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The Political Economy of Social Pacts in the EMU: Irish Liberal Market Corporatism in Crisis

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  • Aidan Regan

Abstract

The economic crisis is a collective action problem. In the absence of currency devaluations, eurozone governments are faced with the painful social process of wage devaluations. This paper examines the strategic choices facing the government and organised labour in how they respond to this problem. It will argue that the European Monetary Union contains an implicit neoclassical assumption that labour markets will automatically adjust to downward wage flexibility. This ignores the politics of collective bargaining. Labour relations systems are the most regulated of all markets. Based on this institutional embeddedness, the paper will outline a typology of political choices facing national governments: neoliberal market adjustment, national or sectoral concertation and euro-coordination. Institutional pre-conditions of collective bargaining mediate what strategy governments adopt. It will subsequently examine the case of Ireland that tried and failed to negotiate a national pact in 2009. Social partnership was a central institution of Ireland's political economy for 20 years but could not internalise the adjustment constraints of the current crisis. The voluntary and exclusive nature of Ireland's corporatist wage pacts weakened the power resources of labour and enabled the government to pursue a neoliberal strategy of adjustment. As an institution, it was dependent upon the political executive of the state.

Suggested Citation

  • Aidan Regan, 2012. "The Political Economy of Social Pacts in the EMU: Irish Liberal Market Corporatism in Crisis," New Political Economy, Taylor & Francis Journals, vol. 17(4), pages 465-491.
  • Handle: RePEc:taf:cnpexx:v:17:y:2012:i:4:p:465-491
    DOI: 10.1080/13563467.2011.613456
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    Cited by:

    1. Jelle Visser, 2016. "What happened to collective bargaining during the great recession?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-35, December.
    2. Sonja Avlijas & Anke Hassel & Bruno Palier, 2021. "Growth Strategies and Welfare Reforms in Europe," Post-Print hal-03380958, HAL.
    3. Sebastian Dellepiane & Niamh Hardiman & Jon Las Heras, 2013. "Building on easy money:The political economy of housing bubbles in Ireland and Spain," Working Papers 201318, Geary Institute, University College Dublin.
    4. Enda Murphy & Julien Mercille, 2019. "(Re)making labour markets and economic crises: The case of Ireland," The Economic and Labour Relations Review, , vol. 30(1), pages 22-38, March.
    5. Höpner, Martin & Lutter, Mark, 2014. "One currency and many modes of wage formation: Why the eurozone is too heterogeneous for the euro," MPIfG Discussion Paper 14/14, Max Planck Institute for the Study of Societies.
    6. Sebastian Dellepiane & Niamh Hardiman, 2013. "The politics of fiscal effort in Spain and Ireland: Market credibility versus political legitimacy," Working Papers 201321, Geary Institute, University College Dublin.
    7. Schmidt, Vivien A., 2013. "Does discourse matter in the politics of building social pacts on social protection?: international experiences," Políticas Sociales 6194, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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