Coordinated Wage-Setting and the Social Partnership Under EMU: A New Framework for Analysis and Results from Belgium, Germany and the Netherlands

Throughout the Eurozone’s economic crisis, little attention has been given to wage-setting practices. This is surprising given that wage setting has been considered an important mechanism for managing the economy in a currency union since the 1960s. Likewise, recent scholarship has found differences in wage-setting practices as a key feature distinguishing healthy and crisis-stricken Eurozone countries. However, very little work has examined the specifics of individual labour-market models under EMU. This paper aims to address this oversight, dissecting labour market models by the mechanisms that deliver horizontal and vertical coordination, as well as the indicators to which they are calibrated. Using this framework, it then presents the results of a comparative study of the wage-bargaining systems in Belgium, Germany and the Netherlands. Comparisons of the Dutch and Belgian systems find that calibration is indeed a very important component of wage-bargaining systems, while greater subtlety is needed in the treatment of the state. The German case suggests that while its system itself has not been undermined by EMU, developments unconnected to monetary union may be limiting its ability to manage its pressures.

This paper presents the results of a comparative study of wage-setting practices in Belgium, Germany, and the Netherlands examining how their systems have coped with pressures from monetary integration and examining the broader implications for EMU.