Institutions and Inequality in Liberalizing Markets: Explaining Different Trajectories of Institutional Change in Social Europe

This paper examines cross-national differences in the development of sectoral collective bargaining in the European telecommunications industry following comparable changes in market regulations. We seek to explain why centralized, coordinated bargaining institutions were established in Austria and Sweden, both within incumbent telecommunications firms and at the sector level, while Germany and Denmark experienced decentralization and disorganization of bargaining at both levels. We argue that these outcomes were the result of differences in institutional loopholes that employers were able to exploit to avoid centralized bargaining and past union structures that influenced patterns of inter-union cooperation. These two explanatory factors were interrelated: the presence or absence of institutional loopholes affected the basis for cooperation between unions, while labor cooperation was an important power resource that unions could draw on to close emerging loopholes. Findings demonstrate the importance of sector-level political dynamics for the construction or erosion of solidaristic bargaining structures under pressure from market liberalization.