To Extend or Not to Extend: Explaining the Divergent Use of Statutory Bargaining Extensions in the Netherlands and Germany

Employee coverage by multi‐employer bargaining declined since the 1980s in many countries, but countries differ in the extent of that decline. These differences are due, in part, to statutory coverage extension. We analyse the use of statutory coverage extension in two countries, Germany and the Netherlands. Agreements are extended frequently in the Netherlands, where coverage remained stable as a result, but sparingly in Germany, where coverage eroded. The article shows that different employer attitudes are the main cause of this difference. These differences in employer attitudes result from (a) different perceptions of the effects of wage competition by non‐organized firms on organized firms and (b) differences in employer views on the appropriateness of state compulsion.