JOINT REGULATION AND LABOUR MARKET POLICY IN EUROPE DURING THE CRISIS: A SEVEN-COUNTRY ANALYSIS

A. Koukiadaki, I. Tavora and M. Martinez-Lucio

ESRC seminar series: Regulation of Work and Employment

Newcastle, 5 June 2015

The issues• Transmission of the economic crisis to the labour market via the

adoption of policies of ‘internal devaluation’ (Armingeon and Baccaro 2012)

• Process of labour market reforms: transfer of policy-making processes from national to international actors (Dahan 2012, Meardi 2012)

• Reforms centred on employment protection legislation and national systems of collective bargaining (Deakin and Koukiadaki 2013)

• Debate around the implications of the reforms for the systems of collective bargaining emerging but also the future of EU social policy (e.g. Marginson, 2014; Meardi 2012)

Research focus• What are the implications of the reforms for collective

bargaining arrangements at cross-industry, sectoral and company level?

• What are the government and social partner strategies and approaches towards the reforms in collective bargaining?

• What is the extent and nature of changes in management policy and practice and trade union approach at sectoral and company level concerning the process and character (conflictual or consensual) of bargaining?

• What are the implications of the reforms for the content and outcome of collective bargaining at sectoral and company level, especially on wages and working time?

Research methodology • 7-country comparative study: Greece, Ireland, Italy,

Portugal, Romania, Slovenia and Spain• Focus on the manufacturing sector: characterised by

enduring institutions and good practices of multi-level bargaining but also important for the production systems of the countries in question

• Collection and analysis of primary and secondary data on the social partners’ approach and strategies to the labour market reforms and conduct of company case studies

• One common sub-sector across all countries (metal) plus additional ones (e.g. chemicals, food and drinks, textiles)

Bargaining systems pre-crisis and the emergence of the crisis

• EU Member States: IR systems in crisis (e.g. Italy, Greece, Portugal) vs systems in growth/stability (e.g. Ireland, Slovenia and Romania)

• Most multi-level bargaining systems but differences in the degree of articulation/coordination (cf. Italy and Slovenia with Greece, Spain and Portugal) and the degree of voluntarism (cf. Italy and Ireland with Greece and Spain)

• Crisis as having a shock effect (Ireland, Romania and Slovenia), accelerating effect (Italy, Greece, Spain, Portugal) and/or revealing effect (Italy, Greece, Spain, Portugal) (Gazier, 2012)

• Absence of social dialogue (e.g. Romania, Slovenia, Greece), absence of due regard to outcomes of social dialogue (e.g. Greece and Spain), substantial involvement (e.g. Portugal, Italy)

The role of supranational institutions• Financial assistance programmes:

• Non-eurozone programmes: Romania• Eurozone programmes:

• Bilateral agreements between Member States complemented by IMF stand-by arrangements: Greece I

• European Financial Stabilisation Mechanism (EFSM) based on Article 122(2) TFEU: Ireland and Portugal

• European Financial Stability Facility (company under the control of the Eurozone Member States): Ireland, Portugal and Greece II

• European Stability Mechanism (ESM) (inter-governmental mechanism): financial sector in Spain

• New set of rules on the EU economic governance regime: European Semester affecting all EU Member States (i.e. Italy and Slovenia)

• Promotion of ‘internal devaluation’ policies to restore national competitiveness, targeting wage determination and collective bargaining institutions

Labour market reforms in 7 countriesCountry/

topicWage-

determination

& national CB

Company-level

derogations/favourability

Changes in extension

rules

Agreements’ duration/

after-effect

Other representation

channels

EPL

Greece X X X X X XIreland X  X  X     X

Italy   X     XPortugal X X X X X X

Romania X X   X  X X

Slovenia   X        X

Spain X X X X X

The impact of the austerity measures on bargaining structure (1)

• Decentralisation trends but differences between disorganised forms of decentralisation vs organised forms of decentralisation• Greece, Ireland and Romania: process of disorganised

decentralisation• Portugal, Spain and Slovenia: elements of both organised and

disorganised decentralisation• Italy: process of organised decentralisation

• Differences in the character of collective bargaining: in most cases, antagonistic at higher levels but cooperative at company level (with exceptions, e.g. Greece)

The impact of the austerity measures on bargaining structure (2)

• Three types of collective bargaining systems in light of the reforms (see also Marginson, 2014):1. Systems in collapse: Greece and Romania

2. Systems in corrosion: Ireland, Spain, Portugal, Slovenia

3. Systems in continuity: Italy

• Key factors explaining the different state of the systems 1. Extent of labour market measures (cf. Greece and Portugal with

Slovenia and Italy)

2. Pre-existing strength of the bargaining systems (i.e. in terms of articulation/coordination) (e.g. cf. Italy and Slovenia with Greece and Spain)

3. Scope for social dialogue in the process for the adoption of the reforms or in coordinating attempts to contain unilaterally imposed reforms (e.g. Greece and Romania with Italy and Portugal)

The impact of the austerity measures on wage determination

Decentralization Reduced coverage

Negative impact on workers not

covered

Suspension of favourability principle,

opt-outs and derogations

Negative impact on wages even for covered workers

Weakened bargaining position of unions

Negative impact on wages even for

covered workers

Cuts/freezes to the NMW

Negative impact on wages of the most

vulnerable

The impact of the austerity measures on working time

• Short time working schemes : Greece, Portugal, Ireland and Romania• Increasing use of part-time workers: Greece • Cut to overtime pay: major strategy in Portugal; also observed in

Greece along with reducing the use of overtime • Time banks: used by some Slovenian employers; major response in

manufacturing in Portugal• Working time flexibility was introduced via sector agreements: Italy,

Portugal and Slovenia • Still informal arrangements widespread in Portugal and Slovenia• Even though working time decreased in most countries, management

flexibility to raise them increased, particularly in Spain• Lower employee control and predictability of working hours, with

negative consequences for work-life balance

Growing divisions in the workforce

• Pay differences between existing and new workers (Greece and Ireland)

• Age inequalities enabled by national policies, namely in Greece where NMW is much lower for younger workers

• Temporary agency workers not covered by CB in Slovenia, so they are paid below the sector standard

• Gender pay inequalities in Portugal due to a NMW freeze and blockages in bargaining in sectors with high female labour market participation

• Increasing numbers of workers not covered by collective bargaining and in non-standard arrangements

The approach of employers and unions • Employers:

• Fast in taking up the new options under the reforms to reduce labour standards and undermine the nature and form of the labour movement (e.g. Greece, Romania, Spain and Ireland); cf. evidence of some legacy of social dialogue in Portugal, Slovenia and Italy

• Signs of an emerging demand for the preservation of sector level bargaining and its remit (e.g. Greece, Italy, Portugal and Spain) for reasons including burden on smaller firms and politisation of labour relations

• Trade unions: • Difficult position balancing the defence of their core representatives and the structures of

joint regulation on the one hand and the need to create some kind of bridgehead for the more excluded workforce outside of those structures

• Adoption of a more realistic strategy within the trade union movements, especially those from a social democratic and centrist heritage: objective of maintaining agreements even if not applicable to all workers and including significant wage cuts

• The state: • Withdrawal of support by the state in certain areas (e.g. extension of collective

agreements) but greater intervention in other areas (e.g. setting of minimum wage levels). Questions over resources in terms of labour enforcement

Concluding remarks • Shift of regulatory space from joint regulation between the

industrial relations actors to state and employer unilateralism• Question over the cognitive resources/capabilities of the actors

for responding to the growing decentralisation of bargaining and re-politicisation of employment relations at company level

• Wider implications: collective bargaining reduction, dualisation of labour market, increase of informal economy, juridification of bargaining and introduction of new actors (e.g. consultancy firms, lawyers, non-independent employee representation structures) with uncertain outcomes

• How will political developments, e.g. rise of leftist parties in Southern Europe, will affect regulation and policy at domestic but also European levels?

The need for re-orientating the policy objectives

• Move away from ‘regulated austerity’ under the current EU institutional arrangements

• Development of better links between wage and productivity growth and fairness, whilst sustaining domestic demand is essential

• Promotion of a European ‘solidaristic’ wage policy and equitable wage developments based on strong bargaining institutions (Deakin and Koukiadaki, 2013; Schulten and Muller, 2014)

• Role of multi-employer bargaining in acting as ‘beneficial constraint’ (Streeck, 1997, Marginson, 2014) minimising the externalities of market and policy-driven adjustments

The need for re-orienting the decision-making processes

• Establishment of more rigorous impact assessments, especially in the context of macroeconomic adjustment programmes and bail-outs

• Involvement of a wider set of EU actors and institutions in the design, implementation and monitoring of assistance programmes and other forms of supranational intervention (e.g. through Council-Specific Recommendations) in national social policy issues

• Promotion of participation of all key actors and social partners at national level and greater attention to the social dimension and capacities of the social partners

Thank your for your attention!• For further details see: https://

research.mbs.ac.uk/european-employment/Ourresearch/Currentprojects/Socialdialogueduringtheeconomiccrisis.aspx