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From Convergence to CrisisLabor Markets and the Instability of the Euro$
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Alison Johnston

Print publication date: 2016

Print ISBN-13: 9781501702655

Published to Cornell Scholarship Online: January 2017

DOI: 10.7591/cornell/9781501702655.001.0001

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Strength in Rigidity

Strength in Rigidity

Public Sector Employment Reform and Wage Suppression in Germany, the Netherlands, and Italy

(p.110) 5 Strength in Rigidity
From Convergence to Crisis

Alison Johnston

Cornell University Press

This chapter examines how public sector employers and the state in some European Economic and Monetary Union (EMU) countries undertook actions that upheld export-favoring national collective bargaining models. Focusing on Germany, Italy, and the Netherlands, the chapter considers what types of power dynamics, bargaining structures, and legal pretexts were used by public sector employers to counter wage inflation pressures from public sector unions. More specifically, it asks how these three countries have continued to produce extreme sheltered sector wage moderation with the removal of inflation-averse central banks and Maastricht's nominal and fiscal rules. It also explores how the disparities in public sector employment reform paths for the three countries may have contributed to their varying capabilities in delivering public sector wage moderation under monetary union. It argues that the current account balances of Germany, Italy, and the Netherlands are partially influenced by public employers' capacity to uphold intersectoral coordination institutions with the exposed sector.

Keywords:   public sector employers, European Economic and Monetary Union, collective bargaining, public sector, wage inflation, sheltered sector, wage moderation, monetary union, current account, employment reform

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