grants and subsidies)

No Yes- included in fee

Services related to exchange relations with suppliers (e.g. information on the quality and availability of raw materials and intermediate goods)

Yes- included in fee

No

Services related to exchange relations with customers (e.g. information on sales markets, export promotion)

No No

Services related to vocational training No No Services related to further training and qualification of company staff

Yes- extra charge

Yes- included in fee

Services related to the development and monitoring of quality standards for the products of the member companies

No Yes- included in fee

4a.2.8 What is the focus of the association’s activity: interest representation or services?IBEC: Focus equally on interest representation and servicesISME: Focus equally on interest representation and services

4a.3 Data on membership and staff of association for 2003IBEC ISME

Aggregate number of companies which are directly and indirectly (through membership of affiliated associations) members of your association

6 961 3 600

Aggregate number of employees which work in companies that are direct and indirect (through membership of affiliated associations) members of your association

698 714 78 000

Average number of employees that work in the companies that are direct and indirect (through membership of affiliated associations) members of your association

100 30

Please state the total number of staff working in your association 178 8

Please state the total number of staff working in your affiliated associations

Not Available

10

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4a.4 Has the association undergone internal reforms aimed at economising on resources since 1990?IBEC – not willing to disclose informationISME – Yes (same as section 4.4)

4a.5 Are there channels and mechanisms of intra-associational goal formation which give the SMEs a specific opportunity to articulate their interests?IBEC: The interests of SMEs are articulated through their affiliated association, the Small Firms Association (SFA).ISME: The association is ‘run by the members for the members’. ISME is structured and managed by an executive board, the national council and the board of directors which all comprise of SME members and therefore the members have a direct opportunity to articulate their interests.

4a.6 Composition of the annual budget (%)

IBEC ISME

membership dues from firm members 88% Not available

membership dues from affiliates <1% Not available

income from sales of services 11% Not available

voluntary subsidies from members none Not available

obligatory dues and levies (e.g. dues and levies imposed by collective agreements and their extension)

none Not available

state subsidies (including contracts with government) none Not available

5. CULTURAL FACTORSIn recent decades the Irish economy has transformed from a predominantly agrarian and traditional manufacturing based economy to one increasingly based on the hi-tech and internationally traded services sectors. In 2002, the services sector accounted for 65% of employment, industry for 28% and agriculture for 7% (ESRI 2004). Since the 1970’s SMEs share of economic turnover and employment in Ireland has steadily increased with over 90% of Irish businesses being micro or small-sized. Over the past number of years there has been a drive to promote the entrepreneurial culture of Ireland. In the early 1990’s there was a fundamental change in policy towards the promotion of the indigenous sector and its SMEs. The 1992 Culliton report on Industrial Policy established a government agency with sole responsibility for indigenous and SME industry in Ireland, which is now known as Enterprise Ireland. In addition, in 1994 the Task Force on Small Businesses resulted in the establishment of a Small Businesses and Local Enterprise Division within the government’s Department of Enterprise, Trade and Employment. Its

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role is to improve the working environment for SMEs through the development of policy initiatives. Through these agencies and EU programs such as the LEADER program, the entrepreneurial culture is promoted at the local level by the establishment of incubators at third-level colleges as well as training and mentoring initiatives.

Coinciding with this drive to promote SMEs, the higher educational system in Ireland has changed dramatically since the 1960s. In the last forty years, higher education developed from an elite system of just four university colleges to a widely accessible system of free fees for third-level education. The availability of a highly skilled workforce has been the main attraction for foreign investment in Ireland over the past number of years. Building the skills base of the Irish people as well as the promotion of enterprises has contributed to the development of an entrepreneurial culture in Ireland. It is in response to the increasing number of SME companies operating and their importance to the Irish economy that has led to the development of a number of associations focused on representing the needs and providing a voice for SMEs.

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Bibliography

Traxler, Franz (2003), The Association of Small and Medium-Sized Enterprises

CSO (2000), Quarterly National Accounts, Dublin: CSO.

CSO (2004a), Annual Services Inquiry, Dublin: CSO.

CSO (2004b), Census of Industrial Production: provisional results, Dublin: CSO.

CSO (2004c), Quarterly National Household Survey, Dublin: CSO.

Murphy, Thomas V. and W.K. Roche, (1998), Irish Industrial Relations in Practice, Dublin: Oak Tree Press.

National Competitiveness Council, (1999), ‘Annual Competitiveness Report 1999’, Forfas, Dublin.

National Competitiveness Council, (1998), ‘Annual Competitiveness Report 1998’, Forfas, Dublin.

O’Donnell, Rory (2000), “Europe The Irish Experience”, Institute of European Affairs: Dublin.

Websites

Department of An Taoiseach (2004), www.taoiseach.gov.ie/

IBEC (2004), www.ibec.ie

ISME (2004), www.isme.ie

SFA (2004), www.sfa.ie

IEA (2204), www.irishexporters.ie

IMI (2004), www.imi.ie

CCI (2004), www.chambersireland.ie

IDA Ireland (2004), www.idaireland.ie

Enterprise Ireland (2004), www.enterprise-ireland.ie

ESRI (2004), Economic and Social Research Institute www.esri.ie

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ITALYAlessia Vatta, University of Trieste

1. The Economic Structure and Cultural Properties

According to OECD data (2002), in Italy SMEs account for over 99% of firms in manufacturing and in many services and utilities. Enterprises with fewer than 50 employees represent almost 98% of manufacturing firms and at least 99% in the quasi-totality of services. SMEs account for 71% of manufacturing employment and about 90% of employment in construction and many service activities (wholesale and retail trade, hotels and restaurants, business services, real estate). The Italian Civil Code includes also craftsmen in the definition of small entrepreneurs (§ 2083: “small entrepreneurs are…those who practice a professional activity which is mainly organized by their own work and that of their families”, more than by recruiting employees). As a matter of fact, artisan firms are mostly very small, and so are also many agricultural firms. In agriculture, employment often involves the family of the owner and is frequently temporary or part-time, even when it implies the resort to employees (Unioncamere 2001; 2002b). Only a small percentage of agricultural firms counted 3 or more units of labour force between 1999 and 2000 (Charlier 2003). From the data of the Italian Statistics Institute (ISTAT), the predominance of small firms – and of micro-firms, with less than 10 employees – stands out clearly. Between 2000 and 2002, a growing divergence was recorded between the class of firms with 1-9 employees and that with more than 100 employees, in comparison with intermediate size classes (which registered a strong decrease). In particular, the class with 250 employees and more has grown: this has been greeted as a sign that the traditional prevalence of micro-firms could slowly retreat, at least in industry (ISTAT 2003a).68 A rather negative aspect is that between 2000 and 2002 both the number of active firms and the level of employment have grown rather slowly, whatever the interpretation of the role of SMEs may be (see tables 1-3).

Historically, the widespread presence of SMEs influenced the constitution of employers’ organizations. Especially as far as trade, handicraft and cooperatives are concerned, the prolonged ideological cleavage along political lines between the Catholic and the Communist sub-cultures caused the creation of politically opposed ASMEs. The strong preference for the establishment of SMEs is partly considered a consequence of this double cultural heritage, which encourages small entrepreneurship. The relevance of cooperatives’ organizations is also due to the persistence of small-scale productive activities. According to the critical view of a former president of Confindustria, even public initiatives in favour of SMEs (see Section 2) may have led to an excessive protection against market competition, if not to the increase of the “hidden” economy (D’Amato 2004). This view is supported by OECD data on administrative regulation (OECD 2001; Onida 2004a). Another critical aspect regards the scarcity of venture capital and the dependency of firms on short-term loans from banks: this hinders the potential enlargement of firms, since investments become particularly expensive and re-investments tend to be delayed because of pressing indebtedness (Garonna 2004). It has been demonstrated (by Kumar, Rajan and Zingales, 1999) that the average size of firms in industries dependent on external finance is larger in countries with better-functioning financial markets: consequently, financial constraints can keep firms small. Larger firms are more frequent in industries that require little external financing, are physical capital-intensive, hire qualified personnel (by paying high wages) and do a lot of R&D activities. These conditions are often not met in Italy, where especially SMEs frequently depend on external financing, financial markets are comparatively underdeveloped, firms are

68 However, the most recent yearly report by ISTAT (2004c) confirms that the average firm size is stable (3.7 employees for the total of the sectors). In manufacturing, it is 8.7 employees; in construction, 2.9; and 3.0 in commerce and services.

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labour-intensive in many crucial economic sectors and do not invest on R&D (nor can hire graduated personnel or PhD holders, which would imply paying high wages). According to OECD data (Main Science and Technology Indicators, 2003, 1, p. 29), investments on R&D by Italian firms were equivalent to 0.56% of GDP in 2001: in Germany the figure was 1.76, in France 1.37 and in the USA 2.1 (Onida 2004a, 164).

Among policy variables, institutional development seems to be positively correlated with lower dispersion in firm size within an industry (Kumar, Rajan and Zingales 1999, 22). In particular, legal institutions related to firms (like patent rights, brand names and other forms of protection of intellectual property, innovative processes and property rights, combined with transparent and effective regulations on accountancy and financial markets) can be connected with an increase in firm size. This happens because entrepreneurs are supported in their control on the productive activity, and are encouraged to enlarge the firms. An efficient legal system also protects outside investors and reduces co-ordination costs. On the contrary, high corporate taxes and costly regulations may drive firms towards a smaller size, in order to avoid such costs. These observations may help to explain the spread of SMEs in Italy, because corporate taxes are comparatively high and only SMEs can partly elude regulations (see note 12). Moreover, SMEs are often family-owned: this can be very problematic as far as management and financing are concerned, since the division of property and prerogatives is not always clear (Onida 2004b, 266). In spite of all these difficulties, SMEs have proved successful in the many productive districts of the country, thanks to flexible specialization, innovation capabilities and quality productions (Piore and Sabel 1984; Pike, Sengenberger and Becattini 1990; Onida 2004a; Fortis 2004). They have increased employment at an average rate of about 3.4% per year between 1982 and 2001, while in the same period large firms have decreased employment at an average yearly rate of 3.1% (Conti e Varetto 2004).

As regards professionalism, it is commonly intended as the stable, systematic and non-occasional practice of a given activity. There is no particular legal requirement for industrial production, but there are some exceptions. Brokers, agents and mediators (in financial and tourist services) must hold at least a high school certificate, follow a course of lessons at the local chamber of commerce and overcome a final examination. Alternatively, they must hold a degree. Some other professional categories must overcome a specific exam: maritime mediators and agents, taxi drivers, import-export carriers (they must go through a two-year apprenticeship in a registered firm), restaurant and bar owners. After passing the exam, these entrepreneurs get a license and are registered at the chamber. Chambers of commerce, regional public authorities and representative organizations organize training courses, especially for beginners (e.g. in the food and beverage sector) and in order to spread the knowledge of legal and technological innovations. Craftsmen are registered separately from other categories, in order to benefit from fiscal and financial provisions. Since the definition of SME given in the civil code is very general, the consequences on legislation were mainly two: the enactment of separate sectoral provisions and the gradual extension of some of them to other sectors. Provisions may either apply to handicraft, commercial and industrial SMEs simultaneously, or be handicraft-only.69 Handicraft representative organizations regularly 69 In recent years, state budget laws have offered further opportunities to SMEs. Currently, measures common to handicraft, commerce and industry are as follows:- underdeveloped areas fund (established according to the budget law 2003, § 37): it includes all the financial resources for the development of economically depressed areas, mainly in the Mezzogiorno. Resources are assigned to the regions according to specific criteria (population, average income and sectoral workforce);- unitary fund: it includes several previously existing provisions for the various sectors – among which the Artigiancassa, a sort of crafts’ fund originally established in 1947. Regional public authorities manage 50% of such resources;- according to the budget law 2003, small entrepreneurs are allowed to claim a further reduction of their personal income tax (named IRPEF); the regional tax on productive activities (IRAP) was reduced with the possibility to deduct part of the employment-related costs. Facilities were introduced in order to resolve queries related to tax

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insist on the need to extend favourable initiatives to their sector. However, separate registration does not mean that handicraft enjoys particular privileges in comparison to other forms of production.70 As a matter of fact, lots of micro and small-medium firms are of craft nature and characterized by traditional and specialized productions. Representative organizations tend to stress the specificity of craft productions also in pressure politics (“Only Handicraft” is a motto of Casartigiani), and it is often remarked how the Italian Constitution (Basic Law) officially states the importance of handicraft (§ 45). This is also the sector where apprenticeship contracts are most widespread. Also goldsmiths, bakers, car repairers, electricians, employers in the disinfestations and cleaning sector must get a license from the chamber of commerce in order to start their activity. Alternatively, they must have followed a professional training course, have a secondary school certificate or hold a degree.

2. The Legal and Administrative Framework for Associational Action

Officially, there are not organizational privileges regarding BIAs and ASMEs. The only possible exception regards consultation by the government in matters of legislation or public policy-making. Usually, the larger BIAs and ASMEs are consulted more regularly, but there is not a “right” in the strict sense. Representativeness is not properly measured according to quantitative criteria: empirically, what counts is “to be comparatively more representative”. However, membership in a large and supposedly influential organization can be an incentive for firms, especially if they are SMEs. From the organizational point of view, the enrolment and the payment of dues entitle to the services supplied by organizations. In absence of specific criteria, political representativeness is more de facto than de iure. There is not any obligation to extend collective agreements erga omnes, but also non-member firms are covered by “minimal provisions” entailed in the agreements, thanks to jurisprudence (court rulings). The Italian Constitution states that receiving a minimum wage is a right of the worker, and the courts take the sectoral collectively agreed wage rates as the levels of fair or minima wages to be paid to workers (Dell’Aringa 2003) As regards collective bargaining coverage, it is generally estimated around 90% of the workforce71; firms with up to 100 employees are mainly covered by sectoral/national bargaining, but those with fewer than 20 employees may also be uncovered.72 Those with more than 100 employees are mainly covered evasion and fiscal disputes between employers and the state. According to Act 383/2001, taxation on re-invested profits was cut;- according to Act 488/1992, incentives are offered for the establishment of new firms, technological innovation and research, with specific regard to southern and economically depressed areas;- the governmental decree 185/2000 introduced “honour loans”: jobless people may ask for loans at favourable conditions in order to start an entrepreneurial activity;- in case of new recruitments, employers are allowed to delay the payment of payroll taxes. In general, provisions regarding payroll taxes are important for artisans because, according to jurisprudence, labour should prevail on capital (as a productive factor) in artisan firms.Handicraft-specific provisions include:- reduced taxation in case of building restructuring;- in case of severe necessity, artisans can count on relatives – up to the second degree – as employees for a maximum period of 3 months per year without paying pension contributions.70 The grievances echoed by SMEs representative organizations are very similar among the different sectors, e.g. as far as fiscal pressure is concerned. Other common problems regard the high costs of electric power, the heavy bureaucratic regulations, the inefficiencies in transport and infrastructures. From the political point of view, the defence of the quality of handicraft and high-standard products has gradually gained importance in external politics, especially against low standard imports from foreign competitors (like China) and against questionable EU-level policies in matter of artisan and quality productions.71 Dell’Aringa (2003) reports a coverage of 82% of the workforce.72 Apart from these estimates, it must be remembered that “black” or “grey” labour remains a serious problem, especially in agriculture (about 30% of workers). Other affected sectors are building, catering, retail, tourism, personal care and domestic services. Undeclared work is about 15% of the total labour force (18% among

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by company bargaining, which in principle should be in line with sectoral arrangements. However, over 1990-1994 company agreements were signed only in 8.7% of enterprises with 20-99 employees, in 19.9% of enterprises with 100-499 employees and 32.9% of those with more than 500 employees (Bellardi and Bordogna 1997; EIRObserver 1999).73 According to EUROSTAT data referred to 1997, company bargaining covers about one third of Italian firms (Boeri 2004b).

As far as the constitution of employers’ organizations is concerned, there are not either supportive or obstructive norms, since general rules on associations provided by the civil code also apply to employers’ organizations. The basic legal precondition for collective bargaining is the autonomy of trade unions and of their representation and mandate on behalf of their members (§ 39 Constitution), while employers’ organizations are free to organize themselves according to § 19 and § 41 of the Constitution (regarding freedom of association and economic organization). As a rule, collective bargaining actors are those collective entities entitled to exert autonomous negotiation power by their members. Usually, such prerogatives are recognized permanently and mainly de facto. As a consequence, the largest organizations in terms of membership can claim the right to negotiate, and this is true also for the ASMEs.

There are several ongoing initiatives in favour of SMEs. Their goals are:- to simplify fiscal rules;- to extend the availability of loans and credit (for craftsmen through the Artigiancassa; for other small and medium employers through the grant fund for SMEs, which guarantees the consorzi di garanzia fidi, i.e. consortia for the guarantee of loans, which have been operating for about 30 years by now at the Ministry for Productive Activities, formerly Ministry of Economy);- to collect all the incentives in force in a single law (“incentive code”);- to amend bankruptcy norms in a way favourable to SMEs;- to encourage technological innovation (Act 46/1982, Act 675/1977, Act 341/1995), also through the electronic deposit of patents and the periodical consultation of ASMEs regarding the protection of industrial property;- to support female and young entrepreneurs (Act 44/1986 and Act 266/1997), also at regional level (Act 44/1986, Act 215/1992, Act 236/1993 and Act 95/1995);- to put firms in touch with the R&D institutions (universities and research centres) and create innovative SMEs (Startech project). Innovation and R&D investments at firm level are supported by Act 297/99;- to increase the spread of E-business among SMEs;- to promote exports and internationalization (Act 277/1997 and Act 394/1981).

Historically, SMEs have frequently resorted to a specific act (the so-called “Sabatini Act” 1329/1965), which guaranteed loans at cut interest rates for investments on new machineries. The massive resort to legal instruments for the promotion of SMEs has been criticised because large public resources have often been spent without success or with uncertain results (Onida 2004a, 192-193).74 In the latest years, small entrepreneurs have taken advantage from “one-stop counters”, i.e. local civil service offices which provide businesses

employees) and is particularly widespread in the south, where one in every five workers is irregular (Broughton 2004). According to the same source, the “hidden” economy oscillates between 15.2 and 16.9% of GDP. According to CNEL data, in metalworking 50% of the employees is not covered by second-level bargaining (see note 6), while in the commercial distribution the percentage rises to 80% (CNEL 2002).73 The July 1993 tripartite agreement envisages two levels of collective bargaining: sectoral bargaining and either company- or territorial-level bargaining, according to the specific features and traditions of the different sectors (Pedersini 2002). Company-level bargaining is the usual second level of collective bargaining in manufacturing and services, while territorial bargaining takes place essentially in agriculture, construction and artisan activities. Company-level bargaining is strictly connected to firm size. A 1997 ISTAT survey on firms having at least 10 employees showed that, in 1995-‘96, company-level bargaining took place only in 9.9% of firms belonging to that size class.74 It has been estimated that about 2% of GDP is devolved in public subsidies to firms (Ostellino 2004).

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with all the information they need for dealing with government departments and agencies, especially for submitting applications and obtaining licences. These counters are operative in about 59% of communal districts, covering 71% of the population (OECD 2002). Tax relief is offered in exchange for training and facilities provided to employees (e.g. crèches), for recruiting skilled personnel, financing grants for PhD students and contracting out industrial research. A state agency, Sviluppo Italia (www.sviluppoitalia.it), finances entrepreneurial development in Southern regions.

Employers’ organizations are involved in these policies by way of concertation (at local and national level), particularly for the elaboration and implementation of “territorial pacts” (patti territoriali, according to Act 662/1996) aimed at the development of economically depressed areas. At the Ministry for Productive Activities, a specific roundtable for the definition of supportive initiatives for the SMEs has been set with the participation of representatives from Confindustria, Confapi, CNA and Confartigianato.

3. The System of Social Dialogue and Public Policy Making

At national level, Confindustria and the major confederations are consulted by trade unions more often than other organizations, also for collective bargaining, because they are reputed to be more representative. At local or sectoral level, regional/provincial branches and sectoral organizations are often involved, also as mediators in bargaining at firm level. At these levels, it may happen that employers’ organizations take different positions in comparison to those taken at national level. Confindustria is considered the most representative and “general” employers’ organization. In the other sectors, Confcommercio and Confartigianato are often consulted by the government, but there is not any “preference” in strict terms, since the other organizations may be asked to give their opinion, too. Since the post-WWII years, representatives from the social partners’ organizations have been involved in the administration of social security bodies and welfare programmes.75 The social partners participate in the implementation of public policies in a “relatively formalized and stable” way (Regalia and Regini 1998, 495).

The most important nation-wide and cross-sectoral tripartite institution of social dialogue is the CNEL (Consiglio Nazionale dell’Economia e del Lavoro, National council for economy and labour, www.cnel.it), which is recognized by the Constitution and whose activity is disciplined by Act 936/1986 and Act 383/2000. Among its 121 members, it includes 14 representatives from Confindustria and 2 from Confapi (industry), 5 from Confcommercio and 2 from Confesercenti (trade and services), 2 from Confartigianato, 1 each from CNA, Casartigiani and CLAAI (handicraft), 1 each from Legacoop, UNCI, Confcooperative and AGCI (cooperatives), plus 3 representatives from autonomous sectoral associations for services, transport and shipping, and 9 from agricultural organizations. The CNEL has merely consultative and research functions. However, there are other opportunities for the associations to participate in social dialogue, either bipartite or tripartite, at national level (through formal and informal consultations, e.g. via the enti bilaterali – bilateral bodies with trade unions and employers’ representatives which deliver services to workers and organize training schemes in the handicraft sector) or at a more decentralized level (De Lucia and Ciuffini 2004). At regional level, the CREL (Consigli regionali dell’economia e del lavoro, regional councils for economy and labour) reproduce the tripartite structure (Regalia 1997; CNEL 2004); but there are also more flexible solutions, with negotiations at regional,

75 Both the trade unions and the employers’ organizations take part in the management of INPS, the institute which administers the pension scheme for most employees in the private sector. Representatives from Confindustria, Confcommercio, Confesercenti, CNA, Confapi and from the main agricultural organizations also sit in the INPS’s supervisory council.

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provincial and even local level (like the cabina di regía – a sort of permanent consultation body at regional level -, within commissions and periodical consultations). Local forms of concertation have received a strong impulse after the 1998 national social pact, because of the decentralization of public functions and resources and the consequent empowerment of regional authorities according to the subsidiarity principle.76 Micro-concertation at firm level has been recorded and studied (e.g. see Regini 1991), though Act 300/1970 – which has led to the establishment of workers’ representational structures (currently known as RSUs, rappresentanze sindacali unitarie, after the 1991 framework agreement among the three main trade union confederations) – applies only to firms with more than 15 employees, leaving out the majority of small firms, whose employees can elect delegates.77 Consultation and information subjects typically involve the economic and financial situation of the firm, the provisions set in industry and company collective agreements, and the employment situation (especially regarding work organization, new technologies and possible redundancies) (European Foundation 2002).

The dissolution of the party system in the early 1990s after the bribe scandals related to Tangentopoli and the adoption of the mixed majority electoral system encouraged an increasing distance of the employers’ organizations from the parties. In the past, the “left/right” cleavage had exerted its influence on most organizations in the various sectors (e.g. left-leaning CNA vs. centre-right Confartigianato, Confesercenti vs. Confcommercio, Legacoop vs. Confcooperative). This was due to the strong ideological polarization and the powerful role of political parties as factors of integration and actors in public policy-making. The lack of autonomy of the associations from the parties was known as collateralismo and has remarkably weakened the system of interest groups’ representation in comparison with political parties and parliamentary representation (Mattina 1997). In the post-WWII years, Confindustria had kept a so-called “consonance” with the small Partito Liberale (Liberal Party), and later an “alliance of necessity” with the Democrazia Cristiana (Christian Democratic Party): in the first case, it was a sort of ideological similarity, while in the second it seemed necessary to stay in good terms with the predominant party, given the presence of a particularly strong Communist party in Italy. Nevertheless, since the early 1990s Confindustria has repeatedly asserted its apartitical orientation.78 Even after the reconstitution of the party system, employers’ organizations appear more legitimated as representative actors than in the past; this could strengthen their political position in the coming years, especially if they prove able to keep their distance from the parties (Lanza and Lavdas 2000).

The 1990s were characterized by a series of social pacts between the governments and the social partners. Two main factors supported the development of concertation. First, the economic changes induced by globalization and the beginning of the European Monetary Union pushed towards the adoption of incomes policy, the reform of the welfare system and of labour policy. Second, the crisis of political parties favoured the empowerment of interest organizations as political “substitutes” (Trentini and Zanetti 2001). The 1992 agreement

76 The operation of local concertation strongly increased in the 1990s, following a constitutional reform, but it still needs improvement. There are wide regional differences concerning the effective involvement of social partners in economic and financial policies, and local concertation has to be integrated into national level agreements (CNEL 2002a). It is also necessary to check the effectiveness of pacts, in order to avoid the dispersion of financial resources, and to monitor their implementation in accordance with clear purposes (CNEL 2002b).77 Originally, Act 300/1970 defined the representational structures as RSA (rappresentanze sindacali aziendali) and conceived them as trade unionist bodies. Historically, they followed the commissioni interne (internal commissions), which dated back to the beginning of the 20th century and represented the workforce as a whole. The current bodies (RSUs) were established in 1993 and devised as a unitary institution, in order to overcome dualistic representation. 78 In the early 2000s some criticisms were expressed against possible “affinities” between the leadership of Confindustria (then led by Antonio D’Amato, a SMEs’ representative) and the centre-right national government (Sarfatti 2003).

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blocked the automatic pay indexation and corrected it according to predicted inflation rates. The 1993 protocol introduced a coordinated two-tier system of collective bargaining and included the social partners in incomes policy-making. The 1996 pact renovated labour policy, introduced several forms of work flexibility and relaunched vocational training. The 1998 pact confirmed the previously agreed commitments, and fostered the reform of public administration and the adoption of concertation at local level. In 2002 the Pact for Italy proclaimed the need to reform taxation, the welfare system, the initiatives in favour of Southern regions and the regulation of dismissals.79 In 2003 a pact for development, employment and competitiveness asserted the need to reserve funds to research and development, to vocational training (especially in Southern regions) and to the building of new infrastructures. All the employers’ organizations included in this paper signed the agreements between 1992 and 200280: in absence of “quantitative” criteria for admission, some observers remarked that the influence of ASMEs has gradually improved and apparently increased in latest years (Ferrante 1998, 82-84; Lanzalaco 2000). However, in 2002 handicraft and trade associations had to insist in order to get the extension of fiscal cuts, originally conceived for industrial firms in the Pact for Italy. In 2003, only Confindustria signed the pact in representation of employers: this raised criticisms from other organizations, fearful of a possible exclusion from future agreements and of a new hegemony of the main BIA. Other tensions regarded the adoption of the EU Directive on fixed-term work in 2001. Trade unions and employers’ organizations produced a joint document on the implementation of the directive, which was then submitted to the government; but Confcommercio, CNA, Confesercenti, Legacoop (plus Confservizi, a sectoral autonomous organization of the tertiary sector) did not sign it. In March 2004, employers and trade unions in the artisan sector reached an agreement for the reorganization of collective bargaining in handicraft, after having retired from the 1993 two-tier structure in 2000. The new system gives more importance to pay bargaining at local level, for the compensation of the difference between predicted and actual inflation in the definition of pay increases. This innovation could next be extended to other sectors: proposals in this sense have been made regarding SMEs affiliated to Confindustria.

4. The System of Cross-Sectoral Business Associations

According to the prerequisites set in the project outline, 12 organizations can be taken into consideration (see table 4).81 By sector, they are Confindustria (Confederazione generale dell’industria italiana) and Confapi (Confederazione italiana della piccola e media industria) in industry; Confcommercio (Confederazione generale del commercio, del turismo, dei servizi e delle piccole e medie imprese), Confesercenti (Confederazione generale italiana esercenti attività commerciali e turistiche) in commerce; Confartigianato (Confederazione generale italiana dell’artigianato), CNA (Confederazione nazionale dell’artigianato e della piccola e media impresa), Casartigiani (Confederazione autonoma dei sindacati artigiani, also known as CASA) and CLAAI (Confederazione delle libere associazioni artigiane italiane) in 79 Following an intense debate among the social partners, a referendum on the extension to all companies of the right to reinstatement for unfairly dismissed workers provided by § 18 of the Workers’ Statute (Act 300/1970, valid only for firms with more than 15 employees) failed in 2003, because of insufficient turnout. In general, employers’ organizations were against the extension. For a discussion of the potential effects of employment protection regulations on firm size, see Garibaldi, Pacelli and Borgarello (2003).80 Confartigianato did not sign the 1992 agreement, because it entailed tax and social contribution increases which were considered too heavy for the artisans.81 The research regards only cross-sectoral associations according to the NACE classification. Within single sectors, other relevant BIAs can be found: it is the case of ABI (Associazione bancaria italiana), whose members count 300,000 employees in banking, and of Confetra (Confederazione generale italiana dei trasporti e della logistica), with 500,000 employees in the transport sector.

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handicraft. Four organizations include cooperatives: Legacoop (Lega nazionale cooperative e mutue), Confcooperative (Confederazione cooperative italiane), UNCI (Unione nazionale delle cooperative italiane) and AGCI (Associazione generale delle cooperative italiane). Apart from Confindustria, which was originally founded in 1910 and definitely established in 1919, the oldest organizations are Legacoop (1886) and Confcooperative (1919). All the others were founded after World War II, since the right to free organization had been recognized after the end of the Fascist corporatist system, in which Confindustria played a central role. The membership in these organizations is voluntary. Eight of them organize lower-level associations. The cooperatives’ organizations adopt direct membership followed by the enrolment of member cooperatives in territorial and sectoral structures. All the organizations have a mixed scope of functions: usually, collective bargaining involves sectoral affiliates, while confederations are active at national level for the “inter-confederal” agreements. An exception is given by Confindustria, whose territorial branches are frequently bargaining partners, and partially by Confartigianato (sectoral agreements have to be transposed at regional level). As for membership domain, in some cases it is open in principle to all firm sizes (Confindustria, Legacoop), while in others small size is officially stated, either in the statute or in the official denomination (Confapi, Confcommercio, Confesercenti). Handicraft organizations may include firms of all sizes, but the membership is mainly small-sized.

Since the majority of Italian firms are SMEs, this determines a large presence of employers’ organizations representing their interests. As explained in Section 1, the pre-eminence of SMEs in Italy has several reasons: cultural, historical, economic (raw materials are scarce and there is a consequent emphasis on transformation and commercialization of goods) and legal (mostly for flexibility reasons). ASMEs are either “self-declared” (by statute or denomination) or de facto (even though they would accept also larger firms, actually they are specialized in the representation of small and medium firms). In the first sub-group there are Confapi, Confesercenti and the handicraft organizations. To the second sub-group belong the cooperatives’ organizations, which often take common positions on public policy matters. This is because their membership is mostly small and medium-sized, though they may have members of larger size (like Legacoop). Confcommercio includes SMEs in its denomination and represents them de facto. In general, the number of employees is the main criterion to determine firm size, with the specification that employers’ organizations often have to deal with micro-firms (fewer than 10 employees).

Most organizations have weighted voting rights, with forms of proportionality regulated in their statutes. However, a potential problem of representation for SMEs affects only Confindustria, in which large firms traditionally exert a disproportional influence in comparison to SMEs. In fact, the most renowned case of unweighted voting rights is that of Confapi (where the principle “one firm, one vote” applies in the general assembly), due to the origins of the association.82 Regarding direct membership associations affiliated to peak confederations, within the sectoral federations and the branch associations of Confindustria proportionality prevails, either referred to the level of paid contributions or to the number of employees in member firms. The “one firm, one vote” principle may apply in some cases (e.g. for the amendment of statutes). Within branch associations of Confcommercio, proportionality may also be calculated with reference to the volume of sales of member firms. Unweighted voting seems to be more common here, especially within branch associations including individual firms (e.g. in sectors like communications or consulting). Within

82 It was established in 1947 by small firms which exited from Confindustria, as a protest against the inefficient representation of SMEs’ interests, especially regarding the access to bank credit (Alacevich 1996). Another sign of the commitment to the potential membership is the rule according to which firms enrolling in an API (APIs are the provincial branches of Confapi) are automatically enrolled in the related national union (the sectoral branches) without paying additional contributions.

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Confartigianato, the member associations have to follow the criteria set in the confederal statute (see Section 5).

The services offered by the organizations are generally free of charge for member firms. They are usually provided by territorial (e.g. regional and provincial) branches. However, legal or fiscal assistance may be subject to a modest fee, and it is possible that member associations charge some services at local level. Especially in recent years, inter-organizational competition regarding services has increased. The cross-sectoral nature of the organizations opens several chances for employers when it comes to joining an association, and the choice often depends on the range and quality of services and on the costs to pay. Sometimes – as in the case of Confindustria – membership becomes a matter of social prestige (Ferrante 1998, 108). Handicraft and commerce organizations also include specific associations for retired members and for the provision of social security subsidies. Among services, an increasing role has been taken by information on international developments (e.g. concerning EU-level initiatives) and the start-up of new firms. A “bulk” of services is common to virtually all associations, i.e. fiscal, legal and concerning labour relations. Another range of services is related to financial resources and access to credit: this is particularly important for handicraft and cooperatives’ organizations, which are connected with specific funds and saving banks. Fiscal consulting regards not only taxes and social contributions, but also social security and pensions. Legal consulting concerns norms related to any aspect of productive activity, from licenses to environmental protection and work safety. Another common series of services is related to information. Most organizations provide training courses, run statistical databases and publish newsletters or bulletins. An important and ubiquitous offer relates to institutional relations (usually with the chamber of commerce and the regional and local public authorities). Many services also regard management, development, informatization and E-business. Some associations run research centres (Confindustria, Confcommercio, Confcooperative). The similarities among the services on offer suggest that competition can be based either on a constant qualitative refinement or on the amount of fees to be paid. The combination of good and extensive services at moderate prices could be attractive for many small and medium employers. However, should quality improvement imply cost increases, this could prove in contrast with the “mutual assistance” image that associations often defend. A stronger professionalization in this sense would imply a remarkable change in the reciprocal attitude between firms and associations, especially in the case of ASMEs. Another source of competition could be located in the offer of international services; here, some organizations (Confindustria, CNA and Legacoop) currently look better equipped than others, especially with regard to the opening of new markets for firms.

In the 1990s and more recently, many reform attempts have been made by employers’ organizations. In some cases there have been explicit projects in this sense, whereas in others a more informal and pragmatic trend towards structural innovation and strategic modernization prevailed. This is true for Confesercenti, and for the handicraft organizations in particular. These have intensified reciprocal cooperation; as a result, they participate jointly in official hearings and release joint documents. They are currently trying to unify their service structures and simplify bureaucratic procedures. Following the adoption of the “Confapi 2000” project, with the implementation of a new confederal statute, Confapi has supported regional decentralization and the resort to network methods, according to the subsidiarity principle. Also cooperatives’ organizations have joined forces, and tried to improve their effectiveness. Confcooperative has established a database in order to let regional branches have access to documents and information, while AGCI has insisted on decentralization and rationalization of management. In comparison with the other BIAs, cooperatives’ organizations rely more often on voluntary work: this practice is currently seen as no longer appropriate, since it can reduce efficiency and effectiveness. Steps in the direction of

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substituting volunteers with employed personnel on a regular basis have recently been made (e.g. by AGCI at its 2002 organizational conference). Reforms within Confindustria, Confcommercio and Confartigianato are dealt with in the following section of the paper.

In Italy the chambers of commerce are mainly administrative structures, which are assimilated to the public administration since they are public law institutions. They are reunited in a national association, called Unioncamere. All firms must be registered at the local chamber, and this gives chambers a privileged view on the state of Italian economy. Because of their institutional role, the chambers also perform public functions related to firm’s activities (like the release of licenses), organize training courses and conferences, and are usually rather active in external relationships, in particular with foreign economic partners. But they are normally excluded from collective bargaining, which remains a domain of voluntary organizations.

5. Confindustria, Confcommercio and Confartigianato in Comparison

According to the criteria set in the research outline, Confindustria and Confcommercio are respectively the selected BIA and ASME. They are the largest in terms of employees in member firms, have a nation-wide domain, are peak-level and cover at least 3 one-digit activities as defined in the NACE classification. Being the most important BIA, Confindustria occupies a central position in the representation of entrepreneurial interests. Among the associations which represent SMEs, Confcommercio was originally founded for the representation of commerce in general. In practice, SMEs have proved to be the vast majority of its members and Confcommercio is specialized in their representation. Because of the importance of the artisan sector in the national economy (about 1,420,000 firms and more than 1,500,000 employees), the main representative organization, Confartigianato, is also included in the analysis.

Membership: Domains, Composition and Figures

Currently, Confindustria includes 18 regional associations, with 105 territorial (mainly provincial) associations, 12 aggregated members, 13 sectoral federations and 112 branch associations.83 Sectorally, manufacturing was the main stronghold in 2002, while other major components were construction, transport, tourism, services and the production of energy and raw materials (see table 5). “Aggregated members” are associations representing activities that are similar or affiliated to those of full-member organizations; they may also be associations of Italian firms operating abroad. Aggregated members pay special dues and do not have the same internal status as full members. Traditionally, territorial associations are more relevant than sectoral associations for the day-to-day activities of the confederation. This seems to be historically related to the origins of the confederation, which was established in Turin, with the north-western regions of the country being the front-runners of industrialization (Lanzalaco 1989). However, in the course of time some sectoral federations have gained a remarkable status, like Federmeccanica (established in 1971 for the representation of the metalworking sector) and, more recently, Federchimica (1984, for chemical firms).

83 Branch associations, which represent firms performing similar activities or sharing similar interests, normally belong to sectoral federations. The statute of Confindustria prescribes that only one federation can correspond to a given sector. However, if a branch association represents interests which cannot be included in any existing sectoral federation, then “that” branch association can be recognized by the giunta (the executive confederal body) as functionally equivalent to a federation. Thus, not all the associations belong to federations (actually, they are allowed to join even more than one federation, provided they pay the related dues), and that is why they are indicated separately from sectoral federations.

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According to the data of Unioncamere (2002), active industrial firms were 1,295,543 (including the construction sector) in 2002, with 6,932,000 working units (employees were 5,394,000) (ISTAT 2004a). This means that the coverage of Confindustria is relatively high as far as employment is concerned (around 59.4% in industry, about 31.3% if services – without commerce- are enclosed), while the data on membership reveal a heavy imbalance between large firms and SMEs.84 According to confederal data, in 2003 the size class with 0-50 employees included 83% of member firms (with 23% of total employees), the 51-250 size class included 14% of firms (with 32% of employees), and the size class with more than 250 employees included 3% of member firms (and 45% of employees). Then, SMEs constitute about 97% of the membership. By dividing the number of employees by the number of firms, the resulting average size is about 36 employees. There is a specific board for the representation of small and medium employers (the consiglio centrale per la piccola industria, central council for small industry), whose president sits in the confederal directive committee. Twenty representatives of small industry, appointed by the central council, take part in the giunta, the confederal executive body. However, the proportional voting system (based on the level of contributions in the general assembly and on the number of employees in the giunta) tends to curtail the role of SMEs within the confederation. At the same time, while other confederal organizations compete for the membership of SMEs, some observers maintain that the lobbying power of Confindustria is further diminished by the opening of the membership to the tertiary sector and by “weak” members, like the firms inherited from the former representative organizations of state-owned firms, Intersind (Associazione sindacale Intersind) and ASAP (Associazione sindacale aziende petrolchimiche), which were dissolved in the 1990s. In many cases, such firms have gone through privatization processes (like telecommunications) or still remain problematic in terms of efficiency and budget (e.g. the railways).

Like Confindustria, Confcommercio considers itself as a “system” made up of different components, which may also enjoy a certain autonomy of action.85 These are commerce (about 500,000 firms), tourism (about 200,000 firms) and services (about 80,000 firms). The confederation counts 21 regional unions, 103 provincial associations and 152 national branch associations. The most important member associations are Confturismo (in tourism, covering about 1,100,000 employees), Conftrasporto (in transport, about 320,000 employees) and FAID (Federazione Associazioni Imprese Distribuzione, in commercial distribution and franchising, about 223,000 employees). Altogether, the confederation member firms count more than 2,000,000 employees. A research made on behalf of Confcommercio and Microsoft on the adoption of information technology, made in 2002 on a sample of 1,000 firms in the tertiary sector, showed that 34.7% of them belonged to Confcommercio, 9.5% to Confesercenti, 8.2% to Confartigianato and 3.4% to Confindustria (NetConsulting 2003). Moreover, 17.2% did not belong to any organization. On one side, this proves that Confcommercio strongly attracts the tertiary sector firms, but on the other it shows that a noteworthy percentage of SMEs – typical of this sector – may well choose not to join any association. The main reason given by associated firms was the possibility to get services, assistance and political representation through the selected associations.

According to Unioncamere data (2002a), there were 2,603,564 active firms in the tertiary sector in 2002, employing about 13,800,000 working units (about 4,000,000 of which were self-employed) (ISTAT 2004a). As for the number of firms, the coverage of Confcommercio looks rather high (the density ratio is around 33%) but the coverage of employees is not so relevant as it might be expected (it should approximately range between 84 Considering the main components within the confederation, in 2002 the density ratio related to firms was 4.1% for industry only (5.2% if construction firms are enclosed in the calculation). For services only (without commerce), the density ratio was about 3.8%.Considering industry, construction and services together, the density ratio was 4.5%. In commerce, employees were 1,723,000 in 2002 (ISTAT 2004a).85 Confartigianato and CNA also have extensive structures, usually referred to as “systems”.

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20 and 24%). This may depend on the fact that employment is tendentially more volatile in the sectors covered by Confcommercio than elsewhere, due to the resort to part-time and flexible contractual forms. It is then more difficult to ascertain the level of “actual” employment, especially in certain areas (e.g. for seasonal employment in tourism). Consequently, one cannot rule out the possibility that even the data given by Confcommercio do not reflect precisely the reality of its different components. In 2002, the average number of employees per firm in the tertiary sector was about 15, while in commerce it was about 3 (NetConsulting 2003): thus, the degree of fragmentation is particularly high. However, this does not seem to have serious consequences on the internal balances of the confederation, since the vast majority of the membership is made of SMEs. Proportionality is based on the number of member firms of the associations: in the general assembly and in the council, each association has a vote plus a number of votes depending on the number of member firms. A similar principle applies for the calculation of votes per sector in the giunta.

The “system” of Confartigianato is composed by 121 territorial associations and 20 regional federations. It also encloses 12 branch organizations, which are sectoral subdivisions of the confederation. The membership includes about 520,000 firms, covering 450,000 employees. The domain is formally defined in the statute and covers artisan firms, the self-employed, small firms, the tertiary sector and services. The average number of employees is about 2.4 per firm. It is estimated that about 30% of all artisan firms belong to Confartigianato, and that its membership covers about 30% of the total employment in the artisan firms (amounting to about 1,546,000 employees in 2002).86 The general assembly is composed by the presidents and/or by the delegates of the member associations. Each association has one vote, plus another one every 2,000 associated firms and fractions superior to 1,000 for further associated firms, calculated at regional level. Each associated firm must have paid the membership fee in order to be included in the calculation. It can be said that, even though each member association has a vote, voting rights are “territorially weighted”, since territorial associations enclosing larger numbers of associated firms can count on extra votes. The same dispositions are valid for the member associations, which have to respect the confederal statute in drawing their own statutes.

Tasks and Activities

Table 6 summarizes the tasks and activities implemented by Confindustria, Confcommercio and Confartigianato. As far as Confindustria is concerned, representation towards trade unions and the state is exerted directly (at national and inter-confederal level) and indirectly, through the territorial and sectoral organizations. In the field of product market interest, sectoral organizations play the main role. In public policy-making, Confindustria participates directly or via the territorial associations, especially at regional level. Standardization of products and product quality do not involve the confederation. This is considered a public interest matter, in which state agencies and chambers of commerce are active, especially if it implies compliance with EU norms. However, the confederation may lobby the government in case quality and standardization matters entail political and legal effects (see note 3). As for services, they are normally free of charge for members, but territorial structures – which usually provide most services – may ask for limited ad hoc contributions (e.g. for fiscal assistance). Territorial branches can also certificate the quality of products or of firms themselves. Even if the confederal statute stresses the importance of offering services to members, the focus of activities is on interest representation. This is encouraged by the pre-eminence of territorial organizations, though interest representation has gradually become more “political” than referred to “unionist” functions. In order to achieve

86 These data were given by Confartigianato (elaboration on Unioncamere data). There are no data available on the sectoral composition of the confederation.

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the adoption of favourable public policies, lobbying has gained a noteworthy strategic importance. However, the impression is that the confederation still lacks a long-term perspective in this sense and needs a proper strategy for the development of industrial relations in the next future (Bordogna 2004).

In matters of tasks and activities the attitude of Confcommercio resembles that of Confindustria, but with a stronger focus on services and conventions for members. Nevertheless, the division of roles among territorial and sectoral associations is less clear cut, since Confcommercio applies the double affiliation for member firms. This means that each firm enters the related sectoral and the nearest territorial structure of the confederal system simultaneously. The provincial ramifications of Confcommercio, called Ascom, play both the sectoral and territorial role.87 Services are free of charge for members, but extraordinary dues can be charged locally. For example, this regards the quality certification of firms and products, which can be provided by local and sectoral member associations.

Confartigianato organizes only lower-level associations and does not accept direct membership of firms. These are registered by territorial associations and are automatically included in the sectoral structures of the confederation. Services are offered at territorial level and are mostly charged. Regional federations have coordinating functions and should become gradually more important in the future, following the delegation of state policy-making prerogatives to the regional public authorities. Concerning product quality standardization, the confederation takes part in state working committees for the establishment of technical and legal norms, with a specific interest for the setting of a single system for quality certification. Confartigianato is also involved in EU programmes through the UEAPME/NORMAPME initiative.

Human and Financial Resources

In 2004, the staff of the confederal head offices of Confindustria in Rome included 220 people; on the whole, 4,600 professionals were involved in the provision of services and representative functions for members. Between 1992 and 2003, the confederal personnel decreased from 319 to 226 employees, in order to cut costs. In latest years, fixed-term and temporary job contracts have become common for flexibility reasons.88 Apparently, the staff of territorial associations is less numerous in comparison with that of other employers’ organizations (Ferrante 1998, 108).89 The system (i.e. the combination of territorial and branch associations, regional and sectoral federations, plus the confederal structures) possibly offers a minor range of services in comparison with other employers’ organizations, but costs a lot. Every year the organizational system of Confindustria absorbs a sum estimated between 400 and 500 million € (it amounted to 481,798,020 € in 2002), about 93% of which come from membership contributions. The maintenance of the confederal apparatus costs about 35-36 million € per year, but this is just 7-8% of the total costs of the system. Sectoral and territorial associations usually transfer part of the dues paid by member firms to Confindustria, but every association uses different criteria in order to fix its quote (most frequently considering the payroll of member firms). Approximately, each firm pays € 120-87 Confindustria has repeatedly tried to impose the same principle, which is enshrined in the confederal statute, to its member firms, but unsuccessfully (Regini and Regalia 1998). Among cooperatives’ organizations, UNCI and AGCI also apply automatic double affiliation. Like Confartigianato, also CNA applies automatic double affiliation in the handicraft sector.88 As part of a wider internal initiative begun in 2002 for analysing and sharing information on the budget figures of the members, the data on the contributions transferred to the confederation by all member associations were made available for the first time in 2003. In perspective, this could change the way balance sheets are elaborated within the confederation, with the inclusion of data on territorial and sectoral associations.89 For example, the staff of the provincial association of Trieste, a middle-sized town with a small province, includes about 30 people. However, in comparison, the sectoral federation of food and beverage products (Federalimentare) has only 16 people in the staff of its central office.

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130 a year per employee for the enrolment in its territorial association, and more or less the same sum for enrolment in sectoral associations. In theory, this means about € 250 a year per employee; actually, conventions among territorial and sectoral associations provide ceilings for contributions. The contribution to the confederal level is set by the confederal assembly every year and is the same for all member associations, i.e. € 17,80 per employee in 2003-2004 (Rizzo 2004). Since 1996, this contribution has increased by 13%, while the minimal associative contribution registered a 50% increase (it is now around € 25,000) (Lanzalaco 2004).90 Critics maintain that contributions are among the highest in the world, between 3 and 5 times the sum paid in the business associations of the most industrialized countries, Germany included (Carraro 2004). Because of internal resistance to paying contributions, in recent years the organization had to resort to the transfers from its publishing house “Sole 24 Ore”, which – beyond a rich catalogue of books – publishes the financial newspaper with the same name. In 2003 about a quarter of confederal activities was financed in this way. According to data given by the confederation (referred to 2002), about 84% of the confederal budget derives from membership dues and contributions, while 16% derives from shares and holdings (particularly from the ownership of the newspaper, which is very well-known and widespread). The confederation does not sell services and does not receive state subsidies or revenues. A rationalization of staff and structures looks urgent, but there is apparently an equally strong opposition from the internal bureaucracy to downsizing, especially in the periphery of the system.

Officially, the proceeds of Confcommercio can derive from three main sources: ordinary and extraordinary contributions, voluntary donations and “other profits”, with the specification that the confederation does not receive state contributions. The organization declares itself as “no profit”, so that even the cost of charged services is defined as “reimbursement” from member associations or firms for the services they have received. Presumably, contributions represent the most important source of income. However, no data are available on the budget of Confcommercio, nor on its staff.91 This confirms the difficulty in collecting this kind of data on employers’ organizations (Windmuller 1984).

In the case of Confartigianato, most financial and staff resources are concentrated on the representation of interests at national and regional level. At territorial level, they are used for services to associated firms. At confederal level, the full-time staff includes 90 employees; the total staff (including member associations and occasional collaborators) amounts to 14,000 people. The proceeds of the confederation derive from member contributions, voluntary offers, real estate income and profits from stock market shares. Nearly 100% of the budget is made of the membership fees from associated firms, collected by territorial associations. Charged services cover a minimal part of the budget. State subsidies are exclusively connected with specific projects and partially cover the implementation costs.

Internal Reforms and Restructuring

It has been said that since 1970, when the first important reform (the “riforma Pirelli”) was approved, the organizational history of Confindustria has been that of a “continuous and perpetual reform” (Lanzalaco 2004).92 In the 1990s changes were meant to improve effectiveness. With the “riforma Mazzoleni” (1991) the confederal apparatus was re-organized as a network. Internal functional “lines” (in the fields of economic relationships, trade unions’ relationships, external and internal affairs), which had been imposed by the Pirelli reform also on member associations and federations, were eliminated. Former 90 Since member SMEs often criticize membership costs, it is possible that lower dues were most inflated by the increase. This would be confirmed by another source (Boeri 2004a), according to which contributions paid by territorial associations have remained stable “in real terms” in the last 6 years.91 The answer given to the author of this paper was simply that “these are not data that we usually make public”.92 In the 1970s, fifteen reform proposals were elaborated inside the confederation.

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“bureaux” were restructured into departments, currently called “strategic areas” (International Affairs, European Affairs, Organization and Development, Enterprise, Welfare and Human Resources, Fiscal and Corporate Law, Communication, plus the Research Centre), which include specific committees. The competences of vice-presidents (former heads of “lines”) were established by delegation of the president, no longer via statutory rules. In 1994, internal rules were reformed. There was a clear attempt to centralize the confederal leadership and to strengthen the ability to represent interests, also at European level, since the integration of the various components of Confindustria has always been problematic. Until 1994, the attitude was to increase the structural coherence by regulating membership criteria and procedures, assigning competences in a detailed way and standardizing the operation of peripheral structures. At the end of 2002, after a two-year internal debate, the “riforma Mondello-Tognana” was initiated.93 The new principles are free enrolment of firms94, strengthening of sectoral federations, regional decentralization, higher autonomy of local structures, with the possible devolution of representative functions to territorial and sectoral associations. Internal regulations were cut by 70%, in order to introduce higher flexibility. Apparently, this should be a sign of the pressure exerted inside the confederation by the SMEs, still dissatisfied with the leadership. It remains to be seen whether this “associative federalism” will be continued in the coming years.

As far as Confcommercio is concerned, there was an effort to innovate, strengthen and specialize the confederal services and structures, in order to improve the network of territorial and sectoral activities. This was in line with the main orientation of the organization, which offers a large number of conventions and advantages to its membership. Between the 1980s and 1990s the organization insisted on the point that the tertiary sector had to be recognized as “productive”, like industry and agriculture, and that any discrimination against employers in this sector should be eliminated, especially under the legal profile.95 The fact that the presidency remains tendentially stable (the current president has been on duty since 1995, being re-elected three times up to 2004) proves that there is not any real internal opposition to the main strategic lines of confederal action. Confcommercio has adopted a modern and up-to-date image, with a strong emphasis on technological innovation and product specialization.96

93 Andrea Mondello was the president of the provincial association of Rome; Nicola Tognana was vice-president of Confindustria and a representative of North-Eastern SMEs. The reform produced the current statute, but did not result in a decrease of membership dues, despite the firm commitment of Mondello (who had publicly denounced the high costs of Confindustria). Once more, this caused discontent among SMEs, which had supported Tognana.94 This means the official renunciation to apply the principle of double affiliation (i.e. the simultaneous inclusion of each member firm in the related territorial association and sectoral federation/branch association) set in § 6 of the confederal statute. According to the most recent orientation, firms should be “encouraged” to double affiliation through properly devised conventions, aimed at reducing fees. However, in practice firms tend to join whichever association they want – more often territorial than sectoral.95 In 1998 a specific act reformed the legal discipline of commerce, which had been previously regulated by a 1971 act. Notwithstanding important advances in terms of liberalization and deregulation, the reform proved partial, apparently because of inner resistances in the sector (Pellegrini 2001). The commercial distribution still results so dishomogeneous and differentiated, that it is often accused of being a direct cause of price inflation and tax evasion in economic and political analyses. Supposed “discrimination” may refer to the persistence of bureaucratic and fiscal burdens more than to “comparative disadvantages” in relation to other sectors. Rather, the proper question regards how far a real reform would be accepted in a sector whose firms are highly differentiated in terms of modernity and efficiency.96 At the EU level, Confcommercio is member of Eurocommerce, which is a further indication of the prevailing interests within the confederation. In Italy, the members of UEAPME are Confapi, Confesercenti, Confartigianato and CNA.

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Since 1999 Confartigianato has started an internal restructuring in order to to get the ISO quality certification. This was achieved in 2002 for both human resources and targeted financial management.

6. Conclusions

All the employers’ organizations in Italy offer both interest representation and services to their members. The range of services may vary, but usually their substance does not differ very much. Here lies a remarkable source of competition, since services need to be more and more sophisticated in order to ensure the survival of firms, especially when they are SMEs. Moreover, one cannot exclude the possibility of fusions among associations, particularly in the most “overcrowded” sectors.97 In commerce, Confcommercio occupies a predominant position, but Confesercenti has been able to cope quite successfully until now. In industry, notwithstanding critical remarks regularly voiced by SMEs against the lack of internal democracy, Confindustria is largely predominant on Confapi, whose representative activity seems to be more effective at regional and local level than at national level. Here a certain complementarity surfaces, since Confapi apparently attracts those industrial SMEs which do not intend (or cannot afford) to join Confindustria. Cooperatives’ organizations often join forces with the other ASMEs in the representation of interests, even though a debate on their role has been going on in the 1980s and 1990s, in coincidence with a series of acts which amended the related legislation.98

More than ever, the multiplicity of employers’ organizations in Italy reflects the fragmentation of production units and the difficulty to reach such a vast and heterogeneous potential membership. SMEs join representative organizations mainly in order to receive services, but it is doubtful whether the second achievement in order of importance, i.e. political pressure, may be effectively exerted by so many organizations on the long term. Some of them have intensified the resort to inter-organizational agreements and joint initiatives, e.g. in handicraft and among cooperatives. This can be a way to increase representativeness, but it may not work in every sector in order to ensure the survival of these collective actors. Another point for further reflection derives from the overlapping membership among organizations and from the effects of tertiarization. If the membership of an organization overlaps that of another (or others, in the case of Italy), it is difficult to imagine a lasting cooperation without tensions. At the same time, as the most important BIA, Confindustria needs to revise its strategy - not only its structure - if it intends to remain a central reference in the system of economic interest groups and in industrial relations in general. The confederation monitors its competitors, particularly as regards their structural features, and stresses its role as representative of SMEs.99 Another challenge regards the

97 In handicraft, there have been talks about a possible fusion of the three confederations in the 1990s (Ferrante 1998, 101).98 Trade unions and Confindustria had even agreed on the need to overcome the potential “unfair competition” exerted by cooperatives (which have long enjoyed specific fiscal regulations and wage flexibility, e.g. in cooperatives offering jobs to disadvantaged people or starting activities in economically depressed areas). The latest reform of company law (2003) established the duty for cooperatives to enrol in a specific public register, to deposit balance sheets and to count at least 9 “working partners” before starting any activity. Moreover, cooperatives will be assimilated to other firm types “in absence of specific rules”. In 2000, another act has clarified the status of working partners (soci lavoratori), i.e. partners in a cooperative who also work within it, with reference to collective bargaining coverage and trade union representation. These innovations should contribute to eliminate any distinction between associations representing cooperatives and those representing enterprises.99 This is stated in the Bilancio sociale 2003 (Social balance survey) of the confederation, available on-line. In the same document, a reference is made to court rulings which recognized Confindustria as “more representative” than “other organizations specifically involved in the protection of SMEs” (p. 119). However, no further details are given about the identity of these competitors.

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reorganization of competences within the confederation, especially at peripheral level. In particular, as far as the defence of the most dynamic productive sectors is concerned, a difficult choice might be necessary between devoting increasing resources to either services or representation. According to confederal data, between 1989 and 2003 member firms in manufacturing have decreased from 73% to about 50% of the membership, while member firms in non-manufacturing industry have increased from 18.5% to 30%. At the same time, the percentage of member firms in services grew from 4.5% to 15% (in 2003, the confederation registered more than 117,000 member firms, with about 4,250,000 employees). Representing tertiary activities (especially those formerly included in the public sector) could prove too expensive and not so rewarding for Confindustria, given the competition from the other representative organizations.

Tables

Table 1: Firms and employees by size classes (included NACE A+B)

Size class   2000 2002 Change in %2000-2002    %    %

1-9 persons Firms 4,380,974 90.6 4,677,834 94.5 6.77  Employees 7,382,151 48.8 7,396,190 46.6 0.1910-19 Firms 321,527 6.7 207,580 4.2 -35.4  Employees 1,715,197 11.3 1,714,936 10.8 -0.0120-99 Firms 128,599 2.6 56,461 1.14 -56.0  Employees 2,414,367 15.9 2,493,229 15.7 3.26100-249 Firms

Employees

6,376

971,273

0.1

6.4

6,906

1,042,223

0.14

6.6

8.3

7.3250 and more Firms 2,890 0.05 3,272 0.06 13.2  Employees 2,648,012 17.5 3,202,422 20.2 20.9Total Firms 4,840,366 100.05 4,952,053 100.04 2.3  Employees 15,131,000 99.9 15,849,000 99.9 4.7

Sources: elaboration on Unioncamere data (Movimprese 2000; 2002a); Charlier (2003); ISTAT (2002; 2003a; 2004a; 2004b).

Table 2: Firms and employees by size class (excluded NACE A+B)

Size class   2000 2002 Change in %2000-2002    %    %

1-9 persons Firms 3,626,936 95.9 3,755,177 95.2 3.5  Employees 7,086,520 48.3 7,537,024 49.0 6.310-19 Firms 81,527 2.1 129,376 3.3 58.6

184

  Employees 1,610,828 11.0 1,685,245 11.0 4.620-99 Firms 63,632 1.7 49,742 1.3 -21.8  Employees 2,363,367 16.1 2,414,790 15.6 2.17100-249 Firms

Employees

6,376

971,273

0.2

6.6

6,906

987,788

0.1

6.4

8.3

1.7250 and more Firms 2,890 0.08 3,272 0.08 13.2  Employees 2,648,012 18.0 2,762,153 18.0 4.3Total Firms 3,781,361 99.98 3,944,473 99.98 4.3  Employees 14,680,000 100 15,387,000 100 4.8

Sources: elaboration on Unioncamere and ISTAT data (see previous table).

Table 3: Establishments (1998 and 2001)

Size class 1998, with NACE A+B

2001, with NACE A+B

Change in % 1998-’01

1998, minus NACE A+B

2001, minus NACE A+B

Change in % 1998-‘01

1-9 3,588,243 (94.6)

4,168,094 (94.65)

16.1 3,587,974 (94.6)

4,138,094 (94.7)

15.3

10-49 182,277 (4.8)

205,907 (4.67)

12.96 182,255 (4.8)

205,907 (4.7)

12.97

50-249 20,977 (0.55)

26,281(0.6)

25.28 20,976 (0.55)

21,198(0.5)

1.05

250-499 1,812(0.04)

2,213(0.05)

22.1 1,812(0.04)

2,213(0.05)

22.1

≥500 903(0.02)

936(0.02)

3.6 903(0.02)

936(0.02)

3.6

Total 3,794,212 (99.98)

4,403,431 (99.99)

16.05 3,793,920 (100.01)

4,368,348 (99.97)

15.1

Sources: ISTAT (1998; 2004b). In Italian statistical sources, establishments are referred to as unità locali (local units).

Table 4: Italy's cross-sectoral business associations: basic data (2002)

Association Scope of functions

Membership domain100and type of

Members Covered employees

Voting rights

100 The term “membership domain” refers to the domain defined by each association. In fact, there is not any real difference between self-defined and actual domain. Rather, there has been a certain evolution in the membership of some associations (e.g. Confindustria, which opened its membership to the tertiary sector in the 1990s). In principle, the denomination of some associations includes firms of all sizes; in practice, as in the cases of Confcommercio and CNA, most member firms are small and medium-sized. This is however just a formal difference, since SMEs are explicitly mentioned in the denomination (“piccole e medie imprese”). The ASMEs do not give a formal definition of what a SME or a small cooperative is. However, Confartigianato refers to the “EU definition of SME” in the statute (Confindustria also accepts the European size threshold). The most used criterion is size, referred to the number of employees. Cooperatives’ organizations also offer data on sales, but for whole sectors, not for single firms. The column also indicates the membership strongholds (some organizations do not publish statistics or sectoral data).

185

affiliationConfindustria (1910)

Mixed All businesses in industry and part of the tertiary sector (A)

113,307 4,280,075 Weighted

Confapi(1947)

Mixed Industrial SMEs (metalworking, textiles, chemicals) (A)

50,715 1,175,888 Unweighted

Confcommercio(1945)

Mixed Businesses (mainly SMEs) in commerce, tourism and services (A)

850,000 more than 2,000,000

Weighted

Confesercenti(1971)

Mixed SMEs in commerce, services, tourism and franchising (A)

250,000 more than 500,000

Weighted

Confartigianato(1946)

Mixed Handicraft firms (mainly SMEs) (A)

520,000 about 450,000

Weighted

CNA(1946)

Mixed Handicraft large firms and SMEs (textiles, transport, mechanics) (A)

350,000 more than 400,000

Weighted

CLAAI(1954)

Mixed Handicraft SME (A)s 160,000 ----------- -----------

Casartigiani(1958)

Mixed Handicraft firms (A) 70,000 about 126,000

-----------

Legacoop(1886)

Mixed Large and small cooperatives (agriculture and fishing, services), cooperative shops (B)

15,000 385,694 Weighted

Confcooperative(1919)

Mixed Small cooperatives (agriculture, bank and social services) (C)

18,592 390,800 Weighted

UNCI(1973)

Mixed Cooperatives (agriculture, construction, services) (B)

about 6,300

about 88,000-90,000

Unweighted

AGCI(1952)

Mixed Small cooperatives (agriculture, bank and social services) (B)

about 5,598

Data not available

Weighted

Sources: Alacevich (1996); Hege (2001); websites and data of the organizations. The data on the employees of handicraft confederations are estimated. Types of affiliation: A=organizes lower-level associations; B=organizes firms; C=organizes both associations and firms (Confcooperative accepts both firms and associations/consortia of firms as members).

Table 5: Sectoral membership of Confindustria (31 December 2002)

Covered sectors Member firms Employees covered% %

Energy, gas and water 1,071 76,682

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Mining and construction materials 3,895 71.8* 176,832 57.9***Chemicals and pharmaceutical products 4,472 312,952Metalworking 19,381 1,380,816Food and beverage 6,404 224,095Textiles, leather, clothing 9,561 447,862Wood and furniture 2,988 113,742Paper and publishing 3,207 126,093Rubber and plastic 1,699 137,921Other manufacturing 1,092 7.5** 51,195 67.1**Construction and installations 13,690 2.1 154,316 15.7Transports and communications 7,198 3.8 348,799 31.0Tourism and entertainment 21,317 9.0 343,556 46.8Services and other tertiary activities 17,612 2.2 385,224 11.9TOTAL 113,587 4,280,085

Source: www.confindustria.it (Dichiarazione Rappresentatività Sistema Confindustria, 31 December 2002). Percentages are the density ratios of membership strongholds (calculations on Unioncamere data, 2002a, and Ministero dell’Economia e delle Finanze, 2002). *: includes also energy, gas and water; **: refer to the whole manufacturing sector; ***: refers to energy, gas and water only.

Table 6: Activities and services performed by Confindustria and Confcommercio

Activities Confindustria Confcommercio ConfartigianatoRepresents:Labour market interests vis-à-vis the unions Yes Yes YesLabour market interests vis-à-vis the state Yes Yes YesProduct market interests in relation to customers

Yes Yes Yes

Product market interests in relation to suppliers

Yes Yes Yes

Product market interests in relation to the state

Yes Yes Yes

Participates in the formulation of and/or implementation of:Public schemes for vocational training Yes Yes YesPublic schemes to aid business Yes Yes YesPublic schemes for the standardization of products and product quality No No YesServices related toIndustrial relations Yes Yes YesEconomic policy programs Yes Yes YesExchange relations with suppliers Yes Yes YesExchange relations with customers Yes Yes YesVocational training Yes Yes YesFurther training and qualification of company staff

Yes Yes Yes

Developing/monitoring quality standards for products

No No No

187

Abbreviations

ABI Associazione bancaria italiana – Italian banks associationAGCI Associazione generale delle cooperative italiane – General association of Italian cooperativesAPI Associazione provinciale della piccola e media industria – Provincial association of small and medium firmsASAP Associazione sindacale per le aziende petrolchimiche e collegate a partecipazione statale – Employers’ association for public sector oil and petrochemical enterprisesCasartigiani (CASA) Confederazione autonoma dei sindacati artigiani – Autonomous confederation of artisan unionsCLAAI Confederazione delle libere associazioni artigiane italiane – Confederation of the free handicraft associations in ItalyCNA Confederazione nazionale dell’artigianato e della piccola e media impresa – National confederation of crafts and small and medium firmsCNEL Consiglio Nazionale dell’Economia e del Lavoro – National council for economy and labourConfapi Confederazione Italiana della Piccola e Media Industria – Italian confederation of small and medium-sized industryConfartigianato Confederazione generale italiana dell’artigianato – General Italian confederation of craftsConfcommercio Confederazione generale del commercio, del turismo, dei servizi e delle piccole e medie imprese – General confederation of commerce, tourism, services and small and medium-sized firmsConfcooperative Confederazione cooperative italiane – Confederation of Italian cooperativesConfesercenti Confederazione generale italiana esercenti attività commerciali e turistiche – General Italian confederation of commercial and tourist operatorsConfetra Confederazione generale italiana dei trasporti e della logistica – General Italian confederation of transports and logisticsConfindustria Confederazione generale dell’industria italiana – General confederation of Italian industryConftrasporto Confederazione del trasporto, della spedizione e della logistica – Confederation of transport, forwarding and logisticsFAID Federazione associazioni imprese distribuzione – Federation of associations of firms in commercial distributionFederalimentare Federazione italiana dell’industria alimentare – Italian federation of food and beverage industryFederchimica Federazione nazionale dell’industria chimica – National federation of the chemical industryFedermeccanica Federazione sindacale dell’industria metalmeccanica italiana – Union federation of Italian metalworking industryINPS Istituto Nazionale per la Previdenza Sociale – National institute for social insuranceIntersind Associazione sindacale Intersind – Employers’ association for public sector EenterprisesIRAP imposta regionale sulle attività produttive – regional tax on productive activitiesIRPEF imposta sul reddito delle persone fisiche – personal income taxISTAT Istituto Nazionale di Statistica – National Statistics InstituteLegacoop Lega nazionale cooperative e mutue – National league of cooperatives

188

RSA Rappresentanza sindacale aziendale – workplace union representationRSU Rappresentanza sindacale unitaria – unitary workplace union representationUNCI Unione nazionale delle cooperative italiane – National union of Italian cooperativesUnioncamere Unione italiana delle camere di commercio, industria, artigianato e agricoltura – Italian union of chambers of commerce, industry, crafts and agriculture

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- Pike, F., Becattini, G., Sengenberger, W. (1990), Industrial Districts and Inter-firm Co-operation in Italy, Geneva: International Institute for Labour Studies.- Piore, M. J., Sabel, C. F. (1984), The Second Industrial Divide, New York: Basic Books.- Regalia, I. (ed) (1997), Regioni e relazioni industriali in Europa. Potenzialità e limiti di un livello intermedio di regolazione sociale, Milan: Franco Angeli.- Regalia, I. and Regini, M. (1998), “Italy: The Dual Character of Industrial Relations”, in A. Ferner and R. Hyman (eds), Changing Industrial Relations in Europe, Oxford: Blackwell, pp. 459-503.- Regini, M. (1991), Confini mobili. La costruzione dell’economia fra politica e società, Bologna: Il Mulino (English edition: Uncertain Boundaries. The Social and Political Construction of European Economies, Cambridge University Press, 1995).- Regini, M., Regalia, I. (1998), "Le associazioni imprenditoriali", in G. P. Cella, T. Treu (eds), Le nuove relazioni industriali. L’esperienza italiana nella prospettiva europea, Bologna: Il Mulino, pp. 147-181.- Rizzo, S. (2004), "L’azienda Confindustria costa troppo: 400 milioni l’anno", in CorrierEconomia, 1 March 2004, p. 1.- Sarfatti, R. (2003), "A chi serve una Confindustria così?", in Europa, 23 May, pp. 1-4.- Trentini, M., Zanetti, A. M. (2001), "Italien", in W. Reutter (Hg), Verbände und Verbandssysteme in Westeuropa, Opladen: Leske+Budrich, pp. 221-241.- Unioncamere (2000), Movimprese 2000, www.infocamere.it.- Unioncamere (2001), Previsioni sull’occupazione delle imprese agricole nel 2001, www.starnet.unioncamere.it- Unioncamere (2002a), Movimprese 2002, www.infocamere.it- Unioncamere (2002b), Imprese agricole in movimento – anno 2002, www.starnet.unioncamere.it.- Windmuller, J. P. (1984), "Analisi comparata delle organizzazioni degli imprenditori: Organizzazione, struttura, governo", in J. P. Windmuller and A. Gladstone (eds), Le organizzazioni degli imprenditori, Rome: Edizioni Lavoro, pp. 13-39.

Address: Dr. Alessia VattaDepartment of Political ScienceUniversity of TriestePiazzale Europa 134127 Trieste (Italy)Tel.: +39-040-5583526Fax: +39-040-5583526Email: VattaA@sp.units.it

191

LUXEMBOURGPatrick Kenis, Tilburg University

1. The Economic Structure and Cultural Properties

Luxemburg is the smallest member country of the EU (with only 436.000 inhabitants). This does, however, not imply that it is much less complex when it comes to its associational system. Also in Luxemburg a wide range of different associations are active in the economy Luxemburg has a rather differentiated but at the same time highly integrated associational system. The legendary industrial peace in Luxemburg is often explained by its system of social concertation, the so-called “Luxembourg model”. The model is characterized by Tripartite consultation, which brings together representatives of employers, labour and the public authorities, and was created in response to the iron and steel crisis. The law of 24 December 1977 institutionalised a “Tripartite Coordination Committee” that is to be convened if the economic and social situation deteriorates. In 1979, the “Tripartite Iron and Steel Conference” reached a first agreement, which was amended in 1981, on restructuring and modernising the iron and steel industry. Over the years, sectoral tripartite agreements were negotiated. The tripartite system rapidly developed from an effective crisis management tool into a consultation mechanism that systematically seeks consensual solutions for economic and social problems that do not necessarily constitute a crisis. Although it is clear that ARBED [Hier muss erklärt werden, was ARBED ist und welchen Stellenwert dieses Unternehmen für LUX hat]had an important impact on the history and economic development of Luxembourg, also here SMEs prevail in the economy.

Table 2.1 Enterprises and employment by company size in Luxemburg 1996 and 2002*____________________________________________________________________________

Size in terms of persons

employed   

1996 2002

Change in %1996-2002

 Total number %  Total number  %

1 to 9Companies 10.133 78,8 12.673 77,9 + 25,1

Employment 28.218 16,2 34,665 14,2 + 22.8

10 to 49Companies 2.187 17,0 2,814 17,3 + 28,7

Employment 41.838 24,0 54,056 22,1 + 29,2

50 to 250Companies 483 3,6 647 4,0 + 39,7

Employment 46.681 26,8 66.499 27,2 + 42,5

250 and more Companies 82 0,6 138 0,8 + 65,9

Employment 57.470 33,0 88,906 36,4 + 54,7

Total Companies 12.865 100 16.270 100 26,5

Employment 174.205 100 244.114 100 40,1

____________________________________________________________________________

Source and notes: - STATEC . Luxembourg.* Excluded are agriculture, public administration, domestic services, extra-territorial activities, and

education

192

As in other EU member states, SMEs prevail in the Luxemburg economy. Their contribution to the total number of companies and employees differs, however, somewhat from the EU-15 standard. Altogether, Luxemburg’s SMEs (in Luxemburg they are defined as companies up to 200 employees but are recalculated here, for comparative reasons, as companies with employees up to 250 employees)[Von wem stammt die Definition von 200 employees: Statist. Amt, Verbände etc.?] represented in 2002 99,2 percent of the total number of companies and 63.6% in terms of employees. Whereas in the EU-15 the number of SMEs is generally speaking higher (i.e. 99,8 percent), their contribution in terms of employees is somewhat lower In the EU-15 SMEs represent 66,4 percent of all employees. Micro-companies (1-9 employees) are, however, much less common in Luxemburg compared to EU-15. In Luxemburg 78.8 percent of the companies are micro-companies whereas in the EU-15 these are 93.7 percent. In Luxemburg there is a comparable large number of medium-sized companies (50 to 250 employees). Whereas their contribution to the total number of companies in the EU-15 is only 0,8 percent, their contribution to the Luxemburg companies is 3,6 percent. Remarkable is also that the relative importance of small and medium-sized (but also large) companies have grown substantial in the years between 1996 and 2002. From such a perspective the company structure of Luxemburg is rather untypical compared to European standards. This structure and development might be explained by the fact that Luxemburg has become an attractive location for financial institutions and transportation companies. The special legal provisions, which exist in Luxemburg, seem to be particularly attractive for a number of companies to settle there.

2. The Legal and Administrative Framework for Associational Action

As regards the legal status of interest associations, there is an important distinction between the Chambers (with obligatory membership) on the one hand and the voluntary interest associations on the other since they are governed by different laws.

Chambers enjoy the public-law status because two basic tasks are attributed to them by statute: to represent their members’ interests and to participate in state regulatory functions. Their involvement in state regulatory functions includes participation in both their formulation and implementation. They have the statutory right to be consulted by the public authorities on all issues affecting their members’ interests in broadly defined areas of economic and social policy. In certain matters (e.g. the collection of statistics) they also function as public administrative bodies. There are six leading chambers in Luxemburg (Chambers of Trade and Industry), which were created by a Law of 4 April 1924, comprising three for employers (Chamber of Industry and Commerce, Chamber of Craft Trades and Chamber of Agriculture) and three for employees (Chamber of Labour, Chamber of White-Collar Workers and Chamber of Civil Servants and Public Servants). Although the unions were initially excluded, they now have seats in the Chambers and use them as an instrument. Apart from their main function of protecting the interests of the occupations they represent, they also participate in the supervision of vocational training, particularly apprenticeship. They also have the right to submit proposals for legislation and must be consulted (without commitment) by the Government on any proposed legislation affecting their constituencies. As becomes clear from the above one of the six Chambers is the Chamber of Craft Trade, which is a first indication that the interest of SMEs figure prominently in the overall process of advancing business interests.

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Whereas the Chambers are installed on the basis of law, business interest associations are created on the basis of will of its voluntary members. Therefore, the legal basis of the voluntary interest associations is the general freedom of association, which implies the principle of the right to organize as guaranteed by the The Luxemburg constitution (Article 11; liberté syndicale) The Associations Act lays down a general framework for the formation, structure and operation of associations, allowing a relatively large degree of discretionary scope. To set up an association, its proponents are obliged to submit the association’s constitution to the authorities for registration. If the constitution is in line with the general framework as defined by the Association Act, the association must be registered and recognized by the authorities. This means that anybody can form a business interest association, provided that the basic requirements of the Association Act are met. Formally speaking the above regulations do neither discriminate nor support the association of SMEs. It is indeed interesting to see that although a Chamber for the Craft Trade, with obligatory membership is in place, nevertheless an association for the Craft Trade has also developed. Given the theoretical argumentation in the introductory chapter, i.e. that SMEs face more difficulties in forming an association, the existence of the Federation of Craft Industries is in need of explanation. Possible explanations are: First, the Federation of Crafts Industries represents sectoral associations of craft industries rather than single companies (although they become automatically indirect members); a clear division of labour has been developed between the Chamber and the federation (as will become clear later); and finally, the fact that the Federation is older than the Chamber. The Federation of Crafts Industries was established in 1905 and was the successor of the even older Allgemeinen Handwerkerverbandes.

The parties which have the right to conclude collective agreements are representatives of employers, a single company, a group of companies of the same profession or trade and the national representatives of labour. In reserving the capacity to be a party to a collective agreement to the most representative trade union organizations at national level, Luxembourg law excludes sectoral and enterprise-level unions as well as employee representatives within the workplace. The concept of national representative status dates from the creation of a legal basis for collective bargaining in the Law of 12 June 1965 concerning collective agreements, which states two criteria for such status: a significant number of members, and independence.Within the meaning of Luxembourg law, an agreement on labour relations and general terms and conditions of employment concluded between one or more manual workers' or white-collar workers' unions on the one hand and, on the other, either an individual employer or a sectoral or occupational association of employers.[Das Verb fehlt im vorangegangenen Satz] The distinguishing feature of a collective agreement in this strict sense is that, on the employees' side, only unions possessing most representative status at national level own the capacity to conclude such an agreement. The duration of most collective agreements is two years (the legal maximum is three years). The Law of 1965 regulating collective agreements specifies issues which must be covered and this mandatory content includes, in particular, rules on payments for night work and dangerous and uncongenial working conditions, on the avoidance of sex discrimination in pay, and on the index-linking of pay that applies to all employees in Luxembourg.Luxembourg law distinguishes two types of collective agreements: ordinary collective agreements and collective agreements which are the outcome of a conciliation settlement or arbitration award within the National Conciliation Service and have been given erga omnes force, i.e. have been declared generally binding on all employers and employees in the occupation concerned through the process of extension of collective agreements ( déclaration d'obligation générale ), effected by grand ducal regulation and published in the Mémorial.[Wie oft wird erga omnes angewandt bzw. wieviele Arbeitnehmer sind dadurch erfasst?]

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Most collective agreements in Luxemburg are concluded at the sectoral level and are negotiated between the national unions and the sectoral associations. In the case of the SMEs, The Federation des Artisans[Federation of Craft Industries?] assists its member associations in bargaining and concluding collective agreements. Given the fact that sectoral associations in Luxembourg are rather small and have only limited resources the Federation plays an important role in this.

As in other member states, SMEs in Luxemburg are also extensively targeted by numerous specific policies such as national state-aides schemes. Initiatives have been taken place to abolish administrative impediments in order to foster SME growth; the ‘Comité de coordination tripartite’ has developed a strategy for increasing employment through specific investments; a National plan in favour of SMEs is implemented (containing 10 points); the implementation of two One-stop Shops (‘Centres de formalités PME’) was launched; the ‘Société luxmebourgeoise de capital-développement pout les PME’ was launched; recently (2004) a new framework law for the craft industry has been agreed upon. These are only some of the examples of policies and initiatives that have been launched to foster SMEs. In all these, both the Chamber of Craft Trades as well as the Federation of Crafts Industries is and has extensively been involved. Although organized business participates in these programmes, this does not necessarily set a special incentive for SMEs to associate. Given the legally-based mandatory membership at the Chamber of Crafts Trade there is no need to present selective incentives to their members. For the Federation this is somewhat different and for both it is clear that the participation in the development of these initiatives improves the chambers and federation’s legitimacy.

3. The System of Social Dialogue and Public Policy Making

Approximately 60 percent of all employees in Luxembourg have their terms and conditions of employment regulated by collective bargaining. Those excluded work primarily in the small firms sector. The social dialogue is a complex phenomena, and takes place at three levels.The micro level concerns the companies and establishments. Depending on the size and structure and private or public nature of the enterprise, workplace representation in Luxembourg takes place through the following channels: employee committees (in all private-sector enterprises with 15 or more employees and also in the public sector where there are 15 or more employees employed under a private-law contract), with special safety representatives designated by and from their members; joint works committees (in larger private enterprises with 150 or more employees); and board-level employee representatives. About half of the 60 percent of the employees regulated by collective bargaining are covered by company-level level agreements.The other half of the 60 percent is covered by sectoral agreements or the meso level. Bargaining at sectoral level, as for example in construction and banking, establishes conditions binding all employers [via erga omnes?] and therefore allows no company-level bargaining to take place. Where no sectoral agreement exists, bargaining at company level may take place in, for example, large retail outlets, major parts of the hotel and catering industry and large companies such as Arcelor (the new company of which ARBED became part).At the macro or national level there is only a collective agreement for the public sector. It regulates terms and conditions of employment for all employees who have a private-law contract of employment. [Auch für LUX ist zu prüfen, ob die Tarifverbände durch den Abschluss von Kollektivverträgen und erga omnes Abgaben von den Unternehmen einheben]

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Although collective bargaining is conducted at the national level as far as the private sector is concerned, the involvement of associations in public policy-making at the national level is considerable. There is an important process of social concertation, based on institutionalized consultation between the Government, employers and unions at the macrosocial level of industrial relations which is the hallmark of Luxembourg's consensual tradition (referred to as the "Luxembourg model") and unquestionably the reason underlying its legendary industrial peace. The fora in which the extensive involvement of the social partners in the formulation of economic and social policy takes place are the Chambers of Labour and Trade, the Economic and Social Council and the tripartite bodies such as the National Employment Commission, the Standing Committee on Employment and the Tripartite Co-ordination Committee. The latter was created in 1977 as a means of dealing with the economic crisis, and the most important achievement in this tripartite context was to enable the restructuring of the steel industry during the 1990s [or 1980s?] (with massive job cuts by ARBED) to be carried through consensually. Its function is to intervene through tripartite meetings (‘conférences tripartites’) convened whenever a worsening of the economic and social situation (notably, unfavourable developments as regards the rate of inflation or the competitiveness of Luxembourg enterprises in international markets) calls for general measures at national level (such as extending the required periods of notice for dismissal, temporarily freezing price margins including interest charges, and imposing temporary restrictions on the thresholds for applying the sliding pay scale ). The Committee advises the government both on the evaluation of the situation and on remedial action. If the three groups of representatives concerned are unable to reach agreement, the Government may appoint a mediator to submit a proposal for remedial action to the Committee. When this tripartite consultation procedure is completed, the Government may table before the Chamber of Deputies any legislative measure designed to remedy the economic situation. The Committee is made up of four representatives each from the Government, employers and the most representative trade unions at national level. [Welche Unternehmerverbände sind in den oben genannten Commissions und Committees vertreten?]

Moreover, Luxemburg has an Economic and Social Council (Wirtschafts- und Sozialrat) in which the Federation of Craft Industry has two seats (of 14 for the employers): “Der Wirtschafts- und Sozialrat ist ein beratendes Organ der Regierung und hat die Aufgabe, sich mit den wirtschaftlichen, finanziellen und sozialen Problemen entweder mehrerer Wirtschaftszweige oder der gesamten Volkswirtschaft zu befassen .... Der Rat wird befasst auf Ersuchen der Regierung oder auf seine eigene Initiative“. What is also interesting here is that the government can ask the Rat „um Stellungnahme zu allen Angelegenheiten von allgemeinem Interesse und zu allen Fragen ersuchen, zu denen die Berufskammern eine grundlegend abweichende Meinung vertreten haben“. [Quelle dieser Aussage?]

Finally, as said before there is also a legal consultation process which is based on the system of six Chambers. They have the right to submit proposals for legislation and must be consulted by the Government on proposed legislation affecting their constituencies. They also participate in the supervision of vocational training, particularly apprenticeship. Consequently the Chamber of Skilled Craft Trades is automatically consulted by the Government if a legislative text is under way in parliament and concerns either the interest of SMEs in the skilled craft sector or the economy as a whole. Moreover, there is a regular but informal dialogue between the governmental administrations or ministries and the organizations representing the interest of SMEs. The Federation of Craft Industry is indirectly involved in this process since it has a number of seats on the Board of the Chamber of Craft trades.

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4. The System of Cross-sectoral Business associations

Following the definition of cross-sectoral nation-wide business associations, as documented in the project outline, one finds the following associations. Of the three Chambers of Trade and Commerce for employers (Chamber of Industry and Commerce, Chamber of Skilled Craft Trades and Chamber of Agriculture) only the Chamber of Craft and Trades fulfils the criteria since both other organizations are not cross-sectoral in the sense as defined in the project outline. [Wenn die Chamber of Industry and Commerce manufacturing (D), construction (F) und commerce (G) abdeckt, wäre sie cross-sectoral nach der Projektdefinition] In a certain respect the Chamber of Craft and Trades is a borderline case since it is a member of the peak association of industry, the UEL. The UEL (Union des Entreprises Luxembourgeoises) is the only business associations which fulfils the criterion of a nation-wide cross-sectoral peak association. There is another borderline case which I also would like to include here, the Federation des artisans. The main reason is that they fulfil all criteria of the project outline except for the fact that they are not a peak association in the strict sense since they are also a member of the UEL. Formally this indicates a subordination of the Federation des artisans, but is actually far from the case. The UEL is a peak association with eight members and is in the first place run and governed by its members.

The UEL was founded in June 2000 as the result of the formalisation of the until that time existing “Committee liaison”. This was an informal platform of business associations that met regularly in order to discuss common issues. To communicate their positions in a more forceful and homophone way it was decided to found a formal national association of business interests. UEL is now the principal peak association of business in Luxemburg. UEL has eight members: la Chambre de Commerce du Grand-Duché de Luxembourg, la Chambre des Métiers du Grand-Duché de Luxembourg, l'Association des Banques et Banquiers, Luxembourg, l'Association des Compagnies d'Assurances du Grand-Duché de Luxembourg, la Confédération Luxembourgeoise du Commerce, la Fédération des Artisans, la Fédération des Industriels Luxembourgeois, la Fédération Nationale des Hôteliers Restaurateurs et Cafetiers de Luxembourg (Horesca). Apart from the agricultural sector and some professionals (e.g. lawyers and doctors) UEL represents all sectors of industry.[Wie ist die Mitgliederdomäne formal definiert?] Although UEL would in principal be interested in also representing these groups, their interests turn out to be quite divergent from those of the other member associations. The interest of agriculture sector are often more linked to employees interest than to employers interests and doctors, for example, have quite a different position when it comes to positions on reforming the health insurance system. Otherwise the interests of SMEs are generally well represented through the UEL. At least 5 of the eight membership associations have a large number of SMEs as their members (the three associations among these [l’Horesca, la Confédération du Commerce and la Fédération des Artisans]). Moreover they are also grouped in the more informal Confédération des Classes Moyennes, which allows them to formulate common positions with regard to SMEs). Voting rights of the members are allocated on the basis of one member/two votes.[Auf welchen Verband bezieht sich diese Aussage?] All members of UEL are associations. Individual companies can, according to the statute of UEL, not become member of the association. In terms of representational activities, UEL deals only with labour market interests.[Unter 5.2 wird u.a. festgestellt, dass UEL auch zu gesundheitspolitischen Fragen Stellung nimmt. Da Produktmarktinteressen alle anderen als Arbeitsmarktinteressen umfassen, sind gesundheitspolitische Ziel den Produktmarktinteressen zuzurechnen, mit der Implikation, dass UEL mixed ist.] UEL is not directly involved in concluding collective agreements (since they are concluded at the sectoral or company level) but has regular informal contacts and

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meetings with members of government and does also represent the entrepreneurs in the Comité de coordination tripartite; the Conseil économique et social; the Société nationale de Crédit et d’Investissement; and the Office National de Conciliation.

The Chamber des Métiers (Chamber of Skilled Craft Trades)[oben bezeichnet als Chamber of Trades?] is one of the three Chambers of employers. The Chamber of Skilled Craft Trades represents all enterprise of the skilled craft sector, belonging to construction, housing and metal transformation sector, the food, the fashion, health and hygiene sector, the printing industries as well as the handicraft activities.[Wie ist die Mitgliederdomäne formal definiert?] The main features of the The Chamber of Skilled Craft Trades are the compulsory affiliation, the elective basis[Was heißt das?], the financial autonomy and the representation of interests of all professions belonging to the skilled craft sector in Luxembourg. According to the law of 1924, the Chamber of Skilled Craft Trades has the task to create and or to subsidize if necessary any establishment, institution, operation or service contributing to the development of skilled craft enterprises, to broaden their range of activities, to supply advice, to put forward claims, to solicit information and to produce statistical data about the sector.

The Plenary Assembly of the Chamber has the right to submit proposals for legislation to the Government, which the latter must consider and transmit to the national Parliament. The opinion of the Chamber has to be asked for all grand-ducal and ministerial laws and regulations relating to the occupations that it represents as well as the sector of skilled craft enterprises. Moreover, there is a regular but informal dialogue between the governmental administrations or ministries and the organizations representing the interest of SMEs.

The Chamber of Skilled Craft Trades consists of 22 members[? nach Tab 5.1 sind es 4200 Mitglieder] (19 elected members and 3 delegates chosen by the Federation des Artisans) brought together in 19 electoral groups that are represented in the Plenary assembly.[Wer wird als Mitglied zugelassen: Firmen, Verbände …?] Physical persons, commercial companies, as well as the branches of foreign companies established in Luxembourg engaged in skilled craft activity are members of the Chamber.

The Chamber is responsible for the organization of the apprenticeship (organization of the system, determination of the training programme and organization of the examination), gives free of charge advice and assistance to SMEs in all economic, legal, fiscal, social or administrative matters and runs a Centre which conducts research, realizes promotion activities as wel as economic and technical advice (Centre de Promotion et de Recherche). [Vertritt die Chamber auch Arbeitsmarktinteressen; ist sie direkt oder indirekt in Collective Bargaining involviert? Wie steht es mit den Voting rights und müssen Services vorwiegend bezahlt werden?]

The Federation of Craft Industry (Fédération des Artisans) is another cross-sectoral nation wide organization in Luxemburg. It covers the same domain as the Chamber of Skilled Craft Trades but is an association (and thus has no mandatory membership) and has sectoral associations as its members. The Federation of Craft Industry is the principal association representing the interest of craft industry. It has those sectoral associations as a member that represents a registered craft. The 52 member of the association are divided in eight sectoral groups: Alimentation; Mode, santé, hygiène; Mécanique; Construction; Fermeture du Bâtiment; Installations Techniques du Bâtiment; Parachèvement; Divers.[Englische Übersetzung] In terms of representational activities the FdA is a mixed association, dealing with both product market interests and labour market interests. The FdA consults and facilitates its member associations in their collective bargaining processes. It does generally participate in the collective bargaining meetings but the sectoral associations sign the

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agreement. It also represents the interests of the craft industry in formal and in informal settings. Moreover, the FdA provides service to its members free of charge. These services include advice with respect to public subsidies. labour, tax and social legislation and financial issues of companies. Voting right within the associations are allocated on the basis of the number of members in the sectoral associations and the number of employees within the sector. For example the Fédération des Entreprises de Construction et de Génie Civil has 20 votes in the general assembly whereas the Fédération des Laboratoires Dentaires has one vote.The associational system in total has thus a clear structure. The peak association UEL has eight members two of which are the Chamber of Skilled Craft Trades and the Federation of Craft Industry. The UEL is a peak association but is (given the small number of members and the important status of these members) mainly governed by these members. Between the Chamber and the FdA there, on the one hand, a clear division of labour (mainly as a result of their different legal status) and, on the other hand, very close forms of collaboration.[Worin besteht die division of labour?] They consider promoting the interest of the same sector and companies without, however, being in competition for member contributions. Both, the Chamber and the FdA have some overlapping membership with the Chambre the Commerce. All three organizations consider this undesirable and have taken action to reduce the number of double membership.

5. The UEL, the Chamber of Skilled Craft Trades (CdM) and the Federation of Small and Medium Sized Enterprises (FdA) in Comparison

5.2. Membership: Domains, Composition and Figures

Table 5.1 CdM, FdA and UEL: Membership, density of membership anddecision-making

____________________________________________________________________________

CdM FdA UEL

Membership in terms of lower level associations

Number of potential members (associations)

Not applicable 52 8 plus some associations of professional (lawyers, physicians)a)

Number of direct and indirect members (associations)b)

Not applicable 52 8

Density (calculated or estimated)

Not applicable 100% ± 80%

Membership in terms of companies

Number of potential members (companies)

4200 4200 25.000

Number of direct and indirect members (companies)

4200 ± 3500 22.500

Density (calculated or estimated)

100% 80-85% 90%

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Membership in terms of employees

Number of potential members (employees)

58.000 (of 103 official crafts)

58.000 280.000

Number of direct and indirect members (employees)

58.000 ± 50.000 224.000

Density (calculated or estimated)

100 80-85% 80%

Size of membership firms

Average number of employees in all membership companies (direct or indirect)

7 7 9

____________________________________________________________________________Sources:

- Interviews

a) Nach p. 9 gehören lawyers nicht zur Domäne von UEL!?b) Es sollten hier nur jene Verbände gezählt werden, die direkt Mitglied im Spitzenverband sind.

The law on the chambers obliges every natural and legal person to be a member of the economic chambers, if the business carried is falls within the scope of the 103 different recognized crafts in Luxembourg. Due to the principle of mandatory membership, the actual number of members is identical with the potential members. The membership domain of the FdA is the exactly the same as the membership domain of the CdM. Here the membership is not mandatory but nevertheless the density is very high. In practice all SMEs are indirect members of the FdA. The exception being newly started companies and companies of newly developing industries (e.g. IT). Also the membership density of the UEL is very high. In terms of direct membership the UEL groups almost all national associations of business. Exception are some professional associations since their interests might at times conflict with the interests of the other members, as explained above. Consequently, also in terms of indirect membership the UEL covers a large part of the Luxembourg economy and at the same time also covers the companies represented by the CdM and the FdA.

5.2. Tasks and activities

Table 5.2 CdM, FdA and UEL: Representational activities____________________________________________________________________________

Type of activity CdM FdA UELRepresents:Labour market interests vis-à-vis the unions

Yesa) Yes Yes

Labour market interests vis-à-vis the state

Yes Yes Yes

Product market interests in relation to customers

Yes Yes No

Product market interests in relation to Yes Yes No

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suppliers

Product market interests in relation to the state

Yes Yes Nob)

Participates in the formulation of and/or implementation of:Public schemes for vocational training Yes Yes Yes

Public schemes to aid business Yes Yes YesPublic schemes for the standardization of products and product quality

Yes Yes No

____________________________________________________________________________.Sources ands Notes:

- Interviews- Main activities are market in italics

a) Wodurch?: durch direkte/indirekte Beteiligung an den Kollektivvertragsverhandlungen; durch Teilnahme in relevanten Commissions u. Committees?b) Ausgehend von dem Beispiel zur Gesundheitspolitik ist UEL als mixed einzustufen. Siehe auch die Anmerkung auf p. 9.Table 5.2 summarizes the scope of the representational activities regularly performed by the CdM, the FdA and the UEL. Although the table seems to indicate overlaps or even duplication in representational activities for SMEs this is not the case. The three organizations operate at different levels. Whereas the CdM represents interests of individual companies (micro-level)[Dieses Argument leuchtet mir nicht ein. Wenn sie ein Interessenverband ist, ist die CdM mit der Aggregation u. Vertretung kollektiver Interessen beschäftigt und kann nicht bloß Individualinteressen aufgreifen.] is the FdA more concerned with the representation of the interest of the associations (meso-level) and is the UEL more concerned with representation of the industry at the national level (macro-level). This division of labour is rather clear among the organizations and is also respected.

Table 5.3 CdM, FdA and UEL: Services provided____________________________________________________________________________

Type of activity CdM FdA UEL

Industrial relations(e.g. advice on the provisions of collective agreements; representation of members in labour court proceedings)

Yes Yes No

Economic policy programs(e.g. advice on the preconditions for the application for public grants and subsidies)

Yes Yes No

Exchange relations with suppliers(e.g. information on the quality and availability of raw materials and intermediate goods)

No Indirect via sectoral associations

No

Exchange relations with customers(e.g. information on sales markets, export promotion)

No No No

Vocational training Yes Yes No

Further training and qualification of company staff Yes Yes No

Developing/monitoring quality standards for products No No No

____________________________________________________________________________

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Sources and notes:- Interviews- Main activities are market in italics.

The range of member services offered by the three organizations is similar for the CdM and the FdA although also in this case they operate at different levels. The CdM provides direct services to companies whereas the FdA provides the same services to the associations. The UEL does hardly provide any services and largely concentrates on interest representation. About 10% of their resources[auf welche Verbände bezieht sich diese Aussage?] are spent on services in the form of the summary [Was heißt das?] and presentation of relevant information for companies.For both CdM and FdA the provision of services is as important as interest representation. Whereas in the case of the CdM the provsion of service can be mainly considered as part of their legal mandate, in the case of the FdA they can be seen as an important benefit for members associations to be member of the FdA.

5.4 Human and Financial Resources

Table 5.4 CdM, FdA and UEL: Human and financial resources____________________________________________________________________________

Type of activity CdM FdA UELHuman resourcesNumber of staff members

Peak levelAssociation as a wholeSatellite associations

65not applicablenot applicable

16not applicablenot known

5a)

not applicable± 170a)

Staff members per 1000 member firms not known not known not known

Staff members per 1000 employees working in member firms

not known not known not known

Composition of revenues (as a percentage of total revenues)Membership dues (firm members) 50% 95%b)

Membership dues (affiliated associations)

100%

Voluntary subsidies from membersSales of Services

Obligatory dues and leviesRevenues from the state (including contracts with government)

50%

Other 5%

Total 100% 100%

____________________________________________________________________________Sources and notes:

- Interviewsa) Wenn die Daten für peak level und für die satellite associations verfügbar sind, sollte auch Associations as a whole berechnet werden können?

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b) Dies ist nicht stimmig mit der Aussage (siehe Table 5.1) dass FdA nur Verbände als Mitglieder organisiert.Table 5.4 documents the associations’ human resources and the composition of their revenues. It is clear that the Chamber does not only have the most resources but does also have the most secured income of resources (given the mandatory membership to the Chamber). The Chamber has about 65 staff members. The sum of the satellite associations of the UEL is larger but the CdM and other Chambers are also mebers of the UEL which explains the large figure. The FdA has 16 staff member which might be considered rather large for an SME association in a small country like Luxemburg. This can be explained by the fact that most sectoral members associations of the FdA have no staff members at all and are completely dependent on the resources of the FdA.In one [Welche?] of the organizations important informal reforms [Was sind informelle Reformen?] and restructuring have taken place in the last years. All three organizations are rather expanding instead of restructuring or rationalizing.

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NETHERLANDSPatrick Kenis, Tilburg University

1. The Economic Structure and Cultural Properties

The Netherlands is modest in size (with approximately 16 million inhabitants) but is the the world’s 14th biggest economy and the 8th largest exporter. It has traditionally a very high rate of organizational density. Since the dismantling of the Dutch segmented or ‘pillarised’ system in the second half of the 1960s a considerable consolidation has been taken place in the associational system. Until that time there was a general, protestant and catholic association in virtually all sectors of the economy, and in all domains of social, cultural and political life. The ‘de-pillarisation’ took also place, although with some delay as we will see later, among the trade and employers’ associations.Although the Dutch economy is characterized by the presence of a substantial number of very large enterprises (e.g. Phillips, Unilever, Shell, Akzo-Nobel, Heineken, Ahold and some of Europe’s largest banks and insurers) also here SMEs prevail. As can be observed in Table 1 99.5 percent of all companies in the Netherlands are SMEs (i.e. companies with less than 250 employees) and SMEs employ 65.2% of all employees. The comparable figures for the EU-15 (2003) are 99.8 percent and 69.7 percent respectively. This illustrates that large enterprises are indeed more dominant in the Netherlands compared to the overall EU-15 average. Especially the relative share of micro-companies, in terms of number of companies as well as number of employees, are somewhat less predominant in the Netherlands compared to the EU-15 average. In the Netherlands the share of micro-companies is 90.4 percent in terms of number of companies (compared to 92.4% for the EU-15) and 31.7 percent in terms of number of persons employed (compared to 39.7 percent for the EU-15).From a recent evolutionary perspective, the present importance of Dutch SMEs … (1996 data will be supplied soon).

Table 1 Companies and employment by company size in the Netherlands (x 1000)

Size in terms of persons

employed   

1996 2003Change in %1995-2003 Total number %  Total number  %

0 to 9Companies 517 90.4

Employment 2.205 31.7

10 to 49Companies 43 7.5

Employment 1.245 17.9

50 to 249Companies 9 1.6

Employment 1.084 15.6

250 and more Companies 3 0.5

Employment 2.417 34.8

Total Companies 572 100

Employment 6.951 100

____________________________________________________________________________

Source:

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- Observatory of European SMEs 2003, No. 7 (SMEs in Europe 2003)- 1996 data will be supplied soon

2. The Legal and Administrative Framework for Associational ActionIn the Netherlands there exists no obligatory membership in BIAs. None of the existing BIAs can oblige potential members or any enterprise to become member of an association (the exception being some professional associations like doctors or lawyers). Apart from the BIAs there exists a Netherlands Chamber of Commerce, which has as its tasks to manage the trade register, to provide Dutch entrepreneurs with information, stimulate regional trade and industry and advise local and regional government. This is, however, a pure service organization for business and has the public task of managing the trade register. It is also not a membership organization [?Wer sind die Mitglieder?]and consequently quite different from the Chambers of Commerce in other European countries (e.g. Germany and Austria). Given the scope of this study it will therefore not be taken into consideration in the remainder of this chapter.Business associations in the Netherlands have the legal status of non-profit organizations and are thus not part of the state. There exists no special legislation for trade or employers associations.[Es gibt aber den Collective Agreements Act of 1927, siehe unten] Business associations are associations like every other association. Their basis of existence is the principle of the freedom to associate as specified in the constitution (article 8). This means that they are legal entities with members, that they promote a good cause and have to comply to rules of associations (both are specified in Article 2 of the Dutch Civil Code). This implies that in the Netherlands anybody can form a business interest association, provided that the basic legal requirements are met. This also implies that from a formal point of view, these regulations do neither discriminate nor support the association of SMEs. There is also no direct de facto competition from other organizations that have a privileged position in organizing the interests of SMEs (like the Chambers in some countries with their mandatory membership).Although there is no obligatory membership in Dutch BIAs, de facto obligatory membership does exist. The reason being that specific BIAs have an exclusive position in the Dutch consultation system and that the possibility exists to apply collective agreements to non-organized firms (i.e. have erga omnes force). Since the extensions of collective agreements are state-influenced provisions they are an important resource to those associations that have the right to negotiate collective agreements. In the Netherlands extension provisions are known in the narrow sense that means that a collective agreement becomes generally binding within its field of application by explicitly binding all those employees and employers which are not members of the parties to the agreement. In the Netherlands the procedure for erga omnes extension of collective agreements is based on the following principles (see Extension of Collective Agreements Act): the initiative for a request for applying the erga omnes principle is with one or more of the bargaining parties, the extension applies to all employees and employers in a given sector, the minimum requirement for extension is that the agreement must cover a ‘sufficient majority of relevant employees’; and the extension has to be decided by the Ministry of Social Affairs and Employment. [Ist das Ministerium zur extension verpflichtet, wenn a sufficient majority (was heißt das in Praxis) gegeben ist?]Another important resource for associations is whether it is or becomes recognized as a party in collective bargaining. The Dutch collective bargaining system has a legislative basis: under the Collective Agreements Act of 1927. Only trade unions and employers' associations possessing the proper legal capacity and individual employers who belong to an association possessing the proper legal capacity may conclude collective agreements.[Gibt es spezielle Voraussetzungen der Kollektivvertragsfähigkeit, die Arbeitgeberverbände erfüllen müssen, damit sie zum Abschluss von Kollektivverträgen berechtigt sind?] An employer or employee

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is deemed to be bound by an agreement if, during its term, they are or become a member of an organization that has concluded the agreement. Non-unionised employees are also covered by an agreement when employed by an employer who is bound by that agreement either directly or by virtue of being a member of an employers' association. No employees, whether unionised or non-unionised, are covered by the provisions of an agreement if their employer is not bound by it, either as an individual signatory or by virtue of membership of an association. However, all such employers become bound by an agreement, or by one of its particular provisions (a pay increase, for example), if its coverage is extended to an entire industry or parts of an industry in accordance with Article 2 of the 1937 Extension of Collective Agreements Act as described above.The overall effect of the above described formal regulations and industrial relations practices is that SMEs are integrated into the associational system of employers through their representation at the national level (through the peak association MKB as we will see below) and through collective bargaining of sectoral associations of SMEs.As in other countries also Dutch SMEs are targeted by numerous specific policies such as reducing administrative obligations for SMEs, provision of fiscal relieves, allocation of funds to an SME guarantee scheme (BMKB), export promotion, measures to provide R&D information and support in the various phases of innovation. The participation of business associations in the administration and implementation of these programs might present an incentive for SMEs to associate. On the other hand some of these initiatives are administered by the Chambers of Commerce and are thus provided as public goods and many of these services have a public goods character since non—members of associations cannot be excluded from them.

3. The System of Social Dialogue and Public Policy Making

The actors in the Dutch collective bargaining system are the government (in the form of legislation on collective agreements and through direct and indirect regulation of matters which are also bargaining issues, such as pay); the employers' confederations and trade union confederations; separate [independent? lower-level = sectoral?] employers' associations and trade unions; and individual employers. The government and the confederations have no direct involvement in bargaining. Their role consists in consultation at national and central level within the bipartite Stichting van de Arbeid (Labour Foundation) and tripartite Sociaal-economische Raad (Social and Economic Council), in which they establish guidelines for subsequent bargaining at industry and enterprise level. The influence of this tripartite consultation has varied over the years. The labour Foundation is a private-law foundation legally established in 1945 as a bipartite consultation body in which the employers' confederations and trade union confederations co-operate. Its management board is of strictly joint composition, with 7 representatives from each side. Three of the members from the employer’s side three are from VNO-NCW (the peak association for business), two are from MKB (the peak association for SMEs) and two are from LTO (the peak association for the agricultural sector). The Labour Foundation serves as a forum for top-level consultation between the two sides of industry and also plays an important role at national level as an advisory body to the government on social and economic matters. Its main function lies in its influence on the climate of relations between employers and unions and in its capacity as an informal channel alongside the Social and Economic Council to advise the government on pay policy in close detail. The advisory role of the Labour Foundation became less important after the Social and Economic Council was established.Established in law by the 1950 Industrial Organisation Act (Wet op de bedrijfsorganisatie), the SER is the main advisory body to the Dutch government on national and international social and economic policy. The SER is financed by industry and is wholly independent from

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the government. It represents the interests of trade unions and industry, advising the government (upon request or at its own initiative) on all major social and economic issues. The SER also has an administrative role. This consists of monitoring commodity and industrial boards, which perform an important role in the Dutch economy. These boards are responsible for representing the interests of particular branches of industry, and are made up of employers’ representatives and union representatives. In addition, the SER helps the government to enforce the Works Councils Act (Wet op de ondernemingsraden), the Establishment of Businesses Act (Vestigingswet Bedrijven) and the Insurance Agencies Act (Wet Assurantiebemiddelingsbedrijf).The SER has 11 employers’ representatives, seven of which are representatives from VNO-NVW, three are from MKB and one is LTO. The Foundation of labour and the Social-Economic Council are the two most important, though not the only organisations that exert a centralising and aggregating force on the organisation of Dutch business. In any case, it is clear that the state as attributed de facto iare [?] part of these institutions. From the above it becomes clear that representatives of SMEs are clearly-present in the Dutch national Consultation system which set important ramifications for collectiove bargaining at the other levels.The collective agreements are concluded at various levels below peak level. At industry level, unions and employer associations conclude agreements covering an entire industry or parts of it. At enterprise level employers' associations or individual employers (management) conclude company agreements or group-level agreements with trade unions. In the Netherlands, collective bargaining is concentrated at industry level, although there are also sectors in which the enterprise is the most important bargaining level (the chemical industry, for example). There are approximately 200 industry-level agreements and 700 company agreements in force. In terms of employees approximately 68 percent are covered by multi-employer agreements and about 14 percent are covered by single-employer agreements (see eironline)[genaue Referenz?].Three out of four firms negotiating their own collective agreements are advised by the General Employer’s Association (AWVN). AWVN is mainly a service organizations (with a membership of 500 firms and 40 sectoral associations). Traditionally the organization advised firms on job classification and merit pay systems but recently it moved towards a broader HRM profile, including consultancy on work organisation, training and career development. AWVN is now increasingly developing as the ‘social-economic’ branch of Dutch business and started to integrate its activities since 1999 working in the VNO-NCW strucure.[Den letzten Satz habe ich nicht verstanden. Ist AWVN seit 1999 Mitglied von VNO-NCW?]

4. The System of Cross-sectoral Business associations

Following the definition of cross-sectoral business associations, as documented in the project outline, one finds two associations: the Confederation of Netherlands Industry and Employers (Vereniging VNO-NCW) and the Association of Small and Medium-sized Enterprises (MKB Nederland). There is one other national association, the Dutch Organisation for Agriculture and Horticulture (LTO). This is, however, a sectoral association and is therefore not considered part of the system of cross-sectoral business associations. It is remarkable that over the post-war period, through various mergers across the religious divide and by unfying trade and employers’ associations, the number of peak national associations representing business was reduced from ten—in the seventies to the above mentioned three in the nineties.Large and middle-sized firms in the industry, commerce and the service sector are organized in VNO-NCW. The VNO (Federation of Dutch Enterprises) was formed in 1968 through the merger of the former trade and employers association CSWV respectively VNW. The NCW (Dutch Christian Federation of Employers) was formed in 1970 through the merger of the Catholic and Protestant organizations NKWV and VPCW. On the first of March 1995 the

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Confederation of Dutch Business (VNO) federated with the Christian Confederation of Dutch Employers (NCW). VNO-NCW (Confederation of Netherlands Industries and Employers) is now the only peak association in industry and services. VNO-NCW covers directly about 150 sectoral and branch affiliates and indirectly about 88,000 enterprises.[nach Tab 2 sind es 180 associations und 80000 enterprises!?] Moreover, VNO-NCW has about 250 company members, nearly all the larger ones operating in the country (including companies with foreign ownership). These firms are also always indirectly represented through the federations associated. Moreover, often these companies conduct their own collective agreement negotiations with the trade unions.VNO-NCW has an internally differentiated organization in order the meet varying demands and expectations and stimulate personal involvement of the members. VNO-NCW has five regional associations and separate structure grouping the personal membership of some 1,200 young managers. In terms of scope of representational activities, interests covered and membership, VNO-NCW is the principal association of business in the Netherlands. In terms of activities VNO-NCW is in the first place an employers associations although it operates as a mixed association if one considers the full range of its activities (Table 3). It claims to concentrate on common themes and to avoid conflicts among its members by (which might be provoked?) addressing certain, divisive product market interests. It provides only services with respect to the provision of information (on the entire socio-economic, economic, financial, fiscal, legal and ecological spectrum). Other aspects of the services provided include direct contacts between VNO-NCW representatives and its affiliated members, information brochures, information gatherings and a telephone helpline. There seems, however, a growing emphasis on services offered to their members in order to meet varying demands and expectations of their members. In this respect VNO-NCW could challenge the types of services provided by the Chamber of Commerce and claim that these services can be better provided by business associations. VNO-NCW does also claim to represent interests of SMEs and has established an SMEs oriented platforms. Issues which concern SMEs are discussed structurally 4 to 6 times a year within the VNO-NCW. [Wie sind die voting rights in VNO-NCW geregelt? Sind services überwiegend payable?]Employers in the small and medium-sized firms sector are organized in the MKB Nederland (Dutch Federation of Small and Medium-Sized Enterprises). This confederation was formed on July,1 1995 through the merger of the former KNOV (Royal Dutch Federation of Small Businesses) and NCOV (Dutch Christian Federation of Small Businesses). After the first chairperson had left (Jan Kamminga) the association was confronted with problems and two important sectoral organizations, Bovag en Horeca Nederland [?translation?] switched to the general BIA, the VNO-NCW.MKB is based on a two-dimensional organizational structure. It has 125 sectoral business associations among its members as well as about 400 regional associations. It indirectly represents the interests of about 175.000 companies. Its membership domain are the associations that typically represent SMEs (which are in the Netherlands generally defined as companies with less than 250 employees). In those sectors where large and SMEs are active at the same time the sectoral association can be at the same time member of MKB and VNO-NCW.[Wieviele Fälle dualer Mitgliedschaft gibt es?] The menbership to MKB is voluntary and is restricted to associations. MKB does not maintain direct contacts with firms. MKB is a mixed association, but mainly represents employer’s interests. MKB is involved in matters of collective bargaining given its seats on the board of the Labour Foundation and the Social Economic Council. Collective agreements, which in the Netherlands are on the sectoral or company level, are however, signed by the sectoral associations. MKB has a CAO (Collective labour agreement) commission and thus facilitates horizontal coordination between the sectoral associations. Representation of product market interests is only maintained in those cases where all members of MKB have a common interest (which is not necessarily often the

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case). For example, when it came to the issue of who pays the costs of the introduction of the EURO (the state, the banks or the companies) MKB could take a common position (given the fact that Banks are generally not SMEs). MKB provides also services to its members: They provide information and facilities, for some of which members have to pay. This is somewhat surprising since in this way MKB potentially competes for the provision of services with SMEs, which also might provide such services. MKB seems also to increase its emphasis on the provision of services since they use quarterly surveys, commissioned to a public opinion research institute, in order to find out what its members actually want and how they think their interest are best served.Voting rights are weighted at MKB according to the contribution the associations pay. The contribution on its turn depends on the number of members the association has.There is some domain overlap between VNO-NCW and MKB since some sectoral associations have large as well as small and medium enterprises as their members. This is, however, not seen as problematic by neither of both associations.[Sowohl für VNO-NCW als auch MKB fehlen die Informationen zu den voting rights in den Mitgliederverbänden (most common pattern; ebenso fehlen die Informationen zur formalen Definition der Mitgliederdomäne.]

5. The VN-NCW and MKB in Comparison

5.3. Membership: Domains, Composition and Figures

Table 2 VNO-NCW and MKB: Membership, density of membership anddecision-making

____________________________________________________________________________

VNO-NCW MKB

Membership in terms of lower level associations

Number of potential members (associations)

Number of direct and indirect members (associations)

180 sectoral associations250 company membersPersonal members

125 sectoral associations400 regional organizations

Density (calculated or estimated)

Membership in terms of companies

Number of potential members (companies)

330.000 (companies with at least one employee)

570.000 (companies with maximum 250 employees)a

560.000 (companies with maximum 50 employees)a

Number of direct and indirect members (companies)

80.000 175.000

Density (calculated or estimated)

100% of firms with more than 500 employees90% of firms with more than 100 employees

30-31%

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50% of firms with 20 to 100 employeesb

Membership in terms of employees

Number of potential members (employees)

Number of direct and indirect members (employees)

Density (calculated or estimated)

Size of membership firms

Average number of employees in all membership companies (direct or indirect)

5 to 6 employees

____________________________________________________________________________Sources:

- Interviewsa Warum diese beiden Differenzierungen nach Firmengröße?b Ein Schätzwert für die aggregierte Density über alle Größenkategorien sollte ermittelt werden.As said before in the Netherlands there is no mandatory membership for any type of business association. Nevertheless it becomes clear that the membership density in the Netherlands in these type of associations is rather high. VNO-NCW as well as MKB cover a large number of [companies?]. Some companies are even member of both associations. The reason might be that the Netherlands has historically a rich tradition of organizational representation (which might have decreased somewhat since the ‘depilarisation’ but is nevertheless still very strong. Another factor which might play an important role in the case of business associations is the Dutch consultation system. Being represented in some way or the other in this consultation system is considered very important. Both VNO-NCW and MKB are both parties in the bipartite Labor Foundation and tripartite Social and Economic Council. [Ein weiterer Grund für die hohe density sind die extension practices. Firmen sind durch die Kollektivverträge erfasst, können die Tarifpolitik aber nur im Fall der Mitgliedschaft mitbeeinflussen. Weiters wäre noch zu prüfen, ob die Verbände über Kollektivverträge u. extension Abgaben bei den Unternehmen einheben.]The membership domain of the VNO-NCW is formally defined as covering sectoral associations (180), companies (250) and personal members. What is remarkable in the case of this association is that large companies have duplicate membership in this association. Once through their sectoral association and once through an individual membership. This might reflect the fact that large Dutch companies like Shell and Phillips are considered as national champions and the general belief exists that the benefits of these companies are also to the benefits of the country in general. VNO-NCW covers 100% of all large companies (more than 500 employees), 90% of firma with more than 100 employees and 50% of firms with 20 to 100 employees. Consequently there seems not to be a clear demarcation between the membership domain of VNO-NVW and MKB but rather a sliding transition.The number of potential members of MKB is no less than 570.000 companies (i.e. companies with a maximum of 250employees). Through its 125 sectoral and 400 regional associations MKB organizes 175.000 (or about 30%) of these companies.

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5.2. Tasks and activities

Table 3 VNO-NCW and MKB: Representational activities____________________________________________________________________________

Type of activity VNO-NCW MKBRepresents:Labour market interests vis-à-vis the unions Yes YesLabour market interests vis-à-vis the state

Yes Yes

Product market interests in relation to customers

No Yes*a

Product market interests in relation to suppliers

No Yes*a

Product market interests in relation to the state

Yes***a Yes**a

Participates in the formulation of and/or implementation of:

Public schemes for vocational training Sectoral organisations

Yes

Public schemes to aid business No YesPublic schemes for the standardization of products and product quality

N0 No

a Was bedeuten die Sternchen?____________________________________________________________________________

Notes and Sources:- Main activities are market in italics.- Source: Interviews

Table 3 summarizes the scope of representational activities that are regularly performed by VNO-NCW and MKB. It becomes clear that VNO-NCW mainly represents interest vis-à-vis unions and labour. It is a classical party in the bipartite and tripartite Labour Foundations and Social and Economic Council. Product market interests are only advocated towards the state. A case in point is the initiation of an innovation platform. MKB is somewhat broader with respect to its representational activities. They also advocate product market interests in relation to customers and suppliers. This is not very common, but happens if there is a ‘mass interest’ for those among many lower level associations and where there is no potential conflict with a sectoral association. This applies to energy prices (for example, actions were undertaken when the energy market was liberalized) or in case of environmental issues like soil sanitation. MKB is also more involved in the development of public schemes for vocational training and schemes to aid business than is the case with VNO-NCW.

Table 4 VNO-NCW and MKB: Services provided____________________________________________________________________________

Type of activity VNO-NCW

MKB

Industrial relations(e.g. advice on the provisions of collective agreements; representation of members in labour court proceedings)

Yes Yes

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Economic policy programs(e.g. advice on the preconditions for the application for public grants and subsidies)

No Yes

Exchange relations with suppliers(e.g. information on the quality and availability of raw materials and intermediate goods)

No No

Exchange relations with customers(e.g. information on sales markets, export promotion)

No Yes*a

Vocational training No Yes

Further training and qualification of company staff No No

Developing/monitoring quality standards for products No Noa Was bedeutet das Sternchen?____________________________________________________________________________

Notes and Sources:- Main activities are market in italics.- Source: Interviews

The range of member service provided is rather limited in the case of VNO-NCW. This is in the first place an organization for interest intermediation. Hence, services concentrate on the provision of information. There seems, however, a slight move in the organization of the provision of services. Service provision is now considered more important. This is reflected in the structural collaboration with AWVN and the fact that the services provided by the Dutch Chamber of Commerce are seen as activities which could be better provided by the representatives of industry themselves. MKB considers the provision of services somewhat more important but does also consider itself mainly as a organization for interest interest representation as can be seen in Table 5.

Table 5 VNO-NCW, MKB-NL: The division of allocation of resources (financial and staff) among interest representation and services (in percentages)

____________________________________________________________________________

Interest representation Services

VNO-NCW 90% 10%MKB-NL 80% 20%____________________________________________________________________________

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5.3. Human and Financial Resources

Table 6 VNO-NCW, MKB: Human and financial resources____________________________________________________________________________

Type of activity VNO-NCW

MKB-NL

Human resources

Number of staff membersPeak levelAssociation as a wholeSatellite associations

160 8585-

Staff members per 1000 member firmsStaff members per 1000 employees working in member firmsComposition of revenues (as a percentage of total revenues)

Membership dues (firm members) No info - ?Membership dues (affiliated associations)

No info 0 ?

Voluntary subsidies from members No info 0 ?

Sales of Services No info - ?Obligatory dues and levies No info 0 ?

Revenues from the state (including contracts with government)

No info 0 ?

Other; Sponsors No info sponsors

Total 100 100

____________________________________________________________________________Sources and notes:

- Intervieuws

Both organizations are rather well resourced and are in the first place resourced by membership fees. However, more specific information on the human and financial resources is very difficult to assess.Neither VNO-NCW nor MKB have undergone internal reforms and restructuring. Both organizations are, as we have seen above, the result of several rounds of mergers. In the course of these mergers main changes in the organizational structures happened. The major reason for merging usually was an economic one. With rapidly rising salary costs and a stagnating economy, mergers helped to obtain economies of scale and contain costs (see Streeck and Visser 1998). Large member firms already in the 1980s believed that the schism between Christian and general associations should be overcome and asked VNO and NCW to join forces. The reason that a merger, nevertheless, took such a long time was because some parts in the NCW feared domination by large firms as a consequence of the merger. In the end the merger took place since the continuation of two professional organisations became simply too exepensiev (Bruggeman and Camijn 1999: 126).

6. Conclusions

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PORTUGALReinhard Naumann*, CIES/ISCTE, Lisbon

* with the collaboration of Maria da Paz Campos Lima, ISCTE

1 The Economic Structure and Cultural Properties

As in the other EU member states, SMEs prevail in the Portuguese economy. Their contribution to the total number of companies is near to the average observed in EU-15. The same applies to the distribution of the sub-groups (micro, small and medium). In Portugal, micro companies represent 93.5% of the total number of firms (EU-15: 93.2%), the small companies amount to 5.5% (EU-15: 5.8%) and medium-sized companies represent 0.9% (EU-15: 0.8%). A significant difference exists with regard to the SMEs’ share in employment, which is much higher in Portugal (78.8%) than in the EU-15 as a whole (66.4% average). This is also the case in other Southern European countries like Greece (86.7%), Italy (80.3%), and Spain (79.3%).101 This difference is an indicator for the relatively small size of large firms in Portugal. [Characteristically,] the new legislation on labour relations (“Código de Trabalho”, 2003) sets the line between medium and large companies at 200 employees.

The Portuguese system of business associations [is dominated by] small organisations representing particularistic interests [at regional and sectoral level]. This trend, historically strengthened by the corporatist Salazar-regime (1926/33-1974) [has been reinforced] by the voluntary organisations that emerged during and after the revolutionary period (1974-75). [This has led] to a structure frequently described as “pulverized”. Until today, the existing associations have demonstrated a [capacity] for self-preservation and [have] largely resisted all attempts [at] restructuring.102 Peak level business associations are aware of the disadvantages of this situation and have recently begun to open way for an internal debate on this question.

2 The Legal and Administrative Framework for Associational Action

Recognition as an Association

As regards the legal status of interest associations, there is an important distinction between the Employers Associations who are recognized as social partners on the one hand and pure trade associations on the other. Employers’ associations (associações patronais) [are based on voluntary membership and] are established [according to a] specific law on the employers’ right of organisation. They may also assume functions of trade associations. The law on the employers’ right of organisation (Decreto-Lei 215-C/75) lays down a general framework for the formation, structure and operation of employers associations, allowing a relatively large degree of discretionary scope in relation to the definition of membership domains, powers and responsibilities, internal structure and financing. To set up an association, its proponents are obliged to submit the association’s constitution to the Labour Ministry for registration. If the constitution is in line with the general framework as defined by the Decreto-Lei 215-C/75, the association must be registered and recognized by the authorities. Once registered, employers associations have the statutory right to carry out collective bargaining and to be consulted by 101 The non-Southern European country with the highest share of SMEs in employment is

Luxembourg (72,5%).102 Until 1995 this applied to trade unions too, but during the last 9 years the largest union

confederation (CGTP) has undergone a comprehensive process of restructuring based on mergers at primary and intermediate level.

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the public authorities on issues affecting their members’ interests (particularly with regard to labour legislation). There are no legal preconditions regarding the associations’ representativity that would limit their right to carry out collective bargaining. Employers’ associations do not function as public administrative bodies.

The compulsory system of corporations created on the basis of the fascist constitution [of] 1933 was completely abolished after the revolution in 1974. It gave way to a system based on the division between [interest] representation by voluntary organisations and public functions carried out by state agencies. In this context, chambers, which do not have a strong tradition in Portugal, are of marginal importance. In 1992 a new law on chambers came into force, but it did not give them a major role in state regulatory functions or attribute to them important functions as public administrative bodies.

Since the revolutionary period 1974-75, corporatist bodies for specific occupational groups (doctors, lawyers, engineers, pharmacists and architects, and most recently nurses) have gained considerable importance. These corporations (“ordens”) are established by specific law and are based on mandatory membership. They are the [defenders] of formal qualification (gained through university education and vocational training) [as] the precondition for getting the right to practise the [corresponding] business activities. They are involved in state regulatory functions and carry out certain tasks as public administrative bodies. Thus, they hold an exceptional status in a country with no tradition of governance by "self-administration".

The employer peak associations which are the official business representatives on the most important cross-sectoral, nation-wide institution of the social dialogue (i.e. the Permanent Commission of Social Concertation, Comissão Permanente de Concertação Social, CPCS), are the Confederation of Farmers of Portugal (Confederação dos Agricultores de Portugal, CAP), the Confederation of Commerce and Services of Portugal (Confederação do Comércio e Serviços de Portugal, CCP) and the Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP). Since the CPCS’ creation in 1984 these confederations represent business interests in this body. The CPCS consists of 18 members, equally divided between employers (2 representatives from each confederation), trade unions (3 from each of 2 confederations) and government (6). CPCS-members are appointed by law. All attempts of associations outside the CPCS to be admitted to this body failed because the CPCS-members jointly resisted any change in its composition.

Other peak associations (confederations) that are established according to the specific law on the employers’ freedom of association are the Confederation of Portuguese Turism (Confederação do Turismo Português, CTP), the National Confederation of Agriculture (Confederação Nacional de Agricultura, CNA), the Portuguese Confederation of Micro-, Small and Medium Enterprises (Confederação Portuguesa das Micro, Pequenas e Médias Empresas, CPPME) and the Confederation of Representative Organisations of Artisanal Fishery (Confederação das Organizações Representativas da Pesca Artesanal). CAP, CCP, CIP, CTP and CNA are members of the cross-sectoral, nation-wide institution for social and economic consultation, that is the Economic and Social Council (Conselho Económico e Social, CES). The CES was created in 1991 and is composed of a broad set of organisations from civil society, the social partners, government, regional and local authorities, NGOs and organized interests from various other areas. After each election for the national parliament, the composition of CES becomes renewed. Some member organisations have permanent seats (e.g. government, trade unions, public companies), others have to run for a new term (like business associations, NGOs and others). Non-permanent members are appointed by the CES’ president after a consultation process amongst the associations of the respective category. If there is no consensus about their representation at the CES, the CES-president (who is elected

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by the parliament) makes the appointment. Customs have been that new members are not appointed against the will of old ones.103

Pure trade associations are based on the general principle of freedom of association. The most important associations of this kind are the Lisbon based Portuguese Industrial Association (Associação industrial Portuguesa, AIP) and the Entrepreneurial Association of Portugal (Associação Empresarial de Portugal, AEP) from Oporto. Both AIP and AEP are recognized as chambers, but this does not imply that they act as public administrative bodies, nor do they have the right do carry out collective bargaining. AIP and AEP are not represented on either the CES or the CPCS. Admission to the CPCS and CES depends on the consent of those associations which are already members. The employers’ confederations (CAP, CCP and CIP) rejected AIP’s repeated attempts to enter the CES.

The voluntary character of all kinds of business interest association in Portugal (i.e. employers organizations, pure trade associations and chambers) and their private character (i.e. the lack of performing public administrative functions) may even increase the difficulties of SMEs in forming associations. On the other hand, the neutral recognition regulations for collective bargaining (which sets no threshold in terms of size and representativitiy) may facilitate the creation of ASMEs in the future.

The recognition as a party to collective bargaining is based on the constitutional freedom of association and on the constitutional right to carry out collective bargaining. This is specified by labor law. As noted above, employers associations are regulated by the Decreto-Lei 215-C/65. Individual employers or groups of companies are entitled to conclude collective agreements without any preconditions. The whole system of collective bargaining is based on the freedom of the two sides of industry to demarcate the geographical and occupational area and the range of issues covered by their collective agreements. The predominant type of agreement is the Collective Work Contract on branch level (Contrato Colectivo de Trabalho, CCT). Company agreements (Acordos de Empresa, AE) and agreements for several untertakings (Acordo Colectivo de Trabalho, ACT) cover less than 10% of the total number of employees mainly working in large companies. The bulk of SMEs is covered by the branch contracts (CCT) and related extension decrees (see below). CCTs tend to set lower wages and less advantageous regulations for employees than AEs and ACTs.

In the context of this system of voluntary associations and agreements hundreds of business interest associations of all shapes and kinds (pure trade, pure employers or mixed associations) have been created, and collective bargaining has resulted in a large number of agreements, many of them competing with each other. Regardless of their effective coverage, the signatory parties may ask the Labour Ministry to extend their collective agreement by means of extension decree (“Portaria de Extensão”) to the whole geographical and occupational area formally covered by the agreement. Other social partners in the respective area are entitled to veto the extension to their members.

Large companies dominate several business associations in manufacturing, and a growing number of large companies is a direct member of the confederation in manufacturing and services, CIP. Big business seems to have a very strong position in CIP. The situation is different in commerce where small retailers prevail in most lower-level associations and the respective confederation, CCP. Large retailers have emerged since the late 1980s and created

103 The CPCS was created in 1984 under the designation „Permanent Council of Social Concertation” (Conselho Permanente de Concertação Social, CPCS). When the CES was created in 1991, the CPCS was transformed into a commission under the roof of the new broader body. Thus, a curious legal situation emerged, with the CPCS operating formally inside the CES, but representing in fact the more important body and working according to its own rules that differ from those governing the CES. See Vital Moreira 1998.

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their own association outside CCP (see section 4 ). But wholesalers continue to be members of CCP, and other larger firms (some of them directly affiliated to CCP) contribute to a considerable diversity of CCP’s membership base. Each of the two cross-sectoral employers’ confederation may have a certain bias in its composition and policy (CIP towards big business, CCP towards SMEs). However, both are strongly interested in keeping a balance between different interests inside their organisations and pursuing an inclusive strategy.

The most important programmes designed for SMEs (including Micro Firms) are run by the Ministry for Economy and some of its bodies, in the first place the IAPMEI (Institute for the Support of SMEs). IAPMEI’s most important initiatives funded by the Portuguese state and the EU are guarantees for loans (Guarantia Mútua), venture capital funds, specific programmes for the creation or expansion of firms and their modernisation, the introduction of IT, health and saftey standards and quality management (Sistema de Incentivos a Pequenas Iniciativas Empresariais, SIPIE; and PME Digital), specific incentives for commerce in selected urban areas (Sistema de Incentivos a Projectos de Urbanismo Comercial, URBCOM), and the promotion of the recruitment of highly qualified workforce in SMEs (Programa Quadros). Public bodies see BIAs as an important instrument for the implementation of the programs, namely with regard to the dissemination of the program and information about its specifities. Furthermore, BIAs may help companies to apply for and/or carry out projects as well as to promote subsidised projects for the companies. This may work as a special incentive for SMEs to associate and certainly improves the associations’ legitimacy.

3 The System of Social Dialogue and Public Policy Making

Social partnership and social dialogue are rather new phenomena in Portuguese society. Collective bargaining emerged in the aftermath of the revolutionary period 1974-75, and a national body for tri-partite macro-concertation was created for the first time in 1984. CAP, CCP and CIP were the founding employers confederations of the Permanent Commission for Social Concertation (CPCS) and UGT (União Geral de Trabalgadores) was the only founding representative of labour. The largest trade union confederation, CGTP (Confederação dos Trabalhadores Portugueses), struggled against the creation of the CPCS and did refuse to join until 1987.

At micro level employers have two kinds of interlocutors. On the one hand, the trade union workplace representatives (“delegados sindicais”) who may form committees (“Comissões Sindicais” or “Comissões Inter-Sindicais”). Unions have the exclusive right to call for a strike and to conclude legally binding collective agreements (even on company level). On the other hand the works councils (“Comissões de Trabalhadores”) are elected by the workforce of the company. Trade union representatives and works councils have the legal right to be informed and consulted in certain matters. Trade union representatives are more widespread than works councils. In companies with both a works council and a trade union representation the major union normally dominates the respective works wouncil. Workers have the right to elect a works council and/or union representatives in any company, regardless of its size.104 In micro and small companies the scope of representational rights (credits, information and consultation) is narrower than in larger units. In practice, there seem to be few negotiations at micro level. According to comparative studies, workers’ participation in Portuguese

104 There is no threshold at all for electing works councils and union representatives, but the legislator limits the number of representatives who benefit from the respective legal rights (time credit, specific protection, consultation and information) according to the size of the company. Works councils in micro and small undertakings may have 2 members, in medium-sized companies 3, and in large companies (more than 200 employees) up to 11 members. Workers in companies with less than 50 employees have the right to elect 1 union representative who benefits from the respective legal rights.

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companies tends to be limited to the minimum of information and consultation procedures as guaranteed by law.105

Industrial relations at micro level are largely framed by agreements negotiated at the meso (i.e. branch) level. The vast majority of collective agreements is demarcated in sectoral terms.

The prevailing pattern of social dialogue at macro (i.e. the cross-sectoral) level is tripartite. Bipartite contacts are normally informative and consultative. Agreements are extremely rare and limited to certain sectors.106 The tripartite dialogue takes place at the Permanent Council for Social Concertation (CPCS, see above). During the two decades of its existence the CPCS has produced a set of agreements, some of them covering a wide range of issues, others limited to areas like incomes policies, vocational training and health and safety at the workplace.107 The members of the CPCS (i.e. CAP, CCP and CIP, CGTP and UGT) systematically veto any attempts of other associations to be admitted to CPCS. Despite the limited practical impact of the consultations and negotiations within the CPCS framework, all participants consider it an important instrument for their work and most of them as an essential source of legitimacy. Importantly, membership in the CPCS implies access to a large number of consultative bodies of several public institutions.108

There is a problem of coherence in the system of industrial relations in Portugal. This refers, in the first place, to macro-concertation. Agreements produced by the CPCS are not legally binding. Their implementation depends on each party’s willingness and capacity to observe its own obligations from the agreement and to induce the others to do the same. The representatives of the employers and unions frequently criticize that the government does not keep its promises. This is not always caused by a lack of political commitment. Sometimes it is also a problem of power relations in the Parliament.109 Employers and trade unions themselves tend to implement the agreements in a selective way. They have serious difficulties in making bi-lateral arrangements at meso and micro level that are necessary for effective implementation of the macro agreements.110

105 See the comparative studies in „Workplace Involvement in Technological Innovation in the European Community“ carried out by the European Foundation for the Improvement of Living and Working Conditions.

106 One reason for this limitation is that the few agreements that were concluded were negotiated between the trade union confederation UGT and individual employers’ confederations which have basically sectoral domains (CAP for agriculture; CCP for commerce plus services; CIP for manufacturing plus services).

107 All peak associations represented on the CPCS receive a financial compensation from government for their participation.

108 CIP, for example, is represented on 92 public bodies. 34 of them are under the umbrella of the Labour Ministry.

109 The most prominent case of a government’s incapacity to convince its own Parliamentary group to vote in favour of a draft issued on the base of a tri-partite agreement was the „Short Term Tripartite Agreement for 1996“ (ACSCP 1996) (Naumann 1996 and 1997, Campos Lima and Naumann 2000).

110 The history of the Economic and Social Agreement (“Acordo Económico e Social”, AES) from 1990 illustrates this problem. It included an obligation of the social partners to introduce new regulations on working time. This re-regulation should be implemented by collective bargaining. The AES was signed by the employers’ confederations and by UGT, in contrast to CGTP. Due to CGTP’s fierce opposition and the employers’ weak commitment to the project (as they were not much interested in the agreed reduction of working time) the macro agreement was not implemented by the meso-level collective agreements (Naumann 1996 and 1997, Campos Lima and Naumann 2000).

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Looking at the overall system of industrial relations, we may identify an exclusive group of peak organisations recognized by the government as social partners. The members of the CPCS, the most important body for tri-partite consultation and negotiation, can be considered the “inner circle” of employers’ and trade unions’ confederations which can influence government policies. In exchange for their cooperation in tri-partite negotiations, CPCS members frequently use their position to get a variety of trade-offs from government, part of them belonging to other areas than those normally dealt with by CPCS (labour and social affairs).111 Since CES is more informative and consultative than CPCS and also has more participants, CES membership confers far less lobbying power on its members. The pure trade associations (AIP and AEP), which are members neither of the CPCS nor of the CES, exert their considerable influence on public policies in direct contacts with government. Their most important interests are related to public schemes to aid business, and their important role in this area provides them with considerable mobilisation capacities and to put pressure on government.112

At the meso level a large number of organisations with strongly varying domains on both sides of industries is active. They need to be a member of one of the confederations represented on the CPCS, if they want to be linked to the most important consultative public bodies with regulatory functions in the economy.113 Regardless of this, a considerable number of them is not affiliated to any peak-level association. The core of industrial relations is collective bargaining which determines the framework for micro-level labour relations. The lack of effective articulation between the macro-level, and and the meso- and micro-level works as an impediment to the effectiveness of tri-partite macro-agreements.

4 The System of Cross-sectoral Business Associations

Five associations correspond to the definition of cross-sectoral business associations, as documented in the project outline: the Confederation of Commerce and Services of Portugal (CCP), the Confederation of Portuguese Industry (CIP), the Portuguese Industrial Association (AIP), the Entrepreneurial Association of Portugal (AEP) and the Portuguese Confederation of Micro-, Small and Medium Enterprise (CPPME).

The two pure trade associations AIP and AEP are engaged in public policy programs and services rather than in genuine interest representation. Their formal domain is national, while their actual coverage is regional. From the early 1990s until 2001 they were members of CIP. In the course of the creation of a general umbrella for all employers, the Entrepreneurial Council of Portugal (Conselho Empresarial de Portugal, CEP), AIP and AEP terminated their membership and limited their relations to CIP to the role of “contributors”. This is a specific status defined in CIP’s constitution that implies a financial contribution to the confederation. As “contributors” AIP and AEP are not represented by CIP, nor do they have the obligations of regular CIP-members.

The CEP is the most recent of a series of attempts to create an umbrella organisation for the employers’ confederations (CAP, CCP and CIP) and the pure trade associations (AIP and

111 The government has a particular interest in reaching tri-partite agreements. CPCS agreements tend to legitimize government policy in general by creating the impression of a consensus on important issues between the social partners and the government. Thus, government is ready to „pay“ a price for getting all members (or at the minimum one member from each party) „on board“, even if demands may refer to issues without any link to the agreement itself.

112 The recent Congress of entrepreneurs, organized by AEP, was an example for this mobilisation capacity based on large financial and social ressources.

113 Cross-secoral peak associations like CIP and CGTP generally delegate their right for consultation at sectoral bodies to their respective primary or intermediate affiliates.

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AEP), and as its predecessors it never came to work. In April 2004 AEP together with AIP responded to the failure of CEP by creating an own coordinating body, the Entrepreneurial Confederation of Portugal (Confederação Empresarial de Portugal).114 Thus, AEP and AIP demonstrated their claim on a stronger (or even leading) role in interest representation. The employers’ confederations did not welcome this initiative. It is too early to speculate about the future of this project.

CIP was the first employers’ confederation created during the revolutionary period 1974-75. Since then, it has enlarged its domain from manufacturing to all companies. In practice CIP excludes agriculture from its domain. CIP is a mixed association, representing both the product market interests and the labour market interests of its members. CIP is the principal association of business in Portugal. This applies to the scope of representational activities (including industrial relations) as well as to effective organisational coverage and to political influence. CIP’s member associations negotiate a large part of existing collective agreements and offer their members a set of services, most of which are free of charge. Services provided by the confederation itself are closely tied to the type of representational tasks performed, and are generally provided free of charge. At the confederal level voting rights of the members are weighted according to the revenues from membership fees (in the case of associations) or turnover (in the case of companies). The regulations of the member associations may differ from this rule.115

The Confederation of commerce (CCP, created in 1976) was initially based on the division between wholesalers and retailers. Each group was organised in a separate federation and both federations formed the confederation. In 1995 this structure changed. The individual associations became direct members of the confederation and the federations were extinguished. At the same time CCP’s domain was extended to the other services. CCP’s strategy is strongly tailored to retailers’ interests which oppose the expansion of hypermarkets. The latter subsequently organized in a separate association, the Portuguese Association of Distribution Companies (APED).

In 2004 CCP had 100 member organisations. More than 60 of them organize retailers’ at local level, about 20 were branch associations (i.e domain demarcation by commercialized product), and about 15 associations were located in the broader service sector (2004). At the confederal level, voting rights of the members are weighted according to the revenues from membership fees. CCP represents labour-market and product market interests.

AIP and AEP are pure trade associations. Regardless of their claim for national coverage, their effective domain is centered on the metropolitan areas of Lisbon (AIP) and Oporto (AEP). In contrast to CIP and CCP, which focus on interest representation, AIP and AEP concentrate their activities on providing services to members and non-members. They run the country’s largest trade fairs (FIL in Lisbon and EXPONOR in Oporto) and provide a wide range of services (directly or via of companies they own). Most of the services are payable if they are not financed by the state (e.g. participation at fairs, technical assistance, dissemination of public programs to aid business, promotion of training and qualification for workers and managers).116 Thus, AIP and AEP have considerable financial and human resources that exceed considerably those of CCP and CIP.117 In the case of AIP, voting rights are based on the principle of one member/one vote.114 „Público“ April 29th 2004115 There are no data on the situation at CIP’s member associations. The Chemical Companies’

Association APEQ, for instance, allocates voting rights on the basis of one member/one vote., but experts estimate that this may be the exception from the rule. CIP’s present president is a member of APEQ.

116 Members receive a discount on fees and duties and some services free of charge.

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The formation of SME-specific associations is a recent phenomenon in Portugal.118 The Confederation of Micro-, Small and Medium-sized Enterprises (CPPME) is the only peak level organisation of this kind of association that is registered at the Labour ministry as an employers’ confederation. It was founded in the early 1990s. It has 11 local member associations in the greater Lisbon area and south of the country and 6 regional representations. Two “movements of retailers” and the Portuguese Taxi Federation (FPT) are also CPPME-members. Although CPPME and most of its member associations registers as an employers’ association, CPPME does not engage in collective bargaining.119 Due to its limited resources it offers only a small range of free of charge services to its members. Voting rights at the confederation are weighted according to the type and geographic domain of the affiliated association.

There are multiple overlappings between the formal domains of the different associations, but in practice there seems to be few competition. Competition between mixed associations (CCP and CIP) and pure trade associations (AIP and AEP) is mitigated by the different types of activities (interest representation vs. provision of services). Competition for members seems to be marginal. Tensions may emerge if AIP and AEP try to extend their representative role to areas reserved to the social partners.120 Some competition for membership may exist between associations of the same type (CCP vs. CIP and AIP vs. AEP), but it is contained by the possibility of multiple membership of companies and associations and by the preference of the employers for tacit understanding. In terms of member recruitment, CPPME does not pose a challenge to the “big four” because it is too small.

Inside the confederations, a division of tasks can be observed. CIP, for instance, pursues a “universalistic” policy-line of interest representation, while its member associations carry out more specific representational and service tasks. Following the principle of subsidiarity, interests that exceed the domain of one of its member associations are represented by the confederation.121 As a participant in advisory bodies, CIP relies strongly on its member associations’ and affiliated firms’ expertise.

Since the 1990s CCP and CIP have made efforts to reorganize and rationalize their membership structure and extend their coverage. Cost-cutting programs do not seem to be on the top of the agenda. CIP, for example, is traditionally a “lean” organisation with about 22 staff members (in 2004). Turnover, investments and staff at AIP and AEP have grown during the 1990s. AEP’s staff, for instance, increased between 1990 and 2000 continuously from almost 200 to more than 350.

According to data published by the national statistics office INE, in 1976 employers’ associations had about 4,700 employees (trade unions about 3,000). Since then, both employers’ associations and unions have undergone fundamental organisational change. According to INE, the employers’ associations altogether employed about 3,000 people in

117 In order to illustrate this difference, we may compare CIP’s net assets (i.e. 374 thousand Euros) in 2003 with AEP’s net assets (almost 140 million Euros) for the same year.

118 Amongst the 478 employers associations registered at the Labour Ministry in 2002, 7 have names that indicate that they represent exclusively micro and/or small and/or medium-sized enterprises.

119 According to the Labour Ministry’s database of collective agreements only one of CPPME’s member associations has ever signed a collective agreement.

120 In 2003 AIP applied for its admission to the CES, but CIP (and possibly other CES members) vetoed AIP’s admission.

121 Examples are the „Code of Conduct“ negotiated between CIP and the hypermarkets’ association APED, and CIP’s lobbying of government institutions concerning the implementation of the Kyoto-Protocoll.

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1996, approximatley 2,200 of these on fulltime basis (see table 3.2). This represents a considerable decrease over the period 1976-1996.122

None of the four big cross-sectoral business associations referred above (CCP, CIP, AIP and AEP) has special channels and mechanisms of intra-associational goal formation which give the SMEs a specific opportunity to articulate their interests. As regards interest representation, CCP more than the other three associations takes account of the SMEs and their interests. In particular, the retailers demand for protection against the competition of hypermarkets. At any rate, it is difficult to evaluate how much attention each association pays to the specific needs of SMEs. It is, however, obvious that the call for a relief of SMEs from regulatory and fiscal burdens is on the top of CPPMEs agenda, while it may be of less importance in CIP’s activities.

The analysis of how the interests of SMEs are represented in Portugal has to focus on the CIP. Its domain, influence and capacities make this confederation the most important employers association in the circle of social partners. In addition, CPPME as the confederatuon of an emerging group of ASMEs shall be analyzed in more detail.

5.1 The Confederation of Portuguese Industry (CIP)

Historical reasons for CIP’s dominant role amongst Portuguese Business Interest Associations

During the long authoritarian regime (1926/33-1974), employers and workers were forced into a corporatist system of state-controlled interest representation. The primary employers’ associations (“Grémios”) and trade unions (“Sindicatos Nacionais”) obtained the monopoly right to conclude collective agreements and were based on mandatory membership.123 They were not allowed to create cross-sectoral organisations. Only the voluntary pure trade associations AIP, AIPortuense (now AEP, see above) and Associação Comercial de Lisboa (ACL) were allowed to stay outside the authoritarian corporatist system.

Autonomous peak associations were prohibited under the fascist regime and all business confederations had to be re-created after the revolution of 1974.124 On the other hand, many of the primary union and employers’ associations were modelled on the structures of the “Sindicatos Nacionais” and “Grémios” inherited from the corporatist system. AIP, AIPortuense and ACL kept their status as voluntary pure trade associations.

The nationalisation of banks, insurance companies, large parts of infrastructure (energy, transport, telecommunications) and some important industries (steel, chemical, etc.) in 1975 had a strong impact on private business and on business interest associations. During this period, CIP distinguished itself as the main defender of a market economy. The revision of the Constitution (1989) opened the way for the liberalisation of the economy and the privatisation of nationalised companies. These had been central demands by CIP. In the same year (1989) AIPortunese became a member of the CIP, and the confederation made an effort to formally conclude the creation of an umbrella organisation for all employers: the National Council of Portuguese Companies (CNEP) which, however, failed to consolidate. At this time, CIP was

122 Since the number of registered employers’ associations does not correspond to the number of operating organisations (see footnote 29), it is not possible to estimate the number of staff per association. We simply do not know whether the number of operating associations stagnated or even decreased while the number of registered associations grew immensely.

123 Collective bargaining was under tight control of the „Ministry of Corporations“. 124 In the late years of dictatorship, a group of trade unions opposed to the regime formed the illegal „inter-

sindical“. In 1975 this trade union confederation held its first congress and was later renamed as „CGTP-Intersindical Nacional“.

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recognized amongst the primary employers’ associations as a legitimate representative regarding their labour-market interests and a wide range of socio-economic policies.125 In 2002 CIP was again the driving force behind a new attempt to form an umbrella of all employers, the CEP (see above). It seems that this project will have the same fate as its predecessor, the CNEP: All relevant business associations (CIP, CAP, CCP, AIP and AEP) signed the founding document, but the body is not operational. Despite repeated failures to create a coordinating structure for all employers, the CIP’s initiative for such structures indicates its key role in the employers camp.

Recently, a new generation has assumed leadership positions within the CIP and CCP. This may trigger internal reforms and restructuring.

Membership: Domains, Composition and Figures

The extension of CIP’s domain from manufacturing industries to all companies that “produce, distribute or sell products and services” in 1993 was, in a way, the organisational consequence of the confederation’s predominant political role in the employers’ camp. CIP’s organisational structure is essentially based on 33 branch associations embracing manufacturing (28 associations), construction (3), fishery (1) and telecommunications (1). In addition, 10 other associations with differing domain specification (e.g. by branch in the case of fishery and some services, and by region) are members. Furthermore, 7 large companies that are not represented by one of the affiliated associations are direct members,126 including 3 large energy suppliers. Associations are direct members of the confederation, the very few intermediate associations (i.e. 2 federations) are not members but “contributors” of CIP.127

Aside from the two intermediate associations, the group of “contributors” consists of 20 large and medium companies, the 2 sectoral federations and 2 pure trade associations (AIP, and AEP, see above). The bulk of members and contributors is located in manufacturing, but some important associations from the service sector (telecommunications, commerce and maritime transport) amongst CIP’s members indicate that the confederation’s domain is effectively expanding. 8 out of the total of 43 member associations joined during 2003, and further accessions are currently negotiated.128 Overall, CIP is currently increasing its membership in its traditional domain (manufacturing) and is expanding into the service sector (with a particular stronghold in transport/logistics).

There are no reliable data on CIP’s representativity available from public statistics, scholarly studies in employers’ associations, or CIP’s own publications.129 The primary reasons for this 125 This is the result of a survey amongst primary business associations carried out by

the authors of the study J.A Brites, A. Casimiro Ferreira, M.P. Campos Lima, M.R. Lopes. 1988. A concertação social e o Associativismo industrial em Portugal, ISCTE.

126 Membership list CIP, February 2004. 127 Intermediate associations organize the organizations at primary level.128 Some important companies are going to join CIP. The Spanish hypermarket „El Corte Inglés“ has

recently become a member, Nestlé Portugal and the national airline TAP-Air Portugal are negotiating their membership.

129 The only systematic study of the structures of employers’ associations (Cerdeira 1998) does not include any serious conclusion with regard to CIP’s representativity. The author presents some estimates made on the basis of the ratio between the number of associations affiliated to CIP and the number of registered associations in its formal domain. Two factors make such an estimate obsolete. First of all, the number of registered associations does not correspond to the number of actually operating associations. According to data from the Labour Ministry (DGERT/MSST 2002/12/31), the mandate of the governing bodies had expired for 351 out of 478 employers’ associations (i.e. 76%). This raises the question of how many of the registered associations are actually operating. The second problem is that no data are available with regard to the number of

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lack of information is the general aversion of the Portuguese associations to disclosing their internal structures and practices. CIP’s leadership is presently preparing an internal study of its affiliates’ structures, capacities and activities. Researchers will have to wait and see to what extent this project will succeed and wether its results will be made available to the public. At the current “state of the art”, any estimates of the density level of CIP and the other employers’ confederations (in terms of either companies or their employees) are impossible to make.

According to data published by the national statistics office, INE, 196,544 of the existing 539,238 companies were affiliated in employers’ associations in 1993. This number would correspond to a density rate of 36.4%. This is an approximate figure for several reasons.130

The membership structure (about 97% of the affiliated companies employ less than 50 people) reflects largely the overall structure of Portuguese companies.” It is noteworthy that the share of micro and small entrerprises in CIP’s core-domain (manufacturing: 82%, construction: 88%) is significantly lower than their share in the economy as a whole (see table 3).

Tasks and Activities

CIP as a confederation is clearly focussed on representing its members’ labour market interests both vis-a-vis the state and the unions and their product market interests vis-a-vis the state. Based on its participation in advisory boards, the confederation participates in the formulation and monitoring of public schemes for vocational training, industrial policy and the standardization of products and product quality. CIP as a confederation does not participate in the implementation of these schemes, but several of its member associations do so.131

As regards representative tasks, CIP follows the principle of subsidiarity (see above). The same principle applies to the provision of services. The consequence is that most of CIP’s services are provided indirectly, via affiliates, while the confederation limits its activities to a minimum of areas that exceed the domain of its affiliates. Collective bargaining is exclusively carried out by primary and intermediate associations, while CIP observes and (to a lesser extent) coordinates the bargaining process. The confederation may exercise stronger influence on bargaining by signing tri-partite macro agreements on such issues as wage increases and working time regulation, but since 1996 no such agreement has been concluded. The confederation’s role in the provision of services is even more restricted. However, its member associations provide a broad spectrum of services to their member companies.

companies affiliated to the primary associations. 130 „To illustrate the problem, we present here two reasons for a cautious use of the figure. On the

one hand, the INE itself points out that the number of 539.2 thousand companies is inflated by the large group of individual entrepreneurs who employ very few or even no salaried workforce, and that the density rate would increase from 36.4% to 51.6% if these individual entrepreneurs were excluded from the calculation. (See INE, 1993: 15) “ (Paulo Alves and Reinhard Naumann 2001). The density rate calculated on the basis of the above mentioned statistics may be „inflated“ because a lot of companies belong to 2 or more associations in different branches of industry and/or services, thus counting twice or more times in the calculation of aggregate density.

131 „The role of social partners as promoters of VET [vocational education and training] is of considerable importance. This refers in the first place to the employers’ associations which are promoters of almost 70% of the so called “protocol centres” for occupational training (...), of about 13% of vocational schools and of 55% of technological schools. Trade unions run 14% of the protocol centres and 5% of vocational schools, but despite their relatively small share in the number of institutions they are a relevant factor in the system and their role as promoters is of extreme importance for their organisational development.“ Paulo Alves and Reinhard Naumann, Social Dialogue on Training, Report to the CEDEFOP – European Centre for the Development of Vocational Training, July 2001

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Human and Financial Resources

Information on the associations' human and financial resources is as sparse as membership data. This especially applies to the primary associations. CIP as a confederation has 22 full time staff members. No data are available for its member associations.

In 2003, CIP received about 90% of its revenues from its affiliates (associations and companies). This considerably differs from the situation of the employers’ associations in general. In 1977 the share of membership fees in primary associations’ income was almost as high as at CIP today (87,5%), but it decreased contiuously, reaching in 1996 the very low record of 37.7% (see table 3.3). This development is probably the consequence of an increase in public subsidies and a decline in membership.

According to INE data, during the 1990s primary associations received more than 90% of the total income of employers associations. The share of intermediate structures oscillates between 2% and 3%, while the confederations’ share increased from almost 5% in the first years of the decade to 6.9% in 1996 (see table 3.4). The financial weakness of the intermediate structures corresponds to the fact that they do not play a central role in the confederations’ organisational structures. (Until 1995, CCP was the only exception to this rule.)132

5.2 The Portuguese Confederation of Micro-, Small and Medium Enterprise (CPPME)

According to experts, the specific associations for SMEs are small and weak. The total number of primary ASMEs may be estimated at about 14. Six of them are registered as employers’ associations. Four of these associations are regional and are affiliated to CPPME. Two others are national and must be considered competitors of that confederation. CPPME’s member organistaions may be divided into the following categories: 4 local associations for retailers and others (3 of them also affiliated to CCP), 6 local associations for SMEs (2 of them for the construction sector), 6 local CPPME-sections and a national federation of taxi drivers. CPPME’s follows EUROSTAT’s definition of SMEs. In its statutes, CPPME does not exclude larges companies from its domain, but its declared objective is the representation of SMEs. Direct membership of individual firms is possible, but CPPME’s organisational strategy is to allow this only in those cases where there is no local member association. Within the limits of its scarce resources, CPPME seems to be able to develop its organisation with some dynamic. In January 2004 CPPME organised for the first time a National Meeting for officials of associactions of micro and small enterprises. A number of non-affiliated organisations from all parts of the country participated, most of them local trade and/or employers’ associations whose formal domain is not limited to SMEs.133 Main issues of the event were fiscal policy, health and safety at the workplace, vocational training and issues related to the associations’ organisation itself.

At political level (government and parliament), CPPME has lobbied in favour of the adaptation of fiscal and other policies to the needs of Micro and SMEs and against legislation opening way for the expansion of large retailing companies. Frequent contacts with public administration aim at the adaptation of measures and regulations to MSMEs necessities (e.g. safety and health at the workplace). CPPME systematically informs its members about how to 132 In contrast to this situation, the trade union confederation CGTP received more than 70% of

revenues from membership fees, and a considerable share is channeled to the intermediate and peak-level structure (i.e. 12% and 10%, respectively).

133 For example, several local associations of commerce which generally represent small retailers attended the meeting.

225

respond to certain legal obligations (e.g. regarding taxes and health and safety at the work place) and offers qualification for entrepreneurs and staff (financed by the state).

Given that interest organisations tend to be “monopolistic” in their domain, larger asociations like AIP and CIP are not enthusiastic about the emergence of ASMEs. The difference in occupational and territorial coverage, range and volume of resources and political importance between “the big four” (CCP, CIP, AIP and AEP) on the one hand, and CPPME on the other, is abysmal. This is illustrated by the fact that CIP is represented on 92 consultative bodies at public institutions, and CPPME on one.134 In this field, CPPME will have serious difficulties with acting as a voice of SMEs because the established associations will veto its admission to advisory bodies on which they are represented. Recently, AIP used its prerogative as the Portuguese affiliate to UEAPME to prevent CPPME from becoming a member of this European organisation.

The most probable scenario for the near future is a slow growth of CPPME and other ASMEs in terms of membership and influence. This process will hardly pose a serious challenge to either the existing system of social dialogue and public policy making or its principal actors (CIP, CCP and CAP).

6 Conclusions

The configuration of Portuguese BIAs has been moulded in the revolutionary period of transition to democracy (1974-1976). Three sectoral employers confederations were created during this period (CAP, CIP and CCP), and the traditional pure trade associations AIP and AEP (the latter at that time still named AI Portuense) did not expand their activities to labour market interests. The result was a non-competitive organisational configuration. Competition did only emerge during the 1990s. Firstly, between CIP and CCP who both began to claim to represent services.135 Secondly, with AIP’s and AEP’s growing demand for participation in institutionalised social dialogue, a process that culminated in 2004 in the creation of a new general employers’ confederation promoted by the pure trade associations. Thirdly, with the emergence of ASMEs during the 1980s. None of these competitive processes seems to be a serious challenge to the system of business interest representation, at least in the short term.

The two major cross-sectoral employers’ associations are originally linked to different domains (CIP to manufacturing and CCP to commerce). During the 1990s both confederations enlarged their domains. Today CIP covers manufacturing and services, while CCP is limited to the service sector. CCP’s structure and strategy is strongly determined by the interests of small retailers, while CIP registers a strong influence from large firms in manufacturing. A strucutural indicator for this opposition between the two confederations are the affiliation of a growing number of large companies with plain membership rights at CIP, while CCP limits the status of companies affiliated to it to mere “contributors” who are entitled to receive some specific services from the confederation. At the level of activities, CCP’s struggle for state intervention against the expansion of large retailers (“hypermercados”) illustrates this confederation’s proximity to SME-interests. CIP’s

134 CPPME is represented at the consultative body at the state owned broadcasting system. 135 Competition between the two confederations is limited to the service sector and attenuated by the

fact that there is still a “frontier” in this area, that is, a large group of branch associations and companies in services do not belong to any confederation and CIP and CCP may grow without having to compete directly with each other. A potential for conflict may lie in CIP’s approximation to large retailers? who compete directly with CCP’s traditional social basis and are organized in a separate association.

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fundamental scepticism in relation to state intervention into economic affairs suggests that this confederation would hardly ever formulate such a demand. If we follow the idea that SMEs have a stronger need for collective organisation and state intervention, we may consider that CIP’s “liberal” approach indicates a bias towards the interest of large companies.

Independently from these considerations, we have to underline that both confederations, CIP and CCP, run an inclusive strategy and claim to represent firms of all size. None of them has channels and mechanisms of intra-associational goal formation which give the SMEs a specific opportunity to articulate their interests.

Legislation on business interest association is based on the principle of voluntary membership and it does not define any treshold for the representation of employers’ interest in labour market affairs at micro and meso level. Consequently, AIP and AEP are allowed to become “mixed” associations, and there are no legal obstacles for SMEs creating associations representing their specific interests. Nonetheless, both AIP and AEP as well as ASMEs face enormous difficulties in challenging the employers confederations’ dominant position in collective bargaining and social dialogue. CAP, CIP and CCP were involved in the definition of roles and rules during the period of institution building during democratic transition. AIP, AEP and the ASMEs enter the scene too late.136 In their claim for political representation, AIP and AEP may rely on their financial ressources and important services to the business community. ASMEs, on the other hand, have very limited capacities to put a challenge to the traditional players and have enormous difficulties in conquering their place in the system of business interest representation.

The future of representation of SME’s specific interest at employers’ and trade associations may depend on several factors, first of all the course of CIP’s and CCP’s growth and internal restructuring and of the relation between these two confederations. Until now it seems that there is no serious concern about the question of a specific representation of small business at both of them (CCP and CIP). Stimuli for a debate on this issue are weak, because SME associations like CPPME are too small to challenge the confederations’ dominance. The pure trade associations’ (AEP and AIP) move to form a “confederation”, claiming for a more important political role in business interest representation, is at a too early stage to make any assumption of its effect on organized business interest in general and on SME-representation in particular.

Table 1: Portuguese Companies and employment* by company size**

2001: Total Economy 0 Up to 9 10-49 50-249 250-499 500+

number of companies by firm size*

88883

(29%)

178594

(58%)

34689

(11%)

5680

(2%)

517

(0,2%)

318

(0,1%)

number of employees by firm size*

0 571567 674709 543426 176746 480062

136 In relation to the ASMEs, the principle reasons for their late emergence may lie in the specifities of Portugal’s transition to democracy (1974-1976). Faced with a fierce pressure from labour organisations (works councils and unions) and the political left (supported by influential parts of the military), employers “clung” to the associational structures inherited from Salazar’s authoritarian corporatism. ASMEs entered the scene in the late 1980s when the roles and rules in collective bargaining and institutionalized Social Dialogue had already been defined.

227

(23%) (28%) (22%) (7%) (20%)

Source: Instituto Nacional de Estatística, Statistical Yearbook of Portugal 2002, Lisbon 2003

Table 2: Portugal’s cross-sectoral business associations: Basic data (2004)

Association

Scope of functions

Membership domain Members Employees covered

Voting rights

CIP Mixed All businesses that produce, distribute and/or sell products and services (de facto excluding agriculture)

Members: 43 associations and 7 companies “Contributors: 4 associations

and 20 companies

? Weighted

CCP Mixed Commerce and services

Members: 100 associations“Contributors”: 20 companies

?Weighted

AIP Pure trade organisation

All businesses (de facto excluding agriculture)

? ? Unweighted

CPPME Mixed All Micro and SMEs AssociationsCompanies directly

affiliated

? Weighted***

* Members with plain rights and duties** “Contributors” who pay a solidarity fee but do not have plain membership rights*** The weight of each subunit’s vote depends on the type of organisation and the extension of the geographical domain. National federations have 4 votes, regional federations and associations 3, local associations 2 votes and local sections 1 or 2 votes (those with 10-39 firms 1, those with 40 and more firms 2). Sources: Lists of affiliates and statutes of CIP, CCP and CPPME; statutes of AIP

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Table 3.1: Number of Employers’ Associations and Their Affiliates by Branch (1996)

Branch Primary Employers’ Associations

Number of companies affiliated

to association

s (000)

Share of Companies with 0-49 employees in Number of affiliated

companies (%)

Agriculture 28 13,2 99,97Fishery 9 0,8 96,42Mining 3 0,2 78,44Manufacturing 104 15,6 82,11Construction 8 13,0 87,90Transport and Communications

16 15,8 99,01

Hotels and Restaurants 13 13,5 98,99Financial Services 8 0,5 84,28Commerce 90 74,0 98,92Real Estate and Services to Companies

21 3,8 96,74

Health and Social services 13 0,5 99,62Education 5 1,3 99,84Other Services 20 7,6 99,01Miscellaneous 66 59,0 98,98Total 404 218,7 97,06Table drawn up by the author for the study “Social Dialogue on Training”, Report to the CEDEFOP – European Centre for the Development of Vocational Training, July 2001; Source: INE; Inquérito às Associações, Uniões, Federações e Confederações Patronais – 1996; Table “Associações Patronais: 5-Número de Associações por Ramo de Actividade Económica” and Table “6-Número de Empresas Filiadas nas Associações, por Ramo de Actividade, segundo o Escalão de Pessoal ao Serviço”

Table 3.2: Number of persons employed by employers’ associations (1996) (confederations, individual member organisations and intermediate structures)

Individual Member Organisations (associações)

Intermediate Structures (uniões and federações)

Confederations

Total Men Total Men Total MenTotal 2,681 1,280 107 48 275 120Unpaid Staff 55 51 2 2 - -Paid Staff 2,626 1,229 105 46 275 120Senior staff 69 52 - - - -Fulltime officials 1,930 843 82 36 175 67

Nº of Organisations 404 27 5

Table drawn up by the author for the study “Social Dialogue on Training”, Report to the

CEDEFOP – European Centre for the Development of Vocational Training, July 2001;

Source: INE; Inquérito às Associações, Uniões, Federações e Confederações Patronais –

1996; Quadro 9-Pessoal ao Serviço

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Table 3.3 Employers’ Associations’ Income (Individual Organisations)Year Total Current Income

(Million Esc.)Membership Fees

(Million Esc.)Membership Fees

(Share in Total Income)1975 1.205.7 167.2 13,91976 524.0 212.1 40,51977 358.6 313.8 87,51978 466.2 373.5 80,11979 557.5 438.3 78,61980 707.4 543.8 76,91981 846.5 645.0 76,21982 1.099.3 814.1 74,11983 1.438.8 1.065.2 74,01984 1.699.9 1.249.6 73,51985 2.092.6 1.449.0 69,21986 2.797.9 1.870.6 66,91987 3.448.2 2.252.9 65,3…1991 10.515.6 5.432.4 51,71992 15.648.4 7.457.6 47,71993 17.807.8 6.577.0 36,91994 18.965.4 7.704.6 40,6...1996 22.897.8 8.635.4 37,7Table drawn up by the author for the study “Social Dialogue on Training”, Report to the CEDEFOP – European Centre for the Development of Vocational Training, July 2001; Source: INE, Estatísticas de Segurança Social, Associações Patronais e Sindicais and Estatísticas de Protecção Social – Sindicatos e Asociações Patronais and INE-Inquérito às Associações, Uniões, Federações e Confederações Patronais – 1996

Table 3.4 Total Employers’ Associations’ Income (by Level of Organisation)Million Escudos

Year Individual Organisations

Intermediate Structures

Confederations

1991 10.515.6 290.5 548.61992 15.648.4 416.4 670.51993 17.807.8 507.1 931.81994 18.965.4 633.1 911.8

1996 22.897.8 579.7 1.740.6

Table drawn up by the author for the study “Social Dialogue on Training”, Report to the

CEDEFOP – European Centre for the Development of Vocational Training, July 2001;

Sources: INE, Estatísticas de Segurança Social, Associações Patronais e Sindicais and

Estatísticas de Protecção Social – Sindicatos e Asociações Patronais and INE-Inquérito às

Associações, Uniões, Federações e Confederações Patronais – 1996

Table 4: Representational activities of the CIP, CCP, AIP, and CPPME

Type of activity CIP CCP AIP CPPME

Represents:

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Labour market interests vis-à-vis the

unions

Yes Yes No No

Labour market interests vis-à-vis the

state

Yes Yes No No

Product market interests in relation to

customers

Yes No No No

Product market interests in relation to

suppliers

No No No No

Product market interests in relation to

the state

Yes Yes Yes Yes

Participates in the formulation of and/or

implementation of:

Public schemes for vocational training Yes Yes Yes Yes

Public schemes to aid business Yes Yes Yes Yes

Public schemes for the standardization

of products and product quality

Yes No Yes No

Main activities are marked in italics.Sources: CIP, CCP, AIP and CPPME

Table 5: Services provided by the CIP, CCP, AIP and CPPME

Services related to CIP CCP AIP CPPME

Industrial relations (Yes) Yes No No

Economic policy programs (Yes) Yes Yes Yes

Exchange relations with suppliers (Yes) No Yes No

Exchange relations with customers (Yes) No Yes No

Vocational training (Yes) Yes Yes Yes

Further training and qualification of

company staff

(Yes) Yes Yes Yes

Developing/monitoring quality standards

for products

No No Yes No

Activities completely or predominantly carried out by member associations and not by the peak association itself between brackets.Sources: CIP, CCP, AIP and CPPME

Table 6: Human and financial resources (2002)

231

CIP CPPME

232

Human resources

Number of staff membersPeak levelAssociation as a wholeSatellite associations

22?/

3?/

Staff members per 1000 member firms ? ?

Staff members per 1000 employees working in member

firms

? ?

Composition of revenues (as a percentage of total

revenues of peak level association)

Membership dues (firm members) 15% 30%

Membership dues (affiliated associations) 77% 35%

Voluntary subsidies from members 0% 25%

Sales of Services 0% 5%

Obligatory dues and levies 0% 0%

Revenues from the state (including contracts with

government)

0% 5%*

Other 8% 0%

Total 100.0 100.0

Sources: CIP and CCP

* Support from a local authority

233

References

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CEDEFOP – European Centre for the Development of Vocational Training.

Barreto, José and Reinhard Naumann. 1998. “Portugal: Industrial Relations under

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industrial em Portugal”, ISCTE.

Campos Lima, Maria da Paz and Reinhard Naumann. 2000. “Social Pacts in Portugal:

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centralidade na regulação laboral?” in Cadernos Sociedade e Trabalho - Trabalho e

Relações laborais, nº1, Oeiras: Celta Editora.

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Confederações Patronais – 1996. Lisbon

Lucena, Manuel de e Carlos Gaspar. 1991. “Metamorfoses corporativas? - Associações de

interesses económicos e institucionalização da democracia em Portugal” in Análise

Social , Number 114, Volume XXVI, 1991. Lisbon: ICS

Lucena, Manuel de e Carlos Gaspar. 1992. “Metamorfoses corporativas? - associações de

interesses económicos e institucionalização da democracia em Portugal (II)” in: Análise

Social, Número 115, Volume XXVII. Lisbon: ICS

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paper presented at the conference “A Corporativização das Relações Laborais em

Portugal”. Lisbon: CGTP

Naumann, Reinhard, Portugal, 1996, in Giuseppe Fajertag (ed.) Collective Bargaining in

Western Europe 1995-1996. Brussels: ETUI.

Naumann, Reinhard, Portugal, 1997, in Giuseppe Fajertag (ed.) Collective Bargaining in

Western Europe 1996-1997. Brussels: ETUI.

Rosas, Fernando. 1986. O Estado Novo nos Anos 30. Lisboa: Estampa.

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SPAINJoaquim Molins and Rosa Nonell, University of Barcelona

1 The Economic Structure and Cultural Properties

Spain’s economic structure is highly segmented and made up mainly of SMEs. According to the data provided by the Central Business Directory of the INE in 2003, 99.87% of existing firms are SMEs (Table 1). These firms provide jobs for more than 85% of the population. The average number of workers per firm is 5, below the EU´s mean of 15.

A detailed analysis shows that 57.93% of firms are in the non-worker category, that is, are self-employed. This percentage is very high and affects the mean ratio of workers per firm. The large number of firms that do not have workers is related to the high unemployment rate during many years, above the EU´s mean of 15.

The remainder of small firms (microfirms), in the range of 1 to 9 workers, represents 29.6% of the total. If we exclude microfirms, firms between 10 and 199 workers represent 4.14% of all firms. The majority of these firms are industrial manufacturers and belong to the service sector, involved in commerce and repairs.

Large firms with more than 200 workers137 only represent 0.13% of the total and provide jobs for less than 15% of all workers138. In Spain, there is a clear lack of large firms that have an international dimension. Not surprisingly, among the world’s 500 largest firms, there are only six Spanish ones and among Europe’s largest 500 firms there are only 20. These firms are involved in construction and the service sector, principally the financial sub sector. Many of these are former public companies that had been privatised or belonged to deregulated sectors that were previously public monopolies.

Spain is a country of mainly SMEs, especially microfirms with a strong presence in the service sector and with a strong self-employment element (Table 2). The total number of small and medium enterprises is not evenly distributed among the various productive sectors. The average number of workers per firm in the industrial sector is double that which exists in the service sector, and in certain productive branches, large firms are predominant as is the case, for example, in energy and banking. The firms’ productive specialisation is not homogeneously distributed throughout the country, with some regions having a large concentration of productive activity closely linked to firms’ sizes.

If we analyse the main changes that have taken place between 1995 and 2003, we should highlight a very significant factor: the strong growth of firms between 50 and 199 workers (Table 1). This information demonstrates a positive change in Spain’s SMEs structure, especially with the growth of size of small firms, a development that improves their chances of survival.

137 In Spain, the classification of firm sizes is established by DIRCE (Directorio Central de Empresas del Instituto Nacional de Estadística INE), and varies with the one offered in this study and the one used in EU comparative statistics. This classification groups companies from 50 to 199 employees instead of grouping from 50 to 249.

138 The data are taken from the statistics of collective agreement of the Department of Labour.

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With respect to the business dynamics as reflected in firms’ entry and exit ratios into economic activity, in the Spanish case it is very high, according to 1995-2002 data (Table 3). The entry ratio or birth rate of firms is 13.3% and the death rate is 11.4%, resulting in a net ratio of 1.9%. The entry ratio is closely linked to the economic cycle: during periods of lower economic activity, the number of new firms without workers, or self-employment, increases.

From a historical perspective, the large proportion of small-scale Spanish businesses is directly related to a late industrialisation process, and to having belonged to a protected economy, isolated from the exterior and with strong government intervention. These characteristics only change during the end of the 20th Century. With the advent of democracy, the change in economic model and the entry into the EEC in 1986, Spain´s productive sector undergoes great changes. Since then, Spanish firms have evolved towards a competitive model that is open to the outside, with their activities becoming more and more international in scope. Business management has greatly improved, becoming in many cases more professional. But serious problems remain with respect to R&D investment and human capital development.

The complex Spanish associationism system is directly related to the number of firms and their size. In sectors which have large and medium firms, associationism strength resides in national sectoral associations. In contrast, in sectors characterized by a very low degree of economic concentration the associational strength resides in territorial organisations139, mainly at regional and province level. The size of the Spanish firm also conditions the labour relations system. If we look at the data on collective agreements that have been signed, we are able to detect a stable relation between size of firms and level of negotiations without any changes in time (Table 4). In sectors where the firms are considered large: (more than 300 workers per firm on average) one can find single-employer agreements that affect 15% of total workers. If the business association at a sectoral national level exists, the level of negotiation in sectoral collective agreements is national and affects 35% of total workers and the size of firms is medium and large (185 workers per firm on average). In sectors where firms are smaller (i.e. recording 15.2 workers per firm on average) the most important level is the provincial sectoral agreement and affects 50% of total workers.

These characteristics are directly correlated with the structure of representation of the interests of the SMEs. At national level the peak association of SMEs in Spain is a satellite of the peak association of employer interest. Never less, the principal characteristic of the system of representation of SMEs is the territorial dimension. When a special interest association exits in regional level, principally provincial for historical roots from Franco’s regimen, they need to obtain the recognition as a social partner in the collective agreement and in the territorial dimension of the social dialogue to be considered a representative association (Molins, 2002). For these reasons, in Spain during the last few years these territorial associations are very innovative in their activities and strongly compete for the member’s firm and their base associations (Costas, Nonell, 1996). The territorial associations are the key actor in the defence of interest of SMEs and in some regions emerge associations aside from the principal cross-sectoral business associations.

139 The territorial level is correlated with the legal structure of political and administrative power, for instance, at regional level is autonomous or self- directed (similar to a political competence as a country with federal states or the länder in Germany), and at a local level is correlated by the provinces and counties division of the territory.

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2 The Legal and Administrative Framework for Associational Action

Business organizations in Spain are recognized as a interest associations, according to Article 22 of the 1978 Spanish Constitution. Also the article 131 defined the countries economic and social policies allow collaboration between the government and interest associations. At national or regional level the interest associations could participate in the social dialogue and in the formulation and implementation of the schemes of public policy.

A year earlier, Act 19/1977, which regulated the rights of the trade union associations, granted the right to create business organisations outside the vertical trade union that represented the social interests of the Franco’s regime. Following the Act’s the peak cross-sectoral and voluntary employer association was created in 1977 and some existing regional business associations adapted their status to the new legal framework. New associations were formed at lower levels (regional/provincial/local) in the last twenty years, is significant the movements in the regional level and in the national sectoral level.

Two types of business association exist in the Spanish system: compulsory organizations to defended and promoted general public interest of business (Chambers of Commerce) and voluntary organizations to represented and defended the especial interest of companies and to be a social actor in the labour market and in the formulation and implementation of public policy (Business Associations).

For an association to be recognized as a social actor, the voluntary system of business associations must be representative, as established by the legal system. The representativeness of business organisations in labour relations is established by the Workers’ Statute, March 10 Act 8/1980, in the sixth additional provision, in accordance to the wording of August 2 Act 32/1984. At least 10% of potential members (firms and employees) should be obtain by the association in order for it to be recognised at national level as a party to collective bargaining or social pact, and 15% of representativeness (firms and employees) if bargaining or social pact is carried out at territorial level. This representativeness gives it the capacity to negotiate at different levels (social pact at national or regional level and collective agreement at national sectoral level or regional (autonomus, provincial or local) cross-sectoral level. Also the representativeness of the association gives it the capacity to participate in the formulation and implementation of the public policy and for this activity receive it public subsidies, the so called “representational funds”140. In the case of regional government exist special regional public funds to improve the territorial social actors, employer associations and the unions, and to increase the industrial relations in their territory.

Especially important for all the associations is the capacity to management the public funds for continuous formation or long-life learning education of the FORCEM (Foundation for Continual Education). For more of the new or younger associations at regional level the objective to increase their representativeness (more members) is not to obtain more fees, is principally to demand these funds of FORCEM and the representational funds.

140 The ratio of representativeness (potential firms in its domain) defines how much an association can get, the formula designed by the Department of Labour is not available.

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3 The System of Business Associations: compulsory and voluntary, national and regional.

The Spanish system is a mixed system with voluntary and compulsory business associations. The most relevant by number and by activities are the voluntary associations. The territorial dimension is the most significant variable to analyse the associational system specialized in the defence of SMEs. In Spain the business associations of SMEs adopt a “niche strategy” in relation to other associations, based in the defence of specific regional interest.

At national level, one can find cross-sectoral peak employers business associations (normally voluntary associations manly CEOE, Confederation of Spanish Employers Association, Confederación Española de Organizaciones Empresariales and CEPYME, Confederation of Small and Medium Employers Associations, Confederacion Española de la Pequeña y Mediana Empresa). All the voluntary business associations are mixed association. Other types of voluntary national associations are the sectoral peak national associations, mainly on industrial sectors. Finally, the Chambers High Council of Commerce, Consejo Superior de Cámaras de Comercio is the compulsory pure trade associations at national level.

At regional level, every autonomous community has a peak mixed cross-sectoral association. The members of these regional peak associations are cross-sectoral local associations, local guilds and local sectoral associations (base associations). One firm can be a direct or indirect member of the sectoral peak national association, and at the same time it can be associated to the regional peak mixed associations. Also at local level the Chamber’s of Commerce are the compulsory pure trade business association.

3.1 The System of Compulsory Business Associations

Since the end of the 19th Century until now, there are the Chambers of Commerce which are Public Law corporations that promote and defend general, commercial, industrial and navigation interests of business. Chambers of Commerce originated from a Royal Decree 1886 Act that defined them as voluntary associations of traders, industrialists and ship owners. In 1911, the public authorities intervened over these corporations and established mandatory membership, establishing quota payments and widening the scope of their public functions. Currently, the Chambers of Commerce are regulated by the March 22 1993 Act (Official Commerce, Industry and Naval Chambers Basic Law) and are a kind of hybrid of mandatory membership public entities which are under the protection of the government, and at the same time represent business interests. Their domain is normally the province and the local level and cross-sectoral. There are 85 provincial and local chambers in total. The peak-association at national level is the Chambers´ High Council, whose functions are only the coordination of the interests of the territorial organisations vis-à-vis with the central government and the representation at European level.

Its main functions are related to its public, administrative character and to the export promotion of Spanish goods and services. The general interest actions are the proposals to modify and improve regulations, and ruling and studies direct at public administrations on economic policy. Its advisory role in public policy underscores its recognition as representative of business interest’s vis-à-vis the regional or national government. In the area

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of external trade the Chambers offered actions of promotion, support to internationalisation, and advisory services on international trade.

The Chambers are services oriented principally to SMEs and its main priorities are encouraging the founding of companies, enhancing new entrepreneurships, internationalisation of SMEs, encouraging the adoption of new technologies and internet solutions and provision of further training, continuous training programs and vocational stages.

The Chambers of Commerce are normally composed of members of the different activity sectors, elected by democratic election but with a very low participation (the members are determined from among all voters classified by groups, categories and subcategories and the size of companies in all the categories) and on the other hand, 15 % of members are designed by voluntary business associations141.

The distinction between voluntary business organisations and the Chambers of Commerce in front of the representation of interest of SMEs, is based in their functions. The Chambers are legally pure trade associations but in practice they’re oriented to providing services especially to SMEs and consequently to mixed associations as well. The voluntary business associations are employer associations: the principal activity is in the labour market, but they offer a variety of services, for these reason they´re also mixed associations. The two organisations participate in the formulation and implementation of public schemes of vocational training, aid to business and entrepreneurship promotion (Table 7 y 9).

The relation between them has not been devoid of conflicts (Molins, Casademunt, 1998). These took place especially during the mid-1990s since both competed for domains. CEOE called for the abolition of obligatory dues payment imposed on the company members of the chambers (i.e. the chamber’s tax) and advised the firms to stop paying these dues as well as cancelling their membership, while claiming their important inheritatge142. In 1996, a Constitutional Court ruling resolved the conflict in favour of the Chambers, maintaining firms’ mandatory affiliation. Currently, the conflict has diminished and business organisations participate in the election of small % of member of the General Council of the territorial Chambers. Nevertheless, their roles continue to overlap and their relation depends ultimately on their leaders' orientation. Notably, the Chambers of Commerce are particularly important to SMEs when it comes to advancing their interests, but specially in export promotion.

3.2 The System of Voluntary Business Associations

The voluntary associational system is made up of cross-sectoral national organisations of broad scope (large firms and SMEs), as well as associations cross-sectoral or specialised (national and territorial) that are specialised in defending the interests of SMEs ( Figure 1 and Table 5).

141 For instance, in the case of Chamber of Commerce of Barcelona, 60 members are from economic sectors of activity and 9 are designed by regional business association, Fomento del Trabajo.

142 Part of the inheritance become of the public inheritance of the franco’s regimen linked to vertical union.

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At a national level, the most important is the Confederation of Spanish Employer Association, Confederación Española de Organizaciones Empresariales (CEOE) confederation of associations, which is a cross-sectoral, non-specialised, and mixed peak association. CEOE is made up by a series of territorial organisations and sectoral federations at national, provincial, and autonomous level. Small and medium enterprises are represented by both this national confederation and the various territorial and sectoral associations.

The Confederation of Small and Medium Enterprises, Confederacione Española de la Pequeña y Mediana Empresa, (CEPYME) ranks second in terms of importance. This is an association specialised in representing the interests of SMEs, is a peak confederation composed by territorial and sectoral associations Created independently in 1978, it formally became part of CEOE in 1980. From that date onwards, it defines itself as a professional, confederation and cross-sectoral organisation, which is at the national level most representative of small and medium enterprises and self-employed workers. But only had the employer function in the national pacts and any responsibility in the collective agreement.

There is another, independent confederation, the Confederation of small and medium-sized firms, Confederación de pequeñas y medianas empresas, (COPYME), principally firms with self-employment . COPYME operates at national level, is not part of CEOE and is very marginal, both in its organisational network and range of activities.

At territorial level (mainly at the sphere of self-government or Autonomous Community) there are also mixed and cross-sectoral business associations that represent all business interests in their territory and that are part of CEOE. At the same time, and within the structure of CEPYME, one can find in every Autonomous Community either a territorial confederation or a CEPYME delegation (for instance, CEPYME-Aragon, CEPYME- Cantabria) which groups together territorial provincials and sectoral small and medium-sized enterprises.

In Spain, the business representation structure is very complex and it is difficult to identify the specific representation of SMEs’ interests. The business structure itself conditions this associational network. The size of the Spanish firm, which is usually small, forces one to consider CEOE as an association of national scope and to study of business associations of local scope, specialised in representing business interests of SMEs.

Taking into account these considerations in order to be able to carry out a detailed description, we will first analyse business organisations at national level. Secondly, to analyse the complex structure of business interest representation we will focus on the Autonomous Community level, and take Catalonia as an example. We have chosen Catalonia because, together with Madrid, it is the territory that counts the largest percentage of large, small and medium companies (especially in industry), while showing a lower share in self-employment. Due to the fact that more than half of the Spanish business firms consist of self-employment, the case of Catalonia relatively accurately represents the associational system of small and medium-sized enterprises, that is, firms which have more than 10 workers and less than 200.

3.2.1 The representation of SMEs’ business interests at national level

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In Spain, the representativeness of CEOE is legally guaranteed143. CEOE is a peak and mixed association which is made up of several territorial and sectoral organisations that are intertwined among themselves by cross affiliations144. The CEOE does not have formal direct affiliation of the firms, only business associations are members of the peak association. The associations and federations can be full members (all voting rights and obligatory quotes) or collaborative members (i.e. individual companies and with voluntary fees). Therefore, firms directly and indirectly belong to various associations which complicates the task of establishing a direct relation between firms and organisations and determining the associational density.145 Despite the fact that 90% of Spanish firms are SMEs, the reality is that CEOE is controlled by large firms. This applies to both governing capacity and the resources contributed to the confederation. In Spain the majority of large national firms are financial sector companies (also integrated in a sectoral national association, for instance, Spanish Association of Banking (AEB) is one of the most relevant) and public services companies, former public services monopolies, that now are deregulated and privatising. Normally, all theses companies have their central office in Madrid. Although CEOE indirectly represent SMEs, it does not defend their specific interests, while it does offer those specialised services that compete directly with those provided by lower other level association’s manly direct member of the CEOE.

The territorial associations, mainly those at the Autonomous Community level and national sectoral level, are affiliated to CEOE in order to be represented and to legitimize their employer function, which makes it a social actor and a guarantor of social peace. It is estimated that around 75%-80% of firms are represented in CEOE, although this does not mean that they are directly affiliated. Firms are normally affiliated to sectoral and territorial organisations, thus indirectly contributing to financing CEOE.

The main functions of CEOE are the provision of advisory services and the representation of business interest’s vis-à-vis government and its various administrative offices, and such other social actors as the unions. Since its creation, CEOE’s priority has been to encourage Spain's political consolidation and to strengthen the market economy (political lobby). Accordingly, CEOE has participated in all centralised pacts which have been applied to the entire business network. The last agreement was signed in 2004146, extending the 2002 accords on wage control. CEOE does not directly engage in collective bargaining, but has issued a recommendation guide for bargaining at the different levels since several years. Collective bargaining takes place mainly at national and provincial sectoral levels (Table 4). Large firms sign their own collective agreements and the base associations (local and provincial) carry out this type of functions. Aside from concluding central pacts on wages, CEOE has signed accords on reforms of the labour market and the financing of the social welfare system.

CEOE has a staff of 110 employees whose main tasks are interest representation (lobbying) and offering training services. CEOE’s financial resources come from its sectoral federations

143, Work Statute 1980 reformed in 1995, Estatuto de los Trabajadores, art. 87.2 established the conditions at national level and adicional disposition 6º the conditions at regional level.144 The data offered in 2002 by CEOE show more than 1 million firms, 210 sectoral (155) and territorial (55) associations at autonomous level and 2000 base associations or primary associations only with firms.145 In general, employers’ associations’ density is high, but exhaustive and full lists showing associated firms at every level of representation have never been published. An interesting research work would be to create a real data base of business associationalism at the various levels of organisational structures.

146 CEOE and also CEPYME signed and has participated directly in the national agreement, Inter-industrial Collective Bargaining Agreement 2002 and 2004.

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and territorial associations, in direct relation to the number of firms and the revenues (employees and sales) that they represent. But membership dues cannot cover the total budget: in addition, individual contributions are provided by large firms and public subsidies are granted by the government in order to finance CEOE's participation in public policy. Every year the public budget of the Spanish government included a grant to finance the expenditure of the members of the CEOE and other social actors, which had participation in the different national councils of the Department of Labour. In addition, CEOE administers public funds for further training, which is offered both to members and directly affiliated firms147. It is difficult to gain access to the organisation’s budget since it is not made public148.

CEOE is present in all central-level, tripartite negotiations, in the autonomous bodies of the social security system, and in the institutions that manage training funds. In addition, it is a member of several advising committees such as the Economic and Social Committee, Consejo Económico y Social. Also CEOE is a member of UNICE, International Labour Organisation, (ILO), the Business and Industrial Advisory Committee of OCDE and Latin-American Organization of Business, ALE.

CEPYME which is specialised in SME interests is the second peak largest business association. It is part of CEOE (satellite organization), so that it can be identified as CEOE’s second brand and, therefore, lacks effective independence. It consists of 17 territorial associations, grouped by their autonomus region that are not all specialised in SMEs, and 31 small sectoral associations grouped by their respective economic activity (Table 6). Firms are not directly affiliated to CEPYME because it is a confederation. Their estimations are between 850,000 and 900,000 firms, and 1,330,000 employees represented. Its membership quota oscillated to 60% to 80% of potential firms, the representativeness varies among sectors, with the industrial sector reaching 80% of affiliation of potential firms with less than 80 workers. This representativeness is high, if one takes into account the criteria set out in the Worker’s Statute. However, the figures must be considered with caution, because the individual firms had normally multiple, crossed territorial and sectoral affiliations.

CEPYME’s main functions, like in the case of CEOE, are business lobbying and as employer association participate only in national social pacts. In the lasts, years the association begins to offer the provision of specialised services. As a nation-wide organisation, CEPYME represents SMEs interests on the various Security and Control Committees of Social Security Boards, Government Organisations, and in working groups of different public bodies dealing with SMEs. In the case of the Economic and Social Committee, CEPYME participates in close conjunction with CEOE, such that their representatives are in fact the same, having the same resources and personnel to carry out their tasks.

CEPYME, like CEOE, does not participate directly in collective bargaining. However, it has signed, together with CEOE, all of the Spanish central-level national agreements and social pacts concluded by the various social actors to establish wage guidelines and to introduce labour market reforms. Its services revolve around the fields of information, consulting, technical assistance, research and improvement of affiliated business organisations. CEPYME´s managerial structure is closely linked to CEOE´s managerial body. According to insiders the association is not very professional. Salaries of the staff (i.e. approximately 60 people)

147 For all the business association is very important in the last year demand this funds and these funds increases they % respect the total income in the budget.148 In Spain the business association not published their budget and they are not obligate to be audit.

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including that of the Secretary General are paid from CEOE funds. Therefore opinions issued by CEPYME can hardly differ from those expressed by CEOE.

The association’s most important reforms were carried out in 1994, leading to the modification of its statutes, which mainly affected its managerial structure and its capacity to re-elect its president without statutory limits. These reforms copied organizational changes within CEOE. In the case of CEOE, these reforms have allowed its president to remain in office for almost twenty years.

With regards to international links, CEPYME is a member with full rights of the European Association of Craft, Small and Medium-sized Enterprises (UEAPME). Via CEOE it also actively participates in the UNICE Committee on Industrial Affairs and its working groups dealing with SMEs. CEPYME is also a member of the International Labour Organisation (ILO) and the Latin American Organization of Small and Medium-sized Enterprises (OLAMP).

Therefore, CEPYME is a peak association which try to represents SMEs interests, but is not autonomous of the CEOE Spanish peak association and they are not a relevant association for the Spanish SMEs.

3.2.2 SME’s Representation at Autonomous territorial level

In order to be able to analyse the specific defence of SMEs interests, it is necessary to analyse business associations whose actions are circumscribed to a specific territory. It is at these levels of territorial representation where there is true competition to attract new members and to gain representativeness, and where several examples of innovative practices and strong commitment to represent members’ interests can be found. In addition, the majority of bargaining is carried out at this level, through provincial sectoral collective agreements, or indirectly through national sectoral collective agreements. Territorial associations are the real representatives, although in many cases the negotiation process is devolved to external specialists (in particular law firms which have signed provincial sector agreements in many territories) because the employers have renounced to take a protagonist role in the collective agreement. In recent years new territorial associations have began a new role as social actors.

The territorial associational system is rather complex. The members of the different autonomous associations are the territorial business associations at provincial and local level that group the sectors existing in their areas, many of which are of guilds origin. The firms directly join these associations.

Catalonia it’s a good example to analyse. His complexity stands out for the dynamism of its associative network and for the rivalries that emerge when representing business interests especially between associations that focus on SMEs. When analysing these associations, we can observe a high degree of professionalism in the search for members and in the quest to gain representativeness. This competition is encouraging reforms in some associations and enhancing mergers between others.

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In Catalonia, the peak employer association is Fomento del Trabajo Nacional that renewed its status as a business association in 1977. Fomento is a founding member of CEOE and partner of CEPYME. It is a private voluntary interest association, managed by a democratically elected managerial body that is renovated every four years. Fomento represents 160,000 firms and has 170 collective members. The direct members are the sectoral (102) and territorial (28) associations that include 280 guild associations (indirect members), in addition are individual companies and collaborating members. The managerial structure consists of a General Council of all members, with voting rights weighted according to the economic importance of the firms that they represent149. From the Council derives the Board of Directors that is composed of 33 and 18 sectoral and territorial organisations respectively, in addition to 12 associated firms.

In analogy to the relationship of CEOE to CEPYME, Fomento established in 2002 the Federation of SMES, Federación de Empresarios de la Pequeña y Mediana Empresa, (FEPIME), as the second Fomento brand which formally groups together all of the small and medium-sized enterprises. The regional confederation of SMEs had the operating structure of Fomento. The principal member of FEPIME is the main territorial association, Business Association of Tarrasa, Confederación Empresarial de Empresarios de Tarrasa, (CECOT) and the other provincial associations are Business Association of LLeida , Confederación de Empresarios de LLeida (COELL), Business Association of Tarragona, , Confederación de Empresarios de Tarragona (CEPTA) and Business Association of Girona, Confederación de Empresarios de Girona (FOEG). These territorial associations are the effective and real mixed associations of representation of interest of SMEs. FEPIMEC however, is only an instrument of political interest to defence the ratio of representativiness at regional level of Fomento. Now the President of FEPIME is the same of CECOT.

The main objectives of Fomento are the collaboration in general issues of regional level and enhancing the social dialogue by advising on labour and social issues and, in recent years it begin with more intensity to provide services to firms, including consulting and training services. On environmental issues, it offers training information and legal advice to its members. It has a total staff of 60 employees.

PIMEC-SEFES, Catalan Confederation of SMEs, Asociación Catalana de la PIME, is an independent and territorial association that is specialised in the defence of small and medium enterprises. It is a cross-sectoral and mixed association created in 1997 as the result of the merger of the PYMEC, Pequeña y Mediana Empresa Catalana, a Catalan cross-sectoral association, and SEFES, a territorial organisation operating at local level, linked to Baix Llobregat enterprises (one local area), and in the first time, member of Fomento.

It is a confederation of federations base associations, which groups together local associations and guilds, especially in retail sector. It had sufficiently rate of representativiness and provides direct and indirect services for members firms. Therefore, it is primarily a service business organisation. In addition in the last years, it is the employer association in newly established areas of collective bargaining. 150

149 Every individual member one vote, and every collective member 10 votes plus sales, employees and production.150 In certain sectors, especially new ones, there were no employer associations. In 1997, this led the national social representatives to conclude an agreement "on emptiness” which restructured the coordination of collective bargaining in sectors lacking a working bargaining system. Meanwhile, business associations have increasingly shown engagement in these sectors.

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PIMEC-SEFES is independent of Formento and their relations are complicated for historical reasons. Its density is estimated to be 25% of the potential companies that represent 340,000 workers. It is made up of guilds and business base associations that represent 70,000 collective and individual members, included SMEs, micro-firms and self-employment firms. It has 3,000 individual members companies and the remainder of the members, territorial and sectoral associations at micro-local level, 38 of them are guilds of retail sector.

The first function is the representation of business interests vis-à-vis social actors, for instance at regional level dealing with labour, industrial, training and other issues, and at local level the representational activities are concentrated on local government laws that affect the life of firms. The second function is as employer association, PIMEC-SEFES directly negotiates seven collective agreements at regional level (Catalonia) and some at provincial level (i.e. Barcelona), in addition the association gives support to members which conclude single-employer agreements. The last important function is providing services to its members related to business consulting and management of shopping centres. Services are differentiated into a free basic package, and more specialized, payable services. In terms of issues, the focus is on professional and managerial training, environmental issues and labour relations.

The decision-making structure consists of a President, a Board of Directors (Executive Committee) and a General Assembly. Every firm is granted one vote, regardless of its size of its business volume. On the other hand, every collective member has a minimum of two votes and a maximum of 30 votes in relation to its importance and representativeness among the business firms.

The association is divided into six territorial and another six sectoral organisations. It has five working committees: Social/labour, Training and Education, Economic/fiscal, Environmental, and European Commission. Its staff is headed by one Secretary General and several general directorates. The total number of staff members is 108.

It maintains international relations with UEAPME – in addition to being a member with full rights of this organisation, - and is part of Normaqme and has relations with UNICE and ILO.

The reforms carried out during the last years have been thoroughgoing. Its strategic objective has been to reach such size that the role of an important business association in Catalonia can be maintained. Firstly, the status as an employer association has been consolidated by engagement in collective bargaining. Secondly, associational growth has been a means of guaranteeing representativeness and participation in all forums of business representation. Thirdly, associational growth has mainly been achieved by creating provincial associations throughout the Catalan territory and specifically in the central region of Catalonia.

This strategic objective has guided all organizational changes since its creation. In 1978, PYMEC was created, with 2,850 firms. It originated in the craft and trader guilds, especially those of Barcelona province. It gained immediately political support from Catalonia's governing nationalist coalition (CIU) until one year ago. During its first years, it did neither conduct collective bargaining nor participate in public policy. The first significant agreement at autonomous level it was participated in the sector of offices workers and its first institutional representation role came when it intervened in FORCEM´s fund for vocational

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education management. At the same time, there was SEFES, the Baix Llobregat employers’ organisation, which had specialised in the provision of payable services. The Government of the Generalitat (the Catalan Government) supported the 1997 merger of PYMEC and SEFES. The merger helped increase representativeness: Today density is above 25% of potential firms, such that the association is entitled to represent business interests at the regional level in the collective bargaining and formulation and implementation of the public policy.

The increased strength of the PIMEC-SEFES in the Catalan SMEs business association network forced Fomento del Trabajo Nacional to change its strategy. In 2002 Fomento increase the type and the variety of services offered to the members firms and founded FEPIME, as satellite specialized in SMEs. The reason for this has probably been to induce PIMEC-SEFES to merge with FEPIME, something which would pave into the way for restructuring of resources and activities, namely services. 151 Despite several announcements being made in the last year the associations have not merged but continue to compete and consolidate themselves in the sphere of institutional representation (participation in public policy and in mamagement of public funds).152

The second association competing for SME representation at Catalan level is, Confederation of Business Associations of Tarrasa, Confederación de Empresarios de la comarca de Tarrasa, CECOT. It is a cross-sectoral business association created in 1978. Although it initially operated at local level, today it is an organisation working at Catalan level. It is composed of its local-level guilds and associations and recently other guilds and firms.

It defines itself as a new employers’ organisation that believes in innovation as a means of improving its members' competitiveness. It is affiliated to Fomento del Trabajo and CEOE/CEPYME, although it enjoys a high degree of autonomy in decision-making and financial matters.

CECOT claims that its density is 80% of the potential companies. It covers 29 guilds and business associations and represents around 7,000 members (firms, and self-employed).

CECOT concentrates on the following goals: promoting the economic performance of Catalan firms by legal initiatives, defending a micro company statute, encouraging innovation, enhancing sustainability and fostering relations between universities and firms; reaching a critical mass that ensures maximum representation level in all of the institutional collective participation forums; offering services to members , namely support of innovation, continuous training and inter-firm exchange of employees .

Its main activities follow these goals: representing business interests vis-à-vis the social actors and the public institutions, and the provision of services: technological information and economic analysis, consulting, and employment exchange services. It also participates in the management of public services like self-employment, technologies of information and communication services and R&D advising services. CECOT negotiates the national textile

151 In fact, PIMEC-SEFES and FEPIME started negotiations over a new, common structure in 1999 and now 2003. But the disappoint is respect to financial fees both for current and new members, and the composition of govern bodies.

152 This competition also influences the current discussion on a Competitiveness Pact which is initiated by the Catalan government in 2004.

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agreement and the Barcelona provincial metal collective agreement and advises its members on those issues. Hence, it is a mixed association.

Its decision-making bodies consist of a President, a Board of Directors (Executive Committee) and a General Assembly. Each member firm has one vote, regardless of size. The staff is headed by a Secretary General and general directorates that provide support for ten committees: Economic and Fiscal, Foreign Trade and International Relations, Domestic Trade, Heads of Personnel, the Euro, the Young Business people Group, Industry, Environment, Communications and Relations between Universities and Businesses. CECOT's staff includes 60 persons.

As regards institutional participation in public policy, CECOT has several options: acting as a territorial organisation; speaking as the voice of Fomento del Trabajo or CEOE. It may also present itself as an expert. At the local level, it deals with local governments in all matters that affect firms. At the regional level, it participated in the conclusion of the Valles Employment Territorial Pact and the Catalan Territorial Pact. At this level, it is also represented on advising committees. At the autonomous level, it participates in the Catalan Economic and Social Committee, the Catalan Working Service, the Catalan Vocational Training Committee, Consejo Catalan de Formación Continua, Centre for Business Innovation and Development, Centro de Innovación y Desarrollo Empresarial, (CIDEM), the Consortium for the Commercial Promotion of Catalonia, Consorcio de Promoción Comercial de Catalunya, (COPCA), the Immigration Adviser Committee, Consejo Asesor de Migración, and the Barcelona Industrial Pact, Pacto Industrial de Barcelona.. At the national level, it acts as the CEOE representative vis-à-vis the Labour Risk Prevention Committee, Comite de Prevención de Riesgos Laborales. Lastly, it maintains international institutional relations with UNICE and ILO.

CECOT underwent profound changes in the last few years mainly in response to growing membership: In 1998 it had 600 members, as compared to 7,000 in 2003. Its staff has grown from 6 to 60. Its range of activities has been extended from narrowly defined representation of interests to the professional provision of high-quality services.

The territorial coverage of activities has also changed. Initially, CECOT was limited to the local area of Terrasa, where its oldest members come from. Now CECOT had chance their territorial domain and it offers services throughout Catalonia. Therefore, it competes with PIMEC-SEFES for the same members. This competition has resulted in the extension of services to attract affiliates as well as attempts at strengthening their role as a business representative vis-à-vis the public administration and society. On the other hand, neither CECOT nor PIMEC-SEFES compete with Fomento or with its satellite FEPIME, since both more focus on the coordinating role of a peak confederation. But in recent years these behaviour chance, and Fomento offered more specialized services, and CECOT are more interested in controlled the satellite FEPIME to compete for the representational activity at regional level of the SMEs.

Lastly, there are also territorial associations which operate at provincial level. Among these, one must highlight CEPTA, because of its informative transparency, an uncommon characteristic of Spanish business associations. This association was created in 1977, for the province of Tarragona. It is not specialised in SMEs, although they numerically prevail in its membership.

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Its activities are mixed: it lobbies and provides services to firms, but it does not negotiate collective agreements. 19,435 firms that employ 85,480 workers are affiliated to this organisation. Individual firms and local sectoral and territorial federations belong to it. It has an estimated representation rate of 73% of potential firms (according to its own calculations). In 2002, it carried out a reform devised to adapt its statutes to its practices. It modified its management and voting system. 60% of the Assembly are sectoral members’ representatives, 20% territorial representatives and 20% firms’ representatives. Each firm is granted one vote. In the case of collective members this differs: Sectoral members are granted at least two votes (up to ten votes maximum), acquiring one more vote for every additional 25 associated firms it represents, while in the case of territorial members, the maximum is 30 votes. As an association, it is represented on all public institutions at territorial level.

4 Conclusions

In Spain, the associational system of business is formally differentiated by the size of firms. At cross-sectoral peak level, CEPYME is specialised in representing SMEs. However, it shares the same structure, leadership, base associations and institutional representation with the principal peak association of business, CEOE. This lack of real autonomy conditions its representational activities, such that they become subordinated to the interests of large firms and the key industrial sectors that altogether prevail in CEOE.

As a consequence, the economic importance of SMEs in Spain and the concomitant need to advance their interests and to provide them with services has, on a notable scale, entailed the formation of territorial business association geared to SMEs. For structural and cultural reason the most relevant case is Catalonia. As regards the business structure, Catalonia is, together with Madrid, the region where one can find the highest concentration of medium and small industrial enterprises. At the same time, it has an old associational tradition that was revitalised in 1977 through the re-establishment of Fomento del Trabajo and other lower-level organisations such as PIMEC-SEFES and CECOT.

The reliable representation of interest SMEs resides in the scope of regional and inferior level of the collective agreement and in the schemes of public policy participation and implementation. At the same time has resided in the provision of advance services, especially technological, telecommunication and information, training and consulting services. For both activities the associations of SMEs needed members firms. During the last years, SMEs have developed a growing demand for highly specialized services and also highly specialized representational activities which has prompted most of these associations to undergo organizational reforms in order to meet these new demands.

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FIGURE 1: Voluntary Business association in Spain: domain and territorial level CROSS-SECTORAL GENERAL CROSS-SECTORAL SPECIALIZED in SMEs

National level CEOE (1) CEPYME

Regional Level (autonomus)

(2) FEPIME FOMENTO

PIMEC-SEFES

Provincial Level

CECOT (4) PIMEC-SEFES COELL local sectionsCEPTA

FOEG Base Associations (3) Local Base Associations (3) Level Firms (5) SMEs Firms (5)

Observations: The associations and the firms are members of…(1) CEPYME, second branch of CEOE (2) FEPIME, second branch of Fomento(3) Base associations can be members of Fomento and at the same time PIMEC-SEFES.(4) CECOT had changes its territorial domain at regional level.(5) One firm can be member of local and provincial BA, autonomus BA

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Obligatory business associations: domain and territorial level

Provincial and local level Firms 85 CHAMBERS OF COMERCE

National level GENERAL COUNCIL OF CHAMBERS

TABLE 1: Companies by company size

  1995 % 2003 % % changes 1995-2003           Without employers 1326433 57.93% 2642783 66.14% 99%1 to 9 855145 37.35% 1182845 29.60% 38%Total Micro companies 2181578 95.28% 3825628 95.74% 75%10 to 49 103560 4.52% 145442 3.64% 40%50 to 199* 1311 0.06% 19888 0.50% 1417%Total SMEs 2286449 99.86% 3990958 99.87% 75%More than 200* 3310 0.14% 5046 0.13% 52%Total Firms 2289759   3996004    

* The DIRCE Database used these referentsSource: INE Database

TABLE 2: Companies by sectors 1995 and 2003

1995   2003         

industry 246267 10.7 247779 9.1construction 220950 9.6 336075 12.4retail 787133 34.2 796647 29.4rest 1047209 49.6 1396545 49.1  2301559   2777046  Source: INE Database, DIRCE.

TABLE 3: Companies’ dynamics 1995-2002

 SPAIN

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   n of entries 327564% birth rate 13,3n of exits 282035% death rate 11.4net rate 1.9Source: DIRCE

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TABLE 4: Average firm size by number of employees and by level of collective bargaining.

Year Firm Sectoral Provincial

Sectoral National

1990 346.16 14.33 124.551991 329.37 15.83 131.771992 324.95 14.24 143.971993 307.66 13.99 47.071994 313.88 16.00 63.901995 298.45 14.51 202.001996 287.40 15.22 213.741997 269.89 14.69 238.441998 276.17 15.11 232.471999 286.62 16.02 234.472000 279.32 16.37 246.812001 261.80 16.68 279.39Average 1990-2001

298.00 15.22 185.50

Source: Department of Labour and Banco de España

TABLE 5: Spanish cross-sectoral business associations and territorial level (one example, Catalonia (regional) and Barcelona (provincial)): Basic data (2002)

Level Association Scope of functions

Membership Domain

Members Density (% potential firms)

Associational members

Firms Members

Voting rights٭

National

CEOE mixed 1 General 75 % 55 territorial and

155 sectorial

1,300,000 Vote depend size association (employment, wage and sales)

National

CEPYME mixed1 SMEs/not independent3

60%-80%

17 territorial (regional) federations and 37 sectoral federations

900,000 companies indirectly associate

One vote one member

Regional (Catalonia)

Fomento/FEPYME

mixed SMEs/not independent3

80% 170 collective members

160,000 companies directly and indirectly associated

Individual (one vote) associations (10 +% votes/size by sales)

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CECOT mixed SMEs3 80%-70%

7,000 members (individual and collective)

Companies directly and indirectly associated

One vote one member

PIMEC-SEFES mixed SMEs3 25% 70,000 members (3,000 individual)

Companies directly and indirectly associated

Individual (one vote) associations (2 to 30 votes/size)

Provincial (Barcelona)

Chambres service All business with the exception of agriculture and free professions

100 % 348,083 companies directly and obligatory associated

2

National level

General Council of Ch.

service Provincial chambers

100 % 85 Ch.

1 CEOE and CEPYME are more representational lobby as providers of service.2 Voting rights are a function of grouped economic activity and the size of firms (sales).3 The associations define the concept of SME according to DIRCE classification: without employers and 1 to 9 are micro companies, 10 to 49 small companies, and 50 to 199 medium companies. .In the case of base associations the system of voting rights had a significant variability ٭More of them had a minimum of two votes for collective members, and a variable increase for every 25 firms and more, and only one vote for individual members. Other base associations simplified extremely the decisional system: one member one votes.

TABLE 6: CEPYME, territorial associations and sectoral associations

Territorial

Catalonia: Fomento del Trabajo*Valencia: CIERVALAragon: CEPYME_ARAGONNavarre: Organización Empresarial VascaBasque Country: CONFESBASKCantabria. CEOE-Cepyme of CantabriaLa Rioja: FER, Federación de Empresarios de Logroño y La RiojaCastille La Mancha: Confederación de Empresarios de Castilla La ManchaMadrid: CEIM: Confederación de empresarios de MadridCastille and Leon: CECACE Confederación de empresarios de Castilla y LeónAsturias: FADE

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Galicia: CEGExtremadura: CREEXAndalusia: Confederación de Empresarios de AndalucíaMurcia: CROERCanaries: CORIECABalearic Islands: CAEB* There aren’t any referents about FEPIME

Sectoral

Asociación de Centros Autónomosde Enseñanza Privada (ACADE)Asociación de Empresas de Limpieza Pública (ASELIP)Asociación de Mutuas de Accidentes de Trabajo (AMAT)Asociación Española de Entidades de Distribución (ASENDIS)Asociación Española de Franquiciadores (AEF)Asociación Estatal de Empresas de Trabajo Temporal (AETT)Asociación Nacional de Fabricantes de Apósitos Médico-Sanitarios (ANFAMS)Confedración Española de Asociaciones de Jóvenes Empresarios (CEAJE)Confederación Española de Comercio de la Pequeña y Mediana Empresa (CEC)Confederación Española de Empresarios de la Madera (CONFEMADERA)Confederación Española de Organizaciones de Panadería (CEOPAN)Confederación Española de Organizaciones Empresariales del Metal (CONFEMETAL)Confederación Española de Sociedades de Garantía Recíproca (CESGAR)Confederación Nacional de Asociaciones de Empresas Instaladoras y Mantenedoras de Fontanería, Gas, Calefacción, Climatización, Protección Contra Incendios y Afines (CONAIF)Confederación Nacional de la Construcción (CNC)Federación de Asociaciones Provinciales de Empresarios de Salas de Baile, Fiestas y Discotecas (FASYDE)Federación de Industrias del Calzado Español (FICE)Federación Empresarial de Farmacéuticos Españoles (FEFE)Federación Española de Asociaciones de Productos Esportadores de Frutas y Hortalizas (FEPEX)Confederación Española de Centros y Academias Privadas (CECAP)Federación Española de Hostelería (FEHR)Federación Española de Mayoritas de Perfumería, Droguería y Anexos (FEMPDA)Federación Española de Seguridad (FES)Federación Nacional de Asociaciones Mayoristas Distribuidores de Especialidades Farmacéuticas y Productos Parafarmacéuticos (FEDIFAR)Federación Española de Empresas de Tecnología Sanitaria (FENIN)Federación Nacional de Fabricantes de Perfumería y Cosmética (STANPA)Federación Nacional Empresarios de Ambulancias (ANEA)Unión Es pañola de Emtidades Aseguradoras, Reaseguradoras y de Capitalización (UNESPA) Federación Española de Empresas de Confección (FEDECON)Asociación Española de Floristas INTERFLORAAsociación de Empresas de Mantenimientos Industriales (ADEMI)

TABLE 7 : Representational activities of the CEOE/CEPYME and Chambers

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Type of activity CEOE/CEPYME Chambers

Represents:

Labour market interests vis-à-vis the unions (national

pacts)

Yes No

Labour market interests vis-à-vis the state Yes No

Product market interests in relation to customers No Yes

Product market interests in relation to suppliers No No

Product market interests in relation to the state Yes Yes

Participates in the formulation of and/or

implementation of:

Public schemes for vocational training Yes Yes

Public schemes to aid business Yes Yes

Public schemes for the standardization of products and

product quality No Yes

Main activities are market in italics.

TABLE 8 : Representational activities of Fomento/FEPIME, PIMEC-SEFES and CECOT

Type of activity Fomento/FEPIME PIMEC-

SEFES

CECOT

Represents:

Labour market interests vis-à-vis the

unions

Only territorial

level

Only

territorial

level

Yes1

Labour market interests vis-à-vis the state Only territorial

level

Only

territorial

level

Yes1

Product market interests in relation to

customers

No No No

Product market interests in relation to No Yes2 No

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suppliers

Product market interests in relation to the

state

No Yes 2 Yes 2

Participates in the formulation of and/or

implementation of:

Public schemes for vocational training Yes 2 Yes2 Yes2

Public schemes to aid business Yes 2 Yes2 Yes2

Public schemes for the standardization of

products and product quality No Yes2 Yes2

Main activities are market in italics.1 CECOT negotiated at territorial and at national level.2 Normally at regional level but all the associations as represents of the CEOE could represent at national level.

TABLE 9: Services provided by CEOE/ CEPYME and Chambers of Commerce (1)

Services related to CEOE/CEPYME Chambers

Industrial relations (only national pacts) Yes No

Economic policy programs (only long learning) Yes No

Exchange relations with supplies No Yes

Exchange relations with customers No No

Vocational training Yes Yes

Further training and qualification of company staff No No

Developing/monitoring quality standards for products No Yes

(1) Every Chamber had territorial adscription

TABLE 10: Services provided by Fomento/FEPYME, PIMEC-SEFES and CECOT

Services related to Fomento/FEPYME PIMEC-

SEFES

CECOT

Industrial relations only territorial pacts

Yes Yes

Economic policy programs (only long learning)

Yes Yes Yes

Exchange relations with supplies No Yes YesExchange relations with customers No No No

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Vocational training Yes Yes YesFurther training and qualification of company staff

No No No

Developing/monitoring quality standards for products

No Yes Yes

TABLE 11: Human and financial resources ** (2002)

CEOE/CEPYME FOMENTO/FEPIME PIMEC-

SEFES

CECOT

Human resources

Staff members * 110/60 60 108 60

* Including the staff of the satellite associations**In Spain the financial resources date are no publish.

References

Costas, A., Nonell, R. (1996) “Organización de los intereses económicos, función empresarial y política económica en España. El caso de la CEOE” en La empresa en la historia de España, Comin, F. and Martin, P., Editorial Civitas, p. 457-71.

Molins, J., Casademunt, A. (1998) “Pressure groups and the articulation of interest”, West European Politics, vol 21-4.

Molins, J. (2002) “Globalization, social concertation and business organizations. The case of Spain (1986-2000)”, Studia i Prace, p. 8-18.

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SWEDENAnnika Berg, Arbetslivsinstitutet, Stockholm

The enterprise structure in Sweden looks like the same structure in many other European countries. The so-called one-man-companies (enmansföretag) or solo companies dominate in number, 601,522 in 2000 and 628,033 in 2002. Around 200,000 companies are 1-249 employees' companies, (both years). The total number of companies was 814,733 (2000) and 842,358 (2002), the number of companies in agriculture and the like included. Agriculture, fishing and forest activities numbered 145,284 (2000) and 163,780 (2002). These activities excluded result in a total number of companies, 668,449 (2000) and 678,598 (2002). (Professionals like doctors and lawyers are included in the official statistics). As for the number of establishments this follows quite close to the numbers and levels of companies, about 100,000 more in total.

All in all there were 4,201,000 (2000) and 4,230,000 (2002) employees in Sweden. Out of these there are about 1,400,000 employees in the public sector.

The Swedish official statistics from Statistics Sweden (Statistiska Centralbyrån, SCB) is not yet adapted to the European Union system in separating small and medium sized companies at the 249 employees level. The Swedish official statistical definition of SMEs halts at the 199-level. (According to Statistics Sweden the authority decides the employee levels in accordance with the demand of the national users. SCB does not produce EU harmonised statistics in their Company statistics /Företagsregistret/ says Henrik Romanov, Statistics Sweden, head of the company data division).

However, with the help of statistics from SCB processed by Företagarna (“Fakta om små och stora företag 2001, Fakta om små och stora företag, 2003”) at the 249 level it could be stated that in 2000 there were 664, 721 SMEs in Sweden and 1,793,639 employees in companies 0 –249. In 2002 the corresponding figures were 674,712 and 1,840,075.

Summing up, most of all enterprises in Sweden may be classified as SMEs. Sweden had about 675,600 companies in the private sector in 2002 and they employed almost 2.7 million workers. 99 % of these small companies had less than 50 employees. They constituted about 52% of the private employment and almost a third of the total employment in Sweden. Compared with the public sector (31%) 69% of all employees worked in the private sector (ibid, 2003).

Looking back in the associational history: In 1864 the Swedish Riksdag voted for a full freedom of trade. The earlier obligatory crafts associations ceased their activities. The craftsmen and the traders started new, voluntary organizations. In 1905 the first national crafts' association (Sveriges Handtverksorganisation) started, to be followed by many others. The Swedish yearn to form organizations is well known. Associations of any kind have for a long time played a great role in Swedish social and political life. The trade union movement starting around 1880 has had and still has a wide importance among workers of all kinds. The employers, coming together in Svenska Arbetsgivareföreningen (the Swedish Employers' Confederation, currently Svenskt Näringsliv) soon developed into a counter-part, which understood to treat the trade unions with respect (and vice versa). This kind of communication in collective bargaining has been labelled the “Swedish model” of industrial relations.

The legal and administrative frame work

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All kinds of Swedish employer organizations, interest organizations, trade organizations etcetera offer membership on a voluntary basis. There are no statutory provisions either to support or inhibit SMEs to set up an association. The right to join and start an organization is laid down in the Swedish Instrument of Government (Regeringsformen, 1974). The right to conclude collective agreements is based on whether there is at least one trade union and the employer is a member of an employers' association. In this case any kind of local pay bargaining, most often following the directions of the national/sector agreement in the business, may take place.

The regulations about the right to negotiate collective agreements are stipulated in the Swedish Co-Determination Act (Medbestämmandelagen, MBL, 1976) following the LO-SAF Basic Agreement from 1938, the so-called Saltsjöbadsavtalet. MBL was completed in 1982 by the so-called Development Agreement (utvecklingsavtalet) between SAF, LO and PTK, the negotiation cartel for the white-collar trade unions. This is a basic agreement partly containing a participation agreement called the Development Agreement.

The Develop Agreement was received by the social partners with enthusiasm (Sweden Glossary). However it has not turned out to be very important in practical terms. As for the Act on Co-Determination (MBL) it developed and added, in reference to the Saltsjöbadsavtalet a broader adaptation to modern times in above all its regulations on information, co-operation and negotiation procedures between local employers versus employee/trade union representative and the employer/trade union procedure at the work place.

Saltsjöbadsavtalet is the basic agreement for the Swedish social partners as well as the people in general and has served as a model for the whole Swedish labour market. “ It has also come to stand for a particular form of industrial relations, the so-called Saltsjöbaden spirit, marked by willingness to co-operate, mutual respect, the endeavour to arrive at peaceful solutions based on compromise and a sense of responsibility for developments in the labour market.” (Sweden Glossary). The agreement was created in a situation where there was a threat of possible legislation. Certain forms of industrial action and their effects were causing great concern. The agreement thus also reflected the social parties’ wish to control their freedom to regulate their own affairs without the interference of the Government and the governmental authorities.

(May be elaborated (Regelsystemet s,292 ,MBL sid 233)

The Co-Determination Act, short for Act on Employee Consultation and Participation in Working Life, aims at promoting employee decision-making on employment and working conditions in a broad sense. The rules in the Act, covering both the private and public sector can be divided into two main groups. The first group deals with provisions in the system of collective regulations in the labour market, carried over more or less unchanged from earlier legislation and covers the right to organize, general right to negotiate and to mediation, together with collective agreements and their legal effects as for example the peace obligation. There are also rules concerning damages and other remedies for breach of the rules in the Act and in collective agreements. The second group of rules concerns participative employer representation (with no equivalent in previous legislation) whose “introduction signalled what was essentially new in the Act”. Their characteristic feature is that the rights to participate in employer decision-making are mainly confined to trade unions that have concluded a collective agreement with the concerned employer.

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(may be elaborated)

Other forms of employee influence opened up in MBL consist in established union’s right to be provided by business information, and in event of certain disputes right to decide ad interim on the interpretation of contractual matters such as a member’s duty to work. This right is called the priority right of interpretation. The rules include the union right to a veto with respect to an employer’s plans to contract out work to an independent contractor. In later years the Co-Operation Agreement on Industrial Development and Pay Determination, generally called the Industry Agreement (1997), followed by similar agreements in the private and public sectors regulates negotiation and strike procedures, applicable to modern conditions. These agreements have functioned quite well as yet during the three “big” bargaining rounds 1998, 2001 and 2004.

More of this, sid 174,175

Thus, according to the Swedish definition "a collective organization of employers is an organization formed for the purpose, in accordance with its internal rules, of protecting its member interests in dealings with employees (MBL)". These employers' associations are non-profit organizations, which according to praxis must be open to all applicants who meet their membership criteria. The principle of equal treatment within associations means that all members enjoy equal rights and status. Members are both protected against arbitrary expulsion from the organization and entitled to leave without stating any reason.

There is no public authority that oversees the employer associations (or the trade unions) and they are under no obligation to render accounts or otherwise report to any such authority.

Governmental organizations performing SME programs:

The Ministry of Industry, Employment and Communications (Näringsdepartementet) has to further the development of companies, including "fostering entrepreneurship, regions and individuals in the labour market". The Ministry is responsible for many of the public authorities and organizations in the business development area, such as:

NUTEK, the Swedish Business Development Agency (NUTEK), is the central public authority for enterprise and regional development, financed by the Government.

ALMI Företagspartner AB, a publicly financed group with 21 regional companies and a parent company in Stockholm. ALMI offers financing and business development consultation focusing on innovators and new businesses.

VINNOVA, the Swedish Agency for Innovation Systems, is responsible for developing problem-oriented research in for example biomedical engineering, innovation in foods, innovative systems in freight transport systems etcetera

SIC, the Swedish Innovation Centre supports innovators in their earliest phases of development with financing, advice and network.

The Swedish Industrial Development Fund (Industrifonden), founded in 1979 by the Government, offer loans of venture/equity capital to small and medium-sized companies

The Simplex Team (within the Ministry) works since 1998 with different measures in order to facilitate the administration for small entrepreneurs

The BIAs, or regional representatives/offices take part in these programmes whenever it is convenient however not according to formal terms. This means, that the social partners are not automatically involved but welcome to take part. According to the Government SME

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policy (Nutek): "the Swedish SME policy is implemented by a number of organizations all over the country. Their mutual goals, whether they are governmental or private, national or regional, are to encourage individuals to become entrepreneurs, to create favourable conditions for business start-ups and growing enterprises, and to improve the competitiveness of SMEs." Many business organizations have SME programmes of their own, adapted tpo their different sectors.

Among non-governmental organizations may be mentioned:

The Association of Co-operative Developments Agencies, that serves 25 Co-operation Development Agencies in Sweden (within the Co-operation movement),

Eleven Chambers of Commerce (Handelskammare), private business organizations, voluntary membership,

The Confederation of Swedish Enterprise (Svenskt Näringsliv) and affiliates, The Federation of Private Enterprise (Företagarna), The Swedish Association of Ethnic Entrepreneurs The Foundation Jobs and Society Other business organizations

Must be dealt with after summer vacations, questions of state subsidies:Hur deltar övriga BIAs i statsunderstödda program för SMEs? Nutek

Får de statsbidrag? ??? see Traxlers' questionsOlika sorts organisationer, olika sorts deltagande i program, försöker de samtidigt skaffa medlemmar till sina organisationer? NUTEK? Näringsdep?

Social Dialogue and Public Policymaking

In Sweden, the two sides of industry have a role in the social dialogue that is rooted since more than hundred years. SAF was founded in 1902, primarily as a form of defence against the Confederations of Trade Unions (Landsorganisationen LO), founded in 1898. Of course the pattern has changed in different ways over the years, especially concerning the bargaining levels but also considering policy- and decision making in government boards. The collective pay bargaining and bargaining of other working conditions like working time is currently concentrated to national/sector levels and local levels. Each business area/sector has its established employers' associations and established trade unions with which they bargain. There is hardly any competition between the employer associations, as they are all very specialized in their own areas. It happens very seldom that new organizations are created (beside mergers). One - natural - exception is Almega the Employers' Association of IT Trade and Industry (Almega IT-företagens Arbetsgivarorganisation), founded in 2000 and affiliated to Svenskt Näringsliv.

The former collective pay bargaining on the peak level in the private sector ceased in the end of the 1980s. (Obs ta med Albåges omedelbara avgång!) The former Swedish Employers' Confederation, (SAF, now Svenskt Näringsliv) left the three counter-parts, the trade union confederations the Swedish Trade union Confederation (Landsorganisationen, LO) the Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) and the Swedish Confederation of Professional Associations, (Svenska Akademikers Centralorganisation, SACO) . SAF had the initiative of the development following its new policy of decentralised bargaining and of changing its role into a more independent and

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opinion forming lobbyist body. Was the decision of decentralization taken at about the same time as the leaving-the-boards-decision ? Check Pestoff 1995, Johansson

In 1991 SAF decided to withdraw all its representatives, about 6000 from the governing bodies of public administration at central, regional and local levels. A year later the bourgeois parliamentary majority in the Swedish Riksdag made a decision about reconstructing the government authority boards. The decision implied that the peak organizations LO and TCO no longer had the right to participate in those bodies from which SAF had withdrawn. The Labour Market Board (Arbetsmarknadsstyrelsen) and the Work Environment Authority (Arbetsmiljöverket) are two examples of important government authorities, which SAF left.

Nominerar SAF ledamöter i länsarbetsnämnder etc? About Svenskt Näringsliv possibly nominating ….The statutes of for example the Labour Market Board say that in the regional levels (länsarbetsmarknadsnämnder) there are seats for people from the trade unions and from the business life (business life in general, meaning….?) Explain more

SAF never left the Labour Court (Arbetsdomstolen) however and Svenskt Näringsliv has still representatives in the Labour Court and take part in the judging process.

Joakim Johansson is a political scientist at Uppsala University. His doctors' thesis in (2000), about SAF and the so-called Swedish model is a study in the break up from the administrative corporatism 1982 - 1981 (SAF och den svenska modellen. En studie av uppbrottet från förvaltningskorporatismen 1982-1981). According to Johansson SAFs decision was the result of a long-term strategic discussion. The SAF move was an intentional attempt aimed at altering the rules of the game from a corporatist regime to a pluralist regime. The intention was that of strengthening the relative power of organized employers versus the trade union movement, in influencing outcomes in political processes on labour market and work environment issues.

Many Swedish researchers have described the SAF decision to leave corporatism behind in terms like a "milestone", a "dramatic" change, a "lethal hit" to the Swedish corporatism. (Bo Rothstein, Nils Elvander, Victor Pestoff among others.) What made SAF change opinion in the corporatism issue? SAF was always - before the early 1980s - very positive to the system of organization representation in government authority - decisive - boards. However, in 1985 SAF in commenting a proposal from a governmental commission, proposed an abolishment of the Swedish interest representation. This was one of the first public steps towards the coming decision to withdraw.

The 1970s was a decade full of political drawbacks for the Swedish business life. In 1968 there were student revolts - like in other countries - and wild strikes in mining and other sectors. This was the beginning of a more radical political climate in Sweden. The radical tendency was maybe not as strong as in other Western countries but it lasted for a relatively long time. There were many reforms introduced in the labour market area. The new legislation in the labour law area annoyed the employers, as the legislators were intruding in an area that up to now had belonged to the social partners - the collective agreements. The Employment Protection Act (Lagen om anställningsskydd, 1982:80), the Co-Determination in the Work-Place Act (Medbestämmandelagen, 1976:580) the Act on Board Representation (Lagen om styrelsepresentation för de privatanställda, 1987:1245), the Equal Opportunities' Act (Jämställdhetslagen, 1979, amended in 1991) and the Work Environment Act (Arbetsmiljölagen 1977:1160) are some examples of the new legislation. (footnote with more examples?

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There was a shift in governments in 1976, a Conservative, Liberal and Centre Government took over from the Social Democrats, which had been in power about thirty years. The employers, being traditionally orientated towards the political bourgeois side were hopeful to start with. They however ended up in disappointment finding the new government lacking decisive energy and will to change earlier policies, according to Johansson. During the 1970s, in line with the radical tendencies in society the trade union's hegemony had started to become stronger. They had achieved above all the privilege of formulating problems, SAF claimed. (se vidare s 67 ff)

(add the factors that led to the final decision, Johansson)

In the beginning of the 2000s the Government has contacts and communications with all kinds of business organizations. The communication with Svenskt Näringsliv goes on like before, with the exception for the representation in Government Boards. Representatives from as well the "peak" organization Svenskt Näringsliv as the interest organization Företagarna and other organizations may take part in working groups of any kind conducted by the Government in different issues regarding small and medium sized enterprises. One working group that Svenskt Näringsliv recently took part in was one that dealt with life long learning matters.

Also, Svenskt Näringsliv takes part as experts and the like in governmental commissions. In the process of a Governmental bill in labour law matters (as well as for example in tax and social insurance matters) and called to send in comments to the Government. There are tripartite talks arranged between the government, LO,TCO,SACO and Svenskt Näringsliv hitherto on subjects like mediation (before the new legislation on the establishing of a Mediation Office), measures for less sick leaves, and recently on the growth of the Swedish economy. Officials from Svenskt Näringsliv also take part in different informal meetings. The part taking is based on temporary needs of reassembling. When a project is finished, or a committee is presenting its final report the respective groups are dissolved.

(It is not possible to produce a list over projects, where BIAs are represented. This is a research project on its own!

There are also a row of institutions in which Svenskt Näringsliv work together with the trade union confederations, for example with Prevent (former Arbetarskydd), which deals with management and labour improvement in work environment issues.

Since 1 January 2004 there is an official from Svenskt Näringsliv seated at the Board of the Working Life Institute (Arbetslivsinstitutet), governmental research institute of working life. It is chief lawyer Anders Weihe from one of the more important Svenskt Näringsliv affiliates, the Association of Swedish Engineering Industries (Teknikföretagen). Check if some of the other SN affiliates take part in other authority boards?)

Conclusion? So, even if Svenskt Näringliv does not take place in the boards of labour market related authorities since 1991, the organization has not withdrawn from other levels, formal and informal and still does a great deal of part-taking and has a certain influence on different working life matters.

The most important issues on the agenda for Svenskt Näringsliv are by the way practically the same for all SMEs and their business organizations: fairer tax-rules for small enterprises,

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simpler administrative rules, decreased employer pay-rolls, decreased responsibilities for the employers concerning sick pay for their respective employees. Svenskt Näringsliv has also in its new role as an important and more focused lobbyist performed several campaigns as for example in 2003 pro-Euro campaign, and campaigns to monitor growth in SMEs.

The organizations also take part in the general lobbying around the Parliament and in other circles. When needed the Government talks with any business organization, interest organization, trade or branch organization and employer association at any level, asking them for opinions in a certain case. Organizations not being asked to give their opinion in for example a legislation matter can do that anyway. The communication between the Government and the organizations is not very formal. No particular organizations enjoy some kind of privileges in this aspect.

There are “official business” representatives in the social dialogue both in the private and the public sector. Svenskt Näringsliv has currently 46 affiliates: “pure” employer organizations (arbetsgivarförbund), “mixed” organizations, traditional pure trade organizations (branschorganisationer). The affiliate employer organizations are responsible at the first level for a vital part of the national/sector collective bargaining for pay, working time and other working conditions. Svenskt Näringsliv, however still takes care of the collective bargaining of collective insurances and pensions. The local employers negotiate with the local trade unions about local collective agreements, at the second level.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) does not interfere in the national/sector pay bargaining rounds (see above). In 2003, 36 of its affiliates (i.e. 27 pure employer associations and 9 mixed organizations) were engaged in collective wage bargaining, whereas the other ten affiliates were pure trade associations.

The public sector has three head employer organizations, the Swedish Association of Local Authorities (Kommunförbundet), the Federation of City Councils (Landstingsförbundet) and the Agency of Government Employers (Arbetsgivarverket). They all conclude collective agreements with the trade unions at the national/central level.

Further, there are independent employer organizations, standing outside Svenskt Näringsliv, having no affiliates and being parties to collective bargaining in their respective area. Important examples are: the Employers’ Organization of the Swedish Banking Institutions (Bankinstitutens Arbetsgivar organisation) and the Swedish Newspaper Publishers’ Association (Tidningsutgivarna). Bankinstitutens Arbetsgivarorganisation coversbanks and finance companies. The Swedish Newspaper Publishers Association covers newspaper and other media companies in for example television, radio and IT.

The independent employer organizations are generally “pure” employer associations. One out of several exceptions is the Målarmästarna (the master painters’ association) that is rather a mixed organization, both active in collective bargaining and trade interests. The independent employer organizations have the same functions as the associations within Svenskt Näringsliv. They provide services for their members, especially concerning collective bargaining and legal labour law advice, but also in further education, insurances and the like.

Peak, independent, cross-sector employer organizations with a role in social bargaining:

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The Svenskt Näringsliv (bargaining through its employer affiliates)

Kooperationens förhandlingsorganisation (The cooperative movement bargaining

organization)

Arbetsgivaralliansen (Employer alliance for non-profit organizations and sports clubs)

Bankinstitutens Arbetsgivarorganisation The Employers' Organization of the Swedish Banking Institutions (and finance companies)

Tidningsutgivarna(M) The Swedish Newspaper Publishers' Association

Kommunala Företagens Samorganisation Municipality companies' co-organization

Svensk Industriförening (M) Organization for small enterprises in the sweets' manufacturing, electronics, software, food and grain industry.

Svensk Scenkonst (M) Employer for music, dance and theatre.

Arbetarrörelsens Förhandlingsorganisation Idea Employer for non-profit organizations in the labour movement

(The list is not complete, however it should give a fair view of the situation)

Besides, there are pure trade organizations (branschorganisationer) in Sweden, which do not take part in collective bargaining. The trade organizations promote the interests of their members, or company members in various trades and branches.

There are hundreds* of such very specialized trade/branch organizations in Sweden - including the 10 traditional trade organizations and 9 mixed organizations affiliated to Svenskt Näringsliv. Bil Sweden (Bil Sweden, car business), the Steel Producers’ Association (Jernkontoret), the Building Material Producers’ Association of Sweden (Industrins Byggmaterialgrupp) are some examples of the trade organizations within Svenskt Näringsliv (Note 1.) Currently 26 (2000) trade organisations are members in the Federation of Private Enterprise (Företagarna). Företagarna is an interest organization and the biggest ASME, organization for small companies. (F. is however not a social partner, see below). The trade organizations take part in the public policymaking and the public discussions and offer various services as legal advice, vocational training and other education, information services about for example new tax reforms.

(*Nils Elvander has estimated the total number of interest organizations in Sweden to about 1.000 (1967), today it may be estimated to 900 organizations, according to Victor Pestoff)Ask VP

According to Svenskt Näringsliv, the current trend is that its employer affiliates more or less are taking over the role from the trade organizations in the same business. In later years several employer associations and trade associations have merged. The result is a "mixed" organization, performing both the tasks of the employer affiliate and the trade organization affiliate. This trend will possibly continue in the future. The merging is a consequence of cost

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savings, partly in saving human efforts in double work, for the time being performed in both kinds of organizations.

The issue about possible competition between the peak interest organizations has been raised. As for Sweden there is not much competition about members in different kinds of interest organizations to speak of.

The Svenskt Näringsliv kind of mergers is not really an issue of competition between the two (even three?) parties as the employer organizations have a heavy advantage in their strong role as social partners and the trade organizations never had this role. The employer organizations have not as a rule competed with the trade organizations about members, as the former cannot give them any service about collective agreements. The largest trade organization within the private export industry sector, the Federation of Swedish Industries (Industriförbundet) merged in 2001 with Svenskt Näringsliv, and exists no more as an independent organization.

Please note. Even though the small and medium sized companies (SMEs) are dominating within Svenskt Näringsliv, its employer affiliates and trade organizations are not “peak” BIAs or ASMes according to your definition. The employer associations are however the main actors in the social dialogue. They also have larger companies than SMEs as members. The mother organization Sveriges Näringsliv is at the top. The employer associations are independent in the way that Svenskt Näringsliv does not interfere in the collective bargaining or any other issues regarding for example the right to express the associations' own opinion.

The Swedish Industry Association (Svensk Industriförening, SINF) is an interest organization of small and medium-sized Swedish industries. It informs and assists about 1,500 member companies in essential business matters like in for example labour law and contract law. The member companies are divided over twenty branch organisations, for which SINF performs the administration. Some examples from SINFs list of branch organisations: National Association of Conveyor Belt Companies, Swedish Association of Electronics Industries, Swedish Feed and Grain Association, Swedish Foundry Association, Swedish Moulding and Press Tools Association, Swedish Design Association, the Associations of Accredited Laboratories, of Crisp Bread Manufacturers and of Ready Made Clothing Industries. Mer om Industriförbundet här?

REWRITE For example, all three organizations Svenskt Näringsliv, Företagarna and Svensk Industriförening covering a lot of small companies either in their difference of member numbers /or their competence of not being/being social partners. The organisations have one thing in common - they are very specialized and cover different kinds of sectors. Two, Svenskt Näringsliv and Svensk Industriförening are the only organization offering social partnership (through the employer affiliates) and access to collective agreements. Thus, 25% of the companies being members in Företagarna are also members in Svenskt Näringsliv. Why do they stay in Företagarna? Their kind of rural business does not "belong" in Svenskt Näringsliv, aimed at export and engineering industry. And, the fee is very low, in average SEK 2,500 per year. Write a little more Conclusively, Swedish employer organizations are labour market organizations. The companies deal with product matters at company levels. " Mixed" organizations are both social partners and promote trade interests. “Pure” trade organizations promote trade interests

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and arrange education, discussions and give different kind of services as well as promote business development, on a general level.

The Associational System of Business. Svenskt Näringsliv and Företagarna.

The Swedish employer associations conclude collective agreements with the trade unions in different sectors. Interest organizations like Företagarna are not social partners, just interest organizations. The membership is overall voluntary.

I have selected Svenskt Näringsliv and Företagarna to be the two main examples of peak business organizations (BIAs) respective of peak interest organizations for small and medium sized enterprises (ASMEs) in this report.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) is the largest head organization in the private sector. Svenskt Näringsliv gathers a large part of employer associations and trade organizations in the private industry and in other private business. 99% of its member companies are SMEs. Svenskt Näringsliv has about 60,000 (57,000 in the year 2002) member companies. Svenskt Näringsliv is the "mother"-organization on the top. The employer associations are independent: Svenskt Näringsliv does not interfere in the collective bargaining or any other business regarding for example the right to express the affiliates’ (both categories) own opinions.)

The largest ASME is the Federation of Private Enterprise (Företagarna) (only the Federation of Swedish Farmers, Lantbrukarnas Riksförbund, LRF) is bigger in the sense hat it has 157,000 members (not company members). LRF is an interest organization for all those in Sweden who own or work land or forestland and for their jointly owned companies in the Swedish agricultural co-operative movement. Företagarna has about 50,000 (52,000 in 2002) members, being company-owners and about 30,000 members through the 26 (check) trade organizations, linked to Företagarna, in all 80,000 members. About 25% of the members in Företagarna are also members to Svenskt Näringsliv.

As for membership domain, this is formulated, though not very clearly in the statutes of respective organization. For example, the statutes of Sveriges Näringsliv states that the aim of the organization is - among other items - to unite active companies and organizations of companies to a firm body, to reach cooperation in joint issues. As for membership it is stated that members of the organization are affiliated organizations of companies. Member companies are the companies that are members in an affiliated organization. As for Företagarna (please see below) its statutes say that membership in the organization may be received by company owners and other individuals sharing the values of the organization.

It is not difficult for an employer wanting to become a member of an employer organization to find an organization that suits him. The boarders of different sectors of the labour market are clearly defined, in practise. The new-established employer wanting to be involved in the collective bargaining system in the engineering industry would probably choose to apply for membership in the Association of Swedish Engineering Industries (Teknikföretagen, until recently Verkstadsindustrin). There is a national/sector collective agreement concluded on basis of the national sector agreement (Verkstadsavtalet) in the engineering industry. To this

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pay agreement the new employer member will be automatically linked. The employer may also choose to stand outside the employers’ association. However, he will probably be asked to conclude an application agreement, which will be forced upon him by the trade union/s unless he can show that he gives his employees better conditions than in the agreement. This pattern is the same in the whole labour market.

There are no official links to any political party among the BIAs (and the ASMEs). The Swedish tradition tells that there should be as little interference as possible with the labour market organizations and the Government and the political parties. Independency is very important, especially on the employer side. However there is communication between the political parties and the organizations. For example, the Swedish Social Democrat Party just invited Företagarna and its members to a discussion about enterprise issues 19 March 2004. However, Svenskt Näringsliv takes part in the public political debate. For example, in 2003 the organization carried out a campaign promoting yes to the Euro. The member services are generally free to the members in all referred kinds of organizations. The member fees in the different affiliates in Svenskt Näringsliv vary. The members of the affiliates also pay a member fee to Svenskt Näringsliv (thus two different fees). The latter fee amounts since 2001 to 0.09 % of the wage sum in respective company). Check and add

In Företagarna the solo-company owners pay the lowest fee, SEK 2000 yearly. The member fee is accounted on how many employees there are in the company, and is thus variable. That is, every member pays SEK 200 a year. Then there is a service fee, SEK1, 210 per year for solo-companies and SEK 3,400 for members in companies with more than 200 employees. The company owners in between pay fees varying from SEK 1,900 up to SEK 3,100 (50-199 employees). Then there are local fees between SEK50 and SEK500. In average a member in Företagarna pays SEK 2,500 per year. Svensk Industriförening has about 1,500 members, and covers x employees.

Svenskt Näringsliv has more than…medlemsavgift, serviceavgift - both included?

Företagarna is organized in three levels, local, regional and national/central. The company member is both locally and centrally linked to the organization. As for general voting rights in Företagarna, the general principle is one company - one vote or rather, the company owners have one vote each and performs this right independent of six and number of employees at local level. The locally elected representatives for the regional organization in their turn elect the representatives for the Congress (kongressen), the highest decisive organ every second years.

In Svenskt Näringsliv, the affiliates and trade organizations choose one representative each to the Board of the head organization. Single company members do not vote in the head organization. Write more, FT:S questions The member companies within Svenskt Näringsliv have two memberships, in their respective association and in Svenskt Näringsliv itself. The associations have the right to vote in Svenskt Näringsliv, but not the single companies. One representative from each organization has a seat at the board of Svenskt Näringsliv.

Svenskt Näringsliv gives the employer affiliates service in the form of labour law consultations, collective agreements and home produced statistics for wage and working hours. It offers special collective insurances for pension and other insurances. The organization handles conflict pay. There are several yearly publications fabricated and a

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weekly member paper. Conferences, seminars and different kinds of vocational training are arranged.

Svenskt Näringsliv has 220 employees in its staff, out which 140 employees at the head office in Stockholm. There are about 80 employees in the office in Brussels and in the about 300 local organizations and in 25 district offices in Sweden.

Svenskt Näringsliv covers about 1,500,000 employees in all member companies (99% are SMEs). According to SN's statistic calculations for its own area, the member companies had (2002) 110,766 employees in companies with 0-9 employees, 255,299 employees in companies with 10-49 employees, 327,537 employees in companies with 50 -249 employees and 21,757 employees in companies with more than 250 employees.

Företagarna is organized in three levels, local, regional and national/central. The company member is both locally and centrally linked to the organization. As for general voting rights in Företagarna, the general principle is one company - one vote or rather, the company owners have one vote each and performs this right independent of six and number of employees at local level. The locally elected representatives for the regional organization in their turn elect the representatives for the Congress (kongressen), the highest decisive organ every second years. The affiliates and the trade organizations choose one representative each to the board of Svenskt Näringsliv. See FT questions

Here follow some examples of trade organisations linked to Företagarna. The names may tell something about the kind of organizations that are interested to be members of Företagarna: Glasbranschföreningen (the glass business), Kommittén för Alternativ Medicin, Glassbranschföreningen (glass business), Kommittén för Alternativ Medicin, Sveriges Låssmedsmästares Riksförbund (the locksmith masters), Sveriges Skorstensmästares Riksförbund (the chimney-sweeper masters), Optikerförbundet are some examples of trade organizations within Företagarna. About 25% of the F. members are also members in Svenskt Näringsliv. (the committee for alternative medicine), Sveriges Låssmedsmästares Riksförbund (locksmith masters), Sveriges Skorstensfejarmästares Riksförbund (the chimney-sweeper masters), Optikerförbundet (the opticians’ organization), Städ- och Fönsterputsföretagens Riksorganisation (the cleaning and window-cleaning national organization). In Företagarna the solo-company owners pay the lowest fee, SEK 2000 per year. The others' member fee is accounted on the number of employees in the respective company. In average, a member of Företagarna pay, a local fee included, a yearly fee of SEK 2,500. Double info?

Företagarna has about 50,000 (52,000 in 2002) direct members and about 30,000 members through the 23 (in March 2004) trade organizations, which are linked to F, in all 80,000 members. Företagarna is a nation-spread organization, with traditions a long way back in the Swedish handicraft industry. It is organized in three levels, local, regional and national/central. As for voting rights, the general principle is one company - one vote, or rather the company owners themselves have one vote each and performs this right independently of number of employees at local level. The locally elected representatives for the regional organization in their turn elect the representatives for the Congress, the highest decisive organ that meets every second years.

The head office in Stockholm has 60 employees. There are 40 employees in 22 regional offices for the 21 regional organizations. There are 307 local associations. There are also

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about 3,000 voluntary workers, elected representatives all over the country, working without pay on the local level.

Check for double information, upwards and downwards Table 1. Representation.

(Svenskt Näringsliv) (Företagarna)

1. Unions Yes No2. Government Yes Yes3. Customers No No4. Suppliers No No5. Market/state No No6. Vocational trainingYes Yes7. Aid business Yes Yes8. Standards No No

Företagarna are not social partners and do not make any collective bargaining. Företagarna gives service in the form of special entrepreneur insurances and other insurances. There is a telephone service for legal and economical matters. Special agreements exist that gives members favourable IT solutions, for example. Special networks programs for entrepreneurs are offered. A member newsletter is spread every month.

In Företagarna the services for the members are primarily free as for example in giving advice on the telephone on economical and legal matters. If a member wants negotiation support, he must pay for that though. A row of special enterprise and entrepreneur insurances are offered concerning for example sick care insurance. Special co-operation agreements, concluded by Företagarna and for example IT companies give the members cheaper IT solutions. Various kinds of education are offered. Företagarna runs a "folk high school" (folkhögskola) for vocational training in Leksand (in the county of Dalarna, situated in the middle west part of Sweden). The local networks have been built out during the last ten years. Various kinds of IT networks have also been developed, for the use of individual members. A central quality certification system called FR 2000 has also been installed. A program for business development is also at hand, giving current information. A member newsletter is spread every month.

Svenskt Näringsliv gives the affiliates service in the form of labour law, collective agreements and statistical service, offers special terms for pensions and insurances. SN handles conflict remunerations and issues around member fees, informs about the development in wage and working time in yearly publications. /Double info, look above?/

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Table 2.

Services in Svenskt Näringsliv Företagarna

1. IR Yes No2. Advice grants Yes Yes3. Suppliers No No4. Customers No No5. Vocational trainingYes Yes6. Staff training Yes Yes7. Standards Yes Yes8. Interest or service? Both Both

As for potential members the issue does not seem of importance to neither organization. A guess from the spokesman for Företagarna is at that at least 250,000 entrepreneurs might be members in Företagarna. The board of Företagarna has set a goal for 2004 to gain at least 3,000 new members. (move ?)

About 45% of the members in Företagarna are solo-entrepreneurs, (no employees). 38% of the F-members have 1 – 5 employees. (Please note that in Företagarna it is the entrepreneurs, not the companies that are members, direct members (check). Svenskt Näringsliv consists of company members, members in respective employer association)

Staff members. ( Seak information for table of resources)

Svenskt Näringsliv has 220 employees, out of which 140 employees at the head office in Stockholm. There are about 80 employees in the office in Brussels and in the about 300 local organizations and about 25 district offices in Sweden.

Företagarna has 60 employees at the head office in Stockholm and 40 employees in 22 regional offices for the 21 regional associations. There are 307 local associations. Företagarna also has about 3,000 voluntary workers, elected representatives all over the country, that work for F. without pay mostly at local level.

Both Svenskt Näringsliv and Företagarna have undergone internal reforms aimed at economizing on resources since 1990. In 2001 Svenskt Näringsliv merged with the largest trade federation in the industry, the Federation of Swedish Industries (Svenska Industriförbundet). The driving force was bad economy. Also, there were two rather close organizations making double work in opinion making and public relation matters. There was a need of cutting down costs for both organizations. About 85 employees had to leave, those who were over 58 years of age were given an individual pension agreement corresponding 75 % of their salary until the age of 65 (the normal pension age). No important conflicts about the merger have been reported from the member groups.

In 1991 the two "ASMEs" Företagareförbundet and Småföretagens Riksorganisation merged, which was the latest merger in a row of mergers during the 1900s. Företagarnas Riksorganisation was the new name voted by the members. The organization added the shorter, more practical name Företagarna. The reasons for the merger were about the same as for Sveriges Näringsliv. 148 employees were decreased to 119 in 1992.

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4.6. Annual budget

In Svenskt Näringsliv as well as in Företagarna the different membership fees form the basis - about 99 % - of the yearly budget. Both organizations have a marginal income from the sale of various books and information material being produced by them. Other service is mainly free of charge (see above). ( Have talked with Victor Pestoff 22/6 and taken notes. Will write later.)

Sources:Sweden Glossary, 2001(European Employment Industrial Relations Glossary: Sweden)The Swedish Instrument of Government (1974)The Swedish Co-Determination Act (1976)Statistics Sweden (Statistiska Centralbyrån)Företagarna, yearly reports 2003 and 2001Svenskt Näringsliv, member-company statistics, 2002Interwievs with officials at the two peak organizations, Per-Anders Westhed, Företagarna and Jens Hedström, Svenskt Näringsliv"SMEs in Sweden. Structural Change and Policy Development", NUTEK, January 2004Victor PestoffNils Elvander

*

Footnote 1. The 10 "pure" trade organizations within Svenskt Näringsliv are currently:

Bil Sweden (Bil Sweden), car businessThe Steel Producers' Association (Jernkontoret)The Building Material Producers' Association of Sweden (Industrins Byggmaterialgrupp)The Swedish IT and Telecom Industry (IT-Företagen)The Swedish Plastics & Chemicals Federation (Plast- och Kemiföretagen)The Swedish Flour Milling Association (Svenska Kvarnföreningen)The General Department of the Confederation of Swedish Enterprise (Svenskt Näringslivs allmänna avdelning)The Swedish Association of Management Consultants (Svenska Managementkonsulter)The Swedish Shipowners' Association (Sveriges Redareförening)The Swedish Recycling Industries' Association (Återvinningsindustrierna)

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UNITED KINGDOMJustin Greenwood, Robert Gordon University, Aberdeen

1. The Economic Structure and Cultural Properties of the UK Economy

The UK Economy and the Role of SMEs

In 2002, 3,860,465 UK enterprises of all descriptions provided employment for 27,632 million people in the UK’s ‘whole economy’. Enterprises with fewer than 250 employees account for 99.8% of the total in 2002, representing 52.4% of UK employment, and 51.1% of turnover (Small Business Service, 2003). Comparable figures for the EU-15 were 99.8% (all firms) and 66.4% (employment share) (Traxler, this volume). Restricting the definition of an ‘enterprise’ to that of companies and corporations only delivers corresponding proportions of 99.3% of the total, but a lower share (39.9%) of employment (Small Business Service, 2003). By any definition, SMEs therefore make significantly less contribution to UK employment than the average for the EU as a whole.

Table 1.1 below shows the distribution of companies and corporations by firm size, and the share of employees they account for.

Table 1.1: UK Private Sector Enterprises: distribution by firm size and employment share, 2002

Number of employees % total % employment

0 36.9 1.81-9 46.7 9.610-49 12.9 13.750-249 2.8 14.8250-499 0.3 6.4500+ 0.4 53.7TOTAL 100 100Source: Small Business Service Analysis and Statistics (2003) SME Statistics 2002, www.sbs.gov.uk/statistics

Thus:

‘micro’ firms (i.e. those with 0-9 employees) account for 83.6% of the total and 11.4% of employment, compared with an EU-15 average of 93.2% and 34.6% respectively

‘small’ firms (i.e. those with 10-49 employees) account for 12.9% of the total and 13.7% of employment, compared with an EU-15 average of 5.8% (total) and 21.7% respectively

‘medium’ firms (i.e. those with 50-249 employees) account for 2.8% of the total, and 14.8% of employment (compared with an EU-15 average of 2.2% (total) and 19.7% (employment) respectively

over half of all UK employment in companies is accounted for by corporations with more than 500 employees.

These figures therefore indicate that the UK has a below average spread of micro firms, and an above average spread of small and medium firms, compared to the EU-15 average. In each of these categories, the share of employment they represent is substantially less than the EU-15 average. Of interest is that the UK has a much higher than EU-15 average proportion in the category of ‘small’ firms (10-49 employees), yet still a lower than average employment share accounted for by such firms.

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The conclusion to be drawn from the above figures is that the UK is relatively more dependent upon larger companies for employment levels than is the EU-15 as a whole. Such a finding is to be expected among the larger countries/economies of the EU. Nonetheless, there are indications that even where economic activity among UK SMEs exceeds that of the EU-15 average, these generate a disproportionately lower share of employment.

Agricultural related enterprises (NACE A, B) produce little distortion to the UK figures as a whole, accounting for 4.6% of the total number of enterprises and 1.9% of employment. The enterprise firm size for agricultural concerns resembles very closely the UK average for concerns with no employees, and those with less than 50, and indeed is closer to the average than for all but one of the NACE categories A-O (Small Business Service, 2003).

Among NACE categories A-O, manufacturing accounts for 20.1% of UK employment, the wholesale and retail trade 34.3%, and property related activities for 14.3%. All of these sectors exceed the UK average for firms with 1-49 employees, and very significantly so in the case of the wholesale and retail trade (Small Business Service, 2003).

Construction, Transport, and Hotel/Restaurant, sectors are those which deviate most substantially from the UK average in terms of the number of enterprises with no employees, and those with between 1 and 49 staff. Construction and Transport each have a significantly higher than average proportion of enterprises with no employees, and consequently lower than average micro or small (1-49 employees) firms. These sectors appear to be dominated by single person enterprises, but are also sectors where the ‘informal economy’ thrives. Whilst the informal economy is also prevalent in the Hotel/Restaurant sector, it is the complete reverse of construction and transport, in that small enterprises with 1-49 employees are almost three times the UK average (Small Business Service, 2003).

Comparisons over time for the ‘whole economy’ show that, for 1995, enterprises with fewer than 250 employees account for 99.8% of all enterprises in the UK’s, 58.2% of UK employment, and 56.3% of turnover (DTI, 1996). These figures demonstrate that, whilst the share of all enterprises accounted for SMEs has remained constant over time, their contribution to UK employment and turnover has declined between 1995 and 2002. Over a similar period, the proportion of employment accounted for by firms with over 500 employees has risen from 36.4% to 47.7% (Small Business Service, 2003).

Among SMEs, there are some differences in trends over the years between the different categories. In respect of companies and public corporations in 1995,

‘micro’ enterprises accounted for 75.7% of the total, 9.8% of employment ‘small’ enterprises account for 15.7% of the total, and 14.4% of employment ‘medium’ enterprises account for 3.3% of the total, and 16.2% of employment (DTI,

1995).

Over time, these figures reveal that the importance of ‘micro’ firms has grown among the population of SMEs, while that of ‘small’ and ‘medium’ sized firms diminished between 1995 and 2002. The growth of employment represented by micro firms, from 9.8% to 17.6%, has been substantial. The minimum time for setting up a sole proprietorship (employing one to two people) is no longer than two days, with minimal registration costs, while registration costs for a private limited company are below €500. The minimum capital requirement for a private limited company is £1 (2002 position) (European Commission, 2002).

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UK GDP grew in 2003 by 2.3%, and did so consistently in the period between 1992 and 2001. The UK economy currently meets a number of the ‘Lisbon’ EU targets for 2010 for growth, including an overall employment rate of 70%, the retention of older workers in the workforce, and a low long-term unemployment rate (European Commission, 2004). Much of the contribution to growth has come from service industries and from high technology manufacturing, while the share of GDP accounted for by agriculture and traditional manufacturing declined steadily. 11 of the 12 fastest growing industries between 1992 and 2001 come from the ‘services’ sector (Office for National Statistics, 2003).

Exports of goods and services during the past decade has grown steadily, from 18.9% of final demand in 1992 to 21% in 2001, and an overall growth of 10.5% from 1997 to 2001. Imports of goods grew faster, by 25% between the same period. In 2001, the UK had a trade in goods deficit of £40.6 billion, and a trade in services surplus of £13 billion. The trade deficit in goods accelerated from 1997. Gross capital formation, a measure of investment, has been similarly led by the services sector (Office for National Statistics, 2003). Nonetheless, the UK has the second lowest level of business investment in research and development in the EU. Among other problems is a relatively low level of labour productivity, despite a recent increase during the period 1999-2003 (European Commission, 2004).

In summary, a number of trends impacting on the position of SMEs are clearly visible from the above figures in the UK economy in recent years:

there has been overall growth whilst SMEs continue to dominate the population of enterprises, the share of

employment and turnover they represent has declined, largely because the share of employment represented by firms with over 500 employees has increased significantly

SMEs contribute a smaller share of employment to the UK than is the average for the EU-15

an increasing trend towards service activities and high technology manufacturing at the expense of traditional manufacturing

amongst SMEs, micro firms have increased their share of presence, and particularly of employment.

Cultural Properties of the UK Economy

The growing importance of very large firms to the UK economy can be explained by the impact of the single European market (where the logic is towards larger firm size to take account of cross border trade opportunities), and the extent of inward investment. The UK has historically attracted a disproportionate share (when compared to the EU-15) of investment from the US (as a result of language ties and similarities with American models of capitalism), and from Japanese firms (Chisholm, 1995). This reflects the lower cost base of the UK, where longer working hours and lower worker protection compared to the EU-15 reflect a greater harmony with US than with Rhinish capitalism. These factors were used as a deliberate strategy to attract inward investment by Conservative governments from 1979 to 1997, although the attractiveness of the UK as a European base for investment has somewhat diminished by its position outside of the Euro zone in recent years. Nonetheless, the growth in importance of large firms has provided opportunities for new business start-ups, and may help explain the development of the ‘micro’ sector identified above.

A consequence of the greater degree of similarity with American than Rhinish capitalism is a tendency towards more pluralist, rather than corporatist, public policy infrastructures. It is a

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more market oriented variant of capitalism than can be found in most other EU-15 countries. This means that a limited role for the state, and voluntaristic business participation in collective schemes of both a private and public nature, are typical (sections 2 and 3, below). What structures there are tend to be directed at enabling, supporting, and ensuring a framework for competition, rather than at directing or undertaking. A number of these fall within the scope of de-regulation, an agenda to which the UK was the first to reach for and ideologically most committed to among EU governments in recent years. This agenda has been continued across changes in government, with most recent measures including those aimed at:

moderating insolvency laws to enable a fresh start after bankruptcy assessment of ways of lifting company law burdens in accounting and auditing for

small businesses (European Commission, 2002) regulatory impact assessments, and the systematic evaluation of alternatives such as

voluntary agreements.

General and business taxation rates are low in comparison with the EU-15, and the extent of public sector provision and regulation reflects this. Nonetheless, a highly legitimised use of public funds in the UK is for business infrastructure support in the wider interests of wealth creation. Membership of UK business associations constituted by law (section 2) is tax deductible153. Fiscal support measures for SMEs include:

A ‘Business Links’ network of local advice centres for SMEs in England.154

A Learning and Skills Council, responsible for funding and planning non-university education and training for over 16-year olds in England.

A Small Firm Loan Guarantee Fund. Regional Venture Capital funds, and tax incentives for investment in venture capital

schemes. Enterprise funds, including measures to help bring technology driven concepts closer

to market for SMEs, and ‘Early Growth’ funds. The Phoenix Fund to encourage entrepreneurship in disadvantaged communities. Tax incentives to assist SMEs to purchase computing equipment.

A Minister with dedicated responsibility for SMEs oversees government work in the field, though does not hold a Cabinet position. The Prime Minister, Chancellor of the Exchequer and the Secretary State for Industry have endorsed a December 2002 policy framework (Small Business and Government – The Way Forward) for a government-wide approach to helping small firms (www.sbs.gov.uk/strategy) which consolidates many of the above initiatives within a framework of generalised principles. These high level political figures have hosted small business seminars or made themselves available for consultation by UK wide business associations.

Similarities in concept between the UK and US economies can be over-stated; rates of entrepreneurship in the US are nearly twice as high as those in the UK (Small Business Service, 2003b). Ambitiously, the UK government has set itself the task of making the UK the best place in the world by 2005 to start and grow a business (ibid.). A number of its strategies to achieve this resonate with the EU Lisbon process goals for knowledge driven entrepreneurship and social inclusiveness. These include the reduction of ‘red tape’ and time

153 But subject to the application of Value Added Tax154 There are comparable business advice and support services for other parts of the United Kingdom delivered through public sector agencies under different organisations

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taken to start a new business, encouraging more enterprise among disadvantaged communities, bringing enterprise skills into education, locally delivered advice services and grants, and access to finance (Small Business Service 2003c).

At a regional level, support initiatives aimed at SMEs have emerged from tiers of government in Scotland, Wales, and Northern Ireland, and are in plentiful supply at local government level. Some of these relationships are more close-knit in involving representatives of small business organisations and other stakeholders than is typical for the UK as a whole, but which is common to ‘small country’ settings such as Scotland. For instance, the Scottish Ministerial Small Business Consultative Group brings together small business representatives with government officials, development agencies, and academics. The Scottish Council for Development and Industry (SCDI) is part financed by government, but which is a membership organisation comprising mainly corporate and non-departmental public bodies, as well as the Scottish Executive, seeking to influence government economic policies. Scottish Financial Enterprise, whose membership includes very large banks and investment organisations, is similarly structured in respect of the financial services sector. Access to senior ministers, civil servants, and special advisors is very easy for the five business-wide representative organisations, which sit on ministerial groups and advisory bodies155, and work together with the SCDI as part of a loosely organised business lobbying coalition.

Thus, within the UK as a whole, there is some diversity to be found. Competition between business-wide organisations may not be as prevalent as ‘pluralist’ caricatures suggest, particularly at regional levels. While central government relations with outside interests are characterised by pluralism in which SME and other representative organisations act as ‘lobbying agents’, there are relationships where there is a closer incorporation of business interests with devolved regional, and doubtless local, administrations. As is evident later in the report, there are traces of relationships between business representative organisations and central government which go beyond pluralist style ‘lobbying’ and which resonate more with incorporation. Whilst some of these latter tendencies were most visible in the shape of tripartite initiatives involving business and trade union organisations in the 1970s, structures of incorporation of producer interests inside government can still be found today.

A key agent of UK SME policy is the Small Business Service (SBS), established as an Executive Agency of the Department of Trade and Industry in April 2000. Its goal is

“To help build an enterprise society in which small firms of all kinds thrive and achieve their potential, with an increase in the number of people considering going into business, an improvement in the overall productivity of small firms, and more enterprise in disadvantaged communities” (Small Business Service 2003d, p.7).

This mission therefore includes championing an enterprise culture, helping new business start ups and development, and improving access to government support services and to finance. The SBS runs the flagship business support and advice service, ‘Business Links’. Such activities have always been a function of UK central government, and prior to the Small Business Service were previously undertaken by agencies overseen by the Department of Trade and Industry. To an observer schooled in other political systems, some of these functions could potentially overlap with activities which might otherwise be undertaken by business interest associations, and thus weaken their capacity to attract members.

155 These include the Tourism Framework; Business Gateway; and Waste Minimisation

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Differing perspectives on the role of the SBS became evident among the constituency of UK business interest associations who participated in this study. Some took the view that the SBS was seen as an additional channel of access to government for business interest associations. A former Secretary of State for Trade and Industry told the 2000 Annual Conference of the British Chambers of Commerce that the SBS was “an idea that came from the British Chambers of Commerce...to give small firms a strong voice at the heart of government” (Department of Trade and Industry, 2000, p.1). Another organisation took the view that the SBS, as a governmental organisation, needed to be more connected to ‘grass roots’ SME opinion, and that its prime function should be to co-ordinate the sources of evidence presented by SME representative organisations. The Small Business Service has yet to fully establish itself, and over time it would be reasonable to expect ‘niches’ to emerge between it and the respective stakeholder associations so as to avoid arenas of competition. As is evident later, the SBS has attempted to develop stakeholder relations through structured dialogue with the five representative associations covered by this study.

The current Chief Executive of the SBS seeks to extend into a new realm by prioritising less the direct delivery of individual support programmes for SMEs in favour of more orientation towards exerting influence across government (Small Business Service, 2003d). A starting point for this is seen as enhancing government understanding of the impact of its various activities upon small business. 507 people were employed in these various endeavours by the SBS in March 2003 (ibid.).

An accompanying measure to the creation of the SBS was the establishment of smallbusiness|europe in the summer of 2001. This latter organisation traces its origins as

“a direct result of the line of action in the 2000 European Charter for Small Enterprises recommending that EU member states take measures to develop stronger, more effective representation of small enterprises’ interests at European Union level. This recommendation prompted the UK Government’s Small Business Service to initiate and finance the creation of an independent SME liaison point in Brussels” (smallbusiness|europe, 2003, p.3).

smallbusiness|europe is a company limited by guarantee, and although the SBS is its principal client, it also receives funding from other private sector sources. Consequently, smallbusiness|europe describes itself as a

“not for profit organisation based in the heart of Brussels EU area, which aims to maximise the interests of UK SMEs at EU level through the provision of information, advocacy, and other associated services. No other member state administration has decided to financially support the creation of a non-governmental structure to represent SMEs at EU level (ibid.).”

This latter statement concerning the uniqueness of this UK arrangement is confirmed by the European Commission’s Report on the Implementation of the European Charter for Small Enterprises (European Commission, 2002).

The orientation of the SBS to represent SME interests within government, and the advocacy role of smallbusiness|europe at the EU level, are factors which have potential to impact upon the activities of UK business-wide interest associations in the SME domain. But judging from the range of initiatives aimed at them, there has been no corresponding decline

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in the political significance of SME firms in UK public policy to match their declining share of UK employment.

2. The Legal and Administrative Framework for Associational Action

Consistent with the market driven culture of the UK, the limited role of the state, and the generally pluralist character of relations between the machinery of government and civil society interests, there is no specific legislation on business associations in the UK. There are few formal demands placed upon them and no requirement on them for registration. Employers associations, and those affected by competition law, are required to comply with some reporting requirements (Boleat, 2003). Private, rather than public, law provisions dominate for associations.

Business associations can take a variety of available legal formats, of which three can be commonly found:

a company limited by guarantee a company limited by shares an unincorporated structure

A major survey of UK business associations conducted in 2001 found that 79% were companies limited by guarantee, 4% were limited by shares, and 15% were unincorporated (Boleat, 2003). A small number find another format, such as CBI’s position as Incorporated by Royal Charter.

The relative popularity of the company format is that it gives the organisation an independent legal personality from those who own, manage, or work for it. This means an association in this guise can own property, enter into contracts and legal action, and have limited liability, protecting the members from burden for its debts. The cost of guarantee for limitation is set at £1. The small proportion of associations opting for limitation by share is explained by the transaction costs involved with changing details on a share register once members change, or the ownership issues which can arise if holders are restricted to a portion of members (Boleat, 2003).

Establishment as an unincorporated association provides a flexible and low cost option for smaller entities, and may have been a popular option for associations operating with a limited resource base. But it carries with it the risk of unlimited liability, where an action brought against the organisation resulting in awards for damages would pass liabilities directly through to its members. The costs of taking the alternative structure of becoming a company limited by guarantee are not substantial, and there is some evidence of a progressive switch over time to this latter type of format (Boleat, 2003).

Employers Associations are subject to reporting requirements arising from the 1992 Trade Union and Labour Relations (Consolidation) Act. Where an association includes as one of its principal purposes the regulation of relations between employers and workers or trade unions, so it is required to undertake certain functions related to accounting and auditing, amalgamations and transfers of undertakings, and political funds. 178 such associations submitted annual reports to a Certification Officer in 2003, a reduction of 42 when compared to 1994 resulting from mergers and activity cessations. These represent a small proportion of an estimated population of 1600 UK business associations (Boleat, 2003). Employment

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functions clearly do not represent a significant part of the work of most UK business associations, although all the business-wide associations covered by this survey indicated that employment related issues accounts for between 20-50% of their work.

Consistent with the UK’s limited regulatory focus upon providing a framework within which markets can operate, much of the statutory UK provision concerning business associations relates to competition policy. The Competition Act of 1988 embraces functions consistent with the framework of European competition policy and is similar to legislation found elsewhere in the EU-25 by including a number of provisions specific to business associations as collective entities capable as such of influencing markets through direct or indirect mechanisms. These relate to provisions of membership and for excluding members in de jure or de facto senses, to the exchange of information, for the creation of technical standards, and for self-regulatory schemes. The popularity of these latter activities arise from a public policy culture in which the operation of markets and the position of the consumer is sovereign. A very challenging standards regime for self-regulatory schemes operated by trade associations is now in place through the Office of Fair Trading (OFT) following a reform process delivered in 2002. Compliance with the OFT scheme is gradually becoming standard for industries with a direct consumer interface, but does appear to involve substantial compliance costs (Boleat, 2003), particularly for associations with a limited resource base.

Much of the interface between UK associations and government is similarly characterised by ‘regulated voluntarism’ in which associations are key stakeholders. Some codes have achieved the status of being binding upon government departments (and recommended for non-departmental public bodies and devolved administrations). Thus, the UK Cabinet Office published a Code of Practice on Written Consultation in 2001, applying to all UK national public consultations (a subsequent version is scheduled for 2004 to take account of the concept of regulatory impact assessments) (Boleat, 2003). The standards differ only in detail from those recently adopted at EU level, and were likewise written substantially from the perspective of exchanges with representative associations. They include provisions that

targeting consultation through business associations (at an early stage) will assist small firms through the avoidance of burden placing upon those with limited resources

representative groups should give a summary of the people and organisations they represent. The views of broadly representative, rather than factional, organisations are particularly welcomed, with explicit recognition of the role of business associations. However, the scheme seeks to avoid any system of privileged access to any particular type of organisation, and to provide for as broad consultation as is possible for all types of stakeholders

fullest use will be given to electronic means, but not to the exclusion of others. The latter point reflects recognition that a large proportion of small firms do not have sufficient access to electronic resources, but that associations are likely to have such facilities

reasons for decisions taken shall be provided with account for the views expressed.

In concept, these standards assist SME based associations through the principle of broadening consultation beyond those with resource advantage such as large firm dominated industries. But such a principle carries a parallel issue for the business community as a whole arising from attempts to reach out to a much wider constituency of stakeholders in civil society.

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3. The System of Social Dialogue and Public Policy Making

There is no formal, institutional social dialogue in the UK at any level involving any combination of representative associations of employers, trade unions, or/and UK government. The members of UK business wide associations have resisted, and prevented, the involvement of their representative associations in social dialogue, and the formal positions of the five UK business-wide associations (described in section 4, below) reflect this.

A tripartite system of institutional involvement of the Confederation of British Industry (CBI)156 and the Trade Union Congress (TUC) in macro economic policy making did exist in the 1960s and 1970s Keynesian climate, and which embraced labour relations. The context of declining economic performance following the 1973 oil price shocks provided the basis for the emergence of a challenge to the social democratic consensus. This challenge arose in the shape of the ‘New Right’, who successfully presented their platform in the 1979 UK General Election. This positioned tripartism, and trade union influence in particular, as part of the problem of declining economic performance, and set about dismantling apparatus pejoratively labelled as ‘corporatist’. Neo-liberal market ideology and the sovereign position of the consumer in ‘public choice’ theory has prevented its restoration. The ‘Third Way’ pursued by successor Labour governments from 1997 accepted part of the ideological mantle of their predecessors, and prevents a return to a visible, institutionalised involvement of producer associations in anything carrying a resemblance to systems of tripartism of the 1970s. This does not, however, mean that incorporation of producer interests within government led policy processes is absent.

The UK has long accepted a ‘pluralist’ label to characterise relationships between the machinery of government and civil society interests, a label in greatest use by analysts observing from the perch of more corporatist type systems. As a general caricature it holds some degree of plausibility, with relations characterised by open access ‘lobbying’ between competing factions of civil society interests, built upon an ideological basis of ‘Madisonian’ type checks and balances. Hence ‘lobbying’, rather than corporatist style ‘incorporation,’ is a term most frequently used to describe government/business relations, and a thriving commercial public affairs industry in the UK is built upon this. However, these general caricatures mask some islands and traces of corporatist style relationships between government and civil society interests. Associations representing the professions of law, and medicine, have substantial self-governing status based upon historic state delegation of powers. Among business domains, similar corporatist type relations can be found in sectors such as pharmaceuticals. There are relationships to be found in which business associations have undertaken responsibility for delivering, or helping to deliver, public policy initiatives, most notably in the role of some local Chambers of Commerce in delivering training programme initiatives, described later. In another venture, through the Small Business Service, UK government contributed £0.7 million to Enterprise Insight, a joint venture between itself and the CBI, the Institute of Directors, and the British Chambers of Commerce, aiming to foster an entrepreneurial spirit in the UK, in 2002 (Small Business Service, 2003d).

A thumbnail caricature sketch of the organisations is provided initially below ahead of fuller description of each of them individually. The CBI is the undisputed principal business-wide representative organisation, open to full membership for companies of all sizes (the core of CBI membership) as well as (currently, 150) trade associations (Boleat, 2003). Its main membership benefits arise from the relationship with UK government, its lobbying activities, the networking opportunities it provides, and from its membership of the Union of Industrial

156 The Confederation of British Industry has since changed its name to ‘CBI.’

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and Employers’ Confederations of Europe (UNICE). The British Chambers of Commerce (BCC) has a network of affiliated quality approved local Chambers of Commerce. These naturally give the organisation a strong SME profile, and are the most powerful structures of UK local business representation. It has a distinctive range of membership services, including those geared towards export, and training. As is described later, its institutional involvement in the latter activities means that the BCC network is the only one of the UK’s five business-wide organisations to have a significant income from government contracts. It is also the only one to be visibly challenged by recent financial pressures, notwithstanding an issue of detail faced by the CBI, each described later. Both the BCC and the Institute of Directors (IoD) permit membership of public sector organisations alongside their principal membership constituency of private sector firms. The IoD’s members are individual company Directors rather than company members. A substantial number of these are SME Directors. Of the five organisations the IoD has been most willing to be closely associated in its public profile with the Conservative Party and with ‘Thatcherite’ thinking in particular, although its positions are aligned with CBI on a substantial number of issues. It has the highest proportion of income from membership service provision of all the five UK business-wide associations. The Federation of Small Businesses (FSB) is exclusively dedicated to the representation of SMEs, and the Forum of Private Business (FPB) to private business in which the owner/manager is engaged. The FSB is the larger of the two. It has more of a local network of organisations, which explains its greater reputation for membership service provision, and its ‘activist’ member profile. Consequently, its lobbying work tends to be focused on ‘day to day issues’, and it is well placed to undertake political representation with the UK’s devolved administrations as well as at central government level. FPB’s reputation arises principally from its political representation role on long term, growth related issues on behalf of small business at UK central government level, and through its membership of the European Association of Craft, Small and Medium Sized Enterprises (UEAPME), the principal small firm representative organisation at the EU level. A blend of neo-liberal, interventionism, and pragmatism can be found in the approaches of both organisations, and offices alongside regional devolved administrations can have somewhat different outlooks. Each formally share with the IoD a policy position of opposition to Britain joining the European single currency, although the FPB’s membership of UEAPME results in a more enthusiastic EU embrace, and a pragmatic commitment to work within given structures. The ideological positioning of CBI and BCC are more relaxed again, partly arising from their relatively more ‘pro’ EU positions, although their wide constituencies and remit means that they cannot afford to be too distinctly identified with a particular political sheen.

There are views among competing organisations that the CBI enjoys a quasi corporatist relationship with the Department of Trade and Industry. The leader of the largest individual trade union, the Transport and General Workers Union, is quoted in the Financial Times as stating that

“Unions believe that the Department of Trade and Industry has become a ‘provisional wing’ of the CBI...I know of very few DTI policy decisions which are not being written and driven by the CBI” (CBI, 2003a, p.2).

Whilst it is a natural characteristic to exaggerate the influence of one’s ‘opponent’ and to under-estimate that of your own, traces of the above view can also be found among some business-wide organisations who feel less engaged with the DTI than they perceive the CBI to be. This is unsurprising given the position of the CBI as the principal business-wide organisation, but those looking to confirm such a view may be able to locate evidence which

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appears supportive. Within its ‘achievements for business’ literature included in a membership pack, the CBI trumpets among its successes for SMEs:

extending the Small Firms Loan Guarantee Scheme to cover additional sectors, providing £60m of additional support for 400,000 firms

at least £13m saved for small firms as a result of its work in persuading UK government to limit the provisions of the most recent Employment Relations Act, citing the leader of the UK’s second largest Union that ‘the government has capitulated to the demands of the CBI’ (CBI, 2003a, p.4)

an uplift in the qualifying threshold for plant and machinery capital allowances, enabling 3.7 million businesses to become eligible for the 40% investment allowances.

Whilst some of the other organisations embraced by this study would claim a role in these ‘achievements’, CBI does have an historic relationship with UK government which has varied in its degree of closeness, with a high point reached when its current Director General suggested that business relations with the 1997-2001 Labour Government were among the most friendly in living memory. CBI’s relationships with the TUC have intensified since the Labour Party came to power in 1997, and are on a broader range of subjects than any of the other business organisations. These include some joint documents and position papers.

At least one of the other business representative organisations sees itself to be perceived by DTI as a potentially ‘awkward intruder’ into an otherwise smooth relationship which DTI enjoys with CBI. CBI’s formal position towards social partnership reflects the preferences of its members that it should not be involved in any formal arrangements resembling this label. But in practice it does have a significant degree of informal contact with both the TUC and the DTI on topics which could otherwise be included as part of social dialogue arrangements. This is not to the degree that such contact is ‘social dialogue’ by another name, but CBI does see the presence of such informal relationships over employment related matters as an inevitable part of its position as the principal UK business representative organisation.

Issues surrounding UK involvement in EU social dialogue have also resulted in sensitivities as to the relationships of particular organisations within UK government. Important variations within the positions of individual business organisations as to the concept of social dialogue can be found between that which exists at the EU level on the one hand, and formal opposition to UK social dialogue on the other. At the EU level, the CBI has a reputation within UNICE as a brake upon social dialogue, and has in the past used its membership to prevent UNICE from signing up to policy proposals negotiated under EU social partnership terms. In a UK context, the CBI ‘sells’ the role of UNICE in EU social partnership arrangements and its membership of UNICE as placing it in a unique position in comparison to other UK business representative organisations to influence EU social policy. Conservative UK governments used CBI’s position within UNICE’s social partnership status as a channel of interest representation to prevent the development of employment related dossiers. Nonetheless, its ability to influence UNICE positions drives a domestic profile which is pro-European relative to some other UK business-wide organisations. Its membership advocacy literature includes a flyer entitled ‘CBI at Home and Abroad’, in which it states that

“we have the most effective links with EU decision makers of any business organisation in the UK. As the UK member of UNICE, the organisation of representing employers’ interests across Europe, we

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are uniquely positioned as the official business voice in European social policy negotiations” (CBI, undated).

CBI’s propensity to influence EU policy is therefore used to strengthen its domestic position, but has become an issue for the FPB in particular arising from its membership of UEAPME. Following initiation of legal proceedings and a settlement with UNICE in 1998, UEAPME was admitted by agreement with the existing partners among the employer’s institutional engagement in EU level social partnership. FPB identified discussions between the CBI, the UK Trade Union Congress, and the Department of Trade and Industry over matters concerning the UK implementation of the EU framework (non-binding) agreement on tele-working in which it had not been involved. FPB, supported by UEAPME, requested of the DTI that it be included in any future UK discussions involving representative civil society organisations originating from the EU social dialogue as a result of its membership position of UEAPME.

Whilst hopeful of achieving an outcome to its liking, FPB is not yet wholly convinced that the matter has been resolved. Although its members do not wish to see institutional UK level social dialogue, the position of FPB (and that of UEAPME) is that should a de facto dialogue exist concerning UK issues in the EU social dialogue, then FPB should be involved on the basis of its membership of UEAPME. This membership provides FPB with a unique position, which it sees as justifying its claim for special treatment relative to the other three small business representative organisations viz. inclusion in any EU related dialogue at UK level. FPB, CBI and TUC co-authored the UK national ‘Report of the Implementation of the European Employment Guidelines’, presented at the 2004 Tripartite Summit. Whilst the formal, member driven positions of both FPB and CBI would be to oppose a social dialogue in any UK context, both of these organisations would be likely to engage with it constructively (particularly at secretariat level) once it became a fact.

The role of the smallbusiness|europe service is one about which views can be found among the business-wide representative organisations. The second page of the smallbusiness|europe Annual Report for 2002-3 records some very appreciative comments of its operation from individuals occupying positions at the very top of each of the five UK business-wide organisations (smallbusiness|europe, 2003), and some very positive, often shared, views about aspects of the concept. The service reflects a general concept that some of these organisations had sought for some time, although there does not appear to be a consensus when it comes down to the details of the precise role it can undertake, and its funding basis, and some careful wording can be found within these statements. One view was offered from the ‘constituency of five’ during the course of this study that any ‘representative’ role of smallbusiness|europe may reinforce views among others about UK separatism. Views among the five include those that it is a ‘valuable ally...in representing UK SMEs in the EU’, a ‘vital partner in representing UK SMEs’ in the EU, and that their work is ‘totally complimentary’ (smallbusiness|europe, 2003, unpaged). Certainly, the organisation appears well placed to help address a landscape of fragmentation among the EU work of the five UK SME organisations. Four of them are affiliated to different EU associations, while a fifth has no channel of EU representation other than through the work of its London office.

EU related issues of fragmentation in UK SME representation also arise from the choice of the Federation of Small Businesses (FSB), to work outside of UEAPME, and from the historically unsettled relationship between the British Chambers of Commerce and Eurochambres. Although once close to becoming a member of UEAPME through the latter’s

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merger with EUROPMI157, FSB chose instead to be a principal mover behind the foundation of the European Small Business Association (ESBA), a small organisation of which it remains the principal member.

The UK based Small Business Service brings together the five UK business-wide organisations, for meetings held on a quarterly basis. These are principally aimed at getting the five associations behind the SBS, when it talks to government on issues such as the national budget statement. Beyond this, some joint statements between the group of organisations do emerge on an issue by issue basis. The Chief Executive of the SBS, and the Secretary of State for Trade and Industry, are advised on small business issues by a Small Business Council, resourced by SBS, comprising a group of entrepreneurs which has come to include business associations, and an academic. For the five organisations, the SBS has been an additional voice for SMEs in government, but has not had a major impact upon their relationship with government. There is a view that the service needs a longer time to prove itself following some staffing changes affecting the way it engages with SME representative organisations. It is not however intended to be anything resembling a format capable of spawning social partnership structures.

Similarly, none of the projects in which outlets of government involves stakeholder associations resemble, or are intended to be, social dialogue type initiatives. ‘Enterprise Insight’ is no more than a project delivery initiative. At the Parliamentary level, the all party Parliamentary Small Business Group, with over 500 members now the largest such group in Parliament, has succeeded in increasing the voice of SMEs in major debates in the UK Parliament. A similar group is in the process of establishing itself in the Scottish Parliament. The all party group has organised a number of trips to Brussels for interested members to meet up with like minded colleagues in Brussels to discuss regulatory measures to better inform Parliamentary debate in the UK.

Collaboration between UK business associations was the subject of two landmark speeches by the President of the Board of Trade, Michael Heseltine, in 1993 and 1995. For some, these speeches tacitly raised issues about UK social partnership, although in content they did not. His explicit theme was that UK trade associations could sometimes be ineffective, needed a better resource base to keep track of EU and international developments and in promoting the international competitiveness of member companies, and should be playing a more active role in contributing to new government initiatives. He was critical of the constituency of UK trade associations on these criteria, and urged upon them change which explicitly stopped short of a ‘continental pattern’ of hierarchy, but which did involve greater collaboration of resource and effort. Nonetheless, some activists involved with SME associations came to interpret his remarks as an attempt to stimulate a re-organisation of the world of UK business associations into something resembling a ‘continental’ model of linked statutory chambers with compulsory membership. There is no evidence to support such an interpretation, and indeed Heseltine’s 1993 speech included the remark that

“This doesn’t mean that industry should have a rigid structure of representation in this country, with the CBI as some kind of national federation heading a series of lesser federations below it. I am not persuaded that the Continental pattern would prove ideal, even if it could be successfully transplanted here” (Boleat, 2003, p. 21).

157 European Committee for Small and Medium Sized Enterprise Companies

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In his 1995 speech, Mr Heseltine did however return more forcibly to the theme of collaboration, expressing the view that consolidation through mergers would lead to more powerful and effective trade associations. These speeches resulted in the Department of Trade and Industry issuing a best practice guide for trade associations in 1996. DTI also provided funding support for associations to benchmark themselves, and financial support for the establishment of the Trade Association Forum (TAF). TAF is located within the offices of CBI, and has developed into a self-financing membership organisation in the pursuit of best practice among trade associations. There were also drives to enhance the involvement of trade associations as part of a consolidated UK export effort through organisations such as British Trade International (BTI) and Trade Partners UK. The latter organisation produced a best practice guide for supporting exports, including measures specific to SMEs, and which made specific recommendations for trade associations which also embraced SME oriented work.

Whilst Heseltine’s speeches and initiatives have been a change agent for UK trade associations, they have done little to stimulate a widespread reorganisation of the essentially pluralist system of UK trade associations, and the agenda has not been taken up by successor Labour governments (Boleat, 2003). The Heseltine initiatives largely miss a point by now well established in the political science literature on interest groups. Business interest associations reflect, first and foremost, the characteristic nature of the relationship between political systems and producer interest stakeholders. Where state authority is parcelled out to business interest associations for self-government, so a consolidated system of representation arises for the business domain concerned, based around associations acting as intermediaries between their membership and government. Systems are characterised by corporatist type relationships in the Germanic world, whereas pluralist systems such as the UK characteristically involve a fragmented system of business interest associations. Nonetheless, even otherwise pluralistic systems can create ‘islands of corporatism’ where authority is parcelled out to a singular interest organisation for self-government. Thus, the roles performed by the UK British Medical Association, and the UK Law Society, are among the most corporatist relationships to be found in western Europe.

The closest contractual relationship between UK business wide associations and government arise over initiatives designed to support the development of skills in the workplace, and business advisory support services. Whilst a number of associations are closely involved with the Enterprise Insight initiative, the role of the British Chambers of Commerce network in the delivery of workforce learning skills as a partner in government policy, in England at least, has been unique. Whilst arrangements across the UK differ, in England, Training and Enterprise Councils (TECs), and more recently their successor organisations Learning and Skills Councils, have been core business support mechanisms, grounded in public sector provision albeit with substantial private sector involvement. From 1995, a number of Training and Enterprise Councils took up the option of voluntary mergers with quality approved Chambers of Commerce so as to create Chambers of Commerce, Training and Enterprise (CCTEs). In doing so, these switched business support service provision from the public sector, although government provided significant financial support for the mergers to be undertaken and thereafter for service provision (WKÖ, 1998). By October 1998, when the initiative was put on ice while the Government reviewed the future role of TECs, 16 such mergers had occurred (Field, Miller and Maton, 1999) from a constituency of 60 approved quality chambers at that time (WKÖ, 1998). Whilst this review resulted in the replacement of TECs by Leaning and Skills Councils in 2001, the role of CCTEs is of interest in a number of contexts. Early reviews of CCTEs found it difficult to distinguish their performance in delivering business support services from TECs, or to find

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evidence of cross-selling or integration of services. Arrangements were put in place to ensure that the political activities of Chambers of Commerce remained entirely separate from training and enterprise provision (Field at al, 1999). CCTEs fitted with the vision of a single, integrated system of business support and representation envisaged by the British Chambers of Commerce, with Chambers owned, driven and managed by local business communities, enjoying strong government support but without government ownership or prescription (Fallon and Brown, 2000). Today, some Chambers have an integrated structure with the Business Links advice service; the Herefordshire and Worcestershire organisation, for instance, which took the option of CCTE status, describes itself on the front page of its web site as ‘Chamber of Commerce and Business Link’ (http://www.hwchamber.co.uk/default.asp, on 22.4.04).

4. The Cross-sectoral Business Associations

All five UK business organisations, described in detail below, have membership domains which overlap to some extent. All interest groups have ‘niches’ which help them to provide definition, focus, and appeal for a specific membership constituency. It also helps to limit the degree of competition with other cognate organisations, though cannot eliminate it. Those organisations which draw from the most similar membership constituency pools, reviewed in the following sections, are bound to have the most competitive relationships.

The CBI is the largest of the five organisations by any criteria. Full membership is open to individual companies of any size (currently 3000, employing 4 million staff), and trade associations (currently 150, whose members employ 6 million staff).[Does this include membership of employer organizations which conduct collective bargaining?] It is the only one of the five to admit the full range of national trade associations into full membership. There has been a past debate within CBI as to whether its role is primarily that of representing individual companies, or trade associations, with the former view prevailing (Boleat, 2003). For companies there is a membership subscription fee tiered by firm size, and differentiated between manufacturing firms commercial firms. Six tiers for industrial members reflect a wide diversity of firm size, with the extremes between firms with annual turnover up to £25 million and those with turnover over £1000 million. The minimum subscription is £519 plus VAT. [Is there a difference in fees for direct firm members and associational members?]

There are no weighted member voting rights in CBI, with policy positions reached through its 18 Standing Committees and Councils, of which one is a dedicated SME Council which leads on SME issues and which is assisted by 3 permanent working groups. The most important CBI policy Committee (and its de facto governing body) is the Presidents Committee, comprising the Chairs of the different Committees and Councils. There is also a large ruling Council which sets broad policy parameters. [Is there a difference in voting rights between direct firm members and associational members? How are voting rights defined regarding the associational members (most common patterns)?]

Meeting space on CBI premises is the only service for which members pay separately. There are no individual advice services or discounted access to benefits packages through the association arising from its principal role in political representation and as a high-level networking forum.

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CBI has 205 staff in its London office, and around 50 others distributed through its 12 regional offices. Its Scottish office is the best resourced of these, with four executive staff addressing devolved authority to the Scottish Parliament/Executive. Two policy advisors in are dedicated to SME work in its headquarters, although SME work in CBI is also undertaken ‘horizontally’ by all staff across the organisation.

In 2002, CBI’s income was £19.838 million, and its expenditure was £19.402 million (CBI, 2003b). £14.208 million of its income arose from membership subscriptions, with the remainder coming from commercial activities. Whilst it has no trend of financial difficulties, some ad hoc problems have been created by a property renting contract it entered into in which the rent it was paying for its Centre Point, London premises was significantly higher than the value of the property. To resolve this, it has had to secure advance membership contributions from its larger members so as to work itself out of its unfavourable contract (Boleat, 2003).

CBI is principally involved in the representation of economic policy and labour market issues to the state (see also section 3), and in the environment in which the wider constituency of British businesses operates within. For reasons of prioritising its resources, it limits the extent to which it is involved in the formulation and delivery of public schemes to assist business, of which one is Enterprise Insight, described earlier. It is however involved with a number of human capital development related schemes with both public agencies158 and with its members, but is not involved in schemes aimed at product standards or quality, or in structured exchanges with suppliers or customers.

The Federation of Small Businesses was formed in 1974 as the National Federation of the Self Employed by an interest group entrepreneur whose initiative was triggered by a proposal to increase employer National Insurance contributions at the same time as the introduction of Value Added Tax. It is today the largest UK dedicated SME representative organisation. Jordan and Halpin chart the historical transformation of the organisation from its early days as an activist driven campaigning ‘outsider,’ to a perch closer to an ‘insider’ role with government with a stronger emphasis upon involvement by professional staff, and an increasing importance of services to members relative to political work (Jordan and Halpin, 2003). By the end of the 1980s, its National Chairman argued that

“It is listened to in Westminster and Whitehall, and by the media, because it has learned the expertise over the years to negotiate with Government rather than stand outside and shout abuse through the letter-box” (Bettsworth 1999, cited in Jordan and Halpin, 2003 p.320).

The FSB admits into membership any legal business entity with up to 150 employees, but has no trade association members. Its 185,000 company members (around 5% of the eligible constituency) employ 1.25 million staff (around 11% of the potential total), with a typical member employing nine staff (i.e. each around a 5.5% density level[What does this mean?]). These provide membership dues ranging from £100-£800 depending on firm size, and account for almost all its income base of £16.5 million. The organisation has grown significantly within the past decade, with its income up from £1.1million in 1990 (Jordan and Halpin, 2003). Income sources other than those from membership accrue from its ‘pay by use’ membership services, subsidised through the insurance premiums it pays, and income it

158 These include the Learning and Skills Council, and Equality Commissions.

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receives from commission based services offered to its members. There is no weighting of member voting rights according to the subscription paid.

This resource base enables it to employ 140 staff spanning 18 regional offices which support the work of 230 branches. The staff base as a whole has recently grown from 80 in order to invest in this regional office infrastructure, which has resulted in some redundancies at its head office in the North West of England (Blackpool), and a recent increase in membership fees. It maintains a London based parliamentary liaison office, and three offices interfacing with devolved administrations in Wales, Northern Ireland, and Scotland where three parliamentary policy staff work from its Glasgow office. The FSB has developed links with each of the three main UK political parties, through the Industry Forum (Labour), the Enterprise Forum (Conservative), and Business Forum (Liberal Democrats). Approximately 30% of the work of these fora is employment related. In Scotland, befitting a ‘small country,’ the FSB office has a slightly different caricature from arrangements prevailing in England, with strong relationships with political parties (including the Labour Party), more network contacts with Trade Unions, and more emphasis upon the work of professional staff relative to activists in policy work.

FSB services include a legal advice phone-line (over half are employment related matters), defence in Court, and debt collection, which are all provided through contractual insurance arrangements with suppliers. Members pay for surplus use of these services, with the FSB receiving commission. Commission also comes from discounted benefits services, such as mobile phones. Membership services appear to have played an increasing, role in FSB membership over time, as part of the normal pattern of the historical development of an interest group (Jordan and Halpin, 2003).

The FSB has a business-wide remit, although like other organisations can get caught up in sectoral pressures arising from its branches. It has substantial institutional links with public service bodies beyond those common to most or all of the other the business organisations (small business Minister, Small Business Service, smallbusiness|europe, Enterprise Insight, and those in Scotland identified earlier in this report). These include the small business committees of the British Standards Institute and UK Accreditation Services, the National Consumer Council, the Consumers Council, the Disability Rights Task Force, and the Better Regulation Task Force (a number of the other five organisations are also represented on some of these). Whilst it is not part of self-regulatory schemes with government, it does do a ‘name and shame’ of large firms who are late payers, with the support of government, and has claimed a leadership niche role on this topic within the group of five associations.

Despite the inevitable shift over time from ‘outsider’ to more of an ‘insider’ role with a greater emphasis upon professional staff, the FSB remains a member dominated organisation relying mostly on paid activists elected by its members (Jordan and Halpin, 2003). There is no Chief Executive Officer, and a limited capacity for policy staff to bridge transitions between elected leaders. Jordan and Halpin find a unique ‘activist directed brand of insider strategy’ pursued by the FSB, “with sporadic use of paid staff, a leadership based on member approval, and a policy process dominated by committees that are only minimally served by paid staff”, noting “an insider approach that still owes more to activists than is common in lobbying groups” (Jordan and Halpin, 2003, p. 323). One FSB officer told these authors in interview that

“Because we work with volunteers who lead this organisation, we as staff have to follow their every whim. This is not a problem when we have a good activist but many,

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unfortunately, are not. Outside organisations know this and this also influences the reputation of the FSB with policy makers. On the one hand, due to our structure, we are really in touch with the members, but also, due to the structure, it is really difficult to achieve anything” (Jordan and Halpin, 2003, p.324).

Nonetheless, these authors do see a professionalisation of recruitment and reliance upon selective economic incentives, creating a new membership cadre which is largely disinterested in policy activities, evident from a declining participation in membership and annual conferences. This niche blend of increasing professionalisation and activism is evident from its self-presentation in its document ‘The FSB Successes and Achievements 1974-2000’ in which it claims that

“The FSB has unrivalled access to the corridors of power when compared to any other business organisations in Britain. It has not only achieved this by building up a strong membership base whose voice has to be listened to but by the quality and professionalisation of its lobbying” (Jordan and Halpin, 2003, p. 322).

FSB is more unambiguously opposed to anything which resembles collective bargaining at the UK level than the CBI and FPB, partly reflecting their different cultures but also their different outlets in EU interest representation. It acknowledges the need to be aware of what other organisations are saying on employment related matters, and participates with them in joint statements on an issue basis, although there is no systematic co-ordination. It also has some issue driven alliances with independent trade unions, with which it maintains links. While in practice FSB sees similar messages coming from the other organisations on employment related matters, FSB is happy to see each of the representative organisations go their own way. Indeed, it is content for competition to prevail between them if necessary.

The Forum of Private Business comprises members who jointly have the role of owner and manager of a private business, embracing companies, partnerships and sole traders. Full members are those who pay their own subscription directly, while associate members are those who are either a commercial partner of the FPB (i.e. one providing a commercial service to it) or a sectoral (mainly regional) trade association.[Does this include membership of employer organizations which conduct collective bargaining?] There is no cap on the size of member, with the definition of its constituency provided by its insistence that the owner be involved in running the business, and the exclusion of publicly quoted companies. Hence, a small number of large firms are included within its membership constituency. This span of membership gives it a profile whereby the average firm size of its 25,000 members (600,000 employees) is 25, yet a median firm size of 9 employees.

FPB prioritises its work in political representation in recruiting its members, including its institutional involvement in EU social dialogue through UEAPME. The organisation emphasises the research basis of its political representation work, providing for regular surveys of its members’ views, which monitor the depth and breadth of concerns. Whilst it has a ‘one member one vote’ system, there is an informal weighting given where it finds a significant depth of feeling among its members. This, and its embrace of a small number of SME trade (e.g. hairdressing) associations, can involve the organisation in sectoral matters.

The organisation is principally (85%) funded by membership subscriptions, with the remainder from involvement in occasional government project schemes (including a survey

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for the Health and Safety Executive), seminars, and the sale of services to members. These latter services are information services, including guides to employment law and health and safety. Members have access to (sometimes discounted) services in telecoms, payroll, a credit card merchant fee, insurance, legal protection, with the FPB receiving commission on sales. A core service free to members is its ‘telephone sign-posting’ service, where around 40% of calls are employment related queries.

The organisation estimates as a whole that around 50% of its work is taken up with employment related issues. It is engaged with the TUC in the production of employment and safety guidelines, and through a joint conference. It does not support either a formal consultation structure with government or binding collective bargaining at the UK level, and does not nominate individuals for public bodies on anything other than an issue basis. It seeks relations with other employers, but there is no formal dialogue with other employer associations on employment related issues.

However, arising from its membership of UEAPME and the ability of UEAPME to influence EU employment legislation through the EU social dialogue, FPB’s position on engagement with EU social dialogue, and the UK input into EU social dialogue, is somewhat different (section 3). An ideological distinction between FPB and FSB appears to arise principally through their respective EU positioning (section 3), with the FSB sharing with the IoD an opposition to Britain joining the European single currency, while the FPB’s membership of UEAPME results in a more enthusiastic EU embrace. Some traces of a conflictual relationship between the respective organisations to which FPB and FSB are affiliated to at the EU level are evident from coverage in specialist press outlets (EU Reporter, 2003).

The British Chambers of Commerce, founded in 1860, follows the international Chamber of Commerce ‘brand’ in acting as an umbrella organisation for largely independent local Chambers of Commerce, providing a political voice for business at the national level, support for business export activities, and a range of membership services for the network. BCC incorporates 61 (British Chambers of Commerce, 2001; Daily Telegraph, 2002) of the UK’s 174 local Chambers (Fallon and Brown, 2000), as well as a small number of branches based overseas.

Local chambers cover vastly differing geographical areas, and some even have competing geographical boundaries at their margins. BCC membership is available to those local chambers with a membership threshold of at least 1000 enterprises (Institut des sciences du travail, 2001), and those meeting quality approved status, involving the adoption of ISO 9000, a business plan, minimum income levels, and a minimum range of services (Wirtschaftskammer Österreich, 1998). These standards ensure the quality of the BCC affiliated brand, but for the total constituency of UK chambers, some of which lie outside BCC membership, there is a significant variation of size and quality.

BCC standards support the role of local chambers as a training provider, including those which took the option of merger with TECs to form CCTEs, described in section 3, and those involved with local ‘Business Links’ partnership. The BCC is also a national provider of ‘learndirect’ business courses to SMEs in partnership with Ufi (University for industry) Ltd (Ufi, 2002). Other local chamber services include representation, information and advice, export and import certification and documentation (Bratton, Bennett and Robson, 2003). An estimated one third of BCC network income comes from sponsorship from public bodies to cover specific activities performed by Chambers (Institut des sciences du travail, 2001).

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UK Chambers of Commerce are governed by private law status, with membership voluntary. The BCC does not seek a change to this status, emphasising the greater responsiveness which arises from voluntary membership, independence from government, and strong resistance within the business community. Nonetheless, some local Chambers did identify a number of problems arising from private law status, which included a lack of government support, their lack of political influence, government’s unwillingness to consult them, and competition from private sector providers. These factors explain the BCC vision, seeking private sector control combined with a higher degree of government support (Fallon and Brown, 2000).

The BCC network embraces 135,000 members serviced by 2500 staff in accredited local networks and in its national offices in London, Coventry, and offices alongside decentralised UK regional administrations. Membership for an individual enterprise is through a local Chamber of Commerce, which set local membership subscription rates on a tiered basis according to the size of organisation. There is no limit upon the size of organisation which can be admitted into membership, and fluid membership criteria which allows public sector as well as private sector organisations to be members. As noted above, the minimum criteria for accreditation of a local chamber as part of the national network is 1,000 members159. BCC itself has an annual income of around £1.5million (The Times, 2004).

Member services operate on a local and national basis, with a wide range of discounted services available to members from external suppliers, providing commission income to the chambers and its network. These include advice lines on employment and other matters, including provision of a free legal advice service, training, and information services, and export certification services. Some of these are free at the point of use, while those which involve significant service provision to an individual company are charged separately. Its Coventry based office provides its members with substantial export and international trade advice, a service which enhances the distinctiveness of the organisation’s niche.

The BCC’s federal structure does mean that it has been most troubled by internal change drivers among the five organisations. These have included affiliation pressures at both local and federal levels and the consequent resource pressures they bring, and in seeking to find an effective outlet for its representation at the EU level. In 2002, five UK Chambers were reported as being given subscription relief through a phased payment arrangement (Daily Telegraph, 2002). In 2002, the large Bristol Chamber left the BCC network, and considered (but did not finally take the action of) joining the CBI (The Times, 2004). The BCC has itself twice held merger talks with the CBI in the recent past, in 1995 and 1999 (The Times, 2002). A recent article in the Times claimed that the BCC was to merge with the Forum of Private Business, with the merged organisations carrying the name of the ‘Small Business Confederation’ (The Times, 2004). The article reported the BCC as completely denying suggestions of any merger plans, a position shared by the FPB. While some journalism may not let accuracy get in the way of a good story, the prospect of future consolidation in the UK business-wide representative system is not an implausible one.

Whatever the current position is, the BCC has needed to respond to a changing financial base. As part of its restructuring, BCC has recently moved its commercial operations to Coventry. The Coventry location is also one shared by the new Learning and Skills Council, making the BCC well placed to build a relationship with it on the basis of its traditional strengths in training and skills provision. In 2003 the two organisations teamed up to launch a national

159 In exceptional circumstances a Chamber can be admitted where it has a higher penetration than average of the local economic community (Institut des sciences du travail, 2001)

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‘Great Skills Debate’ to seek from employers what they wanted to see in the Government’s skills strategy. Over time, there has been an increasing reliance by Chambers upon statutory funding from government contracts (Fallon and Brown, 2000), and it has recently called for a greater share of funding to be channelled into industry based, rather than College, training (Hammond, 2002).

Beyond general business support schemes, some local Chambers participate in the delivery of government related schemes dedicated to the assistance of SMEs, such as the Small Business Gateway Information Centre, and e-business clubs as part of the DTI’s ‘UK online for business’ programme.[Please add regulations on voting rights for the BCC and its member chambers (most common pattern).]

Membership of the Institute of Directors is possible for a Director (defined as an individual involved at the strategic, governance level of an enterprise, and who has a clean legal record) of a solvent company with a turnover of at least £200,000 with a qualifying time in post and in business. In practice, the criteria are more flexible, in that the organisation has recently been seeking more members from the public sector. 61% of its members are Directors of firms with 1-200 employees, giving a significant focus of the organisation to SME issues. The membership criteria mean that it partly recruits from a pool shared by the Forum of Private Business, although in practice the competition is limited by each finding a sufficiently differentiated niche. As is evident below, the IoD has a distinctive niche based upon a set of values and prestige (such as a Pall Mall, London, address) which are immediately apparent when the organisation is mentioned.

Its varied, individual membership means that it is well placed to resist member pressures where necessary. There is a ‘one member one vote’ system in operation. The IoD does not undertake casework for its members. Member services vary between those which are paid for on a use basis, and those which are free up to a certain level of use. A number of discounted services are provided by arrangement with suppliers for which the organisation receives commission. Together, these contribute significantly to the financial base of the organisation, in that only 50% of IoD income comes from membership subscriptions, the lowest proportion of all the five organisations included in this survey.

This financial basis supports the work of 200 staff, although the structure of its finances and activities means that it has to be somewhat selective about the use of its time to address policy issues. The organisation has eleven staff dedicated to policy issues, with a limited range of specialisms. An estimate is that 20% of its work is addressed to employment related issues. The Institute has recently been developing regional hubs, with premises in 6 UK cities supplementing those of its two London centres, and is able to address devolved tiers of authority. It has a regional network of local branches.

The organisation has relations with government on an issue specific basis, apart from a quarterly meeting with the Director of the Regulatory Unit of the Cabinet Office. The organisation has no preference for formalised or informal consultations with government.

There is very limited co-ordination of UK policy positions with other employer organisations, and none on employment related matters. What co-ordination there is arises on EU related matters through smallbusiness|europe, in which it is an active participant and which provides it with opportunities for informal exchanges with other organisations, though advance discussions are rare.

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From this basis, it sees little by way of rivalry between UK business wide organisations. It has no formal structures of contact with trade associations, consumer or trade union organisations, and would not encourage any such mechanisms at UK government level. What contacts it has exist on a case by case basis. It’s involvement with the British Standards Institute is on a similar basis.

IoD sees no difficulty with contact with government, and no further support issues for associations required. It is institutionally involved with the Conservative Party Enterprise Forum, though does not appear to have such involvement with the business fora established by the other UK political parties. [Please add membership figures for the IoD (i.e. enterprises and employees covered.]

The IoD is the only one of the five organisations which has no identifiable Brussels based outlet for EU interest representation, which appears to be partly related to its ideological positioning. It is, however, trying to develop international links and find a further outlet in Brussels (not via commercial lobby or law firm). This suggests that it does not see smallbusiness|europe as an alternative format of EU interest representation, but an additional channel based around some degree of co-ordination between the five organisations where this is possible.

5. Conclusions

All interest groups develop ‘niches’ which provide identity, focus, and serve to limit the competition between them. Formal and informal factors create such a niche for each of the five organisations covered by this survey.

In membership domains,

the British Chambers of Commerce has a local membership basis which skews membership towards SMEs, but which can include private sector companies of all sizes as well as public sector organisations

the CBI admits companies (but not public sector organisations) of all sizes, including the very largest, and UK trade associations, into full membership. CBI has a regional structure to which one fifth of its staff are devoted, but its position as the unrivalled lead UK business representative organisation means that its strongest profile lies with engaging UK, and EU, public policy

the Federation of Small Businesses admits enterprises of up to 150 employees, and allows public sector members. It has a strong ‘activist’ membership basis rooted in local branches, and is the largest UK SME dedicated association

the Institute of Directors, and the Forum of Private Business, are based around individuals involved in strategic governance, with the FPB having the additional requirement of private ownership. IoD permits public sector membership. Of the two, FPB is thus the more ‘pure’ SME organisation.

In services and membership rationale, the different organisations also have different provision catering for different types of business needs. Membership of

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the CBI is based upon the prestige which comes from being the UK’s lead business organisation, the quality of the network, and political representation. The CBI has almost no other membership services

the Institute of Directors is based upon the prestige of a national club of Company Directors, including those of large firms, and upon a very distinct neo-Liberal, ‘Eurosceptic’, political outlook. There is a significant emphasis upon member services (on a ‘pay per use’ basis), and, while fully engaged in important policy issues, the organisation does explicitly ration the use of its energies upon policy work

the British Chambers of Commerce network is based upon local chamber services which include representation, information and advice, export and import certification and documentation, with the BCC network organisation providing support and representation at national levels

the Federation of Small Businesses is a blend between a core of activists and, increasingly, the provision of business services to a wider range of members. It is a membership driven organisation with a very strong activist base in which professional staff play a subdued, yet over time increasing, role in policy. There is a strong local branch network

the Forum of Private Business has its strongest reputation for political representation work at UK central government, and EU, levels. However, it also has a significant range of business services to support members.

In these respects, each organisation has developed a niche sufficiently distinctive to avoid head on collision in recruitment markets. Where there is overlap between any two organisations, so there is also sufficient differentiation. Thus:

CBI, IoD and BCC have members other than SMEs, and each speak for the entire constituency of UK business. Of this group of associations organising firms of all sizes, IoD is very distinct in that membership is based upon individual Directors, it has a very strong neo-liberal ideological profile, a ‘Eurosceptic’ reputation and lacks any dedicated Brussels based outlet for EU representation. It has no wish for any kind of institutional fora with which to conduct relations with government and civil society, or among other business associations, whereas CBI has no entrenched opposition to these concepts. CBI has virtually no membership services beyond political representation (where it has a lead profile among all UK business organisations), whereas BCC has a very strong range and distinct brand of business services. While both have a regional structure, the BCC network is grounded in local chambers of commerce.

FSB and FPB are both dedicated to the representation of SMEs, and as such have the greatest potential to recruit from the most similar membership pool, though each has differing formal membership criteria. The general outlook they share is not dissimilar, with the greatest degree of differentiation apparent on EU matters arising from different circumstances, although even here there are shared policy positions to be found on issues such as an opposition to UK membership of the Euro zone. The two organisations do, however, have distinct niches. FSB has a very strong local presence,

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a strong political presence among decentralised regional administrations as well as at UK central government level, and a highly developed group of membership services. It has a very distinct brand of member activism and a service group of staff. Each is involved in political representation, though the balance of FPB work tends to be more focused upon this. FPB has developed a particularly strong outlet for EU representation, and uses the position of UEAPME in EU social partnership to develop its role in UK political representation. These factors explain why FPB is much less opposed to the concept of social partnership than is FSB.

BCC and FSB both have notable strengths in local organisation and in service provision. Key differences are that FSB retains the cap on employees of 150, while BCC has a very strong niche market in the provision of training.

IoD and FPB each recruit individual Directors involved in strategic governance, with FPB remaining specialised in owner/manager private firms. The IoD’s very distinct ideological and prestige positioning provide for differentiation, as does its significant regional structure. FPB has a very strong outlet for EU representation, whereas the IoD has none and a ‘Eurosceptic’ profile.

CBI and FPB partly overlap with their emphasis upon political representation, although the CBI’s lack of membership services and the FPB’s membership of UEAPME make these organisations sufficiently different such that there is in practice little competition for members.

Where merger discussions have arisen or been rumoured, they tend to have arisen between organisations which have complementary profiles (BCC and CBI; BCC and FPB). The involvement of BCC in both of these, together with the recent pressures it has experienced, suggests that a consolidation of UK wide business interest representation may not be too far away.

Without doubt, there is an absence of institutional structures to link the five UK business-wide organisations with SME interests, and there is little co-ordination between them. Each has separate access to the UK Minister with responsibility for small businesses. Each is substantially engaged with employment related issues, and they have very similar messages. The greatest level of co-ordination between them arises for engagement with the EU level, where the smallbusiness|europe service is unique among the constituency of member states. The five clearly value the organisation and their participation in it. While there are cultural and member constraints to the development of anything resembling institutionalised ties between the organisations or indeed to their involvement in ‘social partnership’, some of the organisations are quite comfortable with a range of institutionalised ties they have with government which come under other names. It is important to all parties that their involvement in anything at the UK level avoids use of the term ‘social partnership’ or which could justify an accusation of ‘quasi corporatism’ or ‘tripartism’. However, some of the organisations are more relaxed about informalised arrangements which exist under another name, and, were formal arrangements to exist, a number would engage constructively with it.

The CBI, by its nature and position, cannot do other than have extensive relations with TUC and with DTI, and some of its relations with governmental type organisations are somewhat embedded. Where these involve the UK end of EU social dialogue, the FPB seeks inclusion, and if the issues can be resolved to its satisfaction, some possibilities for

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collaborative action may arise. Given the UK’s reputation among other member states for its EU outlook, it is somewhat ironic that the nearest thing to ‘social partnership’ for UK business-wide organisations at a UK level lies with the UK end of EU oriented initiatives. Where there is devolved UK administration, so there are structures of participation which link many of the business organisations, and an informal ‘lobbying coalition’ exists between them. At a UK level, the CBI would appear to be the organisation which meets some of the criteria to be a potential leader of co-ordination, in that its’ work is driven by employment policy issues while having a low focus of competition among the other organisations.

A ‘pluralist’ caricature often applied to UK interest representation may carry some degree of plausibility and be superficially appealing and, but it tends to mask some complexities. Certainly, it resembles some characteristics of free markets through its relative lack of structuration, its relative independence from government, its relative lack of co-ordination, and its resistance to formal structured dialogue, and a preference sometimes heard that it should be thus. Nonetheless, there are some important qualifications to be made:

there may be some consolidation among UK business-wide representative organisations ahead

issue driven collaboration is evident, some common meeting platforms have recently emerged, and at the level of UK devolved administration more than a little collaboration is evident

competition between them is limited by some very distinctive niches

a substantial infrastructure of public sector provision is highly supportive of business development. At one level, there is a substantial governmental organisation aiming to act as a voice for SMEs across the range of government departments. At another level, there are business support arrangements in place at local level which substantially involve a particular business-wide interest association in their delivery. At the EU level, the UK is unique among European countries by having an organisation based in Brussels which aims to maximise the interests of UK SMEs at EU level through the provision of information, advocacy, and other associated services

while central government relations with outside interests are relatively unstructured and independent, there are relationships, visible and less visible, where there is a closer incorporation of business-wide interest associations. Among these associations can be found those which would, while following their members instructions to oppose ‘social partnership’ in any formalised context, engage constructively with it should one emerge, particularly at secretariat level. There is also a view that some ‘de facto’ arrangements may already exist viz. the UK co-ordination of EU social partnership, and whilst EU arrangements are unlikely to be the catalyst for a formal UK social dialogue, they may well increase the scope of informal dialogue on employment related matters.

[To ensure comparability, please add a Table each on the associations' representational activities, services and composition of revenues in a way analogous to the report on Austria. Alternatively, you may simply send you responses to the questionnaire regarding: 4.2.5, 4.2.6, 4a.1, 4a.2 and 4.6.]

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Bratton W, Bennett R J and Robson, P J A (2003) ‘Critical mass and economies of scale in the supply of services by business support organisations’, Journal of Services Marketing, 17, 7, pp730-752

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European Commission (2002) ‘Report from the Commission to the Council and the European Parliament: Report on the Implementation of the European Charter for Small Enterprises’ (COM 2002 68 final: Brussels, Commission of the European Communities)

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Fallon, G and Brown, R (2000) ‘Does Britain need public law status Chambers of Commerce?’ European Business Review, 12, 1, pp19-27

Field P, Miller R and Maton K (1999) The Impact of TEC-Chamber Mergers on Addressing DfEE objectives, Research Brief No. 126 (Sheffield: Department for Education and Employment)

Hammond, D (2002) ‘Clash over adult training’, People Management, 8, 10, p7

Institut des Sciences du Travail (2001) Partenaires sociaux en Europe: British Chambers of Commerce (Louvain: Institut des Sciences du Travail)

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Jordan, G and Halpin, D (2003) ‘Cultivating small business influence in the UK: The Federation of Small Businesses’ journey from outsider to insider’, Journal of Public Affairs, 3, 4, pp313-325

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C. FIRM SIZE; SMEs AND BUSINESS INTEREST ASSOCIATIONS: A EUROPEAN COMPARISONFranz Traxler, University of Vienna

INTRODUCTION

A comprehensive review of the literature on economic performance and firm size found that there "is overwhelming evidence that smaller companies in general are not inferior to larger units" (Aiginger and Tichy 1989). Regardless of this, however, firm size strongly affects the way in which companies are competing in markets. Comparative studies have identified four main properties that make small and large companies differ in their market position and, in particular, their requirements for competitiveness.

- Territorial scope of action and mobility: Small firms still concentrate on local markets, in contrast to large firms the activities of which have become increasingly transnational (OECD 2002).

- Innovation and organizational change: Although small firms are important sources of innovation and do enjoy innovative advantages in several respects (Observatory 2003), they often lack the resources to rapid change. Above all, they spend less on research and development than large firms (OECD 2002).

- Regulations: Compliance costs caused by such regulations as taxation, environmental protection, labor standards etc are likely to be higher for smaller companies, since a certain critical mass of resources and expertise is needed to efficiently cope with them.160

- Capital–labor ratio: The production process of small firms is usually more labor-intensive than that of large firms. In connection with this, labor productivity tend to be lower and unit labor costs , higher in small companies (Loveman and Sengenberger 1990. Observatory 2003).161

Each of these properties constitutes special interests. The difference in territorial scope of action and mobility translates into corresponding differences in power. Highly mobile actors enjoy a competitive edge, as compared to less mobile actors. Hence, the fact that small firms are geared to serving local markets does not mean that they are sheltered from international competition. On the contrary, market liberalization "is exposing many SMEs to fierce international competition and imposes substantial adjustment costs on them" (OECD 2002:13). As a consequence, small and large firms tend to differ in their view of the costs and benefits of market deregulation. Due to their higher capacity for mobility, large firms have been the vanguards of market liberalization. While any kind of business may try to shelter its markets, small firms are especially interested in protecting their local markets from foreign competition. This implies that they favor legal regulation of the access to business activities. A case in point is craft or artisan production as the ideal type of small units in manufacturing: In several countries the acquisition of the right to practise a craft is still subject to a certain formal qualification gained through vocational training. Aside from this, differences in mobility have become increasingly important to tax policy, as the ability of the nation states to tax actors who are transnationally mobile has strongly declined (Ganghoff 2000).Innovation has become a growing factor of competitiveness not least as a consequence of intensified competition in internationalized markets. This has generally created a need to assist companies to deploy their capacities for innovation. Again, small firms are distinct, since programs to aid their innovativeness cannot simply be limited to research and development. Their limited resources require a more systemic approach that includes

160 For an analysis of SME-specific problems of environmental management, see OECD (2002).161 This difference, however, decreases when taking the sectoral distribution of SMEs and large enterprises taking into account (Observatory 2003).

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promotion of such capabilities as innovation management, commercial exploitation of innovations, further training and qualification aimed at fostering the creative potential of the employees.Finally, the difference in the capital-labor ratio makes labor costs much more important to small firms than to larger units. Due to their labor-intensive production any increase in labor costs affects the competitiveness of small firms far more than that of large companies where the share of labour costs in total costs tends to be lower.While the above four properties constitute a general divide between small and large firms, this divide in terms of concrete firm size may vary with the problem in question. As regards compliance costs, for instance, they tend to increase with the sophistication and complexity of a certain regulation, such that the threshold of what amount of resources characterizes an SME varies accordingly. Furthermore, there are certainly many other specificities which also give rise to differing interests. Some of them cluster with sectoral affiliations or – put more generally – the companies' place in the vertical chain of production. For instance, the service sector and especially retail record above-proportionate shares in small companies (Observatory 2003). In the manufacturing sector many small companies operate as suppliers of large multinational companies. Although there have been established manifold cooperative, vertical networks between small suppliers and their large buyers in such sectors as the automobile industry, conflicts over the terms of exchange are endemic even in these circumstances. The difference in firm size between the participants in the networks makes this conflict asymmetrical, enabling the large buyers to enforce short-term changes in the terms of exchange. For example, Nissan demanded price reductions of 20 percent from its suppliers by 2002 (OECD 2002).The upshot of these considerations is that large firms and small firms have distinct and even conflicting interests. As we have seen, such differences arise from the labor market (mainly as a result of differences in the capital-labor ratio) as well as from the "other" markets (e.g. sales markets and the differences in territorial scope of activities there). For reasons of brevity, these other markets will here be designated as "product markets". Given that these differences affect small firms and large firms each as a group, they generate a certain kind of collective interests. Associations are best suited to advance such interests. Adopting a cross-nationally comparative perspective on the EU-15, this paper investigates whether and how the business interest associations cope with the problem of firm size and the corresponding differences in interests. This analysis will concentrate on three issues:

- Demarcation of membership domain: To differentiate between interests which are relevant for their activities and those which are irrelevant, associations have to clarify what business groups are eligible for membership. In this respect, the question is how much important firm size is as a criterion for eligibility, as compared to other criteria.

- Definition of tasks: Specifying an association's tasks and activities is another way of differentiating between relevant and irrelevant interests.162 In analogy to the demarcation of membership the question is whether and how firm size influences the profile of associations, as far as their tasks are concerned.

- Associational resources: The scale of resources which is available for an association is likely to reflect the amount of resources which are at the disposal of its members. Given the differences in resource endowment between large and small firms, it is important to study the impact of firm size on associational resources. Above all, this means examining whether small and large firms differ in their propensity to associate.

The cross-nationally comparative design will enable the analysis to detect common patterns beyond national peculiarities. For obvious reasons, such common patterns are especially

162 For instance two associations may share the same membership but differ in their activities. Conversely, they may perform the same tasks for a differing membership. In both cases they have specified the interests covered in a mutually exclusive way.

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important to a European perspective on the conditions of associational action. Moreover, policy recommendations of European relevance can only be deduced from findings on common patterns. When addressing the above three issues, special attention will be paid to the problems of small and medium-sized enterprises (SMEs) and their associations. The countries included in this analysis are the EU-15.

DEFINITIONS AND CONCEPTUALIZATIONS

SMEs

According to the definition of the European Commission (1996) SMEs have fewer than 250 employees, and have an annual turnover not exceeding ECU 40 million, or an annual balance-sheet total not exceeding ECU 27 million, and must be independent in terms of ownership. This definition is important because it is used as the criterion for access to Community programs in favor of SMEs, whereas many member states have no general definition and operate often on the basis of definitions related to local practice or particular sectors.For simplicity, we adopt the maximum number of 249 employees as the definitional criterion for SMEs. For the reasons mentioned above, however, there is no natural threshold that defines an SME. On the contrary, the distinction between small and large size may vary with circumstances and related interests. Hence, we will use this definitional criterion only for statistical purposes. Aside from this, we will refer to how SMEs are defined in the respective countries. In particular, the way in which a country's BIAs and especially their associations define SMEs is of interest and part of our research questions. Such country-related definitions may differ from the above EC definition which sets a rather high maximum number of employees.

Business interest associations (BIAs)

In any EU member state a multiplicity of BIAs exists the study of which is beyond the capacity of this research project.163 Hence, we have to operationalize and select the BIAs in a way that makes their study both manageable in empirical respects and relevant in theoretical respects. Accordingly, we have to operationalize the concept of a BIA in terms of its sectoral domain, territorial domain, hierarchical level, and functional domain.

- The sectoral domain: This study concentrates on BIAs whose membership domain is cross-sectoral. By cross-sectoral coverage of the membership domain we understand associations which – according to their formal constitution cover at least three one-digit activities as defined by EU NACE classification.164

- The territorial domain: This study centers on BIAs whose domain is nation-wide ( in contrast to provincial or regional BIAs).

163 If not indicated otherwise, the data presented here are collected in the course of this project. For a detailed analysis of each country, see the respective national reports.164 NACE one-digit classification is as follows: A (agriculture, hunting and forestry), B (fishing), C (mining and quarrying), D (manufacturing), E (electricity, gas and water supply), F (construction), G (wholesale and retail trade; repair of motor vehicles, motorcycles and personal household goods), H (hotels and restaurants), I (transport, storage and communication), J (financial intermediation), K (real estate, renting and business activities), L (public administration and defence; compulsory social security), M ( education), N (health and social work), O (other community, social and personal service activities), P ( private households with employed persons). The domain of a BIA may crosscut these one-digit sectors. In this case, a sector can be seen as belonging to the BIA's domain only when its domain covers the majority of the NACE-listed business activities of the respective sector. Cross-sectoral coverage does not rule out the possibility of specifying the membership domain in other respects. For instance, a BIA which limits its membership domain to cooperatives but leaves sectoral activities unspecified is a cross-sectoral association.

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- Hierarchical level: BIAs often build complex pyramids of associations. In such circumstances "lower-level" associations are the member organizations (affiliates) of "higher-order" associations (confederations). This study concentrates on peak-level BIAs. By peak associations, we understand BIAs which are fully independent in the sense that they are not an affiliate (i.e. a subordinate member) of a higher-level BIA. Accordingly, there are two possible categories of peak associations: (1) confederations which are not a subordinate member of another (higher-level) confederation; (2) "direct membership" BIAs which are not a subordinate member of a confederation. The difference between a confederation and a direct membership BIA lies in the fact that the former is an association of association (i.e. has other BIAs as its members), whereas direct membership associations have the companies themselves as members.165 For the purpose of operationalizations, the difference between confederations and direct membership BIAs is not important. The operational criterion here is the status of a peak association in the sense of formal independence (i.e. non-affiliation to a higher-level confederation).

- Functional domain: This refers to the representational tasks performed by a BIAs. We differentiate between two main types of representational tasks: (1) the representation of the labor market interests of business; (2) the representation of product market interests. For simplicity, we understand product market interests as interests other than labor market interests. While business has its labor market interests in relation to the employees and the unions, its product market interests emerge as a result of the exchange relations which a certain business group has with other actors (i.e. suppliers and customers) in its product markets. Since these actors may be other companies, the product market interests of a certain business group often emerge in relation to other business groups. Hence, BIAs represent their members' labor market interests in relation to the unions, while they represent product market interests in relation to other business groups and their BIAs. Notably, both labor-market and product-market interests may also be represented in relation to the state. BIAs may specialize in either of these interests. BIAs specialized in labor market interests are called pure employer associations, while BIAs dealing only with product market interests are pure trade associations. BIAs may also be "mixed" associations that represent both labor-market and product-market interests (Schmitter and Streeck 1981). This project includes all three types of BIAs.

Chambers of business (and similar types of public-law organizations) create special problems of operationalization and classification, since they perform fairly differing functions across the EU member states. Since the focus of our project is on interest associations we include chambers only, if their main field of activity is the representation of interests relating to either the labor market or product markets. This means that chambers which are either pure administrative bodies (that implement certain public policy functions on behalf of the state) or pure service organizations (that are specialized in the provision of certain services for their members) are excluded from consideration.

THE DEMARCATION OF MEMBERSHIP DOMAINS

As outlined above, this analysis includes only BIAs whose membership domain covers at least three one-digit activities according to NACE classification. BIAs which meet this definition may specify eligibility for membership in manifold ways, including specializing in macro-sector that embrace three or more one-digit NACE activities.Seen from the associations' perspective, the basic choice is between leaving the membership domain unspecified or specializing in organizing a special group of business by linking

165 There may also be BIAs which organize both companies and other BIAs.

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eligibility of membership to certain criteria which characterize solely the targeted group. BIAs which leave their domain unspecified will be called general associations. When specifying their membership domain, BIAs may do this formally or informally. Formal specifications are endorsed in the associations' constitution. Domains are informally specified, if an association de facto specializes in certain subgroups of business within a broader formal membership domain. In order to maintain comparability across associations and countries, we will consider here only the formal demarcation of membership, unless a formally general association has clearly narrowed down and specialized its domain in practice.As Table 1 reveals, the most widespread pattern is that one or more BIAs specialized in SMEs co-exist with one or more general BIAs, possibly in combination with BIAs specialized in terms of criteria other than firm size.166 The exceptions to this pattern are Austria, Belgium, Finland, Luxembourg and Spain. In Austria, Belgium, Spain and Luxembourg separate BIAs for SMEs with cross-sectoral, country-wide membership domain are absent. In Belgium this is because the membership domains of all SME-BIAs are sub-national, such that they are not recorded here. Regardless of this, there are important representatives of the SMEs (i.e. UCM and UNIZO) which do operate at national level, namely as participants in the cross-sectoral national social dialogue. In the other three cases SME- BIAs do not exist, since the general associations have managed to incorporate the representation of SMEs formally into their own membership domain. As regards Austria's WKÖ, the combination of obligatory membership and voting rights favorable to SMEs assigns intra-associational power to this business group to an extent that largely corresponds with its numerical strength. In Spain the cross-sectoral national BIA for SMEs, CEPYME, has become part of the general CEOE since 1980. Aside from this, there also exist important independent SME associations at sub-national (i.e. regional) level. Luxembourg's UEL is the general peak of eight, rather autonomous affiliates, including those related to SMEs (i.e. the Federation des Artisans and the Chambre des Metiers). Finland deviates from the common pattern in that no general BIA exists.167

There are a few cases where the formal domain substantially differs from the actual membership focus: The domain is formally unspecified, while the BIAs clearly concentrate on certain categories of business. This holds true for the Dutch MKB, Sweden’s Företegarna and TT, PT and SY in Finland.Closer consideration of how the associations specify their membership domain shows that there are three main clusters of criteria for specification:

- Macrosectors: In this case BIAs confine their domain either to manufacturing and industry or to the service sector. In some countries (e.g. Austria, Finland and Italy) the BIAs specialized in manufacturing and industry have included services which are related to manufacturing into their membership domain. Since firm size in the manufacturing sector is usually above the average, representing this sector often combines with a special focus on the interests of large firms. An example is Austria's IV.

- Ownership, strategic governance and commercial orientation: This cluster embraces specialization in organizing family-owned businesses, the companies' directors, cooperatives and non-profit organizations. One may assume that family ownership implicitly refers to the group of SMEs. However, the only case in this sample, the ASU, registers the highest score on the average number of employees per member firm (i.e. 261.5 employees) among all the German BIAs listed in Table 1. This corresponds with the fact that the ASU was set up by rather large firms.

- Firm size: Membership definitions refer to firm size either explicitly or implicitly. The latter applies to domains targeting the craft sector which represents a certain category

166 In some countries minor parts of the economy – most often agriculture – are formally excluded from the membership domain of the general BIAs.167 This situation will change in 2005, when TT and PT will have finished their merger to form EK.

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of SMEs. Another example of an implicit reference to SMEs is the FBP in the UK which has specialized in members who have jointly the role of owners and managers of private businesses.

Quantitatively, firm size is by far the most important criteria for demarcating membership domains. 28 BIAs (i.e. 42.4 %) of the total number of cross-sectoral national business associations listed in Table 2 have specified their domain by reference to firm size, sometimes in combination with other criteria. Furthermore, all of these BIAs but one focus on SMEs. The Greek SEV is the only case which may be seen as an organization that concentrates on large firms by limiting its domain to firms with more than 50 employees in manufacturing and related services. However, recalling the standard definition of SMEs one has to note that even the SEV includes the larger groups of SMEs.168 Regardless of this, the SEV is understood as the voice of large firms in the Greek context. The domains of the other Greek BIAs complement the SEV quite well in terms of their specification of both sectors and firm size. At any rate, the case of the SEV indicates that associations may have adopted concepts of what size characterizes a small firm in comparison to a large firm, which differ from standard statistical classifications. We will return to this issue later on in this section.Table 2 informs about how BIAs specialized in SMEs formally demarcate their domain from the group of "larger" companies. The standard criterion is a firm's number of employees.169

Aside from this, the associations differ widely in their definition. Surprisingly few BIAs (i.e. only CPPME and Confartigianato) follow the conventional threshold of less than 250 employees. Some definitions set a clearly lower level170, while four associations adopt a level (i.e. 499 employees) which is far higher than the standard. The majority of SME associations (i.e. 63.0 percent) has refrained from any definition of what makes an SME. From an analytical point of view, the most interesting finding on the relationship between firm size and domain demarcation is that so many BIAs have specialized in SMEs, whereas there is only one association formally focusing on large enterprises. This is amazing, at least if one follows conventional wisdom which assumes that political power tends to increase with large numbers. This kind of conventional wisdom suggests that general BIAs will represent interests which are common to all or almost all members of the business community, whereas special interests which are shared only by a minority within the business community need to be taken up by BIAs which have so specialized their membership domain, that their activities can be geared to these special interests. As far as the firm size and the representation of related interests are concerned, it is important to note that in any of the member states belonging to the EU-15 more than 90 percent of the companies are SMEs, recording 66.4 percent of total employment in the business sector according to the conventional standard (Table 3). As a consequence of this numerical predominance, one would expect that SMEs feel quite comfortable with being represented by general associations, whereas large firms do need separate associations specialized in advancing their interests. However, the empirical evidence delineated above clearly contrasts with this conventional wisdom. The observed patterns of domain demarcation indicate that SMEs find their special interests less effectively represented by general BIAs than large firms do. There are two inter-related explanations for this:

- Large firms are more willing to associate than small companies. This implies that large firms tend to be over-represented in general associations, such that they wield a

168 There is another BIA which sets a minimum level of size for membership eligibility. According to its constitution MEDEF of France comprises companies employing more than 10 employees. However, this rather low threshold is irrelevant in practice. 169 There are very few associations which combine this criterion with another quantitative one. For instance, the ISME of Ireland describes its domain as comprising SMEs with up to 150 employees and a turnover of up to Euro 10 m.170 In the case of UPA the definition is pre-determined by law, since a number of employees smaller than 15 is laid down as a constituent property of a craft firm.

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power position within the association which is above-proportionate to their sheer number in the economy. In response to this, there is an incentive for SMEs to set up their own special associations. We test this hypothesis with regard to a country’s general BIA – or when such BIA is not existing - with regard to the most important (i.e. the principal) BIA by comparing the average number of employees per firms operating its domain with the average number of employees per member firms.171 It turns out that the former figure is always lower than the latter, as far as the voluntary associations are concerned (Table 4).172 This shows that there is indeed a higher propensity of larger firms to voluntarily join the general or principal BIAs. More differentiated data on density which are available for the associations Dutch VNO-NCW underscore this conclusion. Accordingly, this confederation organizes 100 percent of firms with more than 500 employees; 90 percent of firms with more than 100 employees; and 50 percent of firms with 20 to 100 employees. However, the figures in (Table 4) also show that in all general BIAs under consideration the average number of employees per member firm is clearly below the threshold of 250 and thus remains within the range of SMEs as set by the standard definition of an SME. This suggests that there is a considerable number of SMEs under the umbrella of the general BIAs and the group of SMEs may even numerically prevail in many cases.

- Even when SMEs numerically prevail in the general BIA, SMEs have good reason to form special associations. This is because the higher amount of resources controlled by the large firms informally or formally translates into higher influence on the association.173 For instance, large firms are more able to engage in associational activities due to their higher number of qualified staff. Moreover, they can provide expertise needed by the associations in many policy fields such as collective bargaining. As consequence, representatives of large firms often play a key role in the association’s negotiations with the authorities and the unions. The amount of dues to be paid is normally linked to criteria of firm size (e.g. the number of employees, the wage sum and sales), something which makes an association strongly dependent on the good will of its largest payers.174 This informal preponderance of large firms becomes formalized if voting rights are weighted according to the dues paid or other criteria referring to firm size. In the case of general confederations another way of formalizing the predominance of large firms is admittance of companies to direct membership in the confederation, aside from the membership of lower-level associations. Under these circumstances, it is usually the large companies which directly associate and then contribute the lion’s share to the confederation’s revenues.175 As an implication of the above reasoning, large firms form separate associations only when they perceive a threat to their "natural" predominance in the general associations. Such a threat may arise from the legal framework for

171 Importance is measured here in terms of the number of companies affiliated and the number of employees represented. If no national statistics were available for calculating the figures in Table 4, the number of companies were taken from the EIM data set. The number of private business employees were then estimated by using dependent employment minus government employment (both from OECD Economic Outlook) and the employees of agriculture (from OECD National Accounts I).172 In the case of the two associations resting on obligatory membership (i.e. the WKÖ and the UEL) the two figures are almost the same. 173 For instance, in 1998 86 percent of the members of SAF, one of the predecessors of SN in Sweden, were companies with up to 25 employees (Fahlbeck and Sigeman 2001). Despite this numerical prevalence of very small firms the strategy, as pursued by SAF to re-organize the Swedish system of industrial relations, was driven by "large firm dominance" in its decisions (Pestoff 1995:158).174 The fact that SMEs are frequently affiliated to a country's general BIA despite large firm predominance seems to be a paradox at first glance. As will be outlined below, provision of services is the key mechanism of integrating SMEs into the general BIAs.175 The section on associational resources considers this issue in greater detail.

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associational action, in particular from provisions on voting rights. In Greece, the only country where a BIA formally specialized in larger firms is established, the statutory regulations of association set a special incentive to form interest organizations whose domain is not general. Most importantly from the perspective of large firms, the principle "one member – one vote" is established by law. Within the framework of an association which is open to all business groups this principle would certainly diminish their internal influence in relation to more numerous groups. Austria most resembles the Greek situation. In the case of Austria' s general BIA, the WKÖ, "one member – one vote" as the basic principle of decision-making is laid down by law, in connection with the WKÖ's status as an obligatory public-law chamber. It is thus no mere coincidence that the most important voluntary BIA, the IV, gathers the large firms, although the IV does not see itself as the voice of "big business".176

TASKS AND ACTIVITIES

There are two basic tasks of interest associations: the representation of interests and the provision of services. These tasks are distinct insofar as representing interests is a collective good the benefit of which is non-exhaustible and non-excludable (i.e. open to all actors interested in it), whereas services can be provided exclusively for the association's members. The following overview will first address the associations' activities of interest representation and then shift to the service activities.

Interest Representation

As outlined above, BIAs can represent two main categories of interests: labor market interests and product market interests. These two interest categories strongly differ in terms of their diversity. Product market interests tend to be more divisive than labour market interests (Traxler 2002). This is because differences in the product market interests of business are mainly endogenous, such that they divide the business community into distinct competing groups (e.g. suppliers and buyers of raw materials and intermediate goods). As a consequence, representing the product market of one special business group often requires advancing these interests in relation to and in conflict with another business group. In contrast to this, differences in labor market interests are primarily exogenous, since the labour market interests must be advanced vis-à-vis a group external to business, i.e. labor. In the case of both interest categories representational activities may address two target groups: either the market counterpart as such or the state. The state has become an important target, since a wide range of product market issues as well as labor market issues are regulated by the state. Following this categorization of interests, we distinguish between three representational types of BIAs (Schmitter and Streeck 1981):

- pure trade associations are specialized in representing product market interests;- pure employer associations deal only with labor market interests;- mixed associations combine the representation of product market interests and labor

market interests.In the case of labor market interests we also classify the associations according to their interlocutors. An association fully represents its members labor market interests, if they are advanced vis-à-vis the state as well as the unions as labor's representatives on a recurrent basis. As regards the unions, this means that the BIA is engaged in collective bargaining either directly (when negotiating with the unions over the terms of employment) or indirectly (via collective bargaining conducted by lower-level member associations). Alternatively,

176 Regardless of this, the IV records the highest number of average employees per member firm (i.e. 354 employees) among all the cross-sectoral associations listed in Table 1.

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associations often restrict their representation of labor market interests to activities targeting the state. Accordingly, we distinguish between full mixed associations and full pure employer associations on the one hand and restricted mixed associations and restricted pure employer associations on the other hand.177

Table 5 groups the BIAs under consideration according to their type of representational activity and demarcation of membership domain. On aggregate the mixed associations numerically prevail. The absolute majority belongs to the group of full mixed associations that include collective bargaining. There is, however, a notable number of cases where this bargaining role is very limited. Pure trade associations rank second in terms of frequency, whereas pure employer associations are rather rare. This observation reflects the fact that product market interests are more divisive than labor market interests. While these patterns hold true for all three categories of membership domains, it is least accentuated in the case of BIAs demarcated by "other" criteria of domain demarcation. As an implication, the general associations and the SME association appear to differ not so much in their representational activities. On closer consideration, this first impression needs revision in three respects. First, with the exception of the Irish CCI all mixed associations with general membership domain deal with collective bargaining one way or another. In contrast to this, a relatively large number of mixed SME associations concentrates on representing labor market interests vis-à-vis the state. The second difference refers to access to the macro-level social dialogue. The general associations involved in collective bargaining always participate in macro social dialogue in all the countries where such forms of policy concertation are established. In three of these countries (i.e. Denmark, Finland and Ireland) the mixed SME associations do not participate although they are more or less engaged in the bargaining process. The fact that two of them show little activities in this field cannot fully explain this exclusion, as no engagement in collective bargaining characterizes one general association operating in countries with macro-concertation (i.e. the CCI in Ireland) which nevertheless is included in the concertation policies. Third, a notable proportion of the general associations are chambers which normally focus on activities which are typical of pure trade associations. If we exclude all the chambers from consideration, then it turns out that all of the remaining general associations engage directly or indirectly in collective bargaining. If we disregard the chambers also in the case of the SME associations, then the percentage of associations involved in bargaining increases only slightly from 66.7 percent to 68 percent.The upshot of these three differences between the general associations and the SME associations is that the general associations are generally more concerned with bargaining tasks than SME associations. There are three main factors behind this pattern:

- There is evidence from OECD-wide studies that union density tends to increase with firm size (Visser 1991). Facing far stronger union presence in the workplace, large firms and their associations are under stronger pressure than SMEs to embark on collective bargaining.

- Collective bargaining takes more resources than most of the other representational activities. This is mainly because collective bargaining is an iterated process that implies dealing with a direct counterpart. An association that is a party to collective bargaining needs a high level of expertise in a wide range of distinct subjects as well as funds for industrial action.178 As will be shown in detail below, SME associations

177 Differentiating the representation of labor market interests by interlocutors is important, because collective bargaining is a fully fledged institution of interest intermediation which is a cornerstone of any kind of social dialogue. In the field of product market interests one finds no comparable institution of joint regulation by the market counterparts themselves.178 The withdrawal of SAF from central-level bargaining illustrates the amount of resources needed for bargaining activities. In 1990 when SAF withdrew and terminated its bargaining section, its staff decreased from nearly 500 to around 300 in 2000. In addition, the confederation managed to substantially reduce their

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are usually worse resourced than the general BIAs, such that the former are less able to engage in collective bargaining than the latter.

- Macro-level arrangements of the social dialogue are closed shops in several cases. There are seven countries (i.e. Denmark, Finland, Greece, Ireland, Italy, the Netherlands and Portugal) where statutory or voluntary forms of institutionalized macroconcertation as well as SME associations exist. These associations do not participate in concertation policies in four of these countries (Table 5). This can be traced to the fact that the "insiders" have little interest in extending the number of participants. Both the government and the unions tend to prefer a low number of business representatives as social partners in the social dialogue. The general associations which normally represent business within the concertation framework are even more determined to keep other business associations out, since they are mainly seen as rivals for representational influence, organizational privileges and possibly public funds which are accessible only to the participants in the macro dialogue. In Finland, Ireland and Portugal requests of BIAs for joining the concertation process were vetoed by the participating business associations.

While the relative importance of these factors may vary from country to country, they altogether create what one may call a "representation gap" of SMEs in matters of collective bargaining: Collective bargaining coverage in terms of employees generally declines with decreasing firm size (Traxler 1994, Traxler and Behrens 2002), and only a minority of institutionalized processes of macroconcertation sees SME associations as participants. Regardless of the manifold obstacles to collective bargaining, most SME associations have nevertheless good reason to incorporate this process into their range of activities. This is due to the negative externalities collective bargaining creates for SMEs in almost all European countries, when being left to other business representatives. Negative externalities arise from the fact that the outcome of collective bargaining tends to affect the SMEs even when they and their associations do not negotiate with the unions. This is due to the widespread practice of extending the validity of multi-employer collective agreements to employers who are not affiliated to the signatory employer association. It is usually the general or similarly encompassing associations and their affiliates that conclude collective agreements (Table 5). If these agreements are then extended, they bind unaffiliated SMEs as a consequence of the encompassing membership domain of the signatory BIA. In these circumstances, it is rational for SMEs to have their own association engaged in collective bargaining, since the large firms whose labor market interests differ from those of SMEs tend to prevail in the general associations, as outlined above. Analogous negative externalities on SMEs result from bi- or tripartite peak-level macroconcertation, if wages are on its agenda and SME representatives cannot participate. There are only three countries (i.e. Germany, Sweden and the UK), where extension practices as well as recurrent peak-level macroconcertation of wages are absent, such that SMEs find little incentive to enter collective bargaining. Regardless of this, SME associations in Sweden and Germany do conduct collective bargaining. However, in Sweden this is done to a rather limited extent. In Germany employer associations face growing difficulties in integrating SMEs into collective bargaining (Traxler et al. 2001).179 The UK is distinct, since even multi-employer bargaining so rarely occurs, that the role of any kind of employer associations in collective bargaining is negligible. None of the country's SME associations is involved in bargaining. In the other countries of the EU-15 extension practices and/or macroconcertation arrangements are in operation (Traxler et al. 2001). As far as SME associations exist there, they are more or less engaged in bargaining activities (Table 5).180

membership dues from a total of 781.5 mio. SEK to 409.7 mio. SEK over the same period (Pestoff 2004).179 In response to this, several affiliates to the BDA have introduced the status of "non-conforming" membership which entitles a firm to opt out of collective bargaining. This option is most frequently used by SMEs.180 The only exception is Portugal, where the CPPME is very weak.

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Services

Large firms and SMEs clearly differ in their need for services. Associational services are important to SMEs due to their limited resources, while their large counterparts can easily make or buy services independently of associations. In accordance with this, research in the activities of sectoral business associations found that associations which have many SMEs as members significantly more invest in membership-related activities than associations whose membership mainly consists of large firms. In the latter case the associations' focus is on lobbying activities (Grote and Lang 2004).Services are usually provided by the primary associations (i.e. the associations which directly organize the firms). Peak associations are not or less involved in these activities, since they often lack direct relationships with the member firms under their umbrella. Therefore, this study refers to services which are either directly or indirectly (i.e. via member associations) provided by the cross-sectoral associations. There are two possibilities of assessing the relative importance of services. The first one adopts an intra-associational perspective and examines the importance of services, as compared to representational activities performed by one and the same association. This can be done by estimating the amount of resources allocated to either of these two main tasks. Second, the importance of services can be analyzed also across the associations by comparing the range of service activities offered by them. The intra-associational importance of services must be differentiated from their inter-associational importance. This is because investment in services may be subordinate to interest representation within one certain association. Regardless of this, the same association may offer more services than another association even when the latter spends more resources for services than for interest representation.181 To examine the inter-associational importance of service activities, we will concentrate on comparing the services of a country's general (or otherwise principal) business association with the services provided by the largest SME association.182 The findings are summarized in Table 6 which differentiates between main categories of services according to their reference to either product market interests or labor market interests.Information on the intra-associational importance of services is not available for all associations, since it is not easy to identify the share of services and interest representation in the total amount of resources an association spends for its activities. Seven of the ten principal associations for which data are available concentrate on interest representation. Representational activities and services are equally important to the remaining associations. None of the associations prioritizes services. Priorities vary somewhat more across the SME associations. Both tasks are of equal relevance for 25 percent of the 8 associations. The same percentage applies to the priority of services. Interest representation prevails in 50 percent of the cases. The pairwise comparison of each country's principal BIA with the largest SME association offers systematic insight into the inter-associational relevance of services. This is possible for the 11 countries, where special SME associations exist. One finds that the SME association offer a broader range of services in 36 percent of the countries (i.e. Ireland, Germany, the Netherlands and the UK). The opposite pattern showing more service activities of the principal association applies to 27 percent (i.e. Greece, Portugal and Sweden). Again in 36 percent (i.e. France, Finland Denmark, and Italy) there is no difference in service activities. Services normally follow the representational activities of an association. This is important to 181 It is precisely this situation which is reported for MEDEF and CGPME in France.182 In the case of Italy it is not easy to identify the largest SME association, since the SMEs are are taken as a criterion for domain demarcation always in combination with other criteria (Table 1). There are two main candidates: CCO and CAR. While CCO is larger in terms of membership, the membership profile of CAR appears to be more tailored to SMEs. Hence, we include CAR in the following pairwise comparisons.

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note, since there is one pure employer association (i.e. the German BDA) and one pure trade association (i.e. the Portuguese CPPME) among the pairs of the 11 countries. As a consequence of their narrower scope of representational activities, their range of services is also smaller than is the case of the other BIAs which are all mixed associations. Hence, these two associations are hardly comparable with their mixed counterparts. When excluding Germany and Portugal from the pairwise comparison, the frequency distribution slightly changes, with 22 percent, 33 percent and 44 percent recording more services provided by the principal association, more services by the SME association, and no differences, respectively.In conclusion, the above findings confirm the stronger concern of SME associations for services. The data, however, indicate that this primarily holds true in intra-associational respects. Since their core members need more services and their resources are more limited at the same time in comparison to the principal associations, SME associations must invest relatively more resources in service activities. This stronger focus on services does not necessarily translate into a surplus of services in inter-associational respects. As Table 6 shows, the range of services provided by a country's principal association usually parallels with its SME counterpart. If the range of services differs, it does so merely by one category of services in most cases. When leaving out the special cases of Germany and Portugal, one finds larger differences (i.e. a clearly stronger service orientation of the SME association) only in two countries (i.e. the Netherlands and the UK). This suggests that the principal associations are hardly less engaged in service activities. The reason for this brings us back to the intra-associational configuration of powers. As outlined above, most of the general associations are dominated by the large firms. This holds true all the more for those principal associations whose membership domain is not general. This internal power configuration implies that the representation of interests tends to be skewed towards the large firms. At the same time, the general and principal associations are forced to integrate as many SMEs as possible for reasons of representativity. The solution to this problem is the provision of services. Hence, the internal trade-off typical of the general and principal associations is that the large firms dominate the politics of interest representation, while the provision of services is geared to the needs of the SMEs. As Table 6 documents, most services are free of charge in all associations. Given that the large firms are the most important contributors to the associations' revenues and the SMEs most frequently use the associations' services, this may often generate an intra-associational re-distribution insofar as the large member firms mainly pay the services most frequently used by the SMEs. Alternatively, the costs of services (as well as the costs of other activities) are externalized, when either state provisions empower the associations to charge outsiders or associational activities are co-financed by the state. This brings us to the issue of resources.

RESOURCES

The strength of associations depends on the availability of resources. Three types of resources are of utmost importance: members, staff and revenues. Membership strength is contingent on an association's ability to recruit those companies which formally belong to the group of potential members, as demarcated by its membership domain. The number of staff employed by an association constitutes its professional capacity to perform representational and service activities. As regards revenues, it is not only the mere scale of available resources that matters. The composition of revenues is also important. Aside from membership dues, associations may receive other incomes (e.g. income from contracts with governments). Income other than dues creates a special kind of associational strength in that this makes an association more independent of members and recruitment requirements (Schmitter and Streeck 1981). Again, this section compares the general or principal business association with the largest SME association for each country where these pairs of associations exist.

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Membership

If membership is understood as a resource of the associations, it should be measured not only in terms of the number of members but also in terms of their economic weight. This is all the more important to this study, since it enables analysis to differentiate between the associational behavior of small and large firms. Possible criteria which are related to a company's economic weight include turnover, the wage sum, the number of employees, total employment etc. The standard indicator of a company’s economic weight is the number of employees. Furthermore, this criterion is an important measure of the associations' membership resources, since the vast majority of them are dealing with labor market interests.We first examine the absolute numbers of membership in terms of companies organized and employees covered and then move to relative figures (i.e. density): The counterpart to the absolute number of companies is density in terms of companies. Unfortunately, no cross-nationally comparable statistics on the aggregate number of employees by firm size are available. Hence, it is impossible to compute the density ratio in terms of employees for the majority of SME associations. There are only comparable data by total employment by firm size (i.e. employees plus self-employed persons by categories of firm size)183. We thus estimate an association’s density in terms of employment, defined as the number of members plus the number of employees working in member firms as a percentage of employment in its membership domain.184

The figures on membership are summarized in Table 7. As far as absolute numbers are concerned, the surprising finding is that in two thirds of the nine countries for which comparable data are available the largest SME association registers more member companies than the general or principal association (i.e. France, Finland, Greece, Sweden and the Netherlands). In the remaining cases (i.e. Denmark, Ireland, Italy and the UK) the general or principal associations outnumber the SME associations .185 The opposite configuration holds true for the number of employees covered by the associations. In this respect, each of the eight comparable countries register a higher level of employment under the umbrella of the general or principal association, as compared to the corresponding level of the largest SME association.Density measures the relative membership of an association, understood as the ratio of the actual membership to the potential membership, as defined by its membership domain. The findings on density tend to echo those on absolute membership numbers. In terms of companies the density ratio of the SME association is higher than density of their general or principal counterparts again in the majority of the eight countries (i.e. France, Finland, Sweden and the Netherlands). Denmark, Greece and the UK record a higher density of the general or principal association. Density of the two associations is more or less at the same level in Portugal.As regards density in terms of employment, there is only one country (i.e. Finland) where the SME association records a higher density level than the general or principal association among the seven countries for which data exist (i.e. France, Finland, Denmark, Greece the Netherlands, Sweden and the UK).There are three conclusions which can be derived from these observations:

183 See the data set of the EIM (www.eim.nl) and Observatory (2003), for these figures.184 To estimate density, we refer to the formal domain for reasons of comparibility. However, if a domain de facto extends beyond this domain to a notable extent (as is the case of MEDEF) the reference is the actual domain. Furthermore, agriculture is always excluded from consideration, in accordance with the available figures on employment by firm size. Since this concept differs from the concepts adopted by some country studies, the figures on density reported there may differ from those in Table 7.185 This comparison excludes Germany, where the SME association rests on obligatory membership in contrast to its general counterpart.

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- The largest SME association tends to attract more companies than the general or principal association. This is possible since the membership potential of the two types of associations does not differ so much. 99.8 percent of the companies in the EU-15 belong to the group of SMEs by conventional standards, with very little differences across the countries in this respect (Table 3). This means that the domain of the general associations is only slightly broader than that of most SME associations. Having thus the choice between the general association and an SME association, more SMEs join the latter rather than the former. In this respect, the more elaborated internal differentiation of most SME associations, as compared to the general associations, may work as a special incentive. On the one hand, the high internal differentiation enables the associations to consider local interests (which are especially important to SMEs); on the other hand, this internal differentiation creates a large number of relatively small subunits, something which equips each single member with a rather high influence on the subunits' affairs.

- The fact that the general or principal associations often show a lower density of companies but almost always a higher density of employment, as compared to the SME associations, indicates that the large firms are their stronghold.

- In the case of both the seven SME associations and the 13 general or principal associations relying on voluntary membership for which data on both density measures are available, density of employees tends to be higher than density of companies. One finds only two exceptions to this rule: that is the principal association as well as the SME association of Greece which both record densities are about the same level.186 This means that the relatively larger companies show a higher propensity to associate across all categories of firm size. Regardless of this, large firms primarily join the general and principal associations, as noted above. This is also manifested in the fact that the difference between density of companies and density of employment tends to be far smaller in the case of the SME associations.

Staff

Table 7 also documents the number of staff members (i.e. the associational employees in contrast to elected representatives) working on behalf of the respective associations. Because most of the BIAs under consideration are confederations, one has to differentiate between the (peak-level) staff working for the confederation and the number of staff on aggregate which refers to the confederation and all the lower-level associations under its umbrella. Since the size of the associations differ not least in response to the size of their country, the absolute numbers of staff do not tell very much. Hence, Table 7 contains also relative figures which relate the number of staff to the number of member companies as well as to the number of employees employed by the member companies. The relative measures of staff (i.e. the number of staff per 1000 member firms and per 1000 employees employed, differentiated by peak-level and aggregate level) enable analysis to compare how well the SME associations are staffed in comparison to the general or principal association. The result of this comparison is very clear: Altogether, there are 18 cases where these two categories of associations can be compared with regard to our relative measures of staff. In all cases but three (concerning staff per 1000 employees on aggregate in the case of Denmark and at peak level in the UK and Italy) the general or principal associations are better staffed than the SME associations. The scale of difference is considerable. In the majority of these cases the general or principal associations are better staffed by factor 10 or even more.

186 It should be noted that the figures for the Greek associations are very rough estimates which probably lack reliability for such comparison.

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Financial Resources

It is most difficult to collect data on the financial situation of the associations. Table 8 informs about the composition of revenues of several associations. The lion's share of revenues comes from member dues in all cases, with the exception of Sweden's SN. The main income of SN stems from interests from own capital, namely the Insurance Fund which is devised to finance industrial action. Revenues from sales of services usually rank second in terms of their importance as a source of income, although they amount no more than approximately 10 percent to the associations' total income. This is because services are used as an incentive for membership, such that they are normally offered free of charge (see Table 6). Revenues from the state and obligatory levies seem to be almost irrelevant. MEDEF which reports a comparatively high share of such income is an exception to this finding. This corresponds with the encompassing system of state-backed resource endowment in France. Against this background, the almost complete irrelevance of this source of income in most of the other cases is surprising, since many country studies do inform about practices of state-backed resource endowment. Notably, data on the composition of revenues are lacking just in some of those countries (i.e. the Netherlands and Spain), where such practices are elaborated. As an insider stated, more than 50 percent of the revenues of CEOE are provided by the state. Overall, there is thus good reason to assume that Table 8 rather under-estimates the actual relevance of this source of income. As far as member dues are concerned, one has to differentiate between dues from company members and dues from member associations, in accordance with how an association defines the unit of membership. Interestingly, even some confederations accept the direct membership of firms, aside from membership of associations. The SME associations and the general or principal associations show differences in this practice. There are only three of the 12 SME associations (i.e. the Danish HVR, the Swedish Företagarna and the Portuguese CPPME) which have firms as members. More than half of Företagarna's 80 000 member companies are directly affiliated. In the case of HVR and CPPME direct firm membership is some kind of a residual, since a company can become a member of CPPME only when there is no appropriate lower-level association which the company might join. In comparison to this, direct firm membership is more widespread among the general or principal associations. Six of the 14 voluntary confederations of this type (i.e. IBEC, CIP, SEV, VNO-NCW,CEOE and CBI) accept this kind of membership.187 In all these cases direct firm membership is designed to attract very large firms. Obtaining the privileged status of a direct affiliate to the confederation, these firms play a key role in associational affairs. This includes their financial contributions. In two of the three confederations for which data on the composition of revenues are documented the member firms account for far more than half of total revenues (i.e. 88 percent regarding IBEC and around 65 percent in the case of the CBI).188 This underpins the fact that the general or principal associations can take advantage of a two-step recruitment strategy which enables them to overcome the collective-action problem without exogenous (i.e.mainly state-based) support: First of all, they may concentrate on recruiting large firms by attributing formally or informally a distinct status to them, such as direct membership at confederal level. They can then invest some of the resources provided by their large members in services as a means of attracting the smaller companies within their domain. This two-step recruitment strategy results in an intra-associational trade off between large and small firms, as outlined above: The small firms can benefit from services in exchange for the prevalence of the large members in interest representation. Otherwise put, the two-step 187 In the case of CEOE direct firm membership is not formally but de facto established, as several large firms are directly represented on the General Council and the Executive Board.188 Depending on circumstances, large firms may also significantly contribute to the confederal budget via voluntary subsidies. For instance, ten large members voluntarily paid each EUR 60 000 to CEOE's budget in 2001.

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recruitment strategy helps overcome the problem of collective action by offering two distinct selective incentives one of which is tailored to large members, whereas the other one, to SMEs.SME associations cannot adopt this recruitment strategy. As the membership figures show, this does not mean that they are less successful when it comes to attracting members. Most SME associations count more member firms than their general or principal counterpart. The main disadvantage of the SME associations probably lies in comparative scarcity of financial resources. Any systematic analysis of the financial situation of the BIAs is burdened with a lack of comparable data on their budget. However, since the size of the staff tends to correlate with an association's budget189, the number of staff per 1000 member firms and per 1000 employees covered (Table 7) can be taken as a yardstick for the associations' financial strength. These measures suggest that the general or principal associations dispose of larger budgets than the SME associations, even when the former have less member firms than the latter.

CONCLUSIONS AND POLICY IMPLICATIONS

Successful interest representation means that important interests are taken up by associations capable of both attracting their potential members and exerting effective influence upon their relevant interlocutors (Traxler and Schmitter 1995). As outlined above, important interest cleavages relate to differences in firm size. Moreover, the difference between small and large firms seems to constitute the most profound divide in interests aside from sectoral differentiations within the business community, since the cross-sectoral associational systems of business are mainly differentiated by domain specifications referring to firm size (Table 1).Firm size has an impact also on the associations' capacity to recruit members and to exert effective influence. As regards recruitment capacities, the impact of firm size ensues from the fact that a company's willingness to associate generally increases with firm size. This has three major implications for representing business interests. First, the large firms usually prevail in the general associations. Hence, SMEs are forced to set up separate associations for advancing their special interests. Second and more surprisingly, the higher propensity of large firms to associate does not translate into a lower level of membership of the SME associations in either absolute or relative terms. On the contrary, SME associations often have more members and a higher density in terms of companies than the general or principal associations, such that they are no less representative than their general or principal counterparts (Table 7). One important reason for this is that almost all companies of the EU-15 are SMEs according to conventional standards with the consequence that the membership potential of the SME associations does not strongly differ from that of the general associations. Hence, the differentia specifica between the general or principal associations and the SME associations is that the former recruit the very large firms in contrast to the latter. The special focus of the general or principal associations on large companies tends to induce so many smaller companies to join the SME association rather than the general or principal association that the former often outnumber the latter in terms of members. The specific focus on local interests, as is crystalized in the high degree of internal differentiation into subunits, helps the SME associations to attract members. Third, the presence of the large firms in the general or principal associations brings about superior resource endowment, as compared to the SME

189 This corroborates the comparison of staff and income of those few BIAs for which income data are available from an earlier study (Pestoff 1994).

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associations: This comparative resource superiority includes employees covered, staff employed and plausibly available budgets (Table 7).When considering the impact of firm size on recruitment capacities, one should not neglect that country-specific institutions, namely state regulations also matter. The relevance of these institutions lies in their effect on the problem of collective action. As is well-known, the problem of collective action is that the representation of interests is a collective good from which anybody interested can benefit regardless of whether he/she contributes to its provision. Hence, it is rational from an individualistic point of view not to associate but to take a free ride, so as to participate in the collective good without bearing the costs of its provision. Selective incentives can help overcome the problem of collective action, since they punish non-members or reward members so that the benefits of membership outweigh its costs (Olson 1965). Services are designed to work as selective incentives. However, their use is restricted in two main respects. First, services can hardly be provided before a critical mass of member needed for financing the service activities is already established. Second, an association's services often to compete with commercial providers. This may deter service companies from joining their associational competitor. In the case of rather sophisticated services which are not merely a by-product of interest representation, companies may find commercial providers more attractive even when the associational services are free of charge This is because the membership dues must cover the costs of services plus the costs of interest representation in contrast to the price for commercial services. Moreover, dues must be paid on a regular base, whereas one buys commercial services only when needed. Against this background, state regulations which equip the associations with selective incentives become all the more important. Statutory provisions for obligatory membership are the regulations most directly related to overcoming the collective action problem. If provisions for obligatory membership exist, then they refer to the chambers which do not figure prominently in matters of interest representation, with the notable exception of the chambers of Austria, Germany and Luxembourg. However, there are numerous other state regulations whose supportive effect on membership and/or revenues is less manifest but no less effective than obligatory membership.190 Since the kind of such regulations fairly differ across countries, it is hard to capture their actual effect on membership in a systematic, comparative way. We thus concentrate here on that regulation which is most common to the EU-15: that is, statutory provisions for extending the purview of multi-employer collective agreements to employers who are not members of the signatory business association. Extension provisions set a selective incentive to associate, since employers cannot rule out the possibility of being obliged to a collective agreement, even when they are unaffiliated. Under these circumstances, they have good reason to join so as to be entitled to participate in the bargaining process, the outcomes of which may be binding on them in any case (Gladstone 1984). The power of extension procedures as a selective incentive for membership should increase with the likelihood of its use. To examine the membership effect of extension, we thus group the countries according to this criterion. This yields three groups of countries (Table 9):191 First, there are countries where extension is standard practice without notable preconditions for representativity (i.e. Belgium, France, Portugal and Spain). The second group includes countries where extension practices are either widespread but bound to a notable threshold of 50 percent or more of the workers covered by the respective agreement without extension (i.e. Finland, Greece and the Netherlands) or rarely used regardless of formal requirements for representativity (i.e. Germany and Ireland). In the case of high thresholds of representativity as well as limited extension practices the possible membership

190 Revenues from the state facilitate recruitment, since they enable the associations to keep the member dues rather low. The comparatively high density ratio of companies in the case of CEOE (Table 7) is probably the consequence of very low, state-sponsored member dues. 191 This classification of countries relies on IST(2001) and Traxler et al. (2001).

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effect of the extension provision should be smaller than that in the first group of countries. Third, any statutory provision for extension is absent in Denmark, Italy, Sweden and the UK. As a consequence, extension-based selective incentives for membership are also lacking. Table 9 considers only the voluntary BIAs which are either mixed associations or pure employer associations which are involved in collective bargaining.192 This is because extension provisions can deploy a membership incentive solely with regard to BIAs which are parties to collective bargaining. In contrast to the above pair wise comparison of the most important BIA and the largest SME association per country (which is designed to detect the impact of firm size on the associations and to control for country effects) this analysis can include all associations for which data are available, since it is precisely the country effect (i.e. the differences in extension practices across countries) which interest us here. The findings concur with earlier comparative studies of the impact of extension practices on employer density (Traxler 1998, Traxler et al. 2001). The level of density in terms of both companies and employees tends to increase with the coverage of extension. On average, less than one third of the companies and the vast majority of employment within an association's domain is actually organized only when the extension of collective agreements is unrestricted practice. In countries where extension is practised in a restricted way less than 20 percent of the companies and about 40 percent of employment within an association's domain is still under its umbrella. If extension practices are completely lacking, the associations can generally organize less than ten percent of the companies and little more than one third of employment. What the three groups, however, have in common, is that density of companies is higher than density of employees. This suggests that extension practices do not offset the impact of firm size on the willingness to associate. Regardless of this, there is an asymmetry in the supportive membership effect of extension provisions, since the general or principal associations are more engaged in collective bargaining than most SME associations.193

The special importance of legally-based extension schemes to associational resource endowment results from the fact that it is also used as a means of fund-raising in several countries (i.e. Belgium, France and the Netherlands). In this case, multi-employer agreements contain provisions for special charges on employers which are then generalized by extension, obliging also unaffiliated firms to pay the charges. While these charges are usually devised to bear the costs of the provision of collective goods (e.g. vocational training, health and safety care), part of them is used by the signatory associations for financing their staff. Overall, it is no exaggeration to say that extension practices tend to blur the formal distinction between voluntary and obligatory membership. Turning from questions of member recruitment to the issue of exerting influence on interlocutors, one finds that SME associations are less frequently incorporated in institutionalized forms of macroconcertation than the general or principal associations. There is even one case (i.e. Finland) where the SME association is excluded from macroconcertation even though it represents more companies than each of those BIAs integrated in concertation policies. The explanation for this refers to industrial relations. At cross-sectoral peak level, the political weight of BIAs is strongly contingent on whether and how much they deal with industrial relations issues. In particular, the role of the BIAs in macroconcertation depends on their involvement in collective bargaining. The scope of macroconcertation normally includes labor costs and wage policy. This has two implications. First, seen from the government perspective, macroconcertation makes sense only, when organized business and labour have a grip on the labour market through multi-employer bargaining. Hence, there is no basis for a macro social dialogue in countries where single-employer bargaining prevails ( i.e. the UK 192 Due to the criterion of voluntariness, Austria and Luxembourg are excluded from this analysis, since all the cross-sectoral BIAs engaged in bargaining there can rely on obligatory membership.193 Unfortunately, figures on density for SME associations involved in bargaining are so sparse that a detailed analysis of whether extension practices have a differential impact on SME associations and the general or principal associations cannot be done.

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among the EU-15). Second, if multi-employer bargaining predominates and its impact is possibly magnified by extension practices, then there is a need of the governments to concert their policies with the two sides of industry. In this case the BIAs which are most engaged in collective bargaining are the partners preferred by the governments as well as by the unions. These are the BIAs which cover most employees in the course of the bargaining process and which are most able to invest resources in bargaining matters. Put otherwise, what makes a certain BIA the principal voice of business in a country is the leading role in industrial relations issues in combination with superior resources.There are several factors which tend to restrain the role of the SME associations in industrial relations, namely in collective bargaining: limited financial resources that must be used primarily for services; the predominance of local orientations and a weak union presence in the companies. Regardless of this, the SME associations must prepare themselves for directing more attention to industrial relations issues, if they want to maintain or even magnify their political influence. This is for four main reasons:

- Due to the demographic development skill formation will gain in importance as a means of avoiding shortages of qualified labour. Skill formation is a matter of public policy for SMEs rather than for the large companies, since the former much more than the latter must rely on collective efforts to deploy qualifications.

- As a consequence of economic integration, the distinct policy fields become more and more interdependent. This means that even associations that concentrate on product market interests have increasingly to take labor market problems and industrial relations into consideration.

- With growing decentralization of collective bargaining which nevertheless maintains high levels of coverage via extension, the need for related services grows. This holds true especially for SMEs which dispose of less industrial relations expertise than their larger counterparts.

- It is an EU strategy to involve the supranational as well as the national social partners in matters of social policy. Since European governance requires an articulated, multi-level approach, participation in the European social dialogue needs to be flanked by analogous efforts at the national level.194

The amount of adjustment pressures that arise from the above developments depends on the associations' current position in the national system of public-policy making and industrial relations. At any rate, it is clear from the above analysis that resource shortages create a serious obstacle to the SME associations when it comes to coping with these challenges. This makes state support important. This does not necessarily mean public funding. The alternative is to establish institutional arrangements that empower the associations to raise their own resources. Extension schemes can be seen as a widespread paradigm case of such model of "self-governance". However, we can also learn from this case that the effectiveness of institutional arrangements depends on certain preconditions that relate to a country's traditions and its overall institutional set-up. Hence, there is no "one best way" but the need to adopt general models of institution-building in a way that matches the properties of a certain country.

194 EU social partnership has strengthened and consolidated analogous processes mainly in such member states (i.e. Greece, Portugal and Spain) where a long-term tradition of collective bargaining and social dialogue did not exist. In the UK too, the business associations have been able to use their participation in the European social dialogue for sharpening their profile as an important voice in social policy matters. For the above reason, this EU impulse has not given rise to national concertation.

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Table 1: The systems of cross-sectoral national business associations (EU-15), 2003

Coun-tries

Number of assoc-iations

Demarcation by membership domainGeneral

(A)Macro-sector

(B)

Cooperatives(C)

Non-profit (D)

Family owner-ship (E)

Directors(F)

MacrosectorLarge firms

(G)

SMEs(H)

Craft(I)

Combination of:BxH CxH HxI

A 4 WKÖ IV ÖRV, ÖGVB 2 FEB/VBO CNM/

CSPODK 2 DA HVRFIN 4 CCI TT+,PT+ SY+

F 5 MEDEF ACFCI CGPME APMC UPA

GER 8 BDA BDI,DIHK

ASU AWM,BVMWBDS-DGV

ZDH

GR 4 KEEE ESEE SEV GSEVEE

IRL 3 IBEC, CCI ISME

I 12 CI LC, UNCI CAS CAP,CCO,CE

CCOO,AGCI

CAR,CNA, CL

LUX 1 UELa

NL 2 VNO-NCW MKB+

P 5 CIP, AIP, AEP

CCP CPPME

SP 2 CEOE, CSCC

S 7 SN KFO Idea, AA Före+, Föref, SINF

UK 5 CBI, BCC IoD FSB, FBP

Total 66 20 9 5 2 1 1 1 15 3 3 2 4

% 100.00 30.30 13.64 7.58 3.03 1.52 1.52 1.52 22.73 4.55 4.55 3.03 6.06

Notes: The principal association of a country is underlined; chambers are put in italics.+ Informal membership demarcationa Several affiliates are chambers.

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Table 2: The formal definition of SMEs by the SME associationsa, 2003

Country Number of employees

< 15 < 150 < 250 < 250 < 500 unspecified

DK HVR

FIN SY

F UPA CGPME APCMC

GER AWM,

BVMW,

BDS-DGV

ZDH

GR GSEVEE

IRL ISME

I CAR CCO, CAS, CL,

CNA, CE, CCOO,

CAP, AGCI

NL MKB

P CPPME

S Före, Föref, SINF

UK FSB FPB

Total 1 2 2 1 4 17

% 3.70 7.41 7.41 3.70 14.82 62.96

Notes:a Categories H, I, BxH, CxH, HxI according to Table 1b Practically relevant definition; formally, the domain includes firms with no more than 50 employees.

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Table 3: Number of enterprises and employment by country and enterprise size-class, 2001

number of enterprisescountry micro small medium-sized large total

in 1000s in % in 1000s in % in 1000s in % in 1000s in % in 1000sAustria 195 85.9 26 11.5 5 2.2 1 0.4 227Belgium 522 95.1 23 4.2 3 0.5 1 0.2 549Denmark 161 89.5 15 8.3 3 1.7 1 0.5 180Finland 201 93.5 11 5.1 2 0.9 1 0.5 215France 2339 93.1 144 5.7 24 1.0 5 0.2 2512Germany 3155 88.2 364 10.2 44 1.2 13 0.4 3576Greece 797 97.7 17 2.1 2 0.2 0 -- 816Ireland 81 86.2 11 11.7 2 2.1 0 -- 94Italy 3992 95.5 170 4.0 16 0.4 3 0.1 4181Luxembourg 19 86.4 2 9.1 1 4.5 0 -- 22Netherlands 500 90.2 42 7.6 10 1.8 2 0.4 554Portugal 644 93.5 38 5.5 6 0.9 1 0.1 689Spain 2593 94.7 126 4.6 17 0.6 3 0.1 2739Sweden 249 90.2 22 8.0 4 1.4 1 0.4 276United Kingdom 3281 94.6 156 4.5 25 0.7 7 0.2 3469EU-15 18729 93.2 1167 5.8 164 0.8 39 0.2 20099

321

employmentcountry micro small medium-sized large total

in 1000s in % in 1000s in % in 1000s in % in 1000s in % in 1000sAustria 563 23.9 512 21.7 463 19.7 816 34.7 2354Belgium 1433 42.9 521 15.6 346 10.3 1041 31.2 3341Denmark 448 28.4 362 22.9 276 17.4 494 31.3 1580Finland 314 26.1 206 17.2 191 15.9 490 40.8 1201France 5949 33.6 3303 18.7 2510 14.2 5929 33.5 17691Germany 8580 28.6 6090 20.3 3316 11.1 11962 40.0 29948Greece 1068 57.0 319 17.0 238 12.7 249 13.3 1874Ireland 229 25.4 212 23.5 186 20.7 274 30.4 901Italy 7010 48.2 3076 21.1 1601 11.0 2870 19.7 14557Luxembourg 50 23.4 51 23.8 54 25.2 59 27.6 214Netherlands 1360 24.7 1014 18.5 1054 19.2 2068 37.6 5496Portugal 1192 37.6 729 23.0 577 18.2 671 21.2 3169Spain 6085 46.7 2612 20.0 1650 12.6 2694 20.7 13041Sweden 624 27.4 413 18.1 362 15.9 877 38.6 2276United Kingdom 6201 29.4 3002 14.3 2482 11.8 9362 44.5 21047EU-15 41106 34.6 22422 18.9 15306 12.9 39856 33.6 118690

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Notes:micro 0 -9 employeessmall 10 -49 employeesmedium-sized 50 -249 employeeslarge >=250 employeestotal irrespective of number of employeesenterprises are in the following sectors of industry: extraction (incl. energy); NACE C+E

manufacturing; NACE D construction; NACE F wholesale trade; NACE 51 retail distribution (incl. car and repair); NACE 50, 52transport, communication; NACE I producer services; NACE J, K personal services; NACE H, N, O

Source:EIM Business & Policy Research

323

Table 4: The average number of employees per potential member firm and per member firm: the principal associations

Country Association Average number of employees

Potential members 1 Members*

A WKÖ2 11.15 11.1

B FEB/VBO 4.74a 32.0

DK DA 9.14d 22.5

FIN TT 6.74d 92.9

F MEDEF 5.85e 20.0

GER BDA 10.0

GR SEV 158.3

IRL IBEC 12.64f 100.4

I CI 3.95e 37.8

LUX UEL3 11.25 10.0

NL VNO-NCW 8.34a 47.5a

P CIP 3.84c 18.9

SP CEOE 3.74b 5.0b

S SN 2.75e 26.3

UK CBI 4.55g 40.0

Notes:

1 As defined by membership domain2 Obligatory membership3 Obligatory membership in several affiliates4 Data according to international statistics (i.e. business sector; agriculture excluded)5 Data according to national statisticsa 1995b 1997c 1998d 2001e 2002f 2002/2003g 2003* Computed on the basis of the figures in Table 7, unless specific years of reference are

indicated above.

324

Table 5: The cross-sectoral national business associations by type of interest representation (EU-15), 2003

Coun-tries

General associations SME associations1 Other associations2

Mixed with CB

Mixed without CB

EO TA Mixedwith CB

Mixed without CB

EO TA Mixedwith CB

Mixed without CB

EO TA

A WKÖ ÖGV4, ÖRV4

IV

B FEB/VBO CNM/CSPODK DA HVR3, 4

FIN CCI SY3, 4 TT, PTF MEDEF CGPME, UPA APMC ACFCI

GER BDA ZDH AWM, BVMW,BDS-DGV

ASU, DIHK BDI

GR KEEE GSEVEE SEV, ESEE

IRL IBEC CCI ISME3, 4

I CI CAR, CCO, AGCI, CAS, CE, CNA, CL, CAP, CCOO

UNCI, LC

LUX UELNL VNO-NCW MKBP CIP AIP, AEP CPPME CCP

SP CEOE CSCCS SN SINF Före Föref KFO, AA,

IdeaUK CBI 3 BCC FSB, FBP IoD

Total 12 1 1 6 18 6 0 3 9 4 3 3% 18.18 1.52 1.52 9.09 27.27 9.09 0.00 4.55 13.64 6.06 4.55 4.55

Notes: The principal assocation of a country is underlined; chambers are put in italics1 Categories H, I, BxH, CxH, HxI according to Table 12 Categories B, C, D, E, F, G according to Table 13 Limited involvement in collective bargaining4 Not participating in macroconcertationCB = Collective bargaining

325

Table 6: Service activities: the principal associations and the largest SME associations in comparison, 2003Services dealing with Form of

provisionFocused task

Industrial relations

Economic policy

Suppliers Customers Vocational training

Further training

Standardization of products and product quality

A: WKÖ ––––

yes yes yes yes yes yes yes F E

B: FEB/VBO ––––

F IR

DK: DA HVR

yes yesyes

yesyes

yesyes yes

FIN: TT SY

yesyes

yesyes

yesyes

yesyes

yesyes

yesyes

yesyes

FF

E

F: MEDEF CGPME

yesyes

yesyes

yesyes

yesyes

yesyes

yesyes

FF

IRS

GER: BDA ZDH

yesyes yes yes

yesyes

yesyes

FF

GR: SEV GSEVEE

yesyes

yesyes

yesyes

yesyes

yesyes

yesyes

yes FF

IRIR

IRL: IBEC ISME

yesyes yes

yes yesyes yes

FF

EE

I: CI CAR

yesyes

yesyes

yesyes

yesyes

yesyes

yesyes

FF

IRIR

LUX: UEL –––NL: VNO-NCW MKB

yesyes yes yes yes

FF

IRIR

P: CIP CPPME

yes yesyes

yes yes yesyes

yesyes

FF

IRIR

SP: CEOE ––––

yes yes yes yes F IR

S: SN Före

yes yesyes

yesyes

yesyes

yesyes

FF

EE

UK: CBI FSB yes yes yes yes yes F

IRS

Notes: F = Completely or mainly free of charge; IR = Interest representation; S = Services; E = Interest representation and services are equally important

326

Table 7: Resources: the principal associations and the largest SME association in comparison, 2002/2003 (unless indicated otherwise)

Member firms*

Employees covered*

Density in terms of

firms

Density in terms of

employment**

Peak-level staff

Aggregate staff

Staff per 1000 member firms Staff per 1000 employees covered

Peak Aggregate Peak AggregateA: WKÖ+

––––200.1 2222.6 100.0 100.0 1120 4615 5.574 22.967 0.504 2.076

B: FEB/VBO ––––

50.0b 1600.0b 9.7 52.1

DK: DA HVR

34.022.5

763.42

130.016.511.94

38.325.34

14540

4.2651.778

0.1900.308

FIN: TT SY

5.688.0

520.0450.0

2.539.8

34.554.7

16040

17850

28.5710.455

31.7860.568

0.3080.089

0.3420.111

F: MEDEF CGPME

750.01500.0

15000.013000.0

29.960.0

83.281.1

20030

0.2670.020

0.0130.002

GER: BDA ZDH+

2000.0850.0

20000.05648.0 100.0 100.0 100

30000.118

1.5000.018

0.150

GR: SEV GSEVEE

0.6101.9

95.0 20.012.5

20.012.5

4410

73.3300.098

0.463

IRL: IBEC ISME

7.03.6

699.078.0

7.2 67.2 1788 10

25.5712.222 2.778

0.2550.103 0.128

I: CI CAR

113.3520.0

4280.1450.0

2.9 23.3 22090

4600 1.9420.173

40.597 0.0510.200

1.075

LUX: UEL++

–––22.5 224.0 90.0 80.8 5 0.222 0.022

NL: VNO-NCW MKB

80.0175.0

3800.0c

1000.0a14.431.73

78.435.1

16085 85

2.0000.486 0.486

P: CIP CPPME

45.0a 85.0a 6.87.0-8.0

30.7 223

SP: CEOE ––––

1300.0 5000.0b 46.8 52.3 110 0.055

S: SN Före

57.082.0

1500.0312.0a

6.79.81

54.719.0

32960

1304160

5.7720.750

22.8772.000

0.214 0.869

UK: CBI FSB

250.0d

185.010000.01250.0

7.25.0

40.49.5

255140 140

1.0200.757 0.757

0.0230.112 0.112

Data source: a = IST 1999, b = Visser 1999, c = Traxler et al. (2001), d = Burgess 1998Notes: * 1000s, ** Density defined as member companies plus employees covered as a percentage of total employment in the membership domain1 = SMEs < 119 employees, 2 = adjusted for part-time jobs, 3 = SMEs < 250 employees, 4 = SMEs <50 employees+ Obligatory membership, ++ Part of the affiliates is based on obligatory membership

327

Table 8: Composition of revenues: the principal associations and the largest SME associations in comparison

Membership dues Voluntary subsidies

from members

Sales of services

Obligatory levies

Revenues from the

state*

OtherFirms Associations

A: WKÖ ––––

85.7 0.0 0.0 4.2 0.0 2.5 7.6

B: FEB/VBO ––––

0.0 90.0 0.0 0.0 0.0 0.0 10.0

DK: DA HVR

****

FIN: TT SY 0.0 88.0 0.0 12.0 0.0 **

0.0

F: MEDEF CGPME

0.0 65.9 0.0 7.7 n.a. 26.5 0.0

GER: BDA ZDH+

0.0 100.0 0.0 0.0 0.0 0.0 0.0

GR: SEV GSEVEEIRL: IBEC ISME

88.0 < 1.0 0.0 11.0 0.0 0.0 0.0

I: CI CAR

0.0 84.0~ 100.0

0.0 0.0 0.0 0.0 16.0

LUX: UEL++

–––0.0 100.0 0.0 0.0 0.0 0.0 0.0

NL: VNO-NCW MKBP: CIP CPPME

15.030.0

77.035.0

0.025.0

0.05.0

0.00.0

0.05.0

8.00.0

SP: CEOE ––––S: SN Före

0.0 25.095.5***

0.00.0

10.00.5

0.00.0

0.00.0

65.04.0

UK: CBI FSB

64.688.3

6.00.0

0.00.0

0.00.9

0.00.0

**

0.028.410.8

Notes:* Including contracts with government** Existing and of minor importance*** Revenues from firm members and member associations**** Mainly revenues from member associationsn.a. not available

328

Table 9: Associational density by extension practices: the principal associations* and the largest SME associations*

Categories of extension practices

Density in terms of companies

Density in terms of employment

Extension is standard practice

B: FEB/VBOF: MEDEF CGPMEP: CIPSP: CEOE

Unweighted mean:

9.729.960.06.846.8

30.6

52.183.281.130.752.3

59.9Extension bound to high level representativity requirements or rarely used

FIN: TT SYGR: SEV GSEVEEIRL: IBECNL: VNO-NCW MKB

Unweighted mean:

2.539.820.012.57.214.431.7

18.3

34.554.720.012.567.278.435.1

43.2No extension practices

DK: DA HVRI: CIS: SNUK: CBI

Unweighted mean:

16.511.92.96.87.2

9.1

38.325.323.354.740.4

36.4

Note:* Only voluntary associations directly or indirectly involved in collective bargaining

329

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D. APPENDIX: LIST OF ABBREVIATIONS

A AustriaAA ArbetsgivaralliansenACFCI Chambres de Commerce et d'IndustrieAPMC Assemblée permanente des chambres des metiersAEP Associação Empresarial de PortugalAGCI Associazione Generale Cooperative ItalianeAIP Associação Industrial PortuguesaASU Arbeitsgemeinschaft Selbständiger UnternehmerAWM Aktionsgemeinschaft Wirtschaftlicher MittelstandB BelgiumBCC British Chambers of CommerceBDA Bundesvereinigung der Deutschen ArbeitgeberverbändeBDI Bundesverband der Deutschen IndustrieBDS-DGV Bundesverband der Selbständigen – Deutscher GewerbeverbandBVMW Berufsverband mittelständische WirtschaftCAP Confapi - Confederazione italiana della piccola e media industriaCAR Confartigianato - Confederazione Generale Italiana dell’ArtigianatoCAS Casartigiani - Confederazione Autonoma Sindacati ArtigianiCBI Confederation of British IndustryCCI Central Chambers of Commerce of FinlandCCI Chambers of Commerce of IrelandCCO Confcommercio - Confederazione Generale del Commercio, del Turismo,

dei Servizi e delle Piccole e Medie ImpreseCCOO Confcooperative - Confederazione Cooperative ItalianeCCP Confederação do Comércio e Servicos de PortugalCE Confesercenti - Confederazione italiana esercenti attività commerciali,

turistiche e dei serviziCEOE Confederación Española de Organizaciones EmpresarialesCGPME Confédération Générale des Petites et Moyennes EntreprisesCI Confindustria - Confederazione Generale dell'Industria ItalianaCIP Confederação da Indústria PortuguesaCL CLAII (Confederazione delle libere associazoni artigiane italie)CNA Confederazione Nazionale dell'Artigianato e della Piccola e Media ImpresaCNM/CSPO Confédération des Entreprises du Non Marchand/Confederatie van de

Social Profit OndernemingenCNPF Conseil National du Patronat FrançaisCPPME Confederação das Micro, Pequenas e Médias EmpresasCSCC Consejo Superior de Cámaras de ComercioDA Dansk ArbejdsgiverforeningDIHK Deutscher Industrie- und HandelskammertagDK DenmarkEK Elinkeinoelämän KeskusliittoESEE National Confederation of Greek Traders F FranceFBP Forum of Private BusinessFEB/VBO Fédération des Entreprises de Belgique/Verbond van Belgische

OndernemingenFIN FinlandFöre Företagarna

332

Föref FöretagarförbundetFSB Federation of Small BusinessGER GermanyGR GreeceGSEVEE General Confederation of Greek Small Businesses and Trades HVR HåndvaerksrådetI ItalyIBEC Irish Business and Employers ConfederationIdea Arbetarrörelsens FörhandlingsorganisationIoD Institute of DirectorsIRL IrelandISME Irish Small and Medium Enterprises Association IV IndustriellenvereinigungKEEE Central Association of Hellenic ChambersKFO Kooperationens förhandlingsorganisationLC Legacoop - Lega nazionale delle cooperative e mutueLUX LuxembourgMEDEF Mouvement des Entreprises de FranceMKB Midden- en Kleinbedrijf NederlandNL NetherlandsÖGV Österreichischer GenossenschaftsverbandÖRV Österreichischer RaiffeisenverbandP PortugalPT PalvelutyönantajatS SwedenSAF Svenska ArbetsgivareföreningenSEV Federation of Greek IndustriesSINF Svensk IndustriföreningSN Svenskt NäringslivSP SpainSY Suomen YrittäjätTT Teollisuus ja TyönantajatUCM Union des Classes MoyennesUEL Union des entreprises luxembourgeoisesUK United KingdomUNCI Unione Nazionale Cooperative ItalianeUNIZO Unie van Zelfstandige OndernemersUPA Union professionnelle artisanaleVNO-NCW Vereniging van Nederlandse Ondernemers-Nederlands Christelijke

WerksgeversverbondWKÖ Wirtschaftskammer ÖsterreichZDH Zentralverband des Deutschen Handwerks

333