Abstract
Abstract The marginalization of trade unions was a notable feature of the sovereign debt crisis in the Eurozone periphery. However, governments have recently imposed liberalizing reforms against union protests in the Eurozone core too. We argue that organized labour loses influence across the core-periphery divide because the ‘new economic governance’ puts national governments under enhanced pressure to compete against each other on wage and labour market flexibility—a process known as competitive internal devaluation. The article illustrates this argument through comparative quantitative indicators of liberalization and qualitative process-tracing in three core countries. Whereas Germany’s outstanding competitiveness position allowed its unions to extract significant concessions, their counterparts in France and Finland faced unprecedented defeats from governments aiming to restore economic growth by closing down the competitiveness gap to Germany. Our findings highlight the class power implications of the Eurozone’s reliance on the labour market as the main economic adjustment variable.
Highlights
The impact of the Eurozone crisis on the trade unions of the periphery has been adverse and deep
Do we identify the causal mechanism leading to union defeats in policymaking? First, we expect a deteriorating competitiveness situation in a context of low economic growth to cause recommendations for the stimulation of internal devaluation through the European Semester and the Macroeconomic Imbalance Procedure’ (MIP), which facilitates the agenda setting of employer associations, bond traders and credit rating agencies
Previous studies have considered the demise of trade union influence in policy-making an exclusive feature of the countries hit hardest by the Eurozone’s sovereign debt crisis—i.e. Greece, Ireland, Italy, Portugal and Spain (Armingeon and Baccaro, 2012; Culpepper and Regan, 2014; Marginson, 2015)
Summary
The impact of the Eurozone crisis on the trade unions of the periphery has been adverse and deep. This article uses comparative quantitative indicators and qualitative case studies of France, Finland and Germany to illustrate the impact of competitive pressures on the policymaking influence of trade unions in the Eurozone core since the global financial crisis of 2008, with a particular focus on the reform activity of the past 5 years. Our case selection puts our argument to a hard test, as the process of internal devaluation against union protests took place under both right and left governments across different varieties of capitalism and trade unionism Despite these differences, trade unions lost influence in similar ways when cost competitiveness deteriorated in a context of economic slowdown (France and Finland), whereas they (re-)gained influence when cost competitiveness improved (Germany).
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