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Work and Occupations
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EMU and Labor Market Institutions in Europe

The Rise and Fall of National Social Pacts

Bob Hancké

London School of Economics and Political Science

Martin Rhodes

European University Institute

During the 1990s, wage setting increasingly became coordinated in many Member States of the European Union (EU), often through new arrangements involving broad encompassing social pacts between employers, trade unions, and governments striking deals across policy areas from wages to social and employment policies. We argue that the different forms of institutional innovation in wage setting found in the EU depended on the combination of the character of external pressures and preexisting protoinstitutional structures in the labor market. The shifts in the institutions of wage-setting and macro-level labor market governance were directly related to shifts in macro-economic policy regimes, especially political-economic pressures associated with the advent of Economic and Monetary Union (EMU). Because these pressures were not symmetrically distributed across the different EMU candidates, both the urgency of the problems and responses they produced differed. Micro institutions conditioned the ability of countries to "embed’these new arrangements in stable rule-based governance structures.

Key Words: EMU • social pacts • varieties of capitalism • wage setting

Work and Occupations, Vol. 32, No. 2, 196-228 (2005)
DOI: 10.1177/0730888405274505


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