The embedded flexibility of Nordic labor market models under pressure from EU‐induced dualization—The case of posted work in Denmark and Sweden

Abstract

AbstractWhile many coordinated market economies have responded to internationalization by regulation that creates dualization between insiders and outsiders, the Nordic countries have opted for an embedded flexibilization in which strong unions and cooperative employers have combined flexibility and equality. However, in recent years, the Nordic countries have come under pressure from an EU‐induced dualization that has institutionalized mobile low‐wage workers as an outside group. This article presents case studies of how Denmark and Sweden have responded to these challenges. While political processes have been different in the two countries, pressure from EU regulation and changes in employers' incentive to compromise implies that there is now a specific category of low‐wage workers in both countries' otherwise egalitarian labor markets. The article, thus, contributes to the literature on dualization by highlighting the pressure coming from EU regulation rather than national policy.