Policy Concertation in Europe: Explaining Government Choice

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Policy Concertation in Europe: Explaining Government Choice INTERNATIONAL INSTITUTE FOR LABOUR STUDIES Discussion paper Policy concertation in Europe: DP/168/2006 Explaining government choice Decent Work Research Programme Lucio Baccaro Marco Simoni P.O. Box 6 CH-1211 Geneva 22 Tel. 00 41 22 / 799 6128 Fax. 00 41 22 / 799 8542 E-mail: inst@ilo.org http://www.ilo.org/inst The International Institute for Labour Studies was established in 1960 as an autonomous facility of the International Labour Organization (ILO). Its mandate is to promote policy research and public discussion on emerging issues of concern to the ILO and its constituents — government, business and labour. The Discussion Paper Series presents the preliminary results of research undertaken by the IILS. The documents are intended for limited dissemination with a view to eliciting reactions and comments before they are published in their final form as special publications. Policy concertation in Europe: Explaining government choice Lucio Baccaro Institute for Work and Employment Research Massachusetts Institute of Technology baccaro@mit.edu Marco Simoni European Institute London School of Economics and Political Science m.simoni@lse.ac.uk International Institute for Labour Studies Geneva Copyright © International Labour Organization (International Institute for Labour Studies) 2006. Short excerpts from this publication may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the Editor, International Institute for Labour Studies, P.O. Box 6, CH-1211 Geneva 22 (Switzerland). ISBN Print 92-9014-807-1 & 978-92-9014-807-4 Web/pdf 92-9014-808-X & 978-92-9014-808-1 First published 2006 The responsibility for opinions expressed in this paper rests solely with its author, and its publication does not constitute an endorsement by the International Institute for Labour Studies of the opinions expressed. Requests for this publication should be sent to: IILS Publications, International Institute for Labour Studies, P.O. Box 6, CH-1211 Geneva 22 (Switzerland). TABLE OF CONTENTS Introduction ..............................................................................................................................................1 The trajectory of policy concertation between 1974 and 2003.................................................................2 Preliminary conclusions ...........................................................................................................................7 Understanding government’s demand for concertation............................................................................8 Case selection.........................................................................................................................................11 Case study analysis.................................................................................................................................11 (1) Government weakness ...............................................................................................................11 (2) Problem load ..............................................................................................................................12 (3) Negative policy feedback...........................................................................................................13 (4) Unions’ declining organizational strength..................................................................................13 (5) The role of partisanship..............................................................................................................14 (6) Changes in employer preferences ..............................................................................................15 (7) The role of the macroeconomic regime......................................................................................15 Overview of findings..............................................................................................................................16 Concluding remarks ...............................................................................................................................17 Bibliography...........................................................................................................................................19 Abstract This paper focuses on the European governments’ decision to involve union and employment representatives in the design and implementation of public policy. It begins by elaborating and plotting over time a measure of the phenomenon at hand (1974-2003), based on coding of textual sources. This reveals no secular growth (or decline) of government willingness to involve or devolve, and consequently no convergence on a pluralist model of interest representation. The measure is then used to identify the clearest cases of policy change by governments. We analyze the contrasting responses of the British and Irish governments as regards incomes policies, and of the Austrian and Italian governments as to pension reform, against the backdrop of several plausible hypotheses about government choice. We find that only two factors account for both increase and increase in government willingness to involve: the role of government’s parliamentary strength (the stronger the government the greater its ability to withstand social opposition on its own) and the trade unions’ organizational and mobilization capacities: strong unions seem to discourage government’s decision to cooperate, weak(ened) unions to favor it. Introduction The literature on corporatism and policy concertation has shown a tendency to conflate a number of questions that it would be best to keep separate: 1) Why are governments willing (or unwilling in some cases) to share their policy making prerogatives with trade unions and employer associations, not just informally, by incorporating their inputs, but, formally, by setting up a bargaining table and engaging in negotiations with them over the content of public policy? 2) In what conditions, contingent on government’s decision to in- (or de-)volve, does a negotiated agreement emerge? 3) In what circumstances does negotiated regulation cease to reflect the contingencies and power balance of the time in which the deal is struck and becomes a durable way of processing public policy? 4) In what respects, if any, is policy concertation more or less effective than alternative policy-making processes?1 Despite its massive size, most of the literature has focused so far on questions two and four, while it has been much less vocal on the other two. Much of the neo-corporatist literature of the 1970s and 1980s more or less assumed (based on functionalist reasoning about problems of governability in advanced societies) that governments would be willing to engage with labor and capital, and then went on to explore the interest group characteristics which allowed or prevented the emergence of durable agreements (see the articles in Schmitter and Lehmbruch, 1979; Lehmbruch and Schmitter, 1982; Berger, 1981; Goldthorpe, 1984). Another strand of research (by now probably larger than the former) dealt with the macroeconomic consequences of policy concertation, especially centralized or coordinated collective bargaining (for recent analyses, see Garrett, 1998; Iversen, 1999; Traxler et al., 2001; Kenworthy, 2002; Traxler, 2003). In this paper we are interested in question number one, which we regard as analytically prior to the others. Governments, accountable to national parliaments (or directly to the electorate), are the sole institutions with a clear mandate to take binding decisions. The constitutional standing and democratic legitimacy of mixed systems of policy-making (involving private actors’ access to the public sphere) have always been considered dubious (see Lowi, 1979; Habermas, 1989[1964]; 1996), including by theorists of neo-corporatism itself (see Schmitter, 1983, for an example). It needs to be explained why democratically elected governments are, in some circumstances, willing to share their policy-making prerogatives with the social partners rather than using them at full and proceeding unilaterally. To address this question, this paper begins by measuring the phenomenon of interest. Based on coding of textual information contained in the European Industrial Relations Review – a monthly publication providing regular updates on industrial relations developments in European countries – we present two indicators of government willingness to engage in policy concertation in Europe, one pertaining to wage policy and the other to welfare policy. These indicators cover 15 European countries between 1974 and 2003. 1 In this paper, the expression “policy concertation” is used as defined by Compston (Compston 2002 ), namely as a policy-making method whereby “employers and trade unions are involved in the making of decisions that are ultimately the exclusive province of the state, in particular decisions on the contents of legislation, regulations and administrative orders.” Policy concertation allows for the formal involvement of societal interests and is, in this sense, different form a pluralist model in which groups exercise informal influence on the governmental sphere. This definition is similar to the definition of corporatism as provided, for example, by Streeck and Kenworthy (2004: 11): “Corporatist theory and practice blur the boundary between state and society as the state shares authority with private interest associations,
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