The State and the Labor Market PDF
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The State and the Labor Market PLENUM STUDIES IN WORK AND INDUSTRY Series Editors: Ivar Berg, University of Pennsylvania, Philadelphia, Pennsylvania and Arne L. Kalleberg, University of North Carolina, Chapel Hill, North Carolina WORK AND INDUSTRY Structures, Markets, and Processes Arne L. Kalleberg and Ivar Berg THE BUREAUCRATIC LABOR MARKET The Case of the Federal Civil Service Thomas A. DiPrete ENSURING MINORITY SUCCESS IN CORPORATE MANAGEMENT Edited by Donna E. Thompson and Nancy DiTomaso INDUSTRIES, FIRMS, AND JOBS Sociological and Economic Approaches Edited by George Farkas and Paula England MATERNAL EMPLOYMENT AND CHILDREN'S DEVELOPMENT Longitudinal Research Edited by Adele Eskeles Gottfried and Allan W. Gottfried THE STATE AND THE LABOR MARKET Edited by Samuel Rosenberg WORKERS, MANAGERS, AND TECHNOLOGICAL CHANGE Emerging Patterns of Labor Relations Edited by Daniel B. Cornfield A Continuation Order Plan is available for this series. A continuation order will bring delivery of each new volume immediately upon publication. Volumes are billed only upon actual shipment. For further information please contact the publisher. The State and the Labor Market Edited by Samuel Rosenberg Roosevelt University Chicago, Illinois With a Foreword by Lloyd Ulman University of California, Berkeley Berkeley, California Plenum Press • New York and London Library of Congress Cataloging in Publication Data The state and the labor market I edited by Samuel Rosenberg. p. cm. - (Plenum studies in work and industry) Includes bibliographical references and index. ISBN -13 :978-1-4612-8089-7 e-ISBN -13 :978-1-4613-0801-0 DOl: 10.1007/978-1-4613-0801-0 1. Labor policy-Europe-Congresses. 2. Labor policy-United States-Congresses. 3. Europe-Full employment policies-Congresses. 4. United States-Full employment policies-Congresses. I. Rosenberg, Samuel. II. Series. HD8376.5.S76 1989 89·33437 331.12'042'094-dc20 CIP © 1989 Plenum Press, New York Softcover reprint of the hardcover 1st edition 1989 A Division of Plenum Publishing Corporation 233 Spring Street, New York, N.Y. 10013 All rights reserved No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording, or otherwise, without written permission from the Publisher Contributors Anne Marie Berg, Work Research Institute, Oslo, Norway Gerhard Bosch, WSI, Hans-Boehler Strasse 39, Dusseldorf, West Germany Sebastiano Brusco, Department of Political Economy, University of Modena, Modena, Italy LIuis Fina, Department of Applied Economics, Autonomous University of Barcelona, Belleterra, Spain Peter Galasi, Department of Labor Economics, Karl Marx University of Eco nomics, Budapest, Hungary Annie Gauvin, Labor Economics Research Institute, University of Paris 1, Paris, France Alberto Meixide, Department of Economics, University of Santiago de Com postela, Santiago de Compostela, Spain Fran~ois Michon, Labor Economics Research Institute, University of Paris 1, Paris, France Michael J. Piore, Department of Economics, Massachusetts Institute of Tech nology, Cambridge, Massachusetts Marilyn Power, Department of Economics, California State University-Sacra mento, Sacramento, California Samuel Rosenberg, Department of Economics, Roosevelt University, Chi cago, Illinois Jill Rubery, Department of Applied Economics, University of Cambridge, Cambridge, Great Britain Paul Ryan, King's College, University of Cambridge, Cambridge, Great Britain Werner Sengenberger, International Institute for Labor Studies, Geneva, Switzerland v vi Contributors Gyorgy Sziraczki, Department of Labor Economics, Karl Marx University of Economics, Budapest, Hungary Roger Tarling, PA Cambridge Economic Consultants Limited, Cambridge, Great Britain Luis Toharia, Department of Basic and Historical Economics, University of Alcala de Henares, Alcala de Henares, Spain Paola Villa, Department of Economics, Catholic University, Milan, Italy Frank Wilkinson, Department of Applied Economics, University of Cambridge, Cambridge, Great Britain Foreword In the two decades before the mid-1970s, macroeconomic policies in Western Europe were frequently accompanied by policies of direct wage restraint in the pursuit of acceptable levels of employment, inflation, and international competitiveness. The same period witnessed a proliferation of social welfare programs, elements of which were sometimes commingled with demand management and pay policies in trilateral bargaining processes involving gov ernments, unions, and employers. In the wake of such subsequent develop ments as the oil price shocks, sharply intensified international competition, and slowing of growth rates in productivity, however, governments resorted more frequently to deflationist macroeconomic policies and also to policies aimed directly at increasing IIflexibility" in wage determination and the de ployment of labor by the firm. It is a major theme of this very interesting book that these labor market policies have not been demonstrably (or at least sufficiently) effective in com bating the high rates of unemployment which have been prevalent in most of the countries of Western Europe since the late 1970s. This theme emerges from the chapters on labor market developments and policies in six countries of Western Europe, the United States, and Hungary (a welcome addition to this type of scholarship), as well as another set of chapters'devoted to specific policy areas. In effect, Samuel Rosenberg and his colleagues-an interna tional team of nineteen economists and sociologists-are repeating in con crete terms a sermon preached by Keynes over a half century ago. Keynes' critics may have been quite correct 1.1 maintaining that wage and price flexibil ity could ensure full employment (without accelerating inflation) as a condi tion of long-run equilibrium under static conditions in a perfectly competitive economy; but this of course represents a considerable departure from the real world conditions that confront the policymaker-and which provided the grist for Keynes' own intellectual mill. The real-world conditions which in spired conservative European policymakers in the 1980s were found by them in the U.S.A., a place in which they saw whole economic sectors being dereg ulated, major labor markets becoming dis-organized, and real wages falling while employment was increasing strongly. But they staged Hamlet without the prince, for this scenario ignores the role played by the heroic Keynesian vii viii Foreword budget deficits that were being racked up by a conservative administration as it cut taxes while increasing defense spending. Lacking the faith of the true believer in Reaganomics, they retained an old-fashioned reluctance to incur the risk of domestic deficits and inflation, and of external deficits and indebt edness-although, in the case of West Germany, the bellwether economy of the area, these risks might indeed have been smaller than those rashly as u.s. sumed by the Reagan Administration in the Thus, they had to rely only on "structural" policies, although these have sometimes included youth training programs and incentives to encourage early retirement (which are discussed in this book), as well as policies designed to weaken collective bargaining structures and protection of workers against dismissal. Nevertheless, conservative governments have not been heavily penal ized by the failure of their pro-competition policies to make progress in reduc ing unemployment in the 1980s; in the U.K. and West Germany, conservative governments won reelection against an overhang of high unemployment. One reason for this might have been the failure of alternative structural ini tiatives, notably a shorter workweek (which is discussed in several chapters), to elicit great expectations of success. In its weak form, without compensatory increases in wage rates, the reduced workweek would leave employed work ers with reduced incomes. With compensatory wage increases on the other hand, the shorter workweek has aroused fear (even within some union move ments) that it could raise unit costs and thus reduce the demand for labor. A more important reason why the high levels of unemployment in Europe have failed to elicit greater popular and political reaction (as had been widely feared in the 1960s and early 1970s) has been the buffering influence of the welfare state. It has of course been argued that high levels of unemploy ment have been caused by high levels of social transfer payments and are thus "voluntary" in nature; but it is a more plausible proposition that the "safety nets" provided by modern systems of social welfare have rendered "involun tary" unemployment sufficiently bearable to make deflationary macro economic policies viable options for policymakers and politicians. In these pages and elsewhere, moreover, it is pointed out that double-digit unemploy ment has persisted despite serious erosion in relative benefit levels and cover age of unemployment and other social insurances. Such erosion has been associated with budgetary stringency and the persistence of unemployment itself, but it may also entail erosion of popular patience and poltical accept ability of high-level unemployment. There has been much discussion among economists about processes of "hysteresis," whereby states of unemploy ment tend to perpetuate themselves, but there may be processes whereby the prolongation of unemployment tends to undermine the social and political base on which it rests. Even if such processes do unfold, it remains a fact that, as Professor Rosenberg writes in one of the chapters on the U.S. experience, "To some degree a sociopolitical regulation of the labor market and employment rela tions is being replaced by market forces'" (p. 63). The same conclusion can be applied to the experience of all the other countries reviewed in this volume. In ix Foreword identifying and documenting an important turning point in the making of labor market policies in the decade of the 1980s, and also in emphasizing the redistributional aspects of policies designed to make wages and labor markets more responsive to adverse changes in demand and supply, this book makes a most valuable and timely contribution to scholarship in labor economics and industrial relations. Lloyd Ulman Department of Economics University of California, Berkeley Berkeley, California Preface Dramatic changes have occurred in North American and European labor mar kets since the late 1960s. Relatively low levels of unemployment were the rule rather than the exception. Full employment characterized some economies, and labor shortages even emerged. The prosperity of the late 1960s was replaced by the serious economic recessions of the 1970s and 1980s. The low levels of unemployment were temporary. Labor surpluses replaced labor shortages. Although government policies were not the only factors lying behind the emergence of substantial unemployment, they did playa role. And although government policies cannot guarantee a return to the low levels of unemploy ment of the 1960s, they can serve to expand employment opportunities. Given the importance of state policies to labor market developments, the International Working Party on Labor Market Segmentation devoted three of its meetings to questions concerning the state and the labor market. The chapters in this volume, focusing on current directions in governmental la bor-market policies in the United States and Europe, are based on presenta tions made to this group. The Working Party is indebted to Jean-Jacques Silvestre and Jean-Paul de Gaudemar for organizing the Aix-en-Provence conference, to Gyorgy Sziraczki, Janos Timar, and Gabor Revesz for planning the Budapest session, and to Jill Rubery and Frank Wilkinson for arranging the Cambridge meeting. The CeI').tre National de la Recherche funded the Aix-en-Provence conference. The Karl Marx University and the Hungarian Academy of Sciences sponsored the Budapest meeting. The Cambridge Journal of Economics and the Department of Applied Economics of the University of Cambridge funded the Cambridge session. Arne Kalleberg made helpful comments on the entire manuscript. Kendy Kloepfer helped with the typing of the manuscript. Samuel Rosenberg Chicago, Illinois xi
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