European Employment Models in Flux:Pressures for Change and Prospects for Survival and Revitalization

Institutions are the building blocks of social order; they shape, govern and legitimize behaviour. Not only do they embody social values but they also reflect historical compromises between social groups negotiated by key actors. It thus comes as no surprise to find major differences in the institutional arrangements of today’s capitalist societies. These differences apply especially to employment institutions, which shape the exchange of human labour. Employment contracts are necessarily incomplete contracts, since the actual performance required and rewards offered are constantly subject to new decisions after the contract has been initiated. To put some limits on this uncertainty, institutions, both formal and informal, have been established to influence not only the contractual conditions but also the rights of employees or their representatives to engage in some shared determination of their working conditions and the organization of the work process. The employment relationship is also a pivotal institution in economic systems, with consequences as much for social and family organization as for the production system. It not only shapes the terms under which labour is supplied to and utilized within firms, but also underpins systems of social stratification and determines standards of living. Furthermore, as welfare states have developed and provided support for citizens not in employment, so the employment relationship has become integrated into welfare arrangements, with time spent in an employment relationship often the basis for accumulated entitlements to benefits.