Coordinated wage setting and social partnership under EMU. A framework for analysis and results from Belgium, Germany and the Netherlands

Abstract

Recent scholarship has found wage-setting practices to be a key ingredient in the eurozone crisis, but has yet to examine the specifics of individual wage-bargaining systems and how they behave under EMU. This article addresses this oversight, dissecting wage-bargaining systems by the mechanisms that deliver horizontal and vertical coordination, as well as the indicators to which they are calibrated. It then presents the results of a comparative study of the wage-bargaining systems in Belgium, Germany and the Netherlands. Comparisons of the Dutch and Belgian systems find that calibration is an important component of wage-bargaining systems, while greater subtlety is needed with regard to the role of the state. While Belgium has clearly struggled because of its practice of indexing wages, the German and Dutch cases instead suggest that developments unconnected to monetary union may be limiting their ability to manage its pressures. The article concludes that in order to continue to function, these three systems require revisions.