THE STATE OF THE EUROPEAN UNION

THE STATE OF THE EUROPEAN UNION

etc.), without suffering a major loss of income,

or find themselves back in employment with an

“acceptable” wage, there is a threat that the

high-wage strategy will collapse and a low-

wage sector will emerge. It is then no longer as

easy to impede the dynamics of social polarisa-

tion because it will (as mentioned above) give

rise to a specific economic structure that is

based on polarization. The experience of this

was particularly dramatic in Germany, which es-

caped endemic unemployment with the politi-

cally sanctioned establishment of a low-wage

sector (and the acceptance of social polarisa-

tion). Without entering into an in-depth discus-

sion of the route chosen by Germany, it can be

observed that in contrast to the Scandinavian

countries and also the Netherlands, Austria and

Switzerland, Germany was not able to reinte-

grate the growing number of unemployed peo-

ple that were the fallout of the slowdown of

economic growth since the “Wonder Years”

and the ensuing structural change into a re-

structured high-wage economy. For all of the

flexibility of Germany’s businesses, there was a

considerable degree of structural rigidity in the

labour market. The trade union

focus on the

protection

of vested interests and on the sectors

that had been the foundation of union power

may well have contributed to this. Trade unions

focus on the protection of vested interests and

on the sectors that originally formed their pow-

er base may well have contributed to this. It is

characteristic of the hopelessness that prevailed

at the time that it was ultimately a social demo-

crat government that entrusted the solution to

the problem to the laws of the market, letting

them have their deregulated way.

In contrast to Germany, the Scandinavian

countries, the Netherlands and Austria have to

date pursued a “high road” strategy which aims

at running as many economic activities as possible

in “high wage mode” and keeping or re-em-

ploying as many workers in highly paid sectors

of the economy. It has been relatively successful

thus far through the previously mentioned inter-

play of 1) trade unions who use their organisa-

tional strength to oppose low wages and precari-

ous working conditions, 2) a policy which keeps

the work-force as employable as possible (qualifi-

cations, inter-sector and geographical mobility),

and 3) a rather multi-layered policy which keeps

the domestic economy and domestic business lo-

cations as competitive as possible on the markets

that generate high wages. The instrument of re-

ducing labour supply on a large scale has so far

only been deployed in the Netherlands with its

widespread part time scheme.

In none of the countries where social polari-

sation has been kept within narrow parameters

is the future of the socially integrated working

society guaranteed. The challenge of rising un-

employment which threatens to shake the trade

union supply cartel remains. It comes from slug-

gish growth of the global economy and from

the prospect of huge future increases in produc-

tivity, brought about by the advances in data

processing and sensor technology. It stems from

the fact that

different national modes of regu-

lating the economy compete

s with each other

and

that competitiveness has priority if needed

It also comes from the ideological disposition to

give in to market forces rather than imposing a

political will. And finally it comes from the capi-

tal owners’ (not necessarily businesses’) interest

that t this ideological predisposition will remain

in place. In other words: even in the countries

that have managed to suppress the trend to-

wards social polarisation so far, the struggle has

by no means been won forever.

The cause of a socially integrated working

society has a powerful supporter, though: demo-

graphic developments that could turn (qualified)