Uruguay and Contemporary Theories of Wage Coordination: Origins and Stabilization of Segmented Neocorporatism, 2005–2019

ABSTRACTThis study seeks to explain the rise and performance of “segmented neocorporatism” in Uruguay in light of contemporary theories of wage coordination, largely framed by the Varieties of Capitalism school and its recent critics. First it argues that the legacy of a centralized labor law framework, and a unified union movement, combined with Frente Amplio’s decisive labor empowerment from above to launch neocorporatist wage coordination in the period 2005–10. Second, it analyzes the stabilization of the coordinated model in 2013–19, in times of sluggish growth and labor tensions, evinced in the control of inflation pressures and social conflict. The article concludes that the macroeconomic combination of supply-side and Keynesian policies and the inclusion of precarious workers shaped an egalitarian version of corporatism with important challenges ahead.

Work and Welfare as Strategic Complements in Germany’s Postwar Economic Order

Chapter 4 argues that in the three high-growth postwar decades, the welfare state facilitated corporatist cooperation between labor and capital, specifically in the form of wage coordination, thereby avoiding inflation in periods of (almost) full employment. The period of high growth and full employment allowed, in turn, welfare state expansion which was always supported by a grand coalition of Christian and Social Democrats. The chapter reconstructs in more detail how industrial conflict in the metalworking sector—both in the north of Germany, in the shipyards, and in the south of Germany, in the automobile industry—over social rights instead of wages laid the ground for wage coordination (and moderation) German style. It also explains how the welfare state helped unions and employers’ associations to “police the bargain,” to stabilize an inherently unstable arrangement between capital and labor.

Pathological Adjustment, Structural Change, and the Welfare State

Once the period of high growth had passed, the welfare state maintained wage coordination by providing labor and capital with the resources to alleviate their deepening distributional conflicts—with an increasingly negative impact on the overall functioning of the German variety of capitalism. The fact that the welfare state provided social actors with the possibility of externalizing the growing costs of adjusting to the period of “diminished expectations” led to a pathological pattern of ever higher non-wage labor costs, poor job growth, and high structural unemployment. This contributed to Germany’s “welfare-without-work”—and “budgets-without-balance”—malaise in the 1970s and 1980s.

Regional value chains and spontaneous multi-employer wage coordination in China

This article explores how wage determination is coordinated within a regional value chain in China's auto industry and the underlying mechanism that governs this coordination. While the market-economy reform over the past four decades has granted firms considerable autonomy in managing their own employees, this case demonstrates that in China's private sector, wage determination is not at individual employers' full discretion. In general, scholars agree that Western-style formal institutional structures for wage coordination – centralized collective bargaining – have not been effectively established in China. But in Tianjin's auto industry, spontaneous multi-employer wage coordination occurs through informal arrangements that leverage a lead firm's control over its suppliers and various social networks that connect employers, labor unions, and workers in the locality. As a result, wages across the local auto industry are greatly compressed. This article concludes by discussing the important role of informal institutions in China's private governance.

The Rise of Segmented Neo-Corporatism in South America: Wage Coordination in Argentina and Uruguay (2005-2015)

Argentina and Uruguay are the only democracies in Latin America (among few in the world) that have developed sustained, state-oriented national and sectoral wage bargaining between employers and unions after 2005. The article defines “segmented neo-corporatism” as a new form of centralized incomes policy in the region that applies to a substantial portion (i.e., registered workers), though not to all the labor force. Drawing on neo-corporatist theory, I explain, first, why only Argentina and Uruguay could consolidate a centralized, national wage policy in the context of the Latin American Left-Turn. Second, I test empirically the degree of state-oriented wage coordination. The study argues that monetary policy deterrence and higher levels of bargaining centralization largely explain the greater capacity of Uruguayan neo-corporatism to govern wage-setting compared with its Argentine counterpart. Finally, the article puts segmented neo-corporatism in comparative perspective in the developing world and draws some theoretical implications.

Norway

In this chapter, Jon Erik Dølvik and Johannes Oldervoll review how recurrent crises since the 1980s have taught Norwegian policymakers to stabilize a crisis-prone petroleum economy through comprehensive macroeconomic policy coordination. While regaining monetary policy autonomy and establishing fiscal policy rules that enable countercyclical use of petroleum revenues, Norway has drawn on reinvigorated wage coordination and welfare state expansion to cushion joblessness and financial hardship in turbulent times. This coordination from the top has been successful in tackling economic volatility but has failed to stem widening wage and wealth gaps during recent years’ affluence and rise in cross-border labour mobility and immigration. Although seemingly robust in the face of periodic shocks, and helping Norway to avert increased financial hardship during the Great Recession, the Norwegian policy regime appears to have lost some of its capacity to balance equity and efficiency.

Why Do Trade Unions Engage in Wage Coordination, Although It Does Not Work? Evidence from the German Metal Sector

The article addresses the following puzzle: if, as it appears, wage coordination under the European Monetary Union is unlikely to succeed, why do European trade unions continue to pursue it? The article examines German metal-sector trade unions’ ongoing participation in wage-coordination initiatives within the Eurozone. It argues that their participation can be explained by two factors – a decoupling of talk and action, as two complementary types of organisational output, and the reframing of wage coordination as an activity that will pay off in the distant future.