Abstract
This contribution engages recent debates in comparative political economy, arguing that labels such as divergence or convergence are ultimately unsatisfactory in analysing German industrial relations and labour market policy. The persistence of formal institutions goes hand in hand with rapid and dramatic change – a neo-liberal re-orientation among political elites in government and a more bellicose stance on the part of employers. Business attempts to shift the bargaining arenas to the micro-level, knowing that at this level its bargaining power is greater and its exit threat more compelling. However, internal divisions within the employers and the unions further complicate the picture. Business does not simply exit, it seeks to press for advantageous outcomes within existing institutions.
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