When Are Concerted Reforms Feasible? Explaining the Emergence of Social Pacts in Western Europe

Abstract

Under what conditions do governments, employers, and unions enter formal policy agreements on incomes, employment, and social security? Such agreements, widely known as social pacts, became particularly prominent during the 1990s when European economies underwent major adjustment. This article seeks to explain national variation in adjustment strategies and specifically why concerted agreements were struck in some countries but not in others. A fuzzy-set qualitative comparative analysis of 14 European countries is employed to assess main arguments about the emergence of pacts. The analysis yields two key findings. First, although prevailing arguments emphasize Economic and Monetary Union—related pressures, or alternatively unemployment, these factors were neither necessary nor in themselves sufficient for pacts to materialize. Rather, a high economic “problem load” appears to be causally relevant only when combined with particular political and institutional conditions, namely, the prevalence of electorally weak governments and/or an intermediate level of union centralization. Second, the analysis refines existing multicausal explanations of pacts by demonstrating three distinct, theoretically and empirically relevant causal pathways to concerted agreements.