Institutions and Inequality in Liberalizing Markets

Abstract

This paper examines cross-national differences in the development of sectoral collective bargaining in the European telecommunications industry following comparable changes in market regulations. We seek to explain why centralized, coordinated bargaining institutions were established in Austria and Sweden, both within incumbent telecommunications firms and at the sector level, while Germany and Denmark experienced decentralization and disorganization of bargaining at both levels. We argue that these outcomes were the result of differences in institutional loopholes that employers were able to exploit to avoid centralized bargaining and past union structures that influenced patterns of inter-union cooperation. These two explanatory factors were interrelated: the presence or absence of institutional loopholes affected the basis for cooperation between unions, while labor cooperation was an important power resource that unions could draw on to close emerging loopholes. Findings demonstrate the importance of sector-level political dynamics for the construction or erosion of solidaristic bargaining structures under pressure from market liberalization.

Coordination versus organization: Diverging logics of firm cooperation in Denmark and Sweden

“…Our argument also adds a dimension to power resources arguments that underpin liberalization theory (Baccaro & Howell, 2017;Streeck, 2009). We agree that union power resources are important for explaining the relative success or failure of employer demands for flexibility (Benassi et al, 2016). However, we argue that the structure of business associations enables or constrains both employers' exit options and their incentives for pursuing lobbying and employment relations strategies oriented to establishing the market conditions consistent with those options.…”

“…In both Sweden and Denmark, as in the rest of Europe, new employment relations institutions had to be built or existing ones changed to accommodate a large number of new employers and industry segments. These took different forms across countries, with significant variation in their structure and effective coverage of employees working for telecommunications firms and across their increasingly complex networks of subcontractors (Benassi et al., 2016). Second, employers in the telecom and related IT industries have been important actors in pushing for liberalized service markets and employment relations institutions; and thus their associations play a central role in the wider national incremental liberalization process.…”

“…In the end, CSC moved over to the DE IT sectoral agreement (Ilsøe, 2012). Thus, the fragmentation of collective agreements, connected to the presence of multiple employer associations, was both mirrored by and exacerbated fragmentation among unions (Benassi et al., 2016).…”

“…These studies have also typically neglected the structural features of business associations themselves, and particularly the degree of coherence within or competition between associations. The effect of union structures, coordination and solidarity on employers’ ability to exploit institutional loopholes is well documented (Benassi et al., 2016). However, bargaining decentralization also affects exit‐oriented wage bargaining strategies through business association structures.…”

Trajectories of liberalisation on the European industrial relations systems

“…From a sectoral approach, several studies show the different responses to EU integration of the same sector in different countries. Benassi, Doellgast and Sarmiento-Mirwaldt (2016) studied the case of the telecommunications sector and how in Austria and Sweden coordination in collective bargaining was maintained while in Germany and Denmark it was not because employers took advantage of loopholes in the legal framework. Hassel, Steen Knudsen and Wagner (2016) studied the low-wage and meat sectors in Germany and Denmark and concluded that the response was different in the two countries.…”