Pissarides, C. (2014) “Social Europe In A Climate Of Austerity, The Need For Social Dialogue To Improve Distribution“, Social Europe Journal, 23 June.
Eurofound stands for Improvement of Living and Working Conditions through social dialogue. Currently, in the midst of high unemployment and increasing inequality, living and working conditions for ordinary people are worse than in 2007. But recession is not the only problem. Even when countries are recovering, the gains go mainly to the wealthier classes, which did not suffer much in the recession. Why?
The reasons are fundamental and long standing. Capitalism, say of the unregulated US type, is good for giving incentives for invention and growth, but it is not good for the distribution of the rewards. Especially after the digital revolution and globalisation, distribution has become worse. A few individuals become very wealthy but global competition for those with less education and skills keeps their earnings low.
In this context the social dialogue is essential in maintaining some balance in the distribution of wealth. Agreements about wages and working conditions based on dialogue between organised labour and organised employers are likely to have a better outcome for distribution than atomistic capitalism. But the conundrum how to ensure that the rewards from innovation and growth remain strong after redistribution is unresolved.
In addition to that, social dialogue between the social partners but excluding government is not likely to have the desired outcomes. We need more than social dialogue, important as it might be. The social partners are not strong enough to enforce a better distribution of the fruits of production across the nation. I believe that social dialogue is more effective at sectoral level but the problem of distribution also has a national dimension.
Relevant posts:
- International Labour Organization (2014) “World Social Protection Report 2014/15, Building Economic Recovery, Inclusive Development & Social Justice“, International Labour Office Geneva, 03 June.
- Kowalsky, W. (2014) “Social Europe – In Europe Or In The Member States?”, Social Europe Journal, 12 May.
- Wren-Lewis, S. (2014) “Central bank advice on austerity“, Mainly Macro Blog, 05 May.