Strong Governments, Precarious Workers: Labor Market Policy in the Era of Liberalization

224 Pages·2018·3.927 MB·English

by  Philip Rathgeb

STRONG GOVERNMENTS,
PRECARIOUS WORKERS

STRONG
GOVERNMENTS,
PRECARIOUS
WORKERS
Labor Market Policy
in the Era of Liberalization
Philip Rathgeb
ILR Press
AN IMPRINT OF CORNELL UNIVERSITY PRESS ITHACA AND LONDON
Copyright © 2018 by Cornell University
All rights reserved. Except for brief quotations in a review, this book, or parts
thereof, must not be reproduced in any form without permission in writing from the
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First published 2018 by Cornell University Press
Printed in the United States of Amer i ca
Library of Congress Cataloging- in- Publication Data
Names: Rathgeb, Philip, 1987– author.
Title: Strong governments, precarious workers : l abor market policy in the era of
liberalization / Philip Rathgeb.
Description: Ithaca : ILR Press, an imprint of Cornell University Press, 2018. |
Includes bibliographical references and index.
Identifiers: LCCN 2018012025 (print) | LCCN 2018015603 (ebook) |
ISBN 9781501730597 (pdf) | ISBN 9781501730603 (epub/mobi) |
ISBN 9781501730580 | ISBN 9781501730580 (cloth ; alk. paper)
Subjects: LCSH: Precarious employment— Austria. | Precarious Employment—
Denmark. | Precarious employment— Sweden. | Manpower Policy— Austria. |
Manpower policy— Denmark. | Manpower policy— Sweden. | Labor unions—
Austria. | Labor unions—D enmark. | Labor unions— Sweden.
Classification: LCC HD5858.A9 (ebook) | LCC HD5858.A9 .R38 2018 (print) |
DDC 331.25/727— dc23
LC rec ord available at https:// lccn . loc . gov / 2018012025
To Anja

Contents
Preface ix
Acknowl edgments xi
Abbreviations xiii
1. The Protection of Outsiders in the Era
of Liberalization 1
2. Labor Market Policy in Austria, Denmark,
and Sweden 35
3. Relying on the Weak: Austrian Unions and
Smoothed Dualization 54
4. Strengthened Governments and the Erosion
of Danish Flexicurity 89
5. Goodbye to Swedish Social Democracy and
Universal Welfare 122
6. Strong Governments and Precarious Workers
in the Era of Liberalization 161
Notes 183
Bibliography 187
Index 207

Preface
“Economic history reveals that the emergence of national markets was in
no way the result of the gradual and spontaneous emancipation of the eco-
nomic sphere from governmental control. On the contrary, the market has
been the outcome of a conscious and often violent intervention on the part
of government which imposed the market organ ization on society for
non- economic ends.”
Karl Polanyi (1944 [1957]), 250
“What makes most Western economies still viable is that the organization
of interests is yet only partial and incomplete. If it were complete, we would
have a deadlock between these organized interests, producing a wholly rigid
economic structure which no agreement between the established interests
and only the force of some dictatorial power could break.”
Friedrich August von Hayek (1979), 93
Why do some Eur o pean welfare states protect precarious workers from eco-
nomic uncertainty better than others? This study of labor market policy in three
small states— Austria, Denmark, and Sweden— explores this fundamental ques-
tion. It does so by examining the power- distributional interaction between trade
unions and governments. Inclusive trade u nions have high pol iti cal stakes in the
protection of precarious workers because they incorporate the margins of the
workforce into their repre sen ta tional outlook. Yet in the era of liberalization,
the impact of u nion preferences has declined over time, with a shift in the balance
of class power from labor to capital across the advanced capi tal ist countries. Na-
tional governments, even those of a Social Democratic character, have accord-
ingly prioritized flexibility for employers over the protection of precarious work-
ers. As a result, or ga nized labor can only be successful when governments are
reliant on union consent for consensus mobilization. When governments have
a united majority of seats, however, they are strong enough to exclude trade
unions, to the detriment of precarious workers. Variations in government strength
best explain why Danish and Swedish trade unions faced remarkable defeats at
the cost of social solidarity, whereas their Austrian counterparts remained much
more influential and could thus enhance the protection of precarious workers.
ix
x PReface
This argument is buttressed with evidence from shadow case studies of Italy and
Spain.
Perhaps strong government is not what most observers would spontaneously
associate with precarious workers. In fact, it is often said that the strengthening
of the market requires the weakening of government. In this way, so the logic
goes, the state’s redistributive function can be cut back in favor of free enterprise.
But the historical record of modern capitalism shows that the politics behind the
expansion of market forces requires a strong government. Economic liberaliza-
tion cannot proceed without a government that is able to remove constraints on
capital and fend off po liti cal demands for material compensation at the same
time. Scholars from fundamentally diff er ent ideological outlooks and political
persuasions came to similar conclusions a long time ago, as illustrated by the
quotations shown at the start of this Preface. In fact, these passages indicate that
liberal forces have been normatively committed to the notion of a strong gov-
ernment—one that can enforce free markets against the resistance of organized
interests in general and trade unions in particular—for quite some time, even
if their political rhetoric might suggest otherwise.
However, their insight about the instrumental role of government strength
was somewhat lost over time, although this was quite understandable. In the
postwar period of high economic growth, national governments of the ad-
vanced capi tal ist countries faced little incentive to create precarious employ-
ment in return for successful economic per for mance. In fact, at that time, such
a strategy was not even a serious option, given the influence of power ful labor
movements and Keynesian economics. Yet the economic crisis of the late 1970s set
in motion a new material and social context, one in which union demands seemed
no longer conducive to capitalist prosperity while employer associations started a
counteroffensive against the Keynesian class compromise. Governments of the
right as well as the left responded accordingly by initiating the contemporary era
of liberalization. But the distributive outcomes of this historical change were not
uniform for precarious workers. The present book explains this variation by recov-
ering a plain truth of capitalist democracies: only when governments are strong
can they liberalize labor markets without compensating the losers this creates.
Otherwise, trade unions oblige them to make concessions. In the end, this finding
calls into question the electoral responsiveness of national governments—and
thus political parties—to the social needs of an increasingly numerous group of
precarious workers.