Transnational Union Cooperation in the European Metal Sector: Reinforcing and Obstructing Factors
48 Pages Posted: 13 Dec 2014
Date Written: May 20, 2014
The literature on unionized oligopoly has demonstrated that unions will generally benefit from cooperation. Despite these benefits, most initiatives towards Europeanization of collective bargaining have been unsuccessful. Some notable exceptions can be found in the European metal industry. The European Metalworkers Federation can claim several path-breaking precedents of cross-border coordination, and is being monitored closely by scholars of European industrial relations. Despite this abundant attention, the reasons for success or failure have not been analyzed analytically.
In this paper, we present a model that takes specific characteristics of the metal industry into account, such as product differentiation, imports from low-wage countries and differences in reservation wages. We predict that cooperation will be easier when reservation wages are similar and when imports are imperfect substitutes. In contrast to the common truth that an external threat encourages cooperation, we find that under specific circumstances unions will be less eager to cooperate when faced with a foreign competitor. Our predictions are in line with the various levels of transnational cooperation in the automobile, electrical equipment and steel industries. Furthermore, our results indicate that the opposition of firms and the reluctancy of the European Commission to support transnational bargaining are generally justified by predicted changes in profits and overall welfare.
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