The State and the Labor Market

265 Pages·1989·6.942 MB·English

by  Samuel Rosenberg (auth.), Samuel Rosenberg (eds.)

The State and
the Labor Market
PLENUM STUDIES IN WORK AND INDUSTRY
Series Editors:
Ivar Berg, University of Pennsylvania, Philadelphia, Pennsylvania
and Arne L. Kalleberg, University of North Carolina, Chapel Hill, North Carolina
WORK AND INDUSTRY
Structures, Markets, and Processes
Arne L. Kalleberg and Ivar Berg
THE BUREAUCRATIC LABOR MARKET
The Case of the Federal Civil Service
Thomas A. DiPrete
ENSURING MINORITY SUCCESS IN CORPORATE MANAGEMENT
Edited by Donna E. Thompson and Nancy DiTomaso
INDUSTRIES, FIRMS, AND JOBS
Sociological and Economic Approaches
Edited by George Farkas and Paula England
MATERNAL EMPLOYMENT AND CHILDREN'S DEVELOPMENT
Longitudinal Research
Edited by Adele Eskeles Gottfried and Allan W. Gottfried
THE STATE AND THE LABOR MARKET
Edited by Samuel Rosenberg
WORKERS, MANAGERS, AND TECHNOLOGICAL CHANGE
Emerging Patterns of Labor Relations
Edited by Daniel B. Cornfield
A Continuation Order Plan is available for this series. A continuation order will bring delivery of each
new volume immediately upon publication. Volumes are billed only upon actual shipment. For further
information please contact the publisher.
The State and
the Labor Market
Edited by
Samuel Rosenberg
Roosevelt University
Chicago, Illinois
With a Foreword by
Lloyd Ulman
University of California, Berkeley
Berkeley, California
Plenum Press • New York and London
Library of Congress Cataloging in Publication Data
The state and the labor market I edited by Samuel Rosenberg.
p. cm. - (Plenum studies in work and industry)
Includes bibliographical references and index.
ISBN -13 :978-1-4612-8089-7 e-ISBN -13 :978-1-4613-0801-0
DOl: 10.1007/978-1-4613-0801-0
1. Labor policy-Europe-Congresses. 2. Labor policy-United States-Congresses. 3.
Europe-Full employment policies-Congresses. 4. United States-Full employment
policies-Congresses. I. Rosenberg, Samuel. II. Series.
HD8376.5.S76 1989 89·33437
331.12'042'094-dc20 CIP
© 1989 Plenum Press, New York
Softcover reprint of the hardcover 1st edition 1989
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All rights reserved
No part of this book may be reproduced, stored in a retrieval system, or transmitted
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recording, or otherwise, without written permission from the Publisher
Contributors
Anne Marie Berg, Work Research Institute, Oslo, Norway
Gerhard Bosch, WSI, Hans-Boehler Strasse 39, Dusseldorf, West Germany
Sebastiano Brusco, Department of Political Economy, University of Modena,
Modena, Italy
LIuis Fina, Department of Applied Economics, Autonomous University of
Barcelona, Belleterra, Spain
Peter Galasi, Department of Labor Economics, Karl Marx University of Eco
nomics, Budapest, Hungary
Annie Gauvin, Labor Economics Research Institute, University of Paris 1,
Paris, France
Alberto Meixide, Department of Economics, University of Santiago de Com
postela, Santiago de Compostela, Spain
Fran~ois Michon, Labor Economics Research Institute, University of Paris 1,
Paris, France
Michael J. Piore, Department of Economics, Massachusetts Institute of Tech
nology, Cambridge, Massachusetts
Marilyn Power, Department of Economics, California State University-Sacra
mento, Sacramento, California
Samuel Rosenberg, Department of Economics, Roosevelt University, Chi
cago, Illinois
Jill Rubery, Department of Applied Economics, University of Cambridge,
Cambridge, Great Britain
Paul Ryan, King's College, University of Cambridge, Cambridge, Great
Britain
Werner Sengenberger, International Institute for Labor Studies, Geneva,
Switzerland
v
vi Contributors
Gyorgy Sziraczki, Department of Labor Economics, Karl Marx University of
Economics, Budapest, Hungary
Roger Tarling, PA Cambridge Economic Consultants Limited, Cambridge,
Great Britain
Luis Toharia, Department of Basic and Historical Economics, University of
Alcala de Henares, Alcala de Henares, Spain
Paola Villa, Department of Economics, Catholic University, Milan, Italy
Frank Wilkinson, Department of Applied Economics, University of
Cambridge, Cambridge, Great Britain
Foreword
In the two decades before the mid-1970s, macroeconomic policies in Western
Europe were frequently accompanied by policies of direct wage restraint in
the pursuit of acceptable levels of employment, inflation, and international
competitiveness. The same period witnessed a proliferation of social welfare
programs, elements of which were sometimes commingled with demand
management and pay policies in trilateral bargaining processes involving gov
ernments, unions, and employers. In the wake of such subsequent develop
ments as the oil price shocks, sharply intensified international competition,
and slowing of growth rates in productivity, however, governments resorted
more frequently to deflationist macroeconomic policies and also to policies
aimed directly at increasing IIflexibility" in wage determination and the de
ployment of labor by the firm.
It is a major theme of this very interesting book that these labor market
policies have not been demonstrably (or at least sufficiently) effective in com
bating the high rates of unemployment which have been prevalent in most of
the countries of Western Europe since the late 1970s. This theme emerges
from the chapters on labor market developments and policies in six countries
of Western Europe, the United States, and Hungary (a welcome addition to
this type of scholarship), as well as another set of chapters'devoted to specific
policy areas. In effect, Samuel Rosenberg and his colleagues-an interna
tional team of nineteen economists and sociologists-are repeating in con
crete terms a sermon preached by Keynes over a half century ago. Keynes'
critics may have been quite correct 1.1 maintaining that wage and price flexibil
ity could ensure full employment (without accelerating inflation) as a condi
tion of long-run equilibrium under static conditions in a perfectly competitive
economy; but this of course represents a considerable departure from the real
world conditions that confront the policymaker-and which provided the
grist for Keynes' own intellectual mill. The real-world conditions which in
spired conservative European policymakers in the 1980s were found by them
in the U.S.A., a place in which they saw whole economic sectors being dereg
ulated, major labor markets becoming dis-organized, and real wages falling
while employment was increasing strongly. But they staged Hamlet without
the prince, for this scenario ignores the role played by the heroic Keynesian
vii
viii Foreword
budget deficits that were being racked up by a conservative administration as
it cut taxes while increasing defense spending. Lacking the faith of the true
believer in Reaganomics, they retained an old-fashioned reluctance to incur
the risk of domestic deficits and inflation, and of external deficits and indebt
edness-although, in the case of West Germany, the bellwether economy of
the area, these risks might indeed have been smaller than those rashly as
u.s.
sumed by the Reagan Administration in the Thus, they had to rely only
on "structural" policies, although these have sometimes included youth
training programs and incentives to encourage early retirement (which are
discussed in this book), as well as policies designed to weaken collective
bargaining structures and protection of workers against dismissal.
Nevertheless, conservative governments have not been heavily penal
ized by the failure of their pro-competition policies to make progress in reduc
ing unemployment in the 1980s; in the U.K. and West Germany, conservative
governments won reelection against an overhang of high unemployment.
One reason for this might have been the failure of alternative structural ini
tiatives, notably a shorter workweek (which is discussed in several chapters),
to elicit great expectations of success. In its weak form, without compensatory
increases in wage rates, the reduced workweek would leave employed work
ers with reduced incomes. With compensatory wage increases on the other
hand, the shorter workweek has aroused fear (even within some union move
ments) that it could raise unit costs and thus reduce the demand for labor.
A more important reason why the high levels of unemployment in
Europe have failed to elicit greater popular and political reaction (as had been
widely feared in the 1960s and early 1970s) has been the buffering influence of
the welfare state. It has of course been argued that high levels of unemploy
ment have been caused by high levels of social transfer payments and are thus
"voluntary" in nature; but it is a more plausible proposition that the "safety
nets" provided by modern systems of social welfare have rendered "involun
tary" unemployment sufficiently bearable to make deflationary macro
economic policies viable options for policymakers and politicians. In these
pages and elsewhere, moreover, it is pointed out that double-digit unemploy
ment has persisted despite serious erosion in relative benefit levels and cover
age of unemployment and other social insurances. Such erosion has been
associated with budgetary stringency and the persistence of unemployment
itself, but it may also entail erosion of popular patience and poltical accept
ability of high-level unemployment. There has been much discussion among
economists about processes of "hysteresis," whereby states of unemploy
ment tend to perpetuate themselves, but there may be processes whereby the
prolongation of unemployment tends to undermine the social and political
base on which it rests.
Even if such processes do unfold, it remains a fact that, as Professor
Rosenberg writes in one of the chapters on the U.S. experience, "To some
degree a sociopolitical regulation of the labor market and employment rela
tions is being replaced by market forces'" (p. 63). The same conclusion can be
applied to the experience of all the other countries reviewed in this volume. In
ix
Foreword
identifying and documenting an important turning point in the making of
labor market policies in the decade of the 1980s, and also in emphasizing the
redistributional aspects of policies designed to make wages and labor markets
more responsive to adverse changes in demand and supply, this book makes
a most valuable and timely contribution to scholarship in labor economics and
industrial relations.
Lloyd Ulman
Department of Economics
University of California, Berkeley
Berkeley, California
Preface
Dramatic changes have occurred in North American and European labor mar
kets since the late 1960s. Relatively low levels of unemployment were the rule
rather than the exception. Full employment characterized some economies,
and labor shortages even emerged.
The prosperity of the late 1960s was replaced by the serious economic
recessions of the 1970s and 1980s. The low levels of unemployment were
temporary. Labor surpluses replaced labor shortages.
Although government policies were not the only factors lying behind the
emergence of substantial unemployment, they did playa role. And although
government policies cannot guarantee a return to the low levels of unemploy
ment of the 1960s, they can serve to expand employment opportunities.
Given the importance of state policies to labor market developments, the
International Working Party on Labor Market Segmentation devoted three of
its meetings to questions concerning the state and the labor market. The
chapters in this volume, focusing on current directions in governmental la
bor-market policies in the United States and Europe, are based on presenta
tions made to this group.
The Working Party is indebted to Jean-Jacques Silvestre and Jean-Paul de
Gaudemar for organizing the Aix-en-Provence conference, to Gyorgy
Sziraczki, Janos Timar, and Gabor Revesz for planning the Budapest session,
and to Jill Rubery and Frank Wilkinson for arranging the Cambridge meeting.
The CeI').tre National de la Recherche funded the Aix-en-Provence conference.
The Karl Marx University and the Hungarian Academy of Sciences sponsored
the Budapest meeting. The Cambridge Journal of Economics and the Department
of Applied Economics of the University of Cambridge funded the Cambridge
session.
Arne Kalleberg made helpful comments on the entire manuscript. Kendy
Kloepfer helped with the typing of the manuscript.
Samuel Rosenberg
Chicago, Illinois
xi