Industrial relations in EMU: are renationalization and Europeanization two sides of the same coin?

Abstract

Recent decades have strained the national systems of industrial relations and collective bargaining that were a cornerstone of the postwar European social model. EMU is widely expected to intensify this strain and change European industrial relations profoundly. The supranationalization of monetary policy and economic governance implies relative decentralization of collective bargaining systems, as national systems become regions of the eurozone economy. Improved transparency of prices and wages and elimination of currency risk will intensify competition among producers and nation states. Without the option of adjusting national exchange rates (and interest rates) and with fiscal policies constrained by the Stability and Growth Pact (SGP), labor market actors will increasingly bear the burden of fluctuating economic circumstances and preventing new unemployment. All this poses a dual challenge of increasing labor market adaptability and enhancing policy coordination both within and across national systems. The implications of EMU for industrial relations are ambiguous, however. With fiercer regime competition and contradictory pressures for adaptation of national systems, the responses of social actors and governments will depend largely on EMU's effects on growth and employment and hence on the macroeconomic policies adopted by EU authorities, and the ECB in particular. At the same time, however, differences in national systems and responses will produce as much potential for diversity as convergence. Three broad scenarios emerge: First, a status quo scenario assumes that the economies and industrial relations systems in the major eurozone countries have already become accustomed to operating under the conditions of fierce competition, strict monetary policies, and high unemployment and that most of the constraints of the Euro-regime have already been absorbed. The emerging path will thus codify trends observable during the 1990s. The central issue for this path will be the long-run influence of present trends on national systems. […]