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Ive Marx and Lien Van Cant

Belgium’s social concertation model is extraordinarily resilient. Social dialogue is institutionally firmly embedded and the social partners continue to wield significant influence in shaping social and economic policy. Belgium is also among the few rich countries not to have seen growing income inequalities. Belgium maintains just about the most equal wage distribution in the capitalist world – including one of the smallest gender pay gaps – and there is little evidence of precarisation of work. The key argument of this chapter is that robust social dialogue has helped to contain inequality. The Belgian experience thus provides a powerful antidote to views that growing inequalities are inevitable. However, Belgium’s labour market is not as inclusive as we would wish and this, too, has to be seen, at least in part, in the context of the institutional rigidities and insider biases inherent in an extensive social concertation model such as Belgium’s.

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Branko Bembič

Once considered an exception among the post-socialist countries owing to its inclusive industrial relations system and the role of social dialogue, the conditions for the social compromise in Slovenia have eroded significantly since mid-2000s. The pressures intensified in the post-2008 period when social dialogue at the national level virtually collapsed, the gap in working conditions and wages between sectors of the economy widened, while precarisation and increased unemployment seriously undermined the position of trade unions at the company level. In cases when collective bargaining was not mere ‘concession bargaining’ it often resulted in reduction of various forms of inequality but, with regard to weaker unions and non-unionised segments of the labour force, union actions at the national level proved crucial for imposing certain minimum standards. On the rare occurrences when meaningful social dialogue at the national level did take place, the results were more pronounced on the flexibility rather than the security side.

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Daniel Vaughan-Whitehead and Rosalia Vazquez-Alvarez

This first chapter, as an introduction to the whole book, summarises how growing inequality in Europe may have emerged from mechanisms in the world of work, with a particular focus on the possible role of social dialogue and the social partners – and more generally industrial relations – in reducing inequalities. The chapter first presents some major lessons from the national chapters and summarises their contributions to the existing research: How did national industrial relations systems address inequalities over time, and what have been their effects on various sources of inequality? This introduction also reviews some concrete outcomes of collective bargaining at national, sectoral and firm level that may have helped to reduce inequalities. It extends for this purpose the number of countries (beyond those covered by national chapters) in order to provide the most extensive overview of such outcomes. Third, this introduction complements the national stories with a comparative statistical analysis from the European Structure of Earnings Survey (SES, Eurostat) to more accurately identify specific effects of collective pay agreements on pay inequality, working time distribution and work contracts. Finally, this leads us to a number of policy considerations, which are presented briefly in the closing section and further developed in the national chapters.

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Edited by Daniel Vaughan-Whitehead

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Rafael Muñoz de Bustillo and Fernando Pinto Hernández

This chapter reviews the role played by the system of industrial relations in the working of the Spanish labour market, focusing on the level of security and flexibility achieved and its impact on inequality. With that aim, we first review the main characteristics of the Spanish system of industrial relations before the Great Recession, including the role played by social agreements and social consultation, and the major changes produced during the economic crisis, both in terms of labour (de)regulation and in terms of the changing power relations between workers and firms resulting from the massive increase in unemployment. With this background, we explore the impact of the system of industrial relations on the functioning of the labour market in terms of jobs security and income inequality using, among other sources, the 2014 wave of the Structure of Earnings Survey. This chapter will provide two successful equality-enhancing case studies of social dialogue.

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Maria Karamessini and Stefanos Giakoumatos

The Greek Great Depression (2008 to date) has had profound consequences on labour market inequalities by producing mass unemployment of historical dimensions and radical changes in industrial relations. By investigating only the effect of the latter on inequalities among employees, the chapter has found that the dismantling of collective bargaining and ‘imposed flexibility’ have reduced traditional differences in employment and working conditions between large and small firms, formal and informal sectors and reinforced those between young and older workers. As regards the public–private divide, inequalities in employment security and working conditions have been amplified, while wage inequalities have narrowed given the huge cuts imposed on public sector wages in 2010–11. Wage devaluation in the private sector since 2012 has reversed the trend but has failed to contribute to the creation of a sustainable growth pattern which requires a multi-level social dialogue framework to promote productivity and investment in quality production.

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Damian Grimshaw and Mat Johnson

The world of work in the United Kingdom has for many years been characterised by major inequalities. Despite hosting some of the world’s highest executive salaries, basic employment and welfare standards tend to be relatively low. Moreover, a series of qualitative shifts in the labour market, in worker protections and in the nature of work have tended both to reproduce and to feed off workers’ unequal socio-economic position. A key causal factor is the ‘perforated’ industrial relations model caused by two generations of trade union decline. This has facilitated a specific mode of labour market flexibility, which is strongly biased towards employer short-term interests and militates against both longer-term employer security needs (for example, to underpin skill investment) and the kinds of flexibilities that might meet worker needs (for example, flexible careers and working time). This chapter investigates the relationship between inequalities and industrial relations and explores positive and negative outcomes via two case studies.

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Annamaria Simonazzi and Giuseppe Fiorani

From the early 1990s, the Italian industrial relations system came to be described as an example of the ‘neo-corporatist revival’. ‘Negotiated flexibility’, implemented with the participation of the social partners, resulted in an increasingly polarised labour market, with a surge in precarious jobs concentrated mostly among the younger generations, and no lasting effects on employment. Since the crisis, labour legislation has turned from negotiated to unilateral. In the name of urgency, national governments have increasingly resorted to legislation by decree, sidestepping the social partners and national parliament to pass reforms in the fields of labour, welfare and industrial relations. The interaction of these reforms with austerity policies has eroded labour rights while weakening the labour unions, magnified the dualism marking the labour market and opened the way to greater precariousness, inequality and poverty. The case of Italy demonstrates that no degree of labour flexibility can amount to adequate response to the crisis, and that the multiple challenges raised by technological, organisational and social changes call for coordinated responses in the production, employment and social spheres.

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Jaan Masso, Maryna Tverdostup, Inta Mierina and Kerly Espenberg

After regaining independence, social dialogue has not been of key importance in the functioning of Baltic labour markets. Despite trade unions’ being the dominant form of workers’ representation in the Baltic States, their role is limited owing to low union density and collective agreement coverage. Unions have, to a certain extent, been unable to overcome the Soviet legacy, although it has been argued that the unions have some unused potential. The effect of unions on labour market flexibility and inequalities is currently limited, thus explaining the balance between flexibility and security being more towards the former, and the favourable inequality dynamics in Estonia during the past 15 years is due to reasons other than the successful activities of unions and social dialogue. The chapter still discusses some moderate recent positive tendencies and effects, such as the dynamics of minimum wages in Estonia in recent years, the unions’ support of wage-bidding power of workers in the lowest wage categories, and positive effects in reducing the gender pay gap in Estonia, which has the largest labour market inequality in the Baltics.

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Wiemer Salverda

The Dutch polder model has practised secular moderation of bargained wages – 25 years’ standstill of purchasing power. Regulatory capture let the minimum wage lag behind and lowered the lowest wage scales, increasing wage inequality. This combined with strong employment growth – mostly in part-time jobs, often low paid and insecure. The household employment rate remained stagnant as single-earner and dual-earner households traded places. The frequent association of higher with lower earnings within dual-earner households mitigated the effects of wage inequality on household income inequality for the persons involved, but also increased inequality as it lifted many of these households higher up the distribution vis-à-vis other households. More than half of all actual aggregate wage growth has accrued to the top decile of the income distribution. Dual-earner world households’ joint access to jobs and working hours adds an essential dimension to income inequality that the polder model has missed.