New versus Established Democracies
Jose Aleman
7
corporatist countries such as Western European OECD nations. National negotiation has
been replaced by negotiation by sector; and negotiation by sector is being replaced or
supplemented by negotiation at the firm level. Several countries – notably, the United
Kingdom, New Zealand, and Chile – have in fact made the firm the only level of wage
bargaining.
20
In the 1990s then, labor market deregulation is sometimes direct, or policy-based,
as when a government eases state regulation of labor markets and employment practices.
More often, however, deregulation takes indirect forms, as when lower government
intervention in the wage setting process undercuts the power of trade unions to demand
increased wage and non wage benefits. In these and other ways, labor systems are
partially freed from the rigidities of social institutions designed to achieve quite
different ends. This raises a pertinent question: if policy concertation is not based on
explicit political exchanges, can labor moderation still be obtained?
Hassel argues that in contrast to earlier periods, under restrictive economic
policies tripartite negotiations are not based on a political exchange whereby
governments compensate trade unions for wage restraint. Rather, governments can
threaten trade unions with tight monetary policy and trade unions can either engage in
negotiated adjustments or suffer restrictions. Social pacts, rather than just a tool of
economic policy, become an instrument of adjustment by governments to a new
economic environment.
21
This suggests that in contrast to the ideal 1970s negotiating
scenario in the established OECD democracies, power asymmetries between employers
and labor unions have severe consequences for the generalized exchange logic of social
pacts, particularly if governments strive to reduce anti-competitive costs inefficiently
20
OECD 1994.
21
Hassel 2003.
Convention