Industrial Relations Systems, Innovation, and Economic Performance: Uncovering Myth and Reality from a Dutch Point of View

Abstract

In the last two decades there has been a considerable amount of rhetoric about an alleged need to subvert established industrial relations systems for the sake of economic performance. Western Europe's Coordinated Market Economies (CMEs) have been the main target of debates centred on the question of whether a more liberal market economy is needed to increase wealth. Using the Netherlands as a case study, this paper tries to shed light on the need for change in the industrial relations systems of CMEs, and connects this discussion to the fundamental issue of innovation, a precondition for economic performance. We find that the Dutch industrial relations system does not hamper innovation and economic performance. However, while centralized and coordinated labour organizations (i.e., unions) cooperate with employers' associations and the government to respond to economic changes, their role in proactive, future-directed innovation calls for improvement.