Institutions and Inequality in Liberalizing Markets: Explaining Different Trajectories of Institutional Change in Social Europe

The expansion of service sector employment in European ‘coordinated economies’ has been associated with the declining coverage of industrial relations institutions and growing labor market ‘dualism’.  A large body of research analyzes the political dynamics driving these changes at national level, focusing on key actors in core manufacturing industries. There has been less research investigating under what conditions encompassing collective bargaining institutions are created and maintained in expanding service industries.

This paper examines cross-national differences in the development of sectoral collective bargaining in the European telecommunications industry following similar EU-driven changes in market regulations in the mid- to late-1990s. We seek to explain why centralized, coordinated bargaining institutions were established in Sweden and Austria, both within incumbent telecommunications firms and at the sector level; while Denmark and Germany experienced substantial decentralization and disorganization of bargaining at both levels. We argue that different outcomes can be explained by both past “union logics” rooted in the historic structure of collective bargaining in the telecommunications industry; and differences in “institutional loopholes” that employers were able to exploit to avoid centralized bargaining. These two explanatory factors are interrelated: the presence or absence of institutional loopholes affected the basis for cooperation between labor unions, and such cooperation in turn served to consolidate the evolving bargaining structure. Findings contribute to debates concerning the future of national varieties of capitalism under pressure from liberalization.