Protective or participative function of labor unions and their influence on income inequality in selected European Union countries

Abstract

Taking into account that income inequality has negative impact on societies, this paper tries to discover factors that may influence reduction of the inequality. It seems reasonable to consider labor unions as social organizations that in their cations should fight for better equality. In 21 countries both OECD and EU6 members 3 factors were examined. Two describing labor union protective function (labor market protection and permanent contracts) and one describing participation function exercised in the countries by unions. Correlation has been checked between Gini Index and labor market protection level, percent permanent contract and EPI 2.0 index. The analyses has been performed for all 21 countries and separately for the 16 representing the “old union”7. Presented results suggest strong correlation between Gini and EPI 2.0 suggesting that the better, stronger employee participation the lower income inequality. At the same time no correlation has been found between Gini and indexes describing labor union protective function.