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Export Dependence and Institutional Change in Wage Bargaining in Germany

Authors


  • Damian Raess is Lecturer in the Department of Political Science and International Relations at the University of Geneva. His research focuses on international and comparative political economy of globalization, industrial relations and crisis responses. His recent articles have appeared in the Annual Review of Political Science, British Journal of Industrial Relations, and Socio-Economic Review.

  • Author's notes: This article has a long history. I thank Klaus Armingeon, Lucio Baccaro, Brian Burgoon, Alex Colvin, Isabelle Ferreras, Richard Freeman, Jean-Christophe Graz, Peter Hall, Thomas Kochan, Jonas Pontusson, Kathleen Thelen, Christine Trampusch, Sigurt Vitols, Stefanie Walter, Christopher Wendt, Daniel Ziblatt, three reviewers, and the Editor for helpful comments and suggestions at different stages of the project. I also thank participants in the 2009 Industry Studies Conference, the 2010 Annual Congress of the Swiss Political Science Association, the MIT Graduate Student Work-in-Progress Group, the Harvard Research Workshop in Political Economy, and the staff seminars at the département de science politique, Université de Genève, and at the Centre de recherche interdisciplinaire sur l'international (CRII), Université de Lausanne. The research was financially supported by the Amsterdam School for Social science Research and the Swiss Nation Science Foundation (grant number PA0011_121485).

Abstract

This article explores the adjustment of wage bargaining institutions to international trade in Germany. Embracing IPE as opposed to CPE lenses yields a novel interpretation of change in the institution of wage bargaining. Export dependence of a sector, we argue, has destabilizing effects for industry-wide bargaining by sparking an intra-sectoral cleavage between domestic- and export-oriented enterprises. Specifically, the greater the degree of export dependence of a sector, the greater the degree to which domestic-oriented enterprises within that sector will abandon collective bargaining. We also explain how workplace employee representation through works councils mitigates this effect, such that the presence of works councils helps domestically oriented firms to hold to collective bargaining agreements in the face of a sector's deepening exposure to export markets. These claims find empirical support in the history of labor relations developments in the metal industry and, especially, in extensive analysis of a cross-section of establishments. Our findings attribute major responsibility to the firms driving globalization for undermining collective bargaining institutions and suggest that economic globalization is a cause of dualization. In all, the article provides fresh ammunition for a version of globalization-induced institutional convergence. [Correction added after online publication on May 28, 2014: “conversion” changed to “convergence” in preceding sentence.]

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