Wage Regulation between Industrial Democracy and Market Pressures Towards a European Model?

Abstract

This paper addresses the relationship between market forces and industrial democracy in the context of European integration. Given the notable imbalance between economic and socio‐political integration in the EU, one may doubt that a European system of organized industrial relations can develop. Moreover, there is the fear that economic integration in Europe may even undermine the national systems that are all strongly committed to the principles of industrial democracy. Following the distinction between system integration and social integration, this paper identifies two hypothetical explanations for the observed imbalance: (i) a structural contradiction between market‐driven performance requirements and democracy; (ii) collective‐action problems of building non‐market institutions of joint regulation. The paper empirically examines these hypotheses with regard to wage regulation. Based on these findings, the prospects for Europeanization of industrial democracy are discussed. The paper's argument is that European regulation may evolve in such a way that it transcends both Euro‐optimist and Euro‐pessimist scenarios.