Labor Law, New Governance, and the Ghent System

BY Matthew Dimick

The Employee Free Choice Act (“EFCA”) was the most significant legislation proposed for reforming the National Labor Relations Act (“NLRA”) in over a generation and the centerpiece of the American labor movement’s revitalization strategy. Yet, the EFCA hewed closely to the particular regulatory model established by the NLRA at the peak of the New Deal, now over seventy-five years ago. Further, recent scholarship suggests that traditional regulatory approaches are giving way to new kinds of governance methods for addressing social problems. Rather than reviving an old regulatory model, should “New Governance” approaches instead be sought for addressing problems in employment representation? Through a comparative legal and institutional analysis, this Article offers a novel study of an alternative governance approach in labor and employment law by exploring the Ghent system.

The Ghent system is a voluntary system of unemployment insurance in which labor unions administer publicly subsidized insurance funds and, along with employers and the state, participate in unemployment insurance policymaking. The Ghent system helps overcome three separate problems in collective employment relations that existing labor law in the United States attempts to resolve in evidently ineffective ways, which the EFCA had sought to reform. First, the Ghent system encourages employers to recognize and bargain with unions by providing workers with incentives to join labor unions prior to and independent of the employers’ recognition of the union. Second, voluntary, union-administered unemployment insurance provides an alternative “selective incentive” that reduces free riding on collective union goods. Finally, union and employer collaboration in unemployment insurance policy generates efficiency gains that underwrite cooperative labor relations and reduce employer resistance and workplace adversarialism. In exchange for generous unemployment benefits, unions yield on employment-protection rules, giving employers more flexibility in the workplace—a bargain referred to as “flexicurity.” The Article concludes by drawing policy lessons from the Ghent system analysis. A “progressive-federalist” strategy of unemployment insurance reform at the state level may be more feasible than federal labor law reform because of the broad deference states enjoy under the federal Social Security Act, but non-legislative lessons can also be applied, as several contemporary and U.S. examples illustrate.

DOWNLOAD PDF | 90 N.C. L. Rev.319 (2012)