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Trade Unions in the Exposed Sector: Their Influence on Neo-corporatist Behaviour
Abstract
The importance of organisational centralisation in determining the behaviour of trade union movements and associations of employers has been widely acknowledged, at least since Ross and Hartmann (1960) identified it as a key variable for predicting levels of industrial conflict. Since the 1970s several researchers working within the theory of neo-corporatism have demonstrated the significance of this variable, as an aspect of corporatism, in accounting for the differential behaviour of various national union movements (Bruno and Sachs, 1985; Cameron, 1984; Crouch, 1985; Garrett and Lange, 1986; Hibbs, 1978; Korpi and Shalev, 1979; Newell and Symons, 1986; Paloheimo, 1984; Schmidt, 1982; Shott, 1984; Tarantelli, 1986). The publication of Olson’s The Rise and Decline of Nations (1982) provided such arguments with an elegant theoretical base in the theory of collective action, through his concept of encompassing organisations.
... The neocorporatist literature distinguishes between wage-formation in exposed and non-exposed sectors (Crouch 1988;Franzese 2001;Garrett and Way 1999). Unions in sectors exposed to international competition are directly affected by the consequences of wage militancy, since the resulting cost increase is likely to lead to reduced product and labour demand and lower employment. ...
... For public sector unions in particular, employment may be entirely disconnected from market conditions. 3 For all these reasons, wage moderation is more likely to emerge in exposed sectors than in non-exposed ones (Crouch 1988;Franzese 2001;Garrett and Way 1999;Hancké 2013;Johnston and Regan 2016;see however Di Carlo 2020). The wage moderating effect of trade exposure is likely to apply to the individual level as well, as suggested by the literature on the effects of trade openness (e.g. ...
... Furthermore, if bargaining has spill-over effects for non-union workers as well, wage dissatisfaction may be lower not just for union members but for non-members as well. Additionally, a more coordinated or centralised bargaining structure may facilitate the internalisation of competitiveness concerns for workers exposed to trade (Crouch 1988;Franzese 2001;Frieden and Rogowski 1996;Garrett and Way 1999). Moreover, it may be hypothesised that workers may be less dissatisfied with low wage growth when wage bargaining is more coordinated or centralised. ...
An extensive literature in comparative political economy has examined the determinants of wage militancy and moderation at the country level. So far, however, there has been no attempt to analyse the determinants of wage satisfaction and dissatisfaction at the individual level. Based on two waves of the International Social Survey Programme, this article seeks to fill this void. It examines to what extent trade exposure affects individual attitudes towards wages, and whether bargaining institutions facilitate the internalisation of competitiveness requirements, as suggested by the vast literature on neocorporatism. Surprisingly, no relationship is found between the structure of wage bargaining (more or less coordinated or centralised) and wage dissatisfaction at the individual level. Instead, wage dissatisfaction decreases strongly when workers are individually exposed to trade and countries rely heavily on export-led growth. The findings point to the need to rethink the determinants of wage moderation.
Supplemental data for this article can be accessed online at: https://doi.org/10.1080/01402382.2021.2024010 .
... Actors in non-exposed sectors face relatively inelastic labor demand curves and thus are able to shift higher nominal costs onto prices. If, conversely, bargaining is directed by firms and unions that are exposed to international competition, the need for maintaining competitiveness will lead to more moderate wage settlements (Crouch, 1990;Garrett, 1998;Johnston & Regan, 2016). Wage inflation, in turn, is systematically related to price inflation because in oligopolistic labor and product markets, prices are formed by adding a mark-up to unit costs. 1 Drawing on the arguments summarized above, a literature inspired by the Varieties of Capitalism (VoC) perspective (Hall & Soskice, 2001) has explained the Eurocrisis as the ultimate consequence of incompatible wage bargaining regimes. ...
... It is important to note that there are two variants of the argument focusing on financial flows and they diverge with regard to the role of foreign vis--vis domestic sources of finance (see Cesaratto, 2017). The first view, summarized above, rests on a mainstream 'loanable fund' theory of credit, according to which for banks to lend money to the private sector, they first have to receive the money from somewhere. ...
... In the explanation centered on domestic credit creation, cross-border flows emerge ex post from southern banks having to borrow reserves from northern banks (seeCesaratto, 2017). ...
There are two main political economy explanations of the Eurocrisis. The labor market view regards cross-country differences in wage bargaining institutions as the root cause of the crisis. The finance view, instead, emphasizes cross-border financial flows and downplays labor market institutions. For the first time, we attempt to assess these two explanations jointly. We find that financial flows are better predictors of nominal wage growth than labor market institutions. At the same time, we show that wage moderation matters for bilateral export performance in the important case of Germany, but not for other countries. These results suggest that imposing wage moderation and labor market reforms onto the countries of the European periphery was unlikely to improve their plight. In contrast, stimulating wage growth in Germany might have contributed to rebalancing the Eurozone.
... 8 A detailed discussion of each of the indicators included in the survey can be found in Aidt and Tzannatos (1999, Appendix 1). Crouch (1990) Power of unions in trade-C 1990-2 foreign 60s, 70s Own exposed sectors _competition and 80s I Note: A=union centralization, B=union concentration, C=employer centralization, D=the level of bargaining, E=informal coordination among employees and employers, F=corporatism/social partnership, and G: other aspects. ...
... 18See Cameron (1984), OECD (1988OECD ( , 1997, Rowthorn (1992a;1992b), Freeman (1988, Tarantelli (1986), Bruno and Sachs (1985), Crouch (1985Crouch ( , 1990, Bleaney (1996). Heitger (1987), Jackman (1993), Golden (1993), McCallum (1983McCallum ( , 1986, Dowrick (1993), Calmfors and Driffill (1988), Soskice (1990), Scarpetta (1996), Cameron (1984), Bean (1994), Blau and Kahn (1996), Zweimuller and Barth (1994), Nickell andLayard (1999), andNickell (1997). ...
... Table 13 summarizes the results. 27 Empirically, OECD (1997) and Crouch (1990) find evidence that supports the view that exposure to international competition disciplines unions and reduces the performance differences between different bargaining systems. Search effectiveness + The level of unemployment consistent with a given vacancy level is lower where bargaining coordination is high, i.e., search effectiveness is higher. ...
Collective bargaining and dispute resolution mechanisms facilitate coordination. Coordination is increasingly seen as an influential determinant of labor market and macroeconomic performance. This paper provides a systematic review of the relevant literature with a specific focus on the role that collective bargaining plays in shaping macroeconomic performance. We focus on comparative studies of labor market institutions in the OECD area that try to disentangle the impact of different institutional approaches to collective bargaining from other determinants of macroeconomic performance.
... For public sector unions in particular, employment may be entirely disconnected from market conditions. For all these reasons, wage moderation is more likely to emerge in exposed sectors than in non-exposed ones (Crouch 1988;Franzese 2001;Garrett and Way 1999;Hancké 2013;Johnston and Regan 2016). The wage moderating effect of trade exposure is likely to apply to the individual level as well, as suggested by the literature on the effects of trade openness (e. g., Mayda and Rodrik 2005;Walter 2017;Busemeyer and Garritzmann 2019). ...
... This effect may apply to union members only or to all workers if bargaining has spillover effects for non-union workers as well. Additionally, a more coordinated or centralized bargaining structure may facilitate the internalization of competitiveness concerns for workers exposed to trade (Crouch 1988;Franzese 2001;Garrett and Way 1999;Frieden and Rogowski 1996). Moreover, it may be hypothesized that faced with low wage growth, workers may be less dissatisfied when wage bargaining is more coordinated or centralized. ...
Although the determinants of wage militancy and moderation have been studied extensively by comparative political economists, so far the literature has focused on the macro level of analysis. As a result, there has been no attempt to analyze the determinants of individual-level attitudes towards wages. Based on two waves of the International Social Survey Programme, in this paper we fill this gap. We examine to what extent workers internalize the imperatives of competitiveness, and whether wage bargaining institutions facilitate this internalization, as suggested by a large literature on neocorporatism. Surprisingly, we find that the structure of wage bargaining (more or less coordinated or centralized) has no relationship with wage satisfaction or dissatisfaction at the individual level. Instead, wage dissatisfaction decreases strongly when workers are individually exposed to trade and countries rely heavily on export-led growth. Our results point to the need to rethink the determinants of wage moderation. Link: https://www.mpifg.de/pu/mpifg_dp/2021/dp21-3.pdf
... Tali incongruenze sono collegate alla particolare struttura dell'economia irlandese (tratteggiata sopra e analizzata più diffusamente nel prosieguo). Si sostiene spesso, ad esempio, che la centralizzazione salariale sia indicata nei casi in cui i sindacati dei settori esposti dominano i sindacati dei settori protetti, mentre avrebbe esiti negativi in casi in cui i sindacati dei settori protetti (per esempio del settore pubblico) abbiano potere sufficiente ad influenzare la politica salariale del movimento sindacale nel suo complesso (Garrett e Way 1999;Crouch 1988;Franzese 2001). Questa argomentazione non è però applicabile all'Irlanda. ...
... Più controverso è invece l'appoggio fornito dai sindacati pubblici. Una tesi diffusa è quella secondo cui la contrattazione centralizzata non sia consigliabile in un paese in cui i sindacati dei settori non esposti alla concorrenza internazionale (come ad esempio quelli del settore pubblico) abbiano una maggiore influenza sulle politiche salariali confederali di organizzazioni dei settori esposti (Crouch 1988;Garrett e Way 1999;Franzese 2001). Mentre i sindacati dei settori protetti non possono permettersi richieste salariali che aumentino di molto i costi delle aziende presso cui sono occupati i propri iscritti, che altrimenti rischierebbero di 25 All'interno dell'ITGWU il margine in favore dei favorevoli fu molto sottile, vedi Baccaro 2002, 17. 26 A questo proposito è interessante rilevare la posizione della ATGWU, l'altro sindacato generale oltre al SIPTU, ma molto più piccolo. ...
... For similar considerations concerning other countries, see Locarno and Rossi, 1995; Dornbusch, 1991. labor movement as a whole, and that the benefits of centralization are lost in countries where public sector unions wield enough power to decisively influence the choices of union confederations (Garrett and Way, 1999; Crouch, 1988; Franzese, 2001). Yet this line of reasoning does not apply to Ireland. ...
... 26 Theory suggests that wage centralization should not be advisable in a country where unions in sectors not exposed to international competition (e.g. public sector unions) have a greater chance to influence wage policy than organizations in exposed sectors (Crouch, 1988; Garrett and Way, 1999; Franzese, 2001). In fact, unions in exposed sector are more likely to be responsive to the threat to their employment prospects resulting from militant wage behavior than unions in non-exposed sectors. ...
... manufacturing sector) versus those sheltered sector from international competition. Thus, where CPE drew on industrial relations scholarship to study the public sector, it did so most of the times to identify and analyse those wage-setting institutions and systems conducive to the subordination of sheltered sector's interests to the interest in wage restraint and cost competitiveness by the exposed actors. 1 This CPE scholarship has contributed substantially to our understanding of national labour market institutions and has a long pedigree (Crouch, 1990;Franzese, 1994;Way, 1995, 1999;Soskice, 1990;Traxler and Brandl, 2012). However, its narrow focus has led to an underappreciation of the strategic importance of public sector employment relations and PSWS in economic policy making within different models of capitalism. ...
This special issue (SI) brings the industrial relations scholarship on the public sector into dialogue with the comparative political economy (CPE) literature on growth models/regimes. While the former has paid great attention to the public sector, in CPE the public sector has been analysed less, and mostly as subaltern to the export-sector’s actors, interests and institutions. We posit that the public sector matters for CPE in its own right for three reasons. First, the state remains today the single largest employer in virtually every European economy, providing incomes to a large segment of the middle class. Second, public employers’ wage bill – one of the largest items of governments’ current expenditures – is funded by the taxpayers. Hence, public sector wage policy is fiscal policy, ultimately pursued by public/political employers. Third, public employers are simultaneously public managers and political sovereigns acting in the shadow of hierarchy. Case-study contributions to the SI detail how these insights matter within different European growth regimes: (1) the Mediterranean demand-led growth regime (France, Italy, Spain and Portugal), (2) the German export-led growth regime, (3) the Nordic balanced growth regime (Denmark and Sweden) and (4) the FDI-led Eastern European growth regime (Czechia and Slovakia).
... Mancur Olson's (1982) theory suggests that special interest groups are most damaging when they have gained a certain amount of power but little responsibility. An encompassing organization can exist at different levels but it always requires that the membership over which the organization has effective authority be coterminous with the population that will bear any adverse consequences of action (Crouch, 1992). This has allowed economists (Calmfors and Driffill, 1988) to argue that wage-bargaining at the company level (decentralized) but also at the national level (centralized) leads to favourable macroeconomic outcomes such as low unemployment and inflation rates. ...
... If centralized or coordinated bargaining is led by wage setters in protected sectors, there is a tendency towards a generalized wage push. If vice versa, it is directed by firms and unions exposed to international competition, the competitiveness needs of these actors will prevail and wage inflation will be lower (Crouch 1990;Garrett 1998;Johnston and Regan 2016). Wage inflation, in turn, is systematically related to price inflation because in oligopolistic labor and product markets prices are formed as a mark-up on unit costs. 1 ...
... In accordance with this, analytical and empirical studies Centralization Performance High Figure 9.2 The hump-shape thesis have produced results that show that the economic performance of collective bargaining is highly contingent on its interaction with its context. Research in this tradition considers the interaction of collective bargaining with factors such as monetary policy (for example Franzese, 2002;Iversen, 1998;Traxler et al., 2001); government partisanship (for example Alvarez et al., 1991, Lange andGarrett, 1985); the sectoral composition of the labour force (for example Crouch, 1990;Garrett and Way, 1995Traxler and Brandl, 2010); and the capacity of the bargaining system to make local pay setting comply with their agreements (for example Traxler and Kittel, 2000;Traxler, 2003). This is not the place to review this literature, it is merely to point out that it is now commonly accepted that the performance of collective bargaining varies depending on the circumstances. ...
... Literature on sectoral interests offers multiple reasons why sheltered sectors witness greater wage excess than exposed ones. The political economy stream of this literature focused on competition's impact on employers' price mark-up strategies (Crouch, 1990;Iversen, 1999). Wage inflation produces lower unemployment costs for public employees than for manufacturing employees because increased labour costs can be financed through taxes or deficit spending rather than employment shedding. ...
Public sector unions push for unmerited wage increases, exacerbating inflation and deficits. Despite this conventional wisdom, governments in several European countries successfully limited public sector wage growth during the 1980s and 1990s. This article argues that the recent rise in public sector wage inflation in the eurozone is an unintended consequence of the shift towards Economic and Monetary Union. I argue that monetary union’s predecessors, the European Monetary System and Maastricht, imposed an institutional constraint on governments, which enhanced their ability to impose moderation: national-level, inflation-averse central banks that could punish rent-seeking sectoral wage-setters via monetary contraction. Monetary union’s alteration of this constraint weakened governments’ capabilities to deny inflationary settlements.
... In contrast, HRM activities are more regulated for firms in coordinated market economies (Farndale et al., 2008), where endeavors are to a larger extent coordinated strategically (Hall and Thelen, 2009). Labor is to a greater extent organized at the national level, constituting more centralized collective bargaining between employers and employees (Crouch, 1990). Employees are considered stakeholders and are given greater rights to voice their opinions through institutionalized organizations, such as trade unions and employee representatives (Farndale et al., 2008). ...
There is a growing debate between mainstream and critical empowerment theorists; the latter criticize empowerment interventions that could be disempowering when the real power continues to reside with management. To draw upon the tension between these dualistic views, this study investigates whether organizations with formal power structures of collective bargaining as represented by union density and employee representation provide a facilitative social environment for empowerment to grow. Based on two combined sets of secondary data collected for the ETUI in 2006 and EWCS in 2005 from 27 European countries, this study found that countries with a stronger union tradition demonstrated higher workplace empowerment and job satisfaction for individual workers than countries with a weaker union tradition. Theoretical and practical implications are discussed.
... Wie Scharpf zeigte, konnten Regierungen Arbeitslosigkeit und Inflation vergleichsweise niedrig halten, wenn es ihnen gelang, die Gewerkschaften durch korporatistische Einbindung auf Nominallohnzurückhaltung zu verpflichten . Auch zahlreiche quantitative Studien hatten linear-inverse Zusammenhänge zwischen dem Grad an Korporatismus einerseits, Inflation und Arbeitslosigkeit andererseits zum Ergebnis, solange der Schwerpunkt der untersuchten Jahre sich nicht zu weit aus den siebziger Jahren in die achtziger und neunziger Jahre hinein verlagerte (Bruno/Sachs 1985; Crepaz 1992; Crouch 1990; Czada 1983; Dell'Aringa/Lodovici 1992; Schmid 1993; Schmidt 1982; Schott 1984 ). Die Antwort der Korporatisten auf die Frage, ob Politik gegen Verbände möglich war, lautete mithin: Wahrscheinlich nicht; aber mangels Realisierbarkeit einer Politik ohne Verbände galt es, die von Olson und seinen Anhängern vernachlässigten Potenziale einer Politik mit und durch Verbände auszuschöpfen. ...
... Some sectors, services, experience static productivity growth while others, manufacturing, experience higher productivity growth. The political science stream of this literature focuses on competition's impact on employers' price mark-up strategies (Crouch, 1990;Iversen, 1996, Iversen 1999a). ...
Many political scientists and economists have addressed the implications of the public sector’s sheltered status on their unions’ wage strategies vis-à-vis the government. Since the public sector is a monopoly provider of necessary and price inelastic services, conventional wisdom suggests that public sector unions’ push for wage increases which their productivity does not merit, exacerbating inflation and fiscal deficits. The argument in this paper challenges this conventional view, and maintains that the recent, puzzling rise in public sector wage inflation, relative to that in manufacturing, in Euro-zone countries is an unintended result of the institutional shift towards European Economic and Monetary Union (EMU). During the 1980s and 1990s, differences in wage inflation between the manufacturing and public sector within most EMU candidate-countries were low. After 1999, these differences significantly worsened; wage moderation continued in the manufacturing sector while wage inflation arose in the public sector. It is argued here that monetary union’s predecessors, the European Monetary System and Maastricht regimes, imposed two important constraints on public employers, which enhanced their ability to enforce wage moderation: the commitment to a hard currency policy via participation in the Exchange Rate Mechanism, adopted by some earlier than others and, the Maastricht criteria. Monetary union’s removal of these two constraints weakened public employers’ capability to deny inflationary wage settlements to public sector unions. Panel regressions results outline a statistically significant relationship between monetary union and higher levels of wage inflation in the public sector, relative to manufacturing. The paper concludes with a brief discussion of the implications of monetary union for inter-sectoral dynamics.
... Wie Scharpf zeigte, konnten Regierungen Arbeitslosigkeit und Inflation vergleichsweise niedrig halten, wenn es ihnen gelang, die Gewerkschaften durch korporatistische Einbindung auf Nominallohnzurückhaltung zu verpflichten . Auch zahlreiche quantitative Studien hatten linear-inverse Zusammenhänge zwischen dem Grad an Korporatismus einerseits, Inflation und Arbeitslosigkeit andererseits zum Ergebnis, solange der Schwerpunkt der untersuchten Jahre sich nicht zu weit aus den siebziger Jahren in die achtziger und neunziger Jahre hinein verlagerte (Bruno/Sachs 1985; Crepaz 1992; Crouch 1990; Czada 1983; Dell'Aringa/Lodovici 1992; Schmid 1993; Schmidt 1982; Schott 1984 ). Die Antwort der Korporatisten auf die Frage, ob Politik gegen Verbände möglich war, lautete mithin: Wahrscheinlich nicht; aber mangels Realisierbarkeit einer Politik ohne Verbände galt es, die von Olson und seinen Anhängern vernachlässigten Potenziale einer Politik mit und durch Verbände auszuschöpfen. ...
Abstract On the occasion of the 25th birthday of Mancur Olson’s “The Rise and Decline of Nations” (RDN), this article reviews the political science debate over
Mancur Olson’s theory on distributional coalitions. In RDN, Olson blamed societal organizations for the (above all: economic)
decline of developed societies. This idea ran counter to the perspective of the debate on corporatism that reached its peak
when RDN was published. I show in detail that, as a general theory, RDN did not succeed. As a heuristic, in contrast, the
RDN perspective gained enormous ground among political scientists in the last years. The discussion leads to the question
of why, contrary to Olson’s projection, liberalization politics became possible in the last 25 years. The article finishes
by identifying questions for future research.
... Second, it is difficult to distinguish empirical cases of institutional complementarity from institutional redundancy. Ex ante, every element of a production regime that fits nicely with its other institutions -whether by virtue of structural coherence or on the basis of fruitful tensions (Crouch/Farrell 2002;Crouch 2005) -looks complementary. Ex post, subsequent to liberalization, one may discover that the respective institutions were not complementary, but redundant: their coordination capacity could be turned off without there being any significant overall implications. ...
This paper suggests a two-dimensional concept of nonliberal capitalism: coordinated capitalism (as described in the varieties of capitalism framework) and organized capitalism. While the coordination function of institutions canalizes individual maximization strategies of firms in order to adjust for collective action problems, the organization function transcends maximization strategies and adjusts them to collective interests beyond maximization. Political economies are highly organized when firms are not only the private business of owners and insiders but, in addition, quasi-public infrastructures and, therefore, highly constrained in their economic decisions by institutionally sanctioned collective interests (such as sectoral interests, class interests, or political interests). I construct an index on organized capitalism by combining data on ownership structures, board level codetermination, the density of employers' associations and trade union density in order to allow for comparison between varying extents of coordination and organization in 20 OECD countries. The German example is used to demonstrate the analytical usefulness of the coordinationorganization distinction in qualitative terms. The distinction allows for differentiation between two forms of liberalization: declining coordination and disorganization.
... Some contrasts may illustrate the additional clarity this research direction might produce. A frequent corporatist theme holds that union wage restraint is more likely in economies with centralized bargaining and left-wing governments, because the latter are more likely to deliver policy outcomes preferred by labor (Crouch 1990, Garrett 1998, Paloheimo 1990). Yet, the explicit modeling of the interaction of centralized bargaining with an accommodative fiscal policy (reviewed in Section 3) predicts higher, not lower, real wages. ...
This paper critically reviews the research on how collective bargaining systems influence macroeconomic performance in industrialized countries. The review considers effects of bargaining level, coordination, and corporatist institutional arrangements. Key empirical results turn out to be quite fragile, and much of the paper explores issues of measurement and specification that account for the fragility. The paper concludes that complementarities between key institutions and between institutions and the economic environment may be more important for macroeconomic performance than the effects of individual institutions, and it suggests research strategies.
Crosscountry variation in the outcomes of public sector wage-setting (PSWS) persists in Europe. Received wisdom from the neo-corporatist scholarship attributes it to the presence/absence of centralized or coordinated wage-setting regimes. This article challenges the conventional view by analysing PSWS through the lens of the common-pool problem of public finance and special-interest politics. Given the structure of political incentives and the use of fiscal money by public employers, PSWS tends to be inherently inflationary. Yet, the article posits that the extent to which wage inflation occurs in the public sector hinges on the institutional properties of PSWS governance systems. Systematic wage restraint occurs within systems where PSWS authority is delegated to a state actor-either the Finance Ministry or an independent agency-with an organizational mandate and powers to ensure PSWS be conducted in the general interest rather than in response to public sector groups' narrow interests. The argument is demonstrated by leveraging an original combination of most-similar and most-different case studies combined with archival research and elite interviews. The findings advance our understanding of the political economy of wage restraint in Europe and highlight the key role state actors and institutional structures play within growth regimes.
The effects of trade unions, and of collective bargaining more broadly, on the specific sectors in which they operate or the economy at large vary depending on what unions, employers and governments do or want to do and whether the economy is competitive and open to trade. Various combinations of unions, firms, governments and types of economies can give rise to different economic outcomes of an otherwise identical configuration of organized labour. Even for the same economy, and union characteristics, effects can be different at different points in a country’s history. And even if the rypology of unions and collective bargaining were clear, there is a multitude of indicators for economic performance: this chapter focuses on more than 30 such indicators (Table 8.1) and this only because it presents a summary of more than one thousand studies on the subject, perhaps omitting as many others.
There has recently been intense debate about the relative merits of a centralised wage-setting system vis-a-vis a decentralised system. Most of the theoretical and empirical works on this issue focus on the static or current macroeconomic performance in terms of employment and inflation and microeconomic efficiency resulting from enhanced labour market flexibility. Following Lancaster's work and subsequent extensions by Schott and Vartiainen, this paper regards wage bargaining as a dynamic game involving conflict over the distribution of current and future income. It is argued that the intertemporal decision makings of both workers and employers are influenced by so-called prisoners' dilemma. In such situations, it is claimed that centralised or corporatist wage negotiations system leads to higher investment rates. This claim is corroborated with evidence from selected OECD countries.
In this paper, the rising divergence in sectoral wage moderation within European Monetary Union (EMU) member states since the introduction of the Euro is examined. During the 1980s and 1990s, wage restraint cycles between exposed, manufacturing sectors, and sheltered, private services sectors within EMU candidate-countries were highly synchronous, and differences in wage inflation between sectors within countries was low. After 1996, significant divergence in sectoral wage inflation emerged, and synchronicity of wage restraint cycles between sectors collapsed after 1999. This paper will address the question of why divergence occurred between sectoral wage restraint within EMU countries after 1996. It will be argued that monetary union's removal of national exchange rate pegs and inflation criteria, and the central banks that enforced them, accentuated wage preference divergence between actors in the exposed and sheltered sectors, enabling unions in sheltered sectors to push for high wage increases while unions in more exposed sectors had to continue with wage moderation due to competitiveness constraints. Unlike some political science literature that assumes powerful, protected sectors produce excessive wage inflation at the expense of the exposed sector, it will be argued that the European Monetary System's fixed exchange rate arrangements, and more importantly the Maastricht inflation criteria, provided an effective monetary constraint on sheltered sector wage growth, keeping sheltered sector wage moderation in line with wage restraint developments in the exposed sector in the 1980s and early 1990s. 1 This is a rough, first draft of a thesis chapter, and includes only descriptive statistics. In the final version I plan on utilising a panel regression approach for 15 countries (10 EMU countries and 5 non-EMU countries), between 1979 and 2005, examining the impact of currency regimes on the difference in wage restraint between the manufacturing and public sector. Any suggestions for time variant proxy variables or categorical variables that embody different currency regimes (i.e. hard peg, soft peg, monetary union, floating exchange rate, inflation targeting, etc.) are most welcome. 2 Ph.D.
Strong exposed-sector unions and weak public-sector unions are seen as having beneficial effects on macroeconomic performance. Although these effects must work through the bargaining structure, the interaction with union composition is unclarified. This paper argues that the interaction effect qualitatively differs with the bargaining type. The findings show that the performance of pattern bargaining significantly increases with growing exposed-sector union strength whereas uncoordinated bargaining and centrally coordinated bargaining do not interact with union composition.
Coordination through collective bargaining is recognised as an influential determinant of labour market outcomes and macroeconomic performance. This article provides a systematic review of the empirical literature on the subject. What emerges from the review is that it is different types and coverage of bargaining coordination, rather than cross-country variation in trade union density, that matter for economic performance. High levels of bargaining coverage tend to be associated with relatively poor economic performance, but this adverse relationship can be at least mitigated by high levels of bargaining coordination. In the absence of formal bargaining arrangements, economies often develop informal bargaining mechanisms whose effects are similar to those arising from formal bargaining provided they both operate at similar levels of coordination. The consequences of labour market coordination or absence thereof depend on the monetary policy regime as non-accommodating monetary policy can eliminate some of the adverse unemployment consequences otherwise associated with industry-level collective bargaining. Finally, bargaining coordination seems to matter most in times of rapid economic change rather than under more stable conditions. Overall, we conclude that it is the total ‘package’ of (formal and informal) labour market institutions that matters for the performance of the economy rather than unionisation as such or individual aspects of unionism.
In den vergangenen Jahren haben zahlreiche Untersuchungen die Liberalisierung der deutschen Spielart des Kapitalismus analysiert
und den Wandel als grundlegend, transformativ und unumkehrbar charakterisiert (siehe beispielsweise Beyer 2006, Manow 2005, Streeck 2008). In der Comparative — Capitalism — Discussion — jenem Teil der Vergleichenden Politischen Ökonomie, der seine Aufmerksamkeit auf Unternehmen und ihre Beziehungen zu stakehol — dern, anderen Unternehmen, der Gesellschaft und ihren Teilgruppen sowie auf die institutionelle Stützung dieser Beziehungen richtet
— ist dieser Befund jedoch alles andere als unumstritten. Weiterhin koordinieren sich die Leitungen großer Unternehmen strategisch
mit ihren Stammbelegschaften, weiterhin sind die Eigentümerstrukturen vergleichsweise konzentriert. Die Exportstatistiken
zeigen, dass deutsche Unternehmen ihre komparativen Vorteile nicht eingebüßt haben.1 Sind die beobachteten Wandlungstendenzen
somit nicht vielmehr ein Oberflächenphänomen eines im Kern stabilen „deutschen Modells“? Was rechtfertigt das Wort vom transformativen
Wandel?
Within the context of debates over national varieties of capitalism, this paper discusses the shareholder value orientation of the 40 largest listed German companies. Three dimensions of shareholder value are distinguished: the communicative dimension, the operative dimension and the dimension of managerial compensation. A shareholder value index compiling data on accounting, investor relations, variable top-management compensation and the implementation of profitability goals makes it possible to compare the shareholder orientations of the companies. The shareholder value phenomenon is explained first by the exposure to markets - the international product market, capital market pressures and the market for corporate control - and, secondly, by internal developments - changing management careers, increasing management compensation and reduced monitoring by banks and corporate networks - which cause external impulses to increase shareholder value to fall on fertile ground. Conflicts over shareholder orientation result in changing coalitions between shareholders, management, and employees. Shareholder value does not make companies opt out of central collective agreements or endanger the existence of employees' codetermination, but it does lead to more market-driven industrial relations. Mit Bezug auf die Debatte um Varianten des Kapitalismus wird in diesem Papier die Shareholder-Value-Orientierung der 40 größten börsennotierten deutschen Aktiengesellschaften diskutiert. Es werden drei Dimensionen kapitalmarktorientierter Unternehmensführung unterschieden: die kommunikative Dimension, die operative Dimension und die Dimension der Managervergütung. Anhand von Daten zur Bilanzierung, zu den Investor Relations, zur Anreizkompatibilität der Managervergütung und zur Implementation von Rentabilitätszielen wird ein Share-holder-Value-Index konstruiert, der einen Vergleich der Kapitalmarktorientierung der betrachteten Unternehmen erlaubt. Zur Erklärung des Shareholder-Value-Phänomen werden zwei Cluster an Erklärungen präsentiert. Erstens wird das Ausmaß an Kapitalmarktorientierung auf den Grad an internationaler Konkurrenz auf den Produktmärkten, auf die zunehmende Handlungsfähigkeit der Kapitalmarktteilnehmer und den Druck des Markts für Unternehmenskontrolle zurückgeführt. Zweitens führen interne Entwicklungen - veränderte Karrieremuster von Topmanagern, steigende Managergehälter und das abnehmende Monitoring durch Banken und Unternehmensnetzwerke - dazu, dass der externe Druck intern auf fruchtbaren Boden fällt. Hinter der Auseinandersetzung um die Share-holder-Value-Orientierung von Unternehmen verbergen sich wechselnde Koalitionen zwischen Aktionären, Managern und den Interessenvertretungen der Beschäftigten. Shareholder Value führt weder zum Ausstieg der Unternehmen aus Flächentarifverträgen, noch zu Versuchen, sich der Arbeitnehmermitbestimmung zu entledigen. Allerdings verstärkt Kapitalmarktorientierung den Trend zu zunehmend marktgetriebenen industriellen Beziehungen.
Der Beitrag knüpft an die von Manfred G. Schmidt entwickelte Unterscheidung von Schulen der vergleichenden Staatstätigkeitsforschung an und schlägt eine Erweiterung der unterschiedenen Schulen um die „Spielarten des Kapitalismus“-Literatur (Varieties of Capitalism, VoC) vor. Dieser Literaturzweig zielte ursprünglich auf Analyse der institutionellen Grundlagen der Wettbewerbskraft von Unternehmen und Volkswirtschaften. Wie der Beitrag im Einzelnen darlegt, haben sich die sechs Grundannahmen dieser Literatur zu einer Perspektive verdichtet, aus der systematisch distinkte Hypothesen zur vergleichenden Staatstätigkeitsforschung folgen. Dies wird anhand von drei Beispielen gezeigt: anhand der „revisionistischen“ Wohlfahrtsstaatsdebatte, anhand neuerer Forschung zur geschlechtsspezifischen Segregation und anhand von Thesen zu den produktionsregimebezogenen Voraussetzungen erfolgreicher makroökonomischer Steuerung. Der Beitrag schließt mit einer Diskussion der Implikationen der vorgeschlagenen Erweiterung für die vergleichende Staatstätigkeitsforschung.
The literature on the relationship between the unemployment rate and wage bargaining fails to separate the offsetting effects of a reduction in competition associated with centralized bargaining and the increased awareness of unemployment externalities. This paper uses OECD data to distinguish these effects. While wages have become more sensitive to changes in the unemployment rate in countries that have switched to centralized wage-bargaining arrangements, the industry wage is not particularly sensitive to internal factors (relative price and productivity shifts) in economies with centralized/industry-level bargaining arrangements. The latter effect dominates in terms of persistently high unemployment and weaker growth.
"Collectively bargained wage contracts - in Germany discussed under the heading ‘Flaechentarifvertraege’ - are often asserted to compress the wage structure, to systematically bias wages and therefore to destroy employment opportunities. Accordingly they are accused of being inefficient compared to bilateral wage negotiations. Traditionally economists favored decentralized wage bargaining because it is closest to the idealized market model. More recent theoretical developments, however, take market imperfections (information asymmetries, market power etc.) as their starting point and show that market imperfections may be reduced by, for example, unions. Models of imperfect markets lead to different and more realistic evaluations of institutions than would be possible on the basis of the perfect market model. This article provides an overview of the theoretical and empirical discussion of the relations between wage bargaining systems, wage inequality, and employment. This contribution shows that more coordinated wage bargaining systems correlate with lower wage inequality but the often claimed correlation between low wage inequality and labor market mal performance cannot be found at the aggregated level. Countries with high wage inequality - like the US - but also countries with low wage inequality - like the Scandinavian countries - achieve high employment rates." (author's abstract, IAB-Doku) ((en))
Centralization of wage bargaining
Lars Calmfors and John Driffill
The structure of labour markets is increasingly perceived as a determinant of the macroeconomic performance of a country. This article focuses on one aspect of labour markets, the degree of centralization of wage setting. The main conclusion is that extremes work best. Either highly centralized systems with national bargaining (such as in Austria and the Nordic countries), or highly decentralized systems with wage setting at the level of individual firms (such as in Japan, Switzerland and the US) seem to perform well. The worst outcomes with respect to employment may well be found in systems with an intermediate degree of centralization (such as in Belgium and the Netherlands). This conclusion is reasonably well supported by the available empirical evidence. It is also logical. Indeed, large and all-encompassing trade unions naturally recognize their market power and take into account both the inflationary and unemployment effects of wage increases. Conversely, unions operating at the individual firm or plant level have very limited market power. In intermediate cases, unions can exert some market power but are led to ignore the macroeconomic implications of their actions. These conclusions challenge the conventional wisdom which asserts that the more ‘corporatist’ is an economy, the better is its economic performance.
Outbursts of strike activity in many industrial societies during the late 1960s and early 1970s focused considerable attention on relations between labour, capital and the state in advanced capitalist systems and led to many inquiries into the sources of the ‘new’ labour militancy. The events of May–June 1968 in France, the ‘hot autumn’ of 1969 in Italy, and the nation-wide strikes of the coal miners in 1972 and 1974 in the United Kingdom (the first since the great General Strike of 1926) are the most dramatic examples, but sharp upturns in strike activity in Canada (1969, 1972), Finland (1971), the United States (1970) and smaller strike waves in other nations also contributed to the surge of interest in labour discontent.
The development of socio-economic conflict in Belgium in recent years needs to be seen in the context of an economy undergoing transformation. The sources of this transformation are varied, and in several cases relate to factors outside Belgian society. Two factors in particular stand out as important: a change in the relations between the two regions of the country, with the industrialisation and development of Flanders and the structural decline of Wallonia;1 and the growth of foreign investment and a shift in the control of industry.
In the 1970s and 1980s, it is often said, the rate of economic change is accelerating while the capacity for political adjustment is shrinking. Throughout the advanced industrial world this divergence has become both a rallying cry for conservatives demanding fewer state intrusions in the market and a challenge to liberals seeking more eaective state intervention. In the case of the small European states, this book has argued, economic flexibility and political stability are mutually contingent. The corporatist strain in the evolution of modern capitalism no longer yields readily to interpretations based on such established dichotomies as market and plan, private and public, efficiency and equity, Right and Left. Under conditions of increasing vulnerability and openness, the large industrial states are groping toward workable solutions for the economic predicaments of the 1980s. The incremental, reactive policy of the small European states and a stable politics that can adjust to economic change provide a point of orientation that is both helpful and hopeful. Students of the international political economy are undecided whether the most important development of the 1970s lay in the predictable growth or the astonishing containment of protectionism. Similarly, students of domestic politics focus their attention both on the cartelization of politics in the hands of party, group, and bureaucratic elites and on the challenge that new social movements pose to established institutions. In analyzing the democratic corporatism of the small European states this book dissents from the view that capitalism is being driven by structural crisis toward collapse, nor does it support the view that capitalism is being resurrected by the vigors of market competition. Contradictions are inherent in all forms of political and economic domination. But democratic corporatism has been able to tolerate contradictions because of its accommodation rather than resistance to market competition and because of its inclusion of all significant actors in the decision-making process. Copyright
Many recent studies argue that labor organization and government partisanship were important determinants of the economic performance of the advanced industrial democracies during stagflation. They do not, however, take into account the potential impact on performance of position in the international economy; the relationships reported may therefore be largely spurious. Even when the strong effects of international position, most notably the extent of dependence on imported sources of oil, were controlled for, domestic political structures remained powerful determinants of economic performance during stagflation. “Corporatist” political economies dominated by leftist governments in which labor movements were densely and centrally organized, and “market” political economies in which labor was much weaker and rightist governments were predominant, performed significantly better than the less coherent cases in which the power of labor was distributed asymmetrically between politics and the market.
This book sets forth both a theory and a comparative empirical analysis of stagflation, that peculiar combination of high unemployment, slow growth, and spurts of high inflation bedeviling the advanced industrial nations during the past fifteen years. The authors first construct a small macroeconomic model that takes full account of aggregate demand and supply forces in the determination of output, employment, and the price level, in both a single-economy and a multi-economy setting. They then apply the model to provide an understanding of comparative performance of industrial countries in the areas of unemployment, inflation, productivity, and investment growth. They argue convincingly that the decay of the major economies during this period resulted from the supply shocks of the 1970s, such as the two major OPEC oil-price increases, and from the consequent policy-induced decrease in demand in response to inflationary pressures. Their analysis differs markedly from similar studies in that it takes specific account of institutional differences in the labor markets of the various economies. This helps to explain in particular the divergent adjustment profiles of the United States and Europe. Bruno and Sachs make several key recommendations for the mix of demand management and incomes policies necessary to combat stagflation in individual countries as well as for the coordination of macroeconomic policies among the major industrial nations.
Centralised Collective Bargaining: Trade Unions, Employers and Government in the Republic of Ireland, unpublished dissertation
- N Hardiman
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Conditions for Trade Union Wage Restraint
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Corporatism or Quasi-corporatism: the development of prices policy mechanisms in Finland
- V Helander
Transition and Crisis: the complexity of Spanish industrial relations
- J Estivill
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La sindicalizzazione tra ideologia e pratica
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Neo-corporatism and the Happiness Index
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Industrial Relations and Trade Unions in Spain
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Changing Patterns of Industrial Conflict
- A M Ross
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Trade Unions in Belgium
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