Joint Regulation and Labour Market Policy in Europe during the Crisis

Against the background of a profound economic crisis in Europe, wide-ranging labour market changes are radically transforming the national systems of collective bargaining in a number of EU Member States. A research project, funded by the European Commission and coordinated by academics in the University of Manchester with the collaboration of teams from European universities, sought to understand how the crisis-driven policy measures translate into changes in collective bargaining in manufacturing. Specific questions included: What have been the effects of the measures for the process and content of collective bargaining at the national, industry and company level? How do employers and trade unions respond to the new regulatory framework and what have been the implications for the outcomes of collective bargaining on issues such as wages, employment conditions and gender equality? The research took a comparative approach to examine the ongoing changes in seven of the countries most affected by the crisis and which had undergone major labour market measures:  Greece, Ireland, Italy, Portugal, Romania, Slovenia and Spain. 

The research findings first suggest that many of the austerity measures respond directly to the paradigm shift within the Troika of creditors (i.e. European Central Bank, European Commission and International Monetary Fund), which extol the decentralisation of collective bargaining as a panacea and solution to both the crisis and the structural problems facing the European economy.  They have also emerged in a context where the trade union movement has been politically challenged not just by the troika but the national governments forcing through measures.  As a result, the measures have substantially increased the scope for unilateral decision making on the part of the management and have undermined the support for joint regulation of the terms and conditions of employment and have shifted the regulatory boundaries between state regulation, joint negotiation and unilateral decision-making by management, with significant implications for the role of the industrial relations actors.

Research evidence suggests that the impact of the measures on the process of collective bargaining has resulted to a crisis of bargaining at different levels, including not only national but also sectoral and company levels. However, the degree to which different EU Member States have been affected is not the same. The research findings from the project suggest that three types of systems of collective bargaining have emerged following the emergence of the crisis and the implementation of labour market measures: systems in a state of collapse, systems in a state of erosion and systems in a state of continuity but also reconfiguration. Rather than these being clear-cut types, they represent points in a spectrum ranging from systems in a state of continuity at the one extreme and systems in a state of collapse at the other extreme. The most prominent examples of systems that are close to collapse are Romania and Greece. While other national bargaining systems are not affected to the same extent as Romania and Greece, they still face significant obstacles in terms of disorganised decentralisation, withdrawal of state support and as such experience erosion (i.e. Spain, Ireland, Portugal and Slovenia). Finally, the Italian system of bargaining could be seen as being closer to a state of continuity but also reconfiguration, with changes in the logic, content and quality of bargaining. Three key factors may explain the differences and similarities in terms of the impact of the measures on the bargaining systems. The first factor accounting for the similarities and differences in terms of the impact is the extent of the economic crisis and in particular of the measures adopted in light of the crisis. The second explaining factor is the extent to which the measures were introduced on the basis of dialogue and deliberation between the two sides of industry and the government. Finally, the pre-existing strength of the bargaining systems, including how well articulated and coordinated they were pre-crisis was crucial. In terms of the content and outcomes of bargaining, while the economic downturn led to a general downward pressure on wages, their actual impact depended on a number of factors that varied across countries. These included firstly, the breath and magnitude of labour market measures, namely the extent of decentralization of collective bargaining and of the reduction in coverage as well as the degree to which they enabled downward wage flexibility at the firm level. A second factor was how these processes interacted with developments in national minimum wages. Finally, the pre-existing system of collective bargaining and the way the social partners responded to the measures was pivotal in mediating their impact on wages.

Overall, the response by trade unions and employers to the changing landscape of collective bargaining reveals a range of issues and tensions in terms of the decentralization and changes to collective bargaining. The responses illustrate that there is no clear paradigm shift in the manner in which collective bargaining change is being engaged with. Instead, what we are experiencing is a process of change and fragmentation which is uneven and ambivalent in terms of its outcomes. The measures are being used in many cases to undermine and change the role of joint regulation: there is a growing pattern of employer strategies which are premised on bypassing the roles of collective worker voice.  There is also a state role which has facilitated this at various levels.  However, the extent of these changes varies.  There are signs that in some cases there is a greater caution in undermining the legacies of collective bargaining. There are also visible signs of unease from many employers. There is concern with the risk of greater fragmentation in terms of collective bargaining and the ability of personnel managers to systematically work through the labour related questions. There is also the risk of a growing politicisation and change – especially the undermining of those trade unions with a culture of collective bargaining.