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Most Highly Unionized Countries Top ‘Happiest Countries” List, Again. Why?

Originally Posted September 10, 2013

Today, the United Nation’s released its second annual “World Happiness Index”.   One thing that is striking about these studies is that the ‘most happy countries’ are always countries with the a long tradition of strong government social welfare programs, high overall tax levels, and of interest to a blog on work law, high levels of collective bargaining coverage.  That is, in happy countries, unions and collective bargaining play a substantial role in the setting of conditions of work, which creates a strong middle class.  Not surprisingly, therefore, the ‘happiest’ countries also tend to be the least unequal societies:  they score well on measures of income inequality.  For example, the top 2 most happiest countries (Denmark, Norway) just happen to have the least income inequality in the Western World. 

That’s interesting, from a labour policy perspective.

The new UN survey  measures happiness by looking at the perceptions of citizens over six factors:  real GDP per capita, healthy life expectancy, having someone to count on, perceived freedom to make life choices, freedom from corruption, and generosity.  This years’ top 5 are Denmark, Norway, Switzerland, Netherlands, and Sweden.  Here is  a break down of those countries by the percentage of workers there whose terms of employment are determined by collective agreements (collective bargaining coverage):

denmark

Denmark: Happy, and Unionized. Coincidence?

 

Denmark (percentage of workers covered by collective agreements bargained by unions, 80%)

Norway  (70%)

Switzerland (51%)

Netherlands (81%)

Sweden (88%)

 

Rounding out the Top 10:

Canada (33%)

Finland (91%)

Austria (95%)

Iceland (88%)

Australia (43%)

Pretty striking, isn’t it? Of the countries in the Top 10 Happiest, only Canada and Australia have collective agreement coverage rates of less than 50 percent.  The United States, by comparison, ranked 17th on the Happiness Index, where only about 8 percent of workers are covered by a collective agreement.

These findings are consistent with academic studies that have established a positive coorelation between unionization and personal satisfaction, as I noted in a 2010 post.  Given what we know about the effects of collective bargaining, the relationship should not be surprising. Empirically, we know that collective bargaining raises incomes, contributes to a stronger middle class, results in better health benefits and pensions, and produces safer jobs and better job security than the alternative system, in which employers usually fix working conditions unilaterally, subject to certain regulatory minimum standards.  We know that countries with high collective bargaining coverage have a broader distribution of wealth throughout society than countries with low collective bargaining coverage.  My colleague Professor Michael Lynk has nicely summarized these outcomes in this paper.

We might also expect that countries that respect collective bargaining rights are also more likely to provide a strong bundle of social benefits that tend to make like more enjoyable, and easier, for its citizens.  These countries operate under a different type of capitalism than prevails in countries, like the USA, where a belief in ‘market forces’ and ‘individual responsibility” borders on religious doctrine.  In these ‘happy’ countries, the role of ‘social partners’, like unions, has long been accepted as a necessary counterbalance to capitalist forces.  Critics of strong government and unions like to deride these systems as ‘socialist’.  But whatever you want to call it, these systems consistently produce the happiest citizens in the world.

Unhappiness is Caused by Wage Envy

The Happiness Index provides another insight into why collective bargaining coverage might be associated with happiness.  In a very interesting segment of the report (pages 62-64), the authors explain that a significant factor affecting happiness is individual perceptions of ‘relative income’.  People become less happy when they believe their income is lower relative to a comparator, such as coworkers or friends.  This is something I’ve discussed before on this blog (see Why Do Workers Support Policies to Weaken Labour Rights?)  A theory might be that where large segments of the population have their wage and benefits fixed by collective agreements, rather than at the whim of human resources policies, there will be fewer gaps in compensation that seem arbitrary or unfair to people.  They can more easily understand differences in pay, because those differences are more likely to be transparent and explained in the collective agreements.

In contrast, in countries where union representation is lower, like the USA, unionized workers earn considerably more money and have better benefits and pensions.  Nonunion workers become resentful (unhappy) of this privilege, because they are relatively worse off than their perceived comparators in the unionized workplaces.  High collective agreement coverage reduces the potential for wage and benefit envy, which breeds unhappiness.  What do you think of that theory?  How would you refute it?

Question for Discussion

What do you think explains the correlation between high levels of collective bargaining coverage and the high levels of social happiness, as suggested in the Happiness Index’s top 1o?

Is it just a coincidence that happy countries have high levels of collective bargaining coverage?

Do you think that this ‘happiness’ index produces any insight into how Canadian governments should shape labour policy?

Do you think experiences from other countries can be useful, or are foreign systems and cultures too different to import?

Tim Hudak of the Ontario Conservative Party has said that Ontario needs to reform our labour laws to discourage collective bargaining and weaken unions.  If you were him, how would you respond to the fact that the happiest countries are those with the highest levels of collective bargaining?

Socialize

14 Responses to Most Highly Unionized Countries Top ‘Happiest Countries” List, Again. Why?

  1. Karin Litzcke Reply

    September 19, 2013 at 3:05 am

    You are likely reversing cause and effect. Much more likely that the happiest countries are where unions find the most hospitable conditions. Also, you don’t differentiate between types of unionism. From a recent article in The Australian, for example: “Yet Finnish academic Hannu Simola says a key reason Finnish schools do so well is that “radical labour-union politics, and the extreme Left, have been virtually non-existent in the Finnish teaching profession”.”
    Policy needs to be made on the basis of what is actually happening here, not what we think or fondly believe is going on elsewhere.

    • admin Reply

      September 19, 2013 at 4:53 pm

      Karin, the notion that ‘happy’ countries are more welcoming to unions and collective bargaining is an interesting theory, and would fly directly in the face of conservative/neoliberal claims that unions and collective bargaining are oppressive, and that ‘individual freedom’ (i.e. not collective action) leads to a better, happier life. And presumably there is much less need for unions to be ‘radical’ in countries where employers and governments actually accept collective bargaining as a normal and good way to organize work-related affairs. In any event, the fact remains that the “happiest people” according to these surveys live in countries with high collective bargaining coverage. I’m sure those who oppose collective bargaining want to dismiss that as irrelevant, unrelated, or erroneous. It is what it is. Why the relationship between collective bargaining and life satisfaction appears over and over again is an interesting question for sociologists to debate. I claim no special expertise in that field.

  2. Christopher Reply

    September 23, 2013 at 3:18 pm

    An interesting point you’ve made before. I had two questions/points – both raised my Karin. First, “unions” do not mean the same thing everywhere. In some of these highly unionized European countries not only have they avoided the hard left division but, in many cases, apparently these unions work with management to not protect employees in the usual way we understand here but actually work to foster more competitive industries which benefit employees in the ways similar to those espoused by capitalists. Secondly especially during the last recession they were much more supportive of employee work share programs than was the case in NA unions which seem to protect older established workers at the expense of younger newer workers. Of course this may be a two way street in that here maybe Employers don’t want to work with unions in this way but I see intransigence on both sides.

    Similar to the point made by Karin, as well, aren’t you in danger of linking two possibly unrelated events as cause and effect similar to those claims made by Hudak’s Tories that you (properly) take on, especially in your On Bullshit post.

    Just throwing that out there.

    • admin Reply

      September 23, 2013 at 3:53 pm

      Chris, Chris, Chris. My point is really a simple one. There is a striking global positive relationship between measures of ‘happiness’ and strong state social programs and respect for collective institutions, like unions. There also seems to be a positive relationship between ‘happiness’ and ‘low income inequality’, and a relationship between higher taxes and citizen happiness. We can debate all day why that is, and that’s the debate I’m interested in. Why does it seem to be that those damn ‘socialist’ states seem to produce such darn happy citizens? It’s a very inconvenient truth for the political right. It gets us no where to argue “well, THOSE unions are nicer to capitalists.” It’s a chicken and egg thing. Unions may be less combative in Scandinavian countries because employers and the state are not constantly trying to destroy them. I don’t claim that collective agreement coverage ’causes’ happiness, like the Tories try to claim, ridiculously, that laws on union dues ’cause’ job creation and population migration patterns. Obviously, we are dealing with different social structures. But isn’t it interesting that the happiest countries have high taxes, collective employment relations, and strong social programs. Surely there is some lesson in that, no? Makes you wonder why we are constantly being told here that polar opposite policy choices (low taxes, fewer unions and government programs) will produce greater happiness and prosperity.

      • Chris Reply

        September 23, 2013 at 6:48 pm

        David:

        I love our playful banter – it keeps me fresh. In the spirit of your post, can I just quote one part of the report:

        “The least happy countries are all poor countries in Sub-Saharan Africa (Togo, Benin, Central African Republic, Sierra Leone) with average life evaluation scores of 3.4. But it is not just wealth that makes people happy: Political freedom, strong social networks and an absence of corruption are together more important than income in explaining well-being differences between the top and bottom countries. At the individual level, good mental and physical health, someone to count on, job security and stable families are crucial.”

        Not much of that has to do with unionization per se. If we look at the least happy countries I might venture to say that those Sub-Saharan countries have a lot of things that make them unhappy and not having unions feature low on the list. Having stable democratic institutions and strong family connections seem to be what is critical – a side effect of that would in some cases be strong unionization but not necessarily, as Canada and Australia demonstrate (and even Switzerland at 51%). The fact that these Northern European countries are also fairly homogeneous countries with strong traditions and large industries and governments that allow for high unionization may also have something to do with it. Again, sure, unions are a symbol of people’s ability to feel they have some control over their lives.

        BTW The whole idea of “happiness” as it relates to income inequality in the report is a little funny when you see that much of this “happiness” derives from not feeling your neighbour has more than you do. Sounds more like schadenfreude than happiness.

        • admin Reply

          September 23, 2013 at 8:59 pm

          Chris, made you read a report on income inequality! Just to repeat, I never said “unions make people happy”. I said countries that score the highest on happiness are strong social democratic countries with high taxes, strong state social programs, and very, very high (by international standards) levels of collective agreement coverage. There is a clear pattern that is not random. Those are the facts. Whether collective agreement coverage is one “cause of happiness” or just a by-product of a social system that tends to produce ‘happier’ people is for sociologists to debate, not mere lawyers. But surely you’d have to concede that the relationships at least calls into question the claim of Conservatives, Walmart, and the Fraser Institutes of the world that we’d all just be much happier if we’d just eliminate taxes, cut government programs, and get rid of unions? Now, don’t you have children to care for?

        • Purple Library Guy Reply

          November 3, 2014 at 7:28 pm

          As a Canadian I would like to point out that Canada’s unionization rate used to be higher, and that my impression of the Canadian situation right now is that unionization and the general group of things under discussion such as broadly social democratic policies and so forth are all in decline, and so is happiness. Happiness is, I suspect, a trailing indicator; it takes time for the rot to set in, the social networks to get overstressed and fracture etc. once the policies that supported them are pulled and the unions that kept them going are crushed.

  3. Karin Litzcke Reply

    September 26, 2013 at 3:35 am

    Sorry to check back so late but I didn’t get notifications of subsequent posts… not sure if there’s a way to request that.

    You keep saying you aren’t asserting cause and effect, yet you are using the results to support your belief system, which is self-evidently on a good/evil dichotomy with unions being good. Your privilege, perhaps, but it creates confusion between what you are saying and what you keep asserting that you are not saying.

    One other interesting parameter would be to look at whether the rates of unionism cited are private or public sector, and also, whether the happiest people in those happy countries are those who are in unions or those who are not. I just hate these simplistic linear comparisons that miss what our key local problem really is (have been reading a lot of Finnish education idolatry lately, gag me).

  4. MaryLou Reply

    October 10, 2013 at 4:32 am

    I am a bit surprised about the misunderstanding regarding the interpretation of a CORRELATION as fact. When I read the article I understood that it was referencing the correlation between happiness and unions, social programs and higher taxes .
    A correlation is a statistical relationship between two or more random variables – but correlation does NOT equal causation…it only indicates a causal possibility between the factors – further research can determine whether or not the factors occur simultaneously but independent of influence (coincidence), or occur as a result of influences between/among the factors (causality/ interdependence).
    As I understood it, this article asks us to discuss the POSSIBILITY that the correlations indicate a causal relationship between the factors of unions, social programs, high taxes, etc. and happiness.

    What I found interesting was the correlation between unions and a larger middle class. It does appear that those countries facing increasing economic disparity (Europe, USA …) did not make the list…however, the inclusion of Canada and Australia challenge this assumption too…

    An interesting article worth discussion.

  5. Ken Krupat Reply

    October 11, 2013 at 8:21 pm

    Well, as an employment lawyer, I felt I had to add this point – more as an illustration than anything else. Look again carefully at the list. Seven of the countries are solidly “cold weather countries.” In fact, you can probably add in Austria as well to that designation, leaving out only the Netherlands and Australia. Sure, there are other cold weather countries that are not as happy on the list – like Russia – but happiness seems to be dominated by countries in which skiing, hockey and snow figure prominently. On the other hand, the countries at the bottom of the list, for the most part, are countries with extremely warm climates. What conclusions can we draw? Cold weather lends itself to higher unionization rates? Ice hockey leads to unionization (tell that to Don Cherry…). Skiing helps reduce the gap between rich and poor? All of these seem to be appropriate conclusions using the same methodology as the initial proposition.

    • Doorey Reply

      October 12, 2013 at 2:14 pm

      Thanks Ken, so your point is that drawing a link between two raw statistics and suggesting a correlation exists between those two numbers is nonsense. Like suggesting that there’s a link between a law governing union dues (right to work states in the USA) and employment levels across an entire state. That’s the argument the Ontario Conservative Party is selling, and I agree that to suggest such a link is bullshit. But I never claim that unionization causes happiness (though other scholars have studied that link and found a positive correlation between the two things). My post points out how the happiest countries are those in which the state and unions play a very active role in structuring the economic and social model, and I ponder whether those two things might be related, and if so, why that might be. I ask readers to think about the question. I would say though that there is more science (studies of what causes human happiness and unhappiness) to suggest that the way a society and economy is organized, and the levels of equality that model produces, should have a correlation with personal contentment than just ‘weather’. Thanks for your comment.

  6. Ken Krupat Reply

    October 18, 2013 at 2:35 pm

    I wouldn’t necessarily say that we can be certain that it is nonsense. But I would say that there are many factors that could contribute to “happiness” in a country, many of which may or may not have anything to do with organized labour. Having a strong social safety net in place, including universal health care, affordable post-secondary education, child care and other benefits, are, in my view factors likely to contribute to happiness. Other factors might include – having a strong, well balanced economy; a state of relative peace with the absence of a genuine military threat (internal or external); an abundance of readily available clean drinking water and food; a lack of corruption in the society; a low rate of crime and violence. The list could go on. Some of these might be the result of efforts of unionized labour. Others might be the products of a national culture or the geographic benefits of a particular location. The rate of unionization might be a product of a political outlook that has allowed unionization to flourish. On the other hand, many of the countries in the list are largely homogeneous societies (Canada is a notable exception). I certainly would not want to conclude that homogeneity causes happiness – any more than I would want to conclude that cold weather causes happiness. Getting back to the “weather” point – I would imagine that there could be a link between the level of physical activity/fitness in a society and happiness. And the active involvement in many different cold weather sports contributes to that. So I don’t think the “weather” link is necessarily as far fetched as one might imagine. It probably goes on the list along with unionization and about 20 other factors.

    • Doorey Reply

      October 18, 2013 at 2:45 pm

      Thanks Ken. I think everything you said there is sensible, and I would agree with it.

    • Purple Library Guy Reply

      November 3, 2014 at 7:50 pm

      One problem here is that all those things are political in nature. And those political forces which promote some of (unionization, strong social safety net, accessible education etc) are likely to promote all of them, while political forces opposing some of them tend to oppose all of them. So in practise it’s probably hard to find that many cases where, say, low unionization and strong social safety nets co-exist for very long.

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