Wage Setting, Social Pacts and the Euro: A New Role for the State PDF
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cover anke hassel 24-08-2006 16:50 Pagina 1 Anke Hassel s Wage Setting, e t a A t s n k e Social Pacts and e r a H f l a e s w s the Euro e g l European monetary integration has posed tremendous challenges to n i governments since it removed the tool of currency depreciation g n previously used for dealing with economic imbalances. As a consequence, a h governments of member states of the Eurozone have turned to wage setting c A New Role for the State in order to achieve economic adjustment. In search of ways to adjust wage W expectations to economic realities, governments have periodically intervened into wage setting systems in Western Europe over the last 25 a g years. During the process of European monetary integration wage setting e institutions in most countries have generally remained centralized or become S so; relations between governments and social partners have intensified e t rather than loosened. Wage Setting, Social Pacts and the Euro: A New Role t i for the State explains the reasons for this continued quest for social n partnership in Western Europe. It highlights the economic and political g , benefits of negotiated wage restraint in a context of stricter monetary S policies and increasing economic openness. o c i Anke Hassel is professor of public policy at the Hertie School of Governance a l in Berlin, Germany. Prior to that she was professor of sociology at the P International University Bremen, senior researcher at the Max Planck a Institute for the Study of Societies and spent a year in the planning division c t of Germany’s Federal Ministry of Economics and Labour. s a n d isbn-13 978 90 5356 919 1 isbn-10 90 5356 919 7 t h e E u r www.aup.nl o Amsterdam University Press A m s t e r d a m U n i v e r s i t y P r e s s wage setting, social pacts and the euro WWaaggeess..iinndddd 11 2288--88--22000066 1155::4433::0066 CHANGING WELFARE STATES Processes of socio-economic change − individualising society and globalising eco- nomics and politics − cause large problems for modern welfare states. Welfare states, organised on the level of nation-states and built on one or the other form of national solidarity, are increasingly confronted with − for instance − fi scal prob- lems, costs control diffi culties, and the unintended use of welfare programs. Such problems – generally speaking – raise the issue of sustainability because they tend to undermine the legitimacy of the programs of the welfare state and in the end in- duce the necessity of change, be it the complete abolishment of programs, retrench- ment of programs, or attempts to preserve programs by modernising them. Th is series of studies on welfare states focuses on the changing institutions and programs of modern welfare states. Th ese changes are the product of external pressures on welfare states, for example because of the economic and political consequences of globalisation or individualisation, or result from the internal, po- litical or institutional dynamics of welfare arrangements. By studying the development of welfare state arrangements in diff erent countries, in diff erent institutional contexts, or by comparing developments between countries or diff erent types of welfare states, this series hopes to enlarge the body of knowl- edge on the functioning and development of welfare states and their programs. editors of the series Gøsta Esping-Andersen, University of Pompeu Fabra, Barcelona, Spain Anton Hemerijck, the Netherlands Scientific Council for Government Policy (Wetenschappelijke Raad voor het Regeringsbeleid − wrr) Kees van Kersbergen, Free University Amsterdam, the Netherlands Jelle Visser, University of Amsterdam, the Netherlands Romke van der Veen, Erasmus University, Rotterdam, the Netherlands previously published Jelle Visser and Anton Hemerijck, A Dutch Miracle. Job Growth, Welfare Reform and Corporatism in the Netherlands, 1997 (isbn 978 90 5356 271 0) Christoffer Green-Pedersen, The Politics of Justification. Party Competition and Welfare-State Retrenchment in Denmark and the Netherlands from 1982 to 1998, 2002 (isbn 978 90 5356 590 2) Jan Høgelund, In Search of Effective Disability Policy. Comparing the Develop- ments and Outcomes of the Dutch and Danish Disability Policies, 2003 (isbn 978 90 5356 644 2) Maurizio Ferrera and Elisabetta Gualmini, Rescued by Europe? Social and Labour Market Reforms from Maastricht to Berlusconi, 2004 (isbn 978 90 5356 651 0) Martin Schludi, The Reform of Bismarckian Pension Systems. A Comparison of Pension Politics in Austria, France, Germany, Italy and Sweden, 2005 (isbn 978 90 5356 740 1) Uwe Becker and Herman Schwartz (eds.), Employment ‘Miracles’. A Critical Com- parison of the Dutch, Scandinavian, Swiss, Australian and Irish Cases Versus Germany and the US, 2005 (isbn 978 90 5356 755 5) Sanneke Kuipers, Th e Crisis Imperative. Crisis Rhetoric and Welfare State Reform in Belgium and the Netherlands in the Early 1990s, 2006 (isbn 978 90 5356 808 8) WWaaggeess..iinndddd 22 2288--88--22000066 1155::4433::0077 Wage Setting, Social Pacts and the Euro A New Role for the State Anke Hassel WWaaggeess..iinndddd 33 2288--88--22000066 1155::4433::0077 The publication of this book is made possible with a grant of the gak- Foundation (Stichting Instituut gak, Hilversum). Cover illustration: Th e “Kearsarge” at Boulogne, 1864, Édouard Manet (1832-1883) Cover design: Jaak Crasborn bno, Valkenburg a/d Geul Lay-out: V3-Services, Baarn isbn-13 978 90 5356 919 1 isbn-10 90 5356 919 7 nur 754 © Amsterdam University Press, Amsterdam 2006 All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, pho- tocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book. WWaaggeess..iinndddd 44 2288--88--22000066 1155::4433::0077 “Statutory or voluntary, it [incomes policy] may not have many positive virtues; but the alternative – leaving it all to the slow-acting and uncertain treatment of tight fiscal and monetary policies – is even less appealing.” the economist, 11 february 1978 WWaaggeess..iinndddd 55 2288--88--22000066 1155::4433::0077 WWaaggeess..iinndddd 66 2288--88--22000066 1155::4433::0077 Table of Contents Figures and Tables Preface The Political Economy of Adjustment in Europe The limits of neo-corporatist analysis The approach of this book Methodological issues Conclusion Governments and Wages – A Theoretical Framework Policies on wages Monetary and wage bargaining regimes in the political economy literature Explaining policy choices Conclusion Policy Options and Institutions: How Governments Respond Policy options towards the redistributional power of trade unions: market responses and negotiations The operationalization of variables The relationship between institutional and political accommodation Conclusion Striving for Conservatism: The Shift in Monetary Regimes Credibility and the inflation bias European monetary integration as a tool for achieving central bank conservatism Central bank independence, monetary policy and government intervention Government intervention to foster monetary conservatism The Politics of Government Intervention Institutional constraints on governments The shared roots of consensus democracy and corporatist responses: the political fragmentation of trade unions and the role of union-party relations WWaaggeess..iinndddd 77 2288--88--22000066 1155::4433::0077 The role of partisanship Conclusion: Negotiated adjustment and the role of political institutions The Responsiveness of Wage Bargaining Institutions Theoretical assumptions about wage flexibility and the role of wage bargaining institutions Priorities of trade unions between employment and real wage protection in wage bargaining – an empirical measure The institutional basis of wage responsiveness Conclusion: Shifting workers’ wage expectations The Interaction between Wage Bargaining Institutions and Government Intervention The responsive wage bargaining regimes: Germany and Austria The non-responsive corporatist countries Adjustment of wage expectations in the non-corporatist countries with non-responsive wage bargaining regimes Conclusion: A comparative view on the dynamic between wage bargaining institutions and government intervention Negotiated Adjustment – A European Approach Policy options towards trade unions’ redistributional power The interaction of institutions and policies The nature of negotiated adjustment: Reinforcing mechanisms of trade union incorporation The German role model The United Kingdom as the European exception Outlook: Implications for adjustment under emu Appendices Appendix to chapter Appendix to chapter Appendix to chapter Notes Bibliography Index of Names Index of Subjects TABLE OF CONTENTS WWaaggeess..iinndddd 88 2288--88--22000066 1155::4433::0077 Figures and Tables Figures . The structure of the argument . Negotiated wage restraint: policies of government intervention . Institutional settings and policy options . Bargaining coordination and government intervention in EU member states, - . Inflation and unemployment in Western Europe, - . Real long-term interest rates in Western Europe, - . Central bank independence and Government intervention in wage bargaining, Western Europe, - . Government intervention and consensus democracy . Responsiveness and Government intervention . Share of trade union members in exposed sector and responsiveness . Political economy of monetary and incomes policies, Western Europe, - A Evolution of wage formation, Western European countries Tables . Index of government involvement and government intervention index . Government intervention in wage bargaining in Western Europe, - . Indicators of corporatism, wage bargaining centralization and coordination . Pearson correlation coefficients of wage bargaining, corporatism and government intervention, - (-) . Exchange rate regimes and credibility . Exchange rate pegging and central bank independence . Depreciation of the national currency vis-à-vis the German Mark (inflation differential with Germany, average per decade) . Legal independence of central banks, Western Europe . Monetary policies by central banks, s and s, Western Europe . Average government intervention by central bank independence and long- term real interest rates (observation per cell), - . Average government intervention by central bank independence and change in money supply (observation per cell), - . Average government intervention by central bank independence and inflation (observation per cell), - WWaaggeess..iinndddd 99 2288--88--22000066 1155::4433::0077
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