The adaptive nature of social dialogue to crises

The financial crisis and the COVID-19 pandemic have had significant impacts on the economy, businesses, and workers in the EU. While there are some similarities in how they have affected the sectoral social dialogue, there are some major differences on the impact and the role the social dialogue was able to take.

The impact of the financial crisis on social dialogue: what do we know?

The financial and sovereign debt crisis that began in 2008 had a severe impact on the EU's economy and led to a rise in unemployment and social inequalities. It profoundly impacted the financial sector and led to significant job losses and wage cuts, particularly in the banking and finance industries. During this period, the sectoral social dialogue focused on addressing issues related to job security, working conditions, and social protection for workers affected by the crisis. 

Still on a more systemic level, the financial crisis aligned with a continuous dominant economic development towards liberalization. For instance, market economies (under the scope of varieties of capitalism) changed in some proportions from coordinated market economies towards more liberalized forms, e.g. Germany (with its previous Hartz reforms, liberalization of banking, a growing liberal service sector compared to stronger coordinated manufacturing) (Thelen 2014).

In fact, these developments even became visible in political reactions to the financial crisis and the role the social dialogue was allowed by the EU Commission. This means, that in some cases the implementation of austerity measures like the Six-Pack from 2011 or the Two-Pack from 2013 with its regulations through Memoranda of Understandings (MoU) and the European Stability Mechanism limited social dialogue. Especially, social dialogue in Greece was bypassed by the Troika and the enforcement of the European Stability Mechanism. But also the European social dialogue was affected (Marginson and Welz 2015). Topics like reduced public spending on social protection and labor market programs ranked above regulations by social dialogue partners and weakened their ability to participate in decision-making processes. A way in which governments hindered the social dialogue was by limiting the scope and duration of collective bargaining agreements. This was done through changes to labor laws and regulations that made it more difficult for social partners to negotiate and enforce collective agreements, making the social dialogue into a “foreign body within European company law” (Kluge 2015: 473; own translation) and treating it as an obstacle rather than a solution (Gies 2018: 263pp.; Vaughan-Whitehead 2015; Meardi 2014).

Lessons from the COVID-19 pandemic and its impact on social dialogue

In comparison, the COVID-19 pandemic has had a much wider impact on the economy, affecting almost all sectors, with tourism, hospitality, and retail among the hardest hit. The pandemic has resulted in a significant increase in unemployment, with many businesses closing down permanently. The sectoral social dialogue during this period has focused on issues such as health and safety measures for workers, remote working, and job retention schemes.

On the systemic level, the EU has responded to the pandemic by stabilizing economies with measures such as the NextGenerationEU recovery fund, which aims to support member states in their efforts to recover from the economic impact of the pandemic. The fund shall support investment in areas such as healthcare, digitalization, and the green transition, and was intended to help promote greater convergence and economic cohesion within the EU (Alcidi and Corti 2022). At the same time, the pandemic has brought together social dialogue partners at the national and EU level, to work together to address the impact of the crisis on workers and businesses (Degryse 2021). As shown by researchers of the project team (Laudenbach and Gies 2024), the reactions to the Covid-19 pandemic instead led to a renewed focus on social partnership and higher engagement of social dialogue partners. Leading to a particular increase of sectoral social dialogue documents and hereby showing stronger employer coordination and perceived importance of social dialogue in general. Here - contrasting to the financial crisis - social dialogue was responsible to negotiate collective agreements to support workers and businesses affected by the pandemic

Conclusion

In summary, while both the financial crisis and the COVID-19 pandemic have had significant impacts on the economy and the social dialogue in the EU, the specific challenges and issues faced by workers and businesses have differed, leading to a different focus for the social dialogue in each case. The comparison between the impact of the financial crisis and the COVID-19 pandemic reveals not only the distinct challenges faced by the EU but also underscores the evolving nature of social dialogue. The financial crisis exposed vulnerabilities in the system, triggering a shift towards liberalization and influencing political reactions. This, in turn, constrained the role of social dialogue in decision-making processes, as evidenced by austerity measures and limitations imposed by the European Stability Mechanism.

Contrastingly, the response to the COVID-19 pandemic has demonstrated a more inclusive approach. The EU's concerted efforts, such as the NextGenerationEU recovery fund, have aimed at stabilizing economies and fostering economic cohesion. Importantly, the pandemic has acted as a catalyst for stronger collaboration among social dialogue partners, both at the national and EU levels. This renewed focus has resulted in increased sectoral social dialogue documents, indicating a heightened sense of employer coordination and perceived importance of social dialogue overall, as observed by researchers in the field.

In conclusion, the comparison underscores the adaptive nature of social dialogue in responding to crises. While the financial crisis prompted limitations and challenges, the COVID-19 pandemic has spurred a resurgence in collaboration and coordination. Acknowledging these differences is crucial for developing regulations that stabilize bargaining processes, facilitate ongoing exchanges, and contribute to the establishment of enduring social relationships among social dialogue partners. As discussed in our working paper (Nussbaum Bitran/Dingeldey/Laudenbach 2022), these regulations and social relationship are pivotal to foster solidarity acts, strengthen European cohesion and the sustainability of a functioning social democracy. The pandemic has, therefore, emphasized the imperative for increased cooperation and coordination, not only between member states but also with social partners at the EU level, reinforcing the integral role of social policy and the incorporation of social dialogue partners in shaping the future landscape of the EU.

References

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