The Politics of Job Security Regulations in Western Europe

• Published date: 01 March 2015
• DOI: 10.1177/0032329214555099
• Date: 01 March 2015
• Author: Patrick Emmenegger
• Subject Matter: Articles

Politics & Society

2015, Vol. 43(1) 89 –118

© 2014 SAGE Publications

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DOI: 10.1177/0032329214555099

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Article

The Politics of Job

Security Regulations in

Western Europe: From

Drift to Layering

Patrick Emmenegger

University of St. Gallen, Switzerland

Abstract

This article analyzes business and union strategies in the reform of job security

regulations. It argues that unions are the main political actors pushing for their

expansion of regulations, but given employers’ opposition, unions are able to enforce

better protection only in exceptional periods. Once the first restrictions are in

place, employers use their power advantages at the workplace level to circumvent

regulations, which unions combat by reducing the level of discretion awarded to

employers in interpreting regulations. In recent decades, job security regulations

have come under increasing pressure. Unions have reacted to this new situation by

consenting to the continuous deregulation of temporary employment, while they fight

any attempt at deregulating job security in open-ended contracts in order to protect

their members’ interests and their institutional involvement in the administration of

dismissals. The theoretical argument is supported by empirical evidence from four

Western European countries since the postwar period.

Keywords

dismissal, unions, dualization, institutional change, varieties of capitalism

Corresponding Author:

Patrick Emmenegger, University of St. Gallen, Rosenbergstrasse 51, 9000 St. Gallen, Switzerland.

Email: patrick.emmenegger@unisg.ch

555099PASXXX10.1177/0032329214555099Politics & SocietyEmmenegger

research-article2014

90 Politics & Society 43(1)

Introduction

Job security regulations are restrictions placed on the ability of employers to use

labor. In particular, job security regulations restrict the managerial capacity to dis-

miss employees and use new forms of employment such as fixed-term contracts

when hiring new workers.1 Economists are generally critical of job security regula-

tions, claiming they are a source of economic inefficiency and an obstacle to job

creation.2

However, there are also important advocates for job security regulations, thus mak-

ing them a controversial labor market institution.3 Next to authors who emphasize the

social protection function of job security regulations,4 important advocates for the

regulations include authors that stress the fundamental role of job security regulations

in shaping national varieties of capitalism.5 In a nutshell, the varieties of capitalism

literature argues that job security regulations lead to long-term employment relation-

ships and investments in specific skills, thus shaping firms’ production strategies and

by extension national models of capitalism. In contrast to conventional views in eco-

nomics, it is argued that in so-called coordinated market economies, such as Germany

and Sweden, job security regulations are conducive to economic success and thus

supported by both employees’ and employers’ organizations, a view expressed, for

instance, by Wood who argues that “where firms are keen to cultivate implicit long-

term contracts with skilled employees, employers will support strong statutory

employment protection.”6

In this article, I contrast this static skill-based view with a perspective that stresses

the role of political conflict and the power implications of institutions. Contra varieties

of capitalism, I argue that job security regulations fundamentally shape the balance of

power between capital and labor.7 Job security regulations restrict managerial control

over the workplace by imposing rules with regard to working conditions and union

representation. In contrast, the unrestricted freedom to hire and fire at will puts capital

in a strong bargaining position. It grants employers complete freedom in choosing

their workforce and in defining the working conditions. Put differently, the ability to

hire and fire at will anchors management’s “control over wage and hours, as over all

labor matters.”8 From this point of view, there is an irreconcilable conflict of interest

between capital and labor with regard to job security regulations, which is likely to

perpetuate itself due to the power implications of regulations in place.

As I demonstrate below, uneven and complex processes of institutional reproduc-

tion and change characterize the development of job security regulations in Western

Europe. Leaving important cross-national differences aside for the moment, first sig-

nificant job security regulations were enacted in the aftermath of World War I and in

particular World War II.9 After a long period of institutional stability, a second regula-

tory wave occurred in the late 1960s and early 1970s, a period characterized by the

resurgence of class conflict.10 The 1980s witnessed the shift of attention from the regu-

lation of open-ended contracts to the regulation of temporary employment.11 As most

Western European countries struggled to dismantle dismissal protection despite mass