Business Against Markets: Employer Resistance to Collective Bargaining Liberalization During the Eurozone Crisis

Abstract

Employer organizations have been presented as strong promoters of the liberalization of industrial relations in Europe. This article, in contrast, argues that the preferences of employers vis-à-vis liberalization are heterogeneous and documents how employer organizations in Spain, Italy, and Portugal have resisted state-led reforms to liberalize collective bargaining during the Euro crisis. It shows that the dominance of small firms in the economies of these countries make employer organizations supportive of selective aspects of sectoral bargaining and state regulation. Encompassing sectoral bargaining is important for small firms for three reasons: it limits industrial conflict, reduces transaction costs related to wage-bargaining, and ensures that member firms are not undercut by rivals offering lower wages and employment conditions. Furthermore, the maintenance of sectoral bargaining and its extension to whole sectors by the state is a matter of survival for employer organizations. The article presents rationales for employer opposition to liberalization that differ from the varieties of capitalism approach.