Lost or in Transition? Business Interest Groups and Organised Labour in Society

Business interest groups in many countries have in recent decades become dominated by the interests of multinational corporations (MNCs). This is a trend that intensified in the early 2000s with the merger of a number of peak business interest groups at the national level. As separate groups, they represented the interests of society, labor as well as those of smaller businesses. In effect, small and medium sized enterprises, societal and labor concerns are increasingly being left out of critical decisions. Are they lost in the institutional mix or simply in transition? Labor appears to have lost some degree of influence not only the future direction of society but also the character and nature of larger societal concerns, e.g. how and what is taught in schools, care for the needy, the ill or the infirm, and ensuring that pensions are provided. Instead, the interests of MNCs are playing a larger role in influencing government policy through peak business interest groups. Organized labor and individuals are no longer adequately represented. There are a number of reasons for this trend. First, it was encouraged by the severing of formal links between ruling political parties and organized labor as the fortunes of the ruling parties have come into question. In Sweden, for example, the dominant labor organization, LO or Landsorganisationen, cut its ties with the Social Democratic Party in 1991. Previously membership in LO had automatically meant membership in the Social Democratic Party. This in effect represented a break in the social contract that dated back to 1938 and is credited with Sweden’s dramatic growth and its so-called ‘Third Way’. Further damage to that contract came in 2001 when the two peak business interest groups, IF or Industriförbundet and SAF or Sveriges Arbetarföreningen, merged to form Svenskt Näringsliv. Without the old ties linking workers’ and business interests inside the new organization Svenskt Näringsliv, business- government relations had become skewed toward the strong voice and power of the multinationals (interview with SN, 2012). In Japan, because of the differing nature of its capitalist system, the breaks in the social contract, which is largely credited with creating Japan’s economic miracle, were slightly different. The first crack in the system came in 1993 when Japan’s Keidanren (known as the boss of all industry) severed its financial ties to the Liberal Democratic Party (LDP). Like the Social Democrats in Sweden, the change in fortunes of the LDP was primarily due to the challenges at the ballot box that the party faced from other smaller parties. Keidanren could no longer count on its historically good relations with and massive network of contacts within the LDP to get things done in the economy. The second crack in Japan’s social contract came in 2002 when the two main business interest groups, Keidanren and Nikkeiren, merged. Nikkeiren, like SAF in Sweden, represented the social welfare interests of business e.g. pensions, labor rights and healthcare. The merger signaled to all that Japan’s workers had lost its strongest voice and that the postwar system was dead (interviews with Keidanren, 2012). A second factor is the interconnected nature of our globalized economy. In other European countries, mergers of peak business interest groups have become a trend, namely, in Ireland in 1993 and in Norway in 1989. On the one hand pressure on EU member countries to merge came from the EU itself (notably Business Europe) that argued for the benefits of having only one peak business interest group in each country. Many EU member countries have not had two separate business interest groups and as noted above some have merged. On the other hand, much of the pressure on these organizations to merge originated from the members themselves. Many businesses found they did not need two domestic organizations in their increasingly globalized business activities. Globalization gradually made it clear that businesses need to keep an eye on many markets. As a result, domestic market interest groups became just one of the many business interest organizations in which they needed to participate. Membership in an array of organizations can be quite expensive, thus firms took an active position in favor of mergers. Further, because the domestic market contributed to a smaller and smaller proportion of their revenues, the need for more than one domestic business interest group came into question. It was not unexpected, therefore, that there would be mergers. Third is the increased pressure on governments from big business to side step the World Trade Organization, which is currently stalled. Instead, the business lobby currently pressures governments via business interest groups and other direct channels to move forward with negotiations on preferential trade agreements, which are seen as a positive alternative to the WTO. Such agreements are perceived of as favoring big business at the expense of smaller and medium-sized companies. Currently several major agreements are under negotiation. The Transatlantic Trade and Investment Partnership between the EU and the USA and the EU-Japan Free Trade Agreement represent two examples of unprecedented preferential trade agreements that could redefine trade and investment relations in three of the world’s advanced industrialized areas. In summary, all of these pressures have altered the traditional balance between business, labor and society, with the apparent result that workers and the interests of society at large may have lost their voice in the institutional mix. I argue that individuals and societal interests will need to be better represented in the future. The question is how. Perhaps institutions, such as political parties and grassroots network organizations, that represent individuals, who do not see themselves as party to traditional organized labor have the capacity to fill the void. (933 words) SASE Mini-conference: Multi-level institutions and the changing global-local dynamics of production in a context of crisis PANEL D: Global-local dynamics of production and the eroded foundations of labour protection