Academic journal article Review of Social Economy

Industrial Relations Systems, Economic Efficiency and Social Equity in the 1990s

Academic journal article Review of Social Economy

Industrial Relations Systems, Economic Efficiency and Social Equity in the 1990s

Article excerpt

Abstract A feature of many European countries after World War II was the kind of institutional arrangements that developed between capital and labour. A central question in the literature concerns whether neo-liberal competitive labour markets or organized corporatist labour markets are more efficient. In this paper the economic and social outcomes from these different market arrangements are compared for a number of OECD countries from the 1980s to the end of the 20th century. Although, in the 1990s strongly corporatist countries remain a great deal more egalitarian than liberal market economies, the evidence from this paper indicates that the latter have outperformed countries with corporatist type arrangements regarding employment and economic growth. It appears that the economic dividend arising from strongly institutionalized industrial relations systems is no longer being delivered. Yet, the outcomes of liberal economic policies of deregulation are increasingly unequal societies. The challenge for advanced democratic societies is to deliver on both social equity and economic growth.

Keywords: corporatism, economic performance, social equity

INTRODUCTION

One of the notable industrial relations features of most European countries after the World War II was the kind of institutional arrangements that developed between capital and labour, with governments as both partner and broker to these arrangements. Indeed, by the 1970s there appeared to be a convergence among Western European societies towards what was termed a bargained corporatist pattern of industrial relations (Crouch 1977: 262). A central question in the literature concerns whether neo-liberal competitive labour markets or organized corporatist labour markets are more economically efficient. To a large degree, the critical issue is whether the advanced welfare states can remain competitive in an increasingly open global economy. This paper explores the economic and social outcomes from these different market arrangements in a number of OECD countries from the 1980s to the end of the 20th century. In particular, we evaluate the effect of the different regimes on economic efficiency and social equality in the period 1990 to 1999.

First, we test the neo-liberal proposition that performance increases with the degree of disorganization (i.e. weak unions and low collective bargaining coverage). From this perspective, liberal market economies are predicted to be more economically efficient than more institutionalized economies. Alternatively, there is the corporatist proposition that performance increases with the degree of centralization of labour relations. Consequently, strong corporatist countries can be predicted to out-perform more liberal market economies. Third, there is the familiar hump-shaped proposition that extreme degrees of organization and disorganization work best. This predicts that the countries at the two extreme ends of the corporatist to liberal market range will perform better than the middle-placed countries with mixed systems. Finally, we examine whether the singular emphasis on inclusiveness and egalitarianism traditionally associated with corporatist countries remains in place in the 1990s.

NATURE OF CORPORATIST ARRANGEMENTS

While the form of corporatist arrangements varied across European countries, a number of characteristic features can be identified. Principally, the agreements negotiated were extensive in scope and included broad economic and social goals. The agreements were a negotiated exchange between the parties in which trade unions agreed to restrain wage militancy in cooperation with government and employers in exchange for political intervention and influence in public policy areas of critical concern to their constituents, such as employment, social welfare and taxation (Maier 1984; Roche 1994). From a purely economic perspective, corporatist agreements can be viewed as helping to provide a solution to improving the inflation--employment trade-off (Henley and Tsakalotos 1993). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.