Andrew Watt

The policy mix and policy coordination in EMU - how can it contribute to higher growth and employment?

This article makes a case for improved coordination between the three main areas of economic policy - monetary, fiscal and wage policy - in the context of EMU. Focusing in particular on the monetary-wage policy link, it argues that, in an uncertain world, a coordinated macro policy mix would produce superior results than the current policy assignment, raising the rate at which the European economy can grow without inflationary pressures. However, such a strategy must overcome a number of practical difficulties and political opposition. The Macroeconomic Dialogue could provide a forum for discussions between policy actors on a more cooperative, growth and employment-oriented strategy. Trade unions must play a key role both in coordinating their wage policies and in promoting greater interaction with the other policy-mix actors. Cet article vient en appui de lamélioration de la coordination entre les trois domaines principaux de politique économique - politique monétaire, fiscale et salariale - dans le contexte de lUEM. Tout en étant axé sur le lien qui existe entre la politique salariale et monétaire, il soutient que, dans un monde incertain, un policy mix macro-économique coordonné pourrait produire des résultats supérieurs à ceux obtenus sous lattribution des tâches de la politique actuelle, augmentant le taux auquel léconomie européenne peut se développer sans pressions inflationnistes. Cependant, une telle stratégie doit surmonter un certain nombre de difficultés pratiques et dopposition politique. Le dialogue macro-économique pourrait fournir un forum de discussions entre les acteurs politiques sur une stratégie plus coopérative orientée vers lemploi et la croissance. Les syndicats doivent jouer un rôle clé en coordonnant leurs politiques salariales et en promouvant une interaction plus forte avec dautres acteurs du policy mix. Dieser Artikel plädiert für eine verbesserte Koordinierung zwischen den drei wesentlichen Bereichen der Wirtschaftspolitik - Geld-, Finanz- und Lohnpolitik - im Kontext der EWU. Hier wird der Standpunkt vertreten, dass - in einer unsicheren Welt - ein koordinierter makroökonomischer Policy-Mix, insbesondere eine Abstimmung zwischen Geld- und Lohnpolitik, bessere Ergebnisse erzielen würde als die gegenwärtige Abgrenzung der Politikbereiche, da er das Wirtschaftswachstum in Europa ohne Inflationsdruck beschleunigen könnte Der Makroökonomische Dialog könnte den politischen Akteuren als Forum dienen, um Strategien zu erörtern, die stärker auf Kooperation, Wachstum und Beschäftigung ausgerichtet sind. Den Gewerkschaften kommt hier eine Schlüsselrolle zu, nicht nur im Hinblick auf die Koordinierung ihrer Lohnstrategien, sondern auch im Hinblick auf die Förderung einer verstärkten Interaktion mit den anderen am Policy-Mix beteiligten Akteuren.

Trouble with EMU: fiscal policy and its implications for inter-country adjustment and the wage-bargaining process

This article takes a somewhat unusual line on the Stability and Growth Pact. While the Pact clearly suffers from very considerable defects, in fact many of the problems encountered in the area of fiscal policy originate elsewhere, notably in monetary policy and in the neglected problems of inter-country adjustment in a common currency area. The linkáges between these areas and the Pact, with its asymmetrical form of operation, are discussed, along with reform ideas for the Pact. The authors conclude that a greater focus on national inflation targets - implying stronger coordination with wage trends - rather than the present focus on unattainable deficit targets is an avenue that needs to be explored. Cet article présente une position inhabituelle sur le pacte de stabilité et de croissance. Měme sil est évident que le pacte est loin dětre parfait, en fait plusieurs des problèmes rencontrés dans le domaine de la politique budgétaire trouvent leur origine ailleurs, notamment dans la politique monétaire et dans les problèmes mal gérés liés à lajustement entre les pays dans une zone monétaire commune. Les liens entre ces domaines et le pacte de stabilité et de croissance, qui a une manièrre asymétrique de fonctionner, sont présentés dans cet article, de měme que certaines idées pour le réformer. Les auteurs concluent quil faudrait peut-ětre envisager dexaminer les objectifs nationaux en matière dinflation - impliquant une coordination plus forte avec les tendances salariales - plutôt que de se pencher sur des objectifs inaccessibles en matière de déficit. Dieser Artikel nimmt einen eher ungewöhnlichen Standpunkt in Bezug auf den Stabilitätsund Wachstumspakt ein. Dieser Pakt weist zwar eindeutig schwerwiegende Mängel auf, aber viele der Probleme, die sich im Bereich der Finanzpolitik stellen, finden ihre Ursache in anderen Bereichen, besonders in der Währungspolitik und in vernachlässigten Problemen bei der Abstimmung der Länder in einem gemeinsamen Währungsraum. Der Artikel erörtert die Verbindungen zwischen diesen Bereichen und dem Stabilitäts- und Wachstumspakt mit seiner asymmetrischen Form der Umsetzung, sowie Ideen für die Reform dieses Pakts. Die Autoren ziehen den Schluss, dass einer der zu prüfenden Wege darin bestehen könnte, dass man sich stärker auf nationale Inflationsziele konzentriert, und somit auf eine verstärkte Koordinierung mit der Lohnentwicklung, statt wie bisher unerreichbare Defizitziele anzupeilen.

Economic security and employment: trade-off or synergy?

The debate on the causes of unemployment and appropriate employment-policy measures remains dominated by the view that unemployment essentially results from barriers that hinder the proper operation of the labour market. On this view trade unions and institutionalised wagesetting systems, dismissal protection legislation and ‘generous’ welfare systems all have the effect of raising real wages above market-clearing levels, thereby pricing workers out of jobs and causing unemployment.

New German law institutes a right to part-time work - a path to job creation?:

currently feasible, combining national rights, with their different range, coverage and effectiveness, with a transnationally co-ordinated, national approach. In doing so they see existing transnational instruments, such as European works councils, as offering useful institutional support. They describe what they see as the central guideline emerging from their practical experience: the strategic effort to achieve internationally binding contractual solutions covering the entire concern, in which agreement is reached on the highest possible standard of participation and collective coverage. On the other hand, Klebe and Roth are reticent about drawing hasty conclusions as to whether their examples already constitute evidence of a specifically European model of corporate management and participation, one founded on the incorporation in decision-making of employees at the earliest opportunity and on co-operative labour relations that overarch national industrial relations traditions. The full article (in German) can be downloaded from www.unternehmenskultur.org/mitbestimmung/literaturtipps

LoWER - European Low-Wage Employment Research network

The present issue of TRANSFER dealing with issues of low pay and the phenomenon of the working poor is to be seen in the context of the growing concern amongst policy-makers, academics and trade unionists about increasingly prevalent new forms of flexible employment contracts and widening pay and income differentials. Even the Commission’s Employment in Europe report just out, whose overall assessment is relatively sanguine, notes that ‘given the (...) increase in involuntary part-time working and the skill composition of temporary employment, concerns about security and career development seem to be well founded. Many of these jobs seem not to offer adequate income security to many individuals and households.’ (p. 8).

Between growth and stability: the consequences of the reform of the European Stability and Growth Pact

been a source of almost constant controversy since its inception in 1997. The Pact was designed to coordinate fiscal policy in monetary union, in order to avoid excessive deficits by EMU members and negative knock-on effects for the monetary authority and thus other Member States. However, the Pact has been accused by some of being totally ineffectual, opening the door to profligate governments no longer constrained by a national monetary authority or the risk of exchange rate depreciation, and by others (including this author) of unnecessarily curbing European economic and employment growth by imposing unreasonable and unjustified constraints on governments’ ability to offset demand shortfalls.

Rejection of the European Constitution must prompt re-think of economic and employment policies

European Treaty in the referendum in founding members France and the Netherlands, immediately after which this article was written, European politicians and commentators have been engaged in a frenzied search for the causes. A whole range of theories have been advanced, some closely linked to the Treaty text itself, others referring to a vaguer euroscepticism, while still others emphasise dissatisfaction with national leaders or a crisis of confidence in the ‘classe politique’. While social reality is inevitably complex, there is a real danger of failing to see the wood for the trees and of a resulting paralysis of European policy-making.

Thorsten Schulten, Solidarische Lohnpolitik in Europa. Zur politischen Ökonomie der Gewerkschaften

the ‘sister institute’ of the ETUI in Germany, has written an important book that raises a number of key issues for trade unions, and for economists and policymakers throughout Europe. In the first part of the publication he considers the role of both wages and unions in economic theory: are wages merely a mechanical outcome of the economic process or are they a political variable subject to influence by organised labour? In the second he considers the changing concepts put forward by European trade unions themselves in support of their pay strategies and wage claims, and in particular the concept of a ‘solidaristic wage policy’. He also examines the outcomes of such concepts: the division of income between labour and capital and that between different categories of workers. Identifying from the way these outcomes have changed over time a crisis in trade union theory and practice, the author considers recent developments in European collective bargaining and union interaction with employers and the state (corporatism). He concludes with ideas about how European trade unions can pursue strategies that will enable them once again to regain the initiative in terms of collective bargaining on wages.

Of TINA and AWIP: Impressions from the 3rd World Social Forum, Porto Alegre, 23-28 January 2003

He supplied some highly topical details on the new institutional architecture of the EU. The joint French-German proposal involves a twofold leadership: a Commission president elected by the European Parliament and a Council President elected by the heads of state and government. This would represent, as Bury explained, a compromise between the French preference for more inter-governmental cooperation and the German understanding of a Europe as moving towards integration.

Sustainable development and trade unions: recent contributions to the debate

to participate actively in the change processes under way. • Whereas in the past firms sought to avoid compulsory redundancies by means of various early retirement schemes, this has since become less and less attractive for employees and more and more expensive for employers. Consequently, avoiding compulsory redundancies can only be achieved in exchange for greater flexibility. • Greater plant-level flexibility helps to lower costs in the longer run and is, to this extent, a superior strategy to redundancies − which are short-term in orientation − and in the firms’ own interest. • Plant-level alliances for jobs tie worker representatives into workplace and even entrepreneurial decision-making processes, up to and including forms of active co-management. In the cases studied the two sides’ dealings were characterised by the desire to reach consensus. • Successful plant-level alliances for jobs require competent employee-representation bodies (works councils). If such bodies are to operate professionally they require staff to be given the time to do the job (leave arrangements) and internal and external advice.