Employer strategies, cross-class coalitions and the free movement of labour in the enlarged European Union

Abstract

The free circulation of workers and services in the European Union after its latest enlargements has been believed to foster a ‘race to the bottom’ in wage standards. This paper explains the strategies of national employer associations towards labour market regulations geared to protect national wage standards in the context of labour mobility. First, this article shows that employers in nontradable sectors confronted with strong trade unions support the regulation of wage standards in order to prevent foreign competitors from using lower wages as a competitive advantage. Second, the strategies of national employer associations (as protagonists, consenters or antagonists) are explained by sectoral power relationships within employer associations, trade union power resources and the risk of unilateral public intervention. A comparative case study analysis of regulation processes in Austria, Switzerland and Ireland shows that employer associations dominated by firms in non-tradable sectors are protagonists of wage regulation, while employer associations dominated by firms in tradable sectors consent to negotiate with trade unions about wage regulation in order to ensure labour acquiescence, or contain unilateral public intervention.