Germany and the United Kingdom

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EUROPA-UNIVERSITAT VIADRINA

INSTITUT D’ETUDES POLITIQUES DE STRASBOURG

United In Diversity ! ?

The dynamics of European Varieties of Capitalism through the examples of

Germany and the United Kingdom

Alexane Barrouillet

University Year 2013 - 2014

Master thesis directed by Hélène Michel and Timm Beichelt in completion of the French-German double degree in European Aﬀairs

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I am very grateful for my professors in Strasbourg, London, Berlin, and Frankfurt-Oder, who brilliantly

showed me the nuances of academia across borders and whose inﬂuence tremendously sharpened my critical thinking.

I would especially like to thank

Hélène Michel for her guidance in the early days of my research.

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NTRODUCTIONNTRODUCTION

“If the facts don’t fit the theory, change the facts.”

Albert Einstein

“Essentially, all models are wrong, but some models are useful.”

George Box¹

Models and theories help shape thinking. They are conceptual tools that enable us to grapple with reality’s diversity, and to identify causation and correlation between sets of institutions, events, and outcomes. In this sense, models help make sense of the world.

Thomas Kuhn highlighted the importance of paradigms in science, and underlined the incommensurability of paradigms – they show competing views of the world that cannot be reconciled leading to paradigmatic shifts in science. When evidence against a model builds up, this leads to a crisis in the subject prompting a “paradigm shift”. This vision of revolutionary science is especially relevant in “hard” sciences, biology, phys- ics mathematics². However, these concepts are also translatable in social sciences, with paradigmatic shifts structuring theories of international relations for instance. Social sciences allow for the coexistence of several paradigms – however, these models may be disproved by empirical findings, this is the very basis of Karl Popper’s concept of

“falsifiability”³ which distinguishes ideology from science.

The objective of this master thesis will be to test the predictive outcomes of a theory by

1 BOX, George. Robustness in the strategy of scientific model building, in Robustness in Statistics, R.L. Launer and G.N. Wilkinson, Editors. 1979, Academic Press: New York.

2 KUHN, Thomas S, The Structure of Scientific Revolutions, University of Chicago Press, 1962, p. 264.

3 POPPER, Karl, The Logic of Science, Mohr Siebeck, 1934.

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looking at empirical data sets. The chosen victim has been the Varieties of Capitalism, mostly because of its far-reaching analysis, touching upon both political economy and sociology, and its importance in the field of comparative economics since the turn of the millennium.

Presenting the suspect : the VoC paradigm The culprit’s history : literature review

The Varieties of Capitalism theory was introduced by Peter Hall and David A. Soskice in their 2001 volume Varieties of Capitalism : the Institutional Foundations of Compar- ative Advantage. Their work draws on previous research on neocapitalism, sectoral gov- ernance, and flexible production regime findings of the late 1980s and 1990s. Their main objective was to bring back a comparative aspect of capitalism. Furthermore, methodologically speaking, their concern was that strategic interactions between actors were left out of the analyses. They therefore developed a framework centered around the corporate actors, seeking this way to bridge the distance between business studies and comparative political economy. Their understanding of political economy, “a ter- rain populated by multiple actors each of whom seeks to advance his interests in a ra- tional way in a strategic interaction with others”⁴ leads them to focus on a relational view of the firm. This focus on relations is divided into five strategic spheres. First and foremost, the industrial relations sphere encompasses the links with the labor force and other employers. The vocational training and education sphere cover the possibility for firms to access well-trained labor force. The corporate governance sphere refers to issues such as financing (access to financial markets or banks). The interfirm relations refer to links with providers or clients, along the production line. Last but not least, the relations with the firm’s own employees show the working conditions and interactions within the firm. VoC emphasises the links between the competitiveness of firms and the

“institutional comparative advantage” of the economy in which they evolve⁵.

These five complementary spheres draw a core distinction between two different types

4 Scharpf, 1997 in HALL, Peter A and SOSKICE, David, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, 2001, p. 570.

5 HALL, Peter A., “The Evolution of Varieties of Capitalism in Europe,” in Bob Hancké, Martin Rhodes, Mark Thatcher, (éds.). Beyond Varieties of Capitalism : Conflict, Contradictions, and Complementarities in the European Economy, New York, Oxford University Press, 2007, p. 39–85.

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of economies : the coordinated market economies (CMEs) and liberal market economies (LMEs). In LMEs, “firms coordinate their activities primarily via hierarchies and com- petitive market arrangements”⁶ whereas in CMEs, firms use “non-market relationships to coordinate their endeavours with other actors and construct their core competencies”⁷. In a nutshell, CMEs rely on strategic interaction whereas the equilibri- um in LMEs is attained through demand and supply mechanisms.

The scope of this introduction is not to give a detailed explanation of the theoretical foundations of the Varieties of Capitalism theory, but to recall the basics of the theory in order to make sense of the research question and its empirical implications. The following table⁸ neatly summarises the implications of the theory for the categories of CMEs and LMEs.

The VoC paradigm has been an inspiration and a starting point for many works of research, which was the initial goal of the authors, to offer a new research agenda⁹. Two

6 HALL, Peter A and SOSKICE, David, op. cit.

8 Source : http://en.wikipedia.org/wiki/Varieties_of_Capitalism

9 HALL, Peter A., “The Evolution of Varieties of Capitalism in Europe,” in Bob Hancké, Martin Rhodes, Mark Thatcher, (éds.). Beyond Varieties of Capitalism : Conflict, Contradictions, and Complementarities in the European Economy, New York, Oxford University Press, 2007, p. 39–85.

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additionnal volumes focused specifically on VoC; Beyond Varieties of Capitalism : Conflict, Contradictions, and Complementarities in the European Economy in 2007 (ed- ited by Bob Hancké, Martin Rhodes and Mark Thatcher) and Debating Varieties of Capitalism : A Reader, edited by Bob Hancké in 2009. These collections of essays will irrigate and accompany my own findings throughout this reflection.

Criticism and limits

This theoretical framework has been challenged by several authors, and notably Ian Bruff and Laura Horn in their 2012 editorial “Varieties of Capitalism in crisis ?” They argue that the varieties of capitalism theory has not evolved over time and that there has been a lack of reflection of the impact of the financial crisis on the spectrum between LMEs and CMEs. Moreover, this theory cannot account for the presumed decline of Germany a decade ago¹⁰, and its recovery following the Hartz package reforms. Further criticism has been voiced by Matthias Ebenau, who rejects the methodological national- ism at the heart of the theory as well as its entrenched ahistoricism, which deprives the theory from searching for explanatory elements into each country’s past¹¹. This vision of the nation-state as hermetically sealed institutions may be a major limit to the work, but it is still the main unit of reference in politics and in research. For instance, economic data on Eurostat is classified by Member States. Occasionally, some indicators concern the NUTS regions, but they are more the exception than the norm. If aggregated data is presented under the label of the Nation-State, this will condition the prism through which a researcher may reach conclusions. Moreover, while retaining the Nation-State as level of analysis, it has been highlighted that the role of the state itself may be under- estimated, explaining all mechanisms through rational choice of firms and civil society.

Others have voiced criticism which was addressed earlier by Hall in his 2007 chapter

“The evolution of Varieties of Capitalism in Europe”. Notably, the theory may have a tendency to “divide the world into reified notions of LME and CME archetypes”, which is true of any theory working along a spectrum. The temptation is there to focus on the extremes, on the elements best explained by the theory. It is also true that the theory

10 Herbert Kitschelt, Wolfgang Streeck, (éds.). Germany: Beyond the Stable State, Psychology Press, 2003, p. 179–

198.

11 BRUFF, Ian and HORN, Laura, “Varieties of capitalism in crisis ?,” Competition and Change, vol. 16 / 3, 2012, p. 161–168.

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tends to focus disproportionately on the CME side of the spectrum – this makes sense insofar as the CME institutions are the anomalies that have to be explained, the resist- ance of which run counter to the traditional neoclassical economic theory. The LME model appears almost as a negative, as the counter-example where the strategic interactions are based on market mechanisms. For instance, in the initial volume, four research essays were based on comparative works with Germany, versus only two with the UK, and one on the US.

Last but not least, the inductive method through which this theory was conceived in the first place has been criticised as not being purely deductive, and thus easily transposable to other countries. This also helps explain the focal point on the German case, however this can also be an asset when testing the theory, for the same countries may enable to nuance or disprove the theory, instead of an ideal-type floating high beyond any empir- ics, immune to science’s process of “falsification” as defined by Karl Popper. By ignor- ing the historical processes having led to the development of each system, it enables a comparative framework focused on the “how” the economy functions, rather than the

“why” institutions are as they are. This timeless paradigm explores causality between institutional set-ups and corporate choices, rather than chronological correlations.

These flaws make the theory interesting to work with, as they are fringes on which the limits of the explanatory power of the theory can be tested. Theories are better equipped to understand stability than formalise change– especially when an equilibrium is theor- ised¹². Kathleen Thelen’s framing of institutional stability as a political problem has led her to offer a “varieties of liberalisation”, arguing that not all change that resembles liberalisation equates to an erosion of the theory¹³. CMEs and LMEs are not isolated from the world and react to external shocks and other influences. Their reaction though, is of utmost interest : is there a real tendency towards convergence to a deregulated economy ? Or are these marginal evolutions that do not begin to affect the institutions at hand ?

12 STREECK, Wolfgang and THELEN, Kathleen, “Introduction : Institutional Change in Advanced Political Economies,” in Wolfgang Streeck, Kathleen Thelen, (éds.). Beyond Continuity : Institutional Change in Advanced Political Economies, Oxford University Press, 2005, p. 1–39.

13 THELEN, Kathleen, “Varieties of Capitalism : Trajectories of Liberalisation and the New Politics of Social Solidarity,” Annual Review of Political Science, vol. 15, 2012.

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Can convergence be expected ?

Within the EU, the empirical works of Marelli and Signorelli show that economic convergence is well under way, especially between countries of the Eurozone. This convergence is visible in terms of productivity, labour market indicators, output correlations, however the question of convergence of economic structures does not have a clear answer.¹⁴Convergence has also been studied in the 2004 ten new member states, and the convergence trend was found to be based on “strong fundamentals” and should slow down but continue in the following years.¹⁵

However, scholars have shown that convergence is far from being automatic, and that it terms of public policy, “convergence to the bottom may be more likely than convergence to the top”.¹⁶Moreover, when analysing Maastricht fiscal convergence, Kocenda, Kutan and Yigit found that monetary unions do not necessarily bring about fiscal convergence.¹⁷ However, Rodrigues found in his work that the EU acts as a “neo-liberal lock-in”, with an asymmetrical European integration at hand enabling full convergence and even hegemony of transnational firms.¹⁸

The question of whether the EU leads to convergence remains open, and convergence occurring on the European continent may not stem from European policies, but from external forces, such as the internationalisation of global capital markets. Has a convergence phenomena undermined the explanatory power of the VoC theory ? What rela- tionship can be mapped out between European policies (and by extension the EU) and Varieties of Capitalism ?

It’s complicated ! Varieties of Capitalism and the EU

Brinegar and others have found that VoC matters for public views of European integration. Indeed, the structure of wage bargaining institutions and conservative christian

14 MARELLI, Enrico and SIGNORELLI, Marcello, “Institutional, nominal and real convergence in Europe,” Banks and Bank Systems, vol. 5 / 2, 2010, p. 140–155.

15 VAMVAKIDIS, Athanasios, “Convergence in Emerging Europe: Sustainability and Vulnerabilities,” 2008, (“IMF Working Paper”), p. 32.

16 NICOLAIDES, Phedon, “A Model of Europeanisation with and without Convergence,” Intereconomics, vol. 45 / 2, April 2010, p. 114–121.

17 KOCENDA, Evzen, KUTAN, Ali M. and YIGIT, Taner M., “Fiscal convergence in the European Union,” North American Journal of Economics and Finance, vol. 19, 2008, p. 319–330.

18 RODRIGUES, João, “The Asymmetries of European Integration and the Crisis of Capitalism in Portugal,” 2012, p. 188–205.

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democratic welfare states seem to shape political opinions about EU integration. In re- distributive welfare states, the left opposes further EU integration. In liberal residual welfare states, the right. In countries dominated by a christian democrat system, the left- right polarisation is not so relevant in understanding support for EU integration.¹⁹

Höpner and Schäfer argue that VoC may limit the social and democratic potential of the EU, because interests are organised along national lines, divided between states in favour of regulatory or non-regulatory answers. Thus, regardless of the political parties in power, European policies do not change : voters may understand this and refuse to parti- cipate in elections, feeling that democracy as “a system of popular control over govern- mental policies and decisions” is being undermined²⁰.

Moreover, Regan contends that the “one-size-fits-all” neoliberal response to the fiscal crisis of the Eurozone, which ignored the specificities and set-ups of the economies of Member States, has weakened the legitimacy of democracy²¹. In the same vein, Snell notes that the Lisbon Treaty does not appear to have harmed the different models of VoC present in Europe, and argues that the integration project must not endanger them, as the EU lacks the democratic legitimacy to choose between the models.²²

The Investigation : Hypothesis and Methodology

Taping off the crime scene : choosing countries and fields of study

The VoC theory has a very strong national premise, meaning that the Nation-State is the level of focus of the analysis and the instrument of comparison. As previously stated, this hypothesis has been criticised, especially in the light of the European integration process, as more and more fields of competencies are harmonised.

Concerning the countries relevant for the empirical analysis, my choice has been to keep the variables simple, and therefore choose only two countries, each embodying

19 BRINEGAR, Adam, JOLLY, Seth and KITSCHELT, Herbert, “Varieties of capitalism and political divides over European integration,” in Gary Marks, Marco R. Steenbergen, (éds.). European Integration and Political Conflict, éds. Gary Marks and Marco R. Steenbergen, Cambridge University Press, 2004.

20 HÖPNER, Martin and SCHÄFER, Armin, “Integration among Unequals - How the Heterogeneity of European Varieties of Capitalism Shapes the Social and Democratic Potential of the EU,” MPifG Discussion Paper, 2012, p. 38.

21 REGAN, Aidan, “Political Tensions in Euro-Varieties of Capitalism,” SSRN Electronic Journal, 2014, p. 1–20 22 SNELL, Jukka, “Varieties of Capitalism and the Limits of European Economic Integration,” 2010.

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one end of the spectrum. The oft-cited “ideal-type” of CME being Germany or Austria, I have chosen Germany as its economy is larger and very diverse, providing potentially more empirical data. On the LME side, the UK stands out as one of the most liberal economies in Europe. Its size and diverse economy makes it the most relevant representat- ive of the LMEs.

Collecting evidence : the methodology

Concerning the fields of analysis, the empirical research will be carried out onto three of the five spheres identified by Hall and Sosckice : industrial relations, vocational education and training, and corporate governance. The “interfirm relations” was left out for lack of convenient indicators and public data, and the firm’s relations with own employees will be partly covered under the heading of corporate governance, as the traditional sense of corporate governance includes this dimension. For each chapter, the basic stances of the VoC theory will be laid out, and then the situation of the UK and Ger- many will be explained, and finally compared, in order to measure how accurately the VoC predictions measure transformations that have occurred.

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C C

HAPTERHAPTER

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^NDUSTRIAL^NDUSTRIAL

R R

^ELATIONS^ELATIONS

Theoretical thinking : differences in labour relations in CMEs and LMEs

The market is the main mean for the allocation of resources in LMEs. This is reflected in the sphere of industrial relations as well, with firms being free to establish or not rep- resentative bodies for employees (ie working councils). Trade unions tend to have less power, as the sector is more fragmented and less cohesive. Wages are not as much set through collective bargaining but through market competition²³. Moreover, LMEs tend to rely more on national minimum wages, set by law, to counter potential “race-to-the- bottom” effects of relying exclusively on markets and labour competition to secure jobs.

It is relatively easy for employers to hire and release staff, however this fluidity may discourage decisions based on long-term employment, such as continuous education and investing in skills. With this same reasoning in mind, employees may also prefer investing in general, transferable skills that can come in useful in other firms and/or sectors, rather than gaining a technical specialisation that would limit them to one sector²⁴. In CMEs, industrial relations institutions are necessary to compensate the weakness of market mechanisms. Indeed, as the labor force tends to be more autonomous, with higher skills and more training received from the employer, other enterprises could be tempted to “poach” these highly-trained workers. Industry-wide collective wide bargaining helps mitigate these effects by ensuring that the labour force is well compensated for their investments and that salaries are similar across an industry. Strong and coordinated trade unions could be tempted to use their relative power to continuously increase workers’ wages. However, the opposite is usually observed, and countries with a sector-wide bargaining mechanisms tend to have lower inflation rates than in European countries

23 HALL, Peter A and SOSKICE, David, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, 2001, p. 30

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without such mechanisms. Indeed, high inflation leads to a loss of competitiveness in exports, which would be prejudicial to industrial sectors relying highly in exports. As the labour unions reach across the whole sector, such systemic concerns are taken into account, whereas in more liberal economies, single labour unions can aim for better wages without worrying about the systemic repercussions²⁵. This may lead to competition between trade unions and sectors, and to a sub-optimal Pareto equilibrium for the workers overall.

Moreover, strong trade unions are balanced out by equally strong employers’ association, often with compulsory membership for companies in the sector, enabling repres- entative sectoral negotiations on a variety of issues.

Within the company, a system of “works councils” with elected representatives usually participates in the important steering decisions of the company. As they have a say in any major changes relative to working or employment conditions, workers may feel re- assured and confident about their future within the company and thus devote more ef- forts in further training²⁶.

Industrial relations in the UK : history and recent developments

The Trade Union Congress (TUC) was established in 1868. The early industrialisation throughout the XIX century along with a rather liberal political culture of non-interference of the state led to the organisation of workers to protect their rights. These were acknowledged and protected through a variety of legal developments. In 1871, trade unions were acknowledged as legal entities and granted the right to strike. The right to picketing was given in 1875. Some twenty years later, the 1906 Trade Disputes Act en- sured that trade unions would not be sued for industrial actions. While the law guaran- teed and extended collective bargaining, it did not interfere in the wage-setting system²⁷. Trade unionism grew during most of the XX century, reaching a peak of twelve million members in 1979, which equated to over half of the workforce of the time.²⁸ This cul-

25 HANCKÉ, Bob, “Varieties of European Capitalism and their Transformation” 2007, p. 1–19.

27 EIRO, “United Kingdom : Industrial relations profile,” [En ligne : http://www.eurofound.europa.eu/eiro/country/united.kingdom.htm].

28 LAYBOURN, Keith, “Trade Unionism in Britain Since 1945,” in Trade Unionism Since 1945: Western Europe, Eastern Europe, Africa, and the Middle East, Peter Lang, 2009, p. 199–228.

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minated with the “Winter of Discontent” with numerous strikes to protest against the Laour government’s stance on public sector pay restraint. However, the tide had turned and the following year the conservative party won the election after having campaigned against trade unions, in a neo-liberal vein²⁹. The gradual changes in management style that accompanied the 1980s have not only challenged traditional industrial representation, but have led trade unions to a more legalistic, less confrontational approach, with a wide variety of services offered to retain membership. The rise in unemployment further weakened trade unions by gnawing at membership. In 1988, it was decided that youth (understood as 16 to 21) would no longer be protected by wages councils. These councils, created by the Trades Board Act at the turn of the century were terminated in 1993.

The tripartite National Economic Development Council, which had been established in 1962 to enable the government, trade unions, and employers’ associations to discuss economic policy was abolished in 1992. This was in line with the Conservative government’s desire to abolish any kind of corporatism³⁰. Moreover, in 1991, the Labour Party set up a group to study the relation that united it to trade unions. This was the beginning of the weakening relations between the Labour Party and the TUC³¹. The election of a

“New Labour” government in 1997 did not reverse the tendency, preferring to protect rights through legal means rather than by empowering trade unions.

According to EIRO, the tradition of non-interference of the state in industrial relations is still visible, in so far as collective agreements are non-binding, and that social partners are only slightly involved in public policy. Since the crisis, collective agreements have been signed at firm level to reduce working time in order to avoid unemployment.

Concerning trade union density, in 2011 it stood at 14,1% of the private sector and 56,5% of the public sector³².

Concerning the fragmentation of the trade unions, mergers have been quite common in the last decade. For instance, in 1990, 306 unions were members to the TUC. Ten years later, this number had fallen to 226, and by 2012 there were only 58 unions affiliated to the TUC. British trade unions are usually cross-sectoral, with the largest being Unite the Union, formed through the merger of Amicus and the Transport and General Workers’

29 EIRO, “United Kingdom : Industrial relations profile,”

31 LAYBOURN, Keith, op. cit., p. 227

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Union in 2007. With 1,5 million workers, it is slightly ahead of Unison, the public sector trade union, which accounts for 1,375 million members³³. However, this does not preclude career-specific or company-specific trade unions from catering to the specific needs of their members, such as the Association of Flight Attendants (AFA-CWA), the Professional Footballers’ Association (PFA) or Accord, the union for employees working within the Lloyds Banking Group.

Collective agreements are “binding in honour only”, but specific clauses may be incor- porated into individual contracts, so that they are legally enforceable. On specific policy issues, when the government wants to consult the social partners, tripartite committees may be established. This was the case of the Low Pay Commission, created in order to help set up a national minimum wage, or the Sector Skills Councils for vocational training. However, these bodies serve an advisory role, and their suggestions may not be taken into account. Moreover, centralised wage bargaining is falling fast, with the per- centage of employees covered by such agreements being estimated by Jelle Visser at 13% in 2004.

The industrial relations reality of the UK appears to fit well the Varieties of Capitalism theory, with social partners being relatively weak, and collective agreements residual.

Germany and the post-war roots of labour coordination

World War II was an earthquake for Germany, and all institutions had to be rebuilt from scratch after the fall of the nazi regime. While the Soviet authorities hurried to create a trade union structure with the help of pro-communist unionists, adopting a fast pace to prevent unionists of other political boards from catching up. In February 1946, a meet- ing in Berlin led to the formation of the Freier Deutscher Gewerkschaftsbund (FDGB), a structure subordinated to the newly created Sozialistische Einheitspartei (SED)³⁴. The debate in Western Germany focused on the structure of the new instances of representation. Was unitary unionism (Einheitsgewerkschaft) too much a legacy of centralised authoritarian institutions ? Or, was it the contrary, with the dispersion of the pre-war

34 SILVIA, Stephen J, “German Trade Unionism in the Postwar Years : the Third and Fourth Movemets,” in Craig Phelan, (éd.). Trade Unionism Since 1945: Western Europe, Eastern Europe, Africa, and the Middle East, Peter Lang, 2009, p. 451.

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trade unions facilitating the nazi takeover, as labour was divided among Christian, liberal and socialist organisations ? Moreover, German unionists argued that dispersed labour was strongly disadvantaged as the employers were represented by unitary organisations capable of negotiating a single stance. The choice of “Einheitsgewerkschaft”

implied that it was separate from the Social Democratic Party which was a strong support³⁵. In 1949, representatives from sixteen sectoral unions met and established the Deutscher Gewerkschaftsbund (DGB) as the umbrella trade union organisation. The DGB remains by far the dominant organisation, as it reunites 80% of trade unions. A separate confederation exists for civil servants (Deutscher Beamtenbund, DBB), alongside a small christian movement (Christlicher Gewerkschaftsbund, CGB).

With the unification, trade unions, with the exception of the Chemical Workers Union, became wary of merging with the eastern labour unions. They preferred to extend their own organisations into the East after the dissolution of previous labour instances. This however was not without losses in property (as the western unions could not reuse that of the dissolved organisations) and in legitimacy. If in 1991, over 50% of eastern workers were members of a union, that proportion was divided by half by 1998.

Throughout the past decades, mergers have substantially reduced the number of unions.

DGB is down to 8 members from 17 initially. The biggest members are IG Metall (with 2,3 million workers) and Ver.di (2,2 million). Because of falling revenue, the DGB was required to cut costs – its budget was cut by 17% between 1992 and 1997. In order to do so, it reduced the number of research departments, the number of members sitting in congress.

Concerning lobbying, the DGB opened an office in Brussels in 1997 to lobby the European Commission, and three years later an office in Strasbourg in order to focus on the European Parliament. According to Stephen Silvia Europe “resonates well with the post nationalistic leanings of the German left” and is mostly a mean to try to push through the German system and agenda³⁶.

In 1995, collective bargaining contracts covered 82,6% of the employees in Western- Germany (versus 73% in Eastern Germany). Ten years onward, the numbers have fallen

35 SILVIA, Stephen J, op. cit.

36 SILVIA, Stephen J, op. cit.

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to respectively 65% and 54%³⁷. Collective bargaining depends on the firm’s membership in employers’ association. In the late 1990s, Gesamtmetall, the employers’ association introduced a new form of membership, the OhneTarifstatus-Mitgliedschaft. This possibility to be a member without being subject to collective agreements was very popular among small firms and contributed to the reduction of conflict within the association. In 2006, 10% of all companies were OT members, as firms eschew membership.

According to Beyer and Höpner, coverage by collective bargaining is typically an example of a change of behaviour of actors creating a systemic change, even if the institutions remain untouched³⁸.

After the reunification, Eastern firms found they could not pay the wages, as productivity was much lower in the East. The possibility of “hardship clauses” was introduced in collective agreements, and amended the system so that major concessions could be brought about in individual cases³⁹. The hardship clauses had an unexpected benefit : as they were decided at company-level, they constituted an incentive for employees to get elected on the Supervisory Board and Works Councils, in order to have a say in the decision, which had a lock-in effect⁴⁰. With the 1992-1993 recession, and the rise of unemployment, employers tried to use this new possibility of company-level bargaining to compensate the lack of flexibility of collective agreements. In this sense, businesses did not try to dismantle the centralised bargaining system, but to optimise it by adding a variety of negotiation options.

Institutions have remained in place, but the content has changed. The 35-hour week is over and previous egalitarian distributional outcomes have been modified by cost-cut- ting measures in social policy. Union density among young employees has been estimated to be around 10%. What has decreased the trade unions’ effectiveness ?

Silvia argues that trade unions on social tradition, workplace pressure, ideological con- viction, and material benefits – all that have been challenged by the rise of individual-

37 EIRO, “Germany : Industrial relations profile,” [En ligne : http://www.eurofound.europa.eu/eiro/country/germany.htm].

38 BEYER, Jürgen and HÖPNER, Martin, “The Disintegration of Organised Capitalism : German Corporate Governance in the 1990s,” in Herbert Kitschelt, Wolfgang Streeck, (éds.). Germany: Beyond the Stable State, éds.

2003, p. 179–198.

39 SILVIA, Stephen J. and SCHROEDER, Wolfgang, “Why Are German Employers Associations Declining?:

Arguments and Evidence,” Comparative Political Studies, vol. 40 / 12, September 2007, p. 1433–1459.

40 HASSEL, Anke, “What does Business want ? Labour Market Reforms in CMEs and its Problems,” in Bob Hancké, Martin Rhodes, Mark Thatcher, (éds.). Beyond Varieties of Capitalism : Conflict, Contradictions, and Complementarities in the European Economy, Oxford University Press, 2007.

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ism. Union membership was more driven the “logic of appropriateness” than the “logic of consequences” and the social pressure to join the union has been decreasing.⁴¹

17% of all German employees receive low wages⁴², which places the country right after UK and Ireland, two traditional LMEs. There is increasing dualism between the highly productive export sector and the service sector. The most recent policy change, with the progressive entry into force of the minimum wage may very well illustrate this sliding towards a dualism in the labour market : on the one hand, workers protected by collective agreements in sheltered sectors, while on the other hand, in service sectors, the le- gislator has to intervene to make sure that where there is no powerful trade unions, employees still get paid a decent minimum wage.

“In other words, while coordinating institutions help the German manufacturing sector remain competitive, they do little to preserve the previously egalitarian nature of the German model.”⁴³

Trends of the new millennium : When Trade Unions meet the EU

An overall decline in Trade Unions ?

From a statistical perspective, trade unions are on the decline across the whole of the developed world. Germany and the United Kingdom are no exception to the rule, as their trade density has fallen to a mere 26 and 22% in 2011 respectively. Moreover, rates of unionisation of young workers are only a quarter of those of older workers, a given that could further challenge the future of trade unions⁴⁴. However, while numbers could draw an unabated picture of overall decline, Kathleen Thelen invites us to consider the question otherwise. She suggests that not apparent “liberalisation” may reflect other types of change, as shown in the graph below. She advocates that in the German case, a dualisation of labour has taken place, as demonstrated by the Hartz IV reform package.

Therefore, this change in trade union density, in membership of employers’ associations may not be the doom and gloom of the system, but its mere adaptation to changing cir-

41 SILVIA, Stephen J., Holding the Shop Together: German Industrial Relations in the Postwar Era, Cornell University Press, 2013, p. 297.

42 EIRO, “Germany : Industrial relations profile,” [En ligne : http://www.eurofound.europa.eu/eiro/country/germany.htm].

43 HASSEL, Anke, op. cit.

44 HASSEL, Anke, Trade unions and the future of democratic capitalism, Hertie School of Governance, 2013.

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cumstances⁴⁵. In a similar vein, Jeremy Waddington contends that the mergers between trade unions, which have accelerated as membership declines, sets the stage for a trade union renewal, if vested interests are overcome⁴⁶.

The creation of the European Trade Union Confederation

A sociological analysis of ETUC has been carried out by Anne-Catherine Wagner, in her 2005 book Vers une Europe syndicale : une enquête sur la confédération européenne des syndicats. This research has provided very useful background information on ETUC as well as shed light on some of the socialisation mechanisms at play in Brussels. The ETUC was founded in 1973 to represent and promote the interests of workers in Europe; the confederation was created specifically to provide a spokesperson for the European institutions. Previously existed the International Confederation of Trade Uni- on, founded in the midst of the Cold War (1949) by American and European non-communist trade unions, as part of the broader containment policy of the time (Wagner, 2005). Gradually, the European branch morphed into the ETUC, and labor unions of communist heritage slowly joined the social-democrat dominated confederation. This organisation has struggled to gain legitimacy, as ETUC has not emerged from the indus-

45 THELEN, Kathleen, “Varieties of Capitalism : Trajectories of Liberalisation and the New Politics of Social Solidarity,” Annual Review of Political Science, vol. 15, 2012.

46 WADDINGTON, Jeremy, “The trade union merger process in Europe: defensive adjustment or strategic reform?,” Industrial Relations Journal, vol. 37 / 6, November 2006, p. 630–651

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trial sphere, but has been created specifically for institutional and representation object- ives⁴⁷. Her sociological analysis also brushes upon the working relations within the ETUC, and she finds that the membership rates are a factor of legitimacy within the working groups – in this sense, the German labour unions tend to dominate issues linked to heavy industry. Moreover, certain national traditions of unionism resonate better with the working methods of a European forum. Again, the German trade union ex- perience of participating in management through supervisory boards and works council comes in handy, for they are accustomed to negotiating and reaching consensus. As one French unionist testified to Anne-Catherine Wagner :

« Les Allemands ont les moyens. Ils sont très nombreux, alors ils occupent tous les postes. Ils sont une référence en termes de négociation. Dans l’échelle

« consultation-information » qu’on a construite dans le séminaire à Berlin l’autre jour, ils sont en haut, à tous les niveaux. Ils sont plus moteurs que les autres. C’est un mastodonte en Europe. Il vaut mieux les avoir avec soi que contre soi. »

The British also have the advantage of mastering the working language naturally, whereas this may be more difficult for the French (even if French is still used within ETUC) or for other unionists, who may not have the educational background providing them with a second language.

Relations under influence ? : Europe and Trade Unions

The initial research project

The initial research project had set out to test the VoC paradigm solely through its industrial relations sphere, and and could be stated as follows : is the Varieties of Capital- ism theory a relevant paradigm to understand the dynamics of interest group representation at the European level ? As previously stated, coordinated market economies rely more on strategic interactions with institutional partners, which builds up stronger economic interest groups such as trade unions and business associations, capable of negotiating with each other. On the contrary, LMEs relying on market mechanisms supposedly have weaker interest groups as the competition between firms and individuals is exacer-

47 WAGNER, Anne-Catherine, Vers une Europe syndicale : Une enquête sur la Confédération européenne des syndicats, Editions d, 2005, p. 160.

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bated. Supposedly, these inherent differences in structures permeate the whole economy, therefore they could be visible on the Brussels interest group representation scene. Is this premise still valid in 2013 ? According to the theory, we could interest groups from CMEs to have more influence inside European confederations than their LME counter- parts. Is this verified empirically ? And can this influence be measured ?

The initial methodological choice was Heike Klüver’s “preference attainment’ approach which consists in comparing policy output with the policy preferences of interest groups

“in order to draw conclusions about the winners and losers of the decision-making pro- cess”⁴⁸. This method has several strengths, as noted by Andreas Dür : it may show influence when lobbying is invisible by studying the outcomes. However, one main draw- back is that establishing actors’ preferences is not always evident. Moreover, self-de- claration is likely to lead to misrepresentation by the actors of their preferences, perhaps unconsciously⁴⁹.

The main obstacle encountered during this preliminary research was the lack of sym- metrical material. For instance, while the DGB has published many policy papers on various subjects, the TUC doesn’t seem to have written any, which makes a comparison impossible in terms of policy alignment. While initially it seemed that this difficulty could be overcome, by narrowing the field to pieces of legislation where policy papers may be found for both, this stance was too optimistic. Indeed, on the rare occasions where all three actors, the German, UK, and European trade unions had voiced an opin- ion, the stances usually were aligned between the institutions. For instance, on the question of negotiations with the United States for a free-trade agreement, the TUC, DGB, and ETUC all voiced their opposition to a potential investor-state dispute settlement (ISDS) clause, as it would endanger the capacity of a state to come up with and imple- ment welfare policies⁵⁰. This policy alignment prevented any research on the respective influence of one or the other members of ETUC and was much more frequent than I had initially anticipated. Moreover discourses, even if seldom, are very pro-European : all trade unions investigated fully support freedom of movement and enlargements, which

48 KLÜVER, Heike, “Lobbying and the issue context : A quantitative analysis of interest group influence in the European Union,” Mannheim, 2010, p. 22.

49 DÜR, Andreas, “Measuring Interest Group Influence in the EU: A Note on Methodology,” European Union Politics, vol. 9 / 4, December 2008, p. 559–576

50 See TUC http://www.tuc.org.uk/ituc-ttip-speech; DGB http://www.dgb.de/themen/++co++ffc5dad0-05c1-11e4- a012-52540023ef1a; ETUC http://www.etuc.org/press/us-ambassador-meets-trade-unions-ttip#.U_YVp0hjHbA

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could constitute a threat to their membership base. The real discrepancy may lie not between trade unions, but between official discourses and the widespread beliefs of the unionists, highlighting the inherent tensions of representation in politics.

As research without sufficient data, I had to reorient my research project towards a broader theme, not limiting my analysis of VoC to the industrial relations sphere. The next section will present my findings organised in two different parts : the first will focus on the material influence in Brussels, whereas the second will focus on the use of the European Union in trade union discourses.

Measuring influence : DGB, TUC, and ETUC in interaction

The European Commission’s Transparency Register is very instructive, insofar as it provides various information about the resources of the interest groups.

The Trades Union Congress’s office in Brussels is located inside the International Trade Union House : they do not have their own premises, but merely an office inside. A single policy officer works in their Brussels office, and she is not accredited for access inside the European Parliament premises. The annual budget is less than 50 000€ a year, which is the minimal amount an organisation can choose when indicating a budget cat- egory. Moreover, in the description of activities, there is a strong insistence on the col- laboration with the ETUC :

“On most issues the TUC functions at the European level within the ETUC um brella – and their (and our) interests are very wide. The TUC also maintains di rect contacts with UK MEPs”

The phrasing of this description is very interesting, as the parentheses (“their (and our)”) seem toindicate that there is not a complete overlap of preferences, but that the TUC relies extensively on the ETUC, without necessarily having the means to influence the European policy conducted within the organisation. Moreover, the only activity specific to the TUC is contact with its national MEPs, showing a preference for domestic interest over European lobbying⁵¹.

51 European Union, “Transparency Register - Trades Union Congress,” [En ligne :

http://ec.europa.eu/transparencyregister/public/consultation/displaylobbyist.do?id=77510791109- 40&isListLobbyistView=true].

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Concerning the DGB however, the situation is quite different. First of all, they have several offices as the contact information specifies which office (“EU-Verbindungsbüro”) should be addressed inside the DGB’s belgian headquarters. As many as ten policy of- ficers work for the DBG in Brussels, two of which are accredited to the European Par- liament. Their annual budget amounts to 286 000€, at least 5,7 times that of the TUC⁵². In the description of their activities, no mention of the ETUC can be found, rather an extensive and precise list of the many fields they are interested in :

“Der DGB ist in Brüssel in allen Bereichen aktiv, die für Arbeitnehmerinnen und Arbeitnehmer von Interesse sind. Dazu zählen insbesondere : Alle Fragen rund um die Entsendung von Beschäftingten und Saisonarbeit, Arbeitnehmerrrechte, Dienstlleistungsfreiheit, Finzanzmarktregulierung, Nieder lassungsfreiheit, Privatisierung- und Liberalisierung, Arbeitnehmerfreizügigkeit, EBR, Gesell schaft srecht, Kontrolle und ggf. Sanktionierung von grenzüberschreitenden Fir men, Arbeits- und Gesundheitsschutz, Systeme der betrieblichen oder überbe trieblichen Altersversorgung, GATS, WTO, Ma terialsicherheit, Agrarprobleme, Menschenrechte, Labelling guter Produkte, Öffentliche Auftrags vergabe, Er weiterunge.”

The ETUC is only mentioned in a lower section on networking with other organisations, alongside the International Labor Organisation. This shows the DGB’s financial, material, and policy autonomy.

Moreover, every year is organised the British-German Trade Union Forum. This forum is financed by three organisations, the Anglo-German Foundation, the Friedrich-Ebert Foundation (FES) and the Hans-Böckler Foundation. Two out of the three are directly related to German politics ; as the FES is linked to the SDP and the Hans-Böckler Foundation is the DGB’s own foundation. Moreover, the forum venues belong to the FES. This event is mostly funded by German political institutions, showing that even in the matter of bilateral conferences, the institutional strength of CME interest groups is visible through the mobilisation of greater resources⁵³.

52 European Union, “Transparency Register - Deutscher Gewerkschaftsbund,” [En ligne :

http://ec.europa.eu/transparencyregister/public/consultation/displaylobbyist.do?id=07595112423- 87&isListLobbyistView=true].

53 FRIEDRICH-EBERT-STIFTUNG, “La Friedrich-Ebert-Stiftung : Au service de la démocratie sociale,”

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From a material standpoint as well, IG Metall, the most powerful German Trade Union, has announced it would be opening its own office in Brussels :

"Die IG Metall will sich stärker als europapolitischer Akteur einbringen und die Interessen der Beschäftigten noch besser gegenüber den europäischen Institu tionen vertreten", sagte Detlef Wetzel, Erster Vorsitzender der IG Metall, bei der Eröffnung des Verbindungsbüros in Brüssel. Die IG Metall ist in Brüssel auch vertreten über IndustriAll European Trade Union, den Verband der europäis chen Industriegewerkschaften sowie den Europäischen Gewerkschaftsbund. Nun wolle die IG Metall mit ihrem eigenen Verbindungsbüro noch eine Schippe drau flegen, betonte Wetzel.”⁵⁴

In this news release, IG Metall reaffirms its alliegiance to Industri’All and ETUC, but emphasise their desire to lobby directly. This is the exact opposite of the TUC which, though representing the whole of Britain’s trade unions, relies specifically on the ETUC for representation. The discrepancy between the resources of German and British trade unions is evident here, discrepancy which also reflects a difference in political priorities.

Both the TUC and DGB websites have a news and media releases section. The TUC even advertises a “24H media line” on its website. An analysis of all the news releases from May to early July 2014 was carried out for both the TUC and the DGB, in order to measure the coverage of EU-related topics. Titles of articles containing an obvious reference to the EU, to Europe in general or to a European policy (such as the negotiation of the TTIP) were counted. For the TUC, out of 68 articles between May 1^st and July 17^th, only one explicitly mentioned Europe, and it referred to EU investment in a York- shire capture project⁵⁵. During that same period, out of the 140 news releases present on the DGB website, 27 were explicitly referring to a European thematic. Topics were ex- tremely varied, ranging from a decision of the European Court of Justice, to the progres- sion of TTIP negotiations, to the European Elections and Energy efficiency directive.

Concerning other documentation, the TUC website does not provide its own policy papers on European issues – its “Europe” page mostly shows example of internal domestic

54 IG METALL, “IG Metall eröffnet Büro in Brüssel,”[En ligne : http://www.igmetall.de/SID-6476EE0C-

F3513786/europa-neues-ig-metall-buero-im-trade-union-house-in-bruessel-14034.htm]. Consulté le18 July 2014.

55 TRADES UNION CONGRESS, “TUC welcomes EU investment in Yorkshire carbon capture project,”[En ligne : http://www.tuc.org.uk/social-issues/environment/climate-change/tuc-welcomes-eu-investment-yorkshire-carbon- capture-project]. Consulté le18 July 2014.

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power games, using Europe to counter the government, like an advertisement on the

“Working Time” directive to disprove Cameron’s politics. Il also refers to European events and speeches by ETUC representatives, and so on, but few substantial contribu- tions to the ETUC policy can be found.

On the contrary, the DGB website lists dozens on policy papers, and other initiatives, such as their “A Marshall Plan for Europe” suggestion⁵⁶, which they launched in December 2012. In March 2013, they organised a conference with the same title in cooperation with the Friedrich-Ebert-Stiftung⁵⁷. The TUC endorsed the DGB’s initiative releasing a press statement in which “the TUC calls for a People’s Plan for Europe” in the setting of the annual German-British Trade Union Forum⁵⁸. The ETUC built upon this initiative for its own proposal published in November 2013 “A new path for Europe : ETUC plan for investment, sustainable growth and quality jobs”⁵⁹. This proposal re- used many of the DGB’s ideas as well as their calculations in the annexes, showing the influence of the DGB inside the European confederation. It was even mentioned in a speech by Bernadette Segol, ETUC’s secretary general who said :

“La DGB a présenté un document sous le titre “Un plan Marshall pour l’Europe”, qui est un document remarquablement détaillé qui circule déjà depuis quelques temps en Europe et qui a été étudié au sein de la CES.⁶⁰”

The best example of the influence of German trade unions within the European confederation is the draft answer of IndustriAll to a European Consultation on state support (see annexes). The document, which is in track changes, shows that the position was drafted jointly by IG Metall and IG BCE for IndustriAll, even if this was not mentioned in the final version of the answer.

To conclude, it seems that Germany remains much more invested on the European

56 DEUTSCHER GEWERKSCHAFTSBUND, “Ein Marshallplan für Europa: Vorschlag des Deutschen Gewerkschaftsbundes für ein Konjunktur-, Investitions- und Aufbauprogramm für Europa,” 2012.

57 DEUTSCHER GEWERKSCHAFTSBUND and FRIEDRICH-EBERT-STIFTUNG, “Workshop: ‘A Marshall Plan for Europe? Proposal by the DGB for an economic stimulus, investment and development programme for Europe,’” Brussels, 2013.

58 TRADES UNION CONGRESS, “TUC calls for a People’s Plan for Europe,”[En ligne :

http://www.tuc.org.uk/international-issues/europe/economic-developments/tuc-calls-peoples-plan-europe].

Consulté le16 August 2014.

59 EUROPEAN TRADE UNION CONFEDERATION, “A new path for Europe : ETUC plan for investment , sustainable growth and quality jobs,” November, 2013.

60 SÉGOL, Bernadette, “Discours d’ouverture de la secrétaire générale de la CES Conférence à mi-mandat de la CES,” Dublin, 2013.

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Trade Union scene than its British counterpart, whether it be in material resources, in coverage of European issues, or in terms of contribution to the European instances of representation. This unequivocal picture, while a result of the intercrossing of many different political dynamics, may partly be a result of the degree of coordination of the German economy, which has socialised German trade unions into a system of negotiation, thus providing them with greater resources at a European level.

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C C

HAPTERHAPTER

II II

V V

^OCATIONAL^OCATIONAL

T T

^RAINING^RAINING ^AND^AND

E E

^DUCATION^DUCATION

From a rational choice perspective, education represents a sunk cost, an investment which is only be worthwhile if it enables the future worker to secure a better position than he would have had without such a financial and time-consuming effort. The VoC paradigm therefore sets out different rational attitudes for both ends of the VoC spectrum.

Which education for which economy ? The Varieties of Capitalism ap- proach to vocational training

How does an economy maintain a highly skilled vocational training system ? The equilibrium is based on intricate incentives. Indeed, students less motivated or less perform- ant in a traditional academic setting, will have access to a extensive vocational training system which will help them find a job afterwards. If these systems are selective, the student will have an incentive to work hard in spite of his difficulties in order to be ac- cepted into the program of his choice. In economies devoid of reliable vocational options, the student will have no incentive to work hard, and may not want to join the vocational program if it does not have a good reputation and does not guarantee him a better position upon entering the labour market⁶¹.

Coordinated market economies have specialised sectors and industries driving their economies. They therefore need highly qualified labour with specific skills, and thus rely on educational institutions to provide adequate working skills to their future employees.⁶² Large firms having the capacity to take on more trainees than they need may do so, thanks to government subsidies and coercive employers’ associations ensuring the

61 HALL, Peter A and SOSKICE, David, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, 2001

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continuation of the high skill equilibrium.⁶³

Liberal market economies generally have a highly fluid labour market, in which general skills represent a better investment for a given worker, as he cannot be sure that he will not be laid off in the future and have to take a new job very different from the previous.

Vocational training follows this pattern and the skills learnt remain very general.

Moreover, apprenticeships may be harder to find because individual firms could be un- willing to invest resources in training a young worker who could leave the firm afterwards. However, workers will be well-equipped with general skills which can be rein- vested in the service sector or in non-technical sectors and contribute to ecomomic growth.

Andrea Herrmann and Alexander Peine have tested empirically the link between skills valued by employers and the form of innovation dominant in a firm. The VoC paradigm states that LMEs favour radical product innovation, while CMEs favour incremental product innovation, through the constant improvement of processes and methods with a contributing highly qualified staff. Interviews were carried out with HR managers in the UK, Germany and Italy. They found that whatever the country, enterprises sought employees with general skills for radical product innovation, workers with specific and technical skills for incremental product innovation, and employees without particular skills for product imitation strategies. This analysis tends to confirm the VoC argument on a micro-level⁶⁴.

Vocational training today : the OECD’s Skills Beyond Schools Reports The situation in the UK

In the United Kingdom, school is compulsory until age 16. Upon reaching their six- teenth birthday, students may choose to enter the workforce, to continue obtaining academic qualifications (A-levels) often to further study at university, or to take part in vocational qualifications or an apprenticeship.

63 CULPEPPER, Pepper, “Employers, Public Policy, and the Politics of Decentralized Cooperation in Germany and France,” in Peter A. Hall, David Soskice, (éds.). Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, 2001, p. 275–304.

64 HERRMANN, Andrea M and PEINE, Alexander, “When ‘national innovation system’ meet ‘varieties of capitalism’ arguments on labour qualifications: On the skill types and scientific knowledge needed for radical and incremental product innovations,” Research Policy, vol. 40 / 5, Elsevier B.V., 2011, p. 687–701

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Those choosing the vocational pathway may have attended a University Technical Col- lege from age 14. These offer a vocationally oriented curriculum, as well as business skills and ICT, in cooperation with local employers. A student may prefer to attend the classic school until age 16 and then only to enrol in a “Further Education” college, which offer programmes from under- to post-graduate students. Moreover, private training providers are a major actor of the vocational system in the UK, with courses on healthcare, social care, information technology, to name just a few⁶⁵.

The Qualifications and Credit Framework is used by all government funded programmes and is divided into three levels; award, certificate, and diploma. In order to be awarded a degree, students have to complete unit-based courses which are relatively flexible.

Apprenticeships form an entirely independent system in the UK, which offered 480 000 places in 2012. They are based on a knowledge-based element, a competence-based element, transferable skills (English and math), a module on employment rights, and per- sonal learning and thinking skills. The formal learning part usually takes place at a Fur- ther Education College. The system has been in rapid expansion, from 184 400 parti- cipants in 2007 to 457 200 in 2011⁶⁶. The sectors in which apprenticeships are most de- velops are those of a service economy. Indeed, with 29,3% of all programmes, « Busi- ness, Administration and Law” is the first choice of apprentices, followed by “Retail and Commercial Enterprise” (22,5%) and “Health, Public Services and Care” (19,7%).

These three programmes add up to 71,5% of all apprenticeships, while “Engineering and Manufacturing Technologies” lags behind with 10,7% of apprenticeships, and Con- struction follows with only 6,1%. The rest of the sectors relate to the tertiary / services economy, with the exception of “Agriculture, Horticulture and Animal Care” which rep-

65 BRITISH COUNCIL and UK TRADE&INVESTMENT, “Putting skills at the heart of global economic success : a brief guide to UK technical, vocational education and training (TVET),” London, 2012, p. 1–48.

66 MCCOSHAN, Andrew and HILLAGE, Jim, “OECD Review : Skills Beyond School Background Report for England OECD Review : Skills Beyond,” 2013.

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resents 1,6% of all apprentices⁶⁷. This is very interesting because it shows that the vocational training sector is dominated by the services economy, reflecting a typical LME feature of the UK economy.

In terms of numbers, in 2007, 89 550 people had achieved a higher level of vocational training, number which progressed to 125 750 people in 2011. In comparison, around 360 000 first university degrees are started every year⁶⁸.

Strengths and challenges according to the 2010 OECD report

The OECD identified several strengths of the UK vocational education system. First, their seems to be a widespread commitment to the idea of improving the level of working skills. Resources have been mobilised for this objective, and many employers have been contacted. Moreover, the system is flexible and offers a variety of solutions to employers. However, the system is undermined by a series of weaknesses. First, the concept of employer engagement is variable, and the apprenticeship system remains un- derdeveloped. As the government preferred an employer-led training system, it lacks the push of a government-supported policy change.

The German school system

The overall structure of the vocational education system

In Germany, schooling is a competence of the Länder and therefore structures and lengths of learning vary from one part of the country to another. Generally speaking, schooling starts at age 6 – after about four years of school, students are oriented according to their capacities into either the Gymnasium, for those aiming at university studies, the Realschule, and the Hauptschule, for those challenged by a traditional academic system. Students from Realschulen and Hauptschulen form the bulk of the vocational education candidates. Among them, 75% choose the dual system and the others enroll in Berufsfachschulen, Fachschulen or Schulen des Gesundheitswesens, which are full-time 2 or 3 year programs⁶⁹.

67 MCCOSHAN, Andrew and HILLAGE, op. cit.;, p. 26 68 MCCOSHAN, Andrew and HILLAGE, Jim, op. cit; p. 24

69 HOECKEL, Kathrin and SCHWARTZ, Robert, “Learning for Jobs - OECD Reviews of Vocational Education and Training : Germany,” 2010.

Germany and the United Kingdom

United In Diversity ! ?

The dynamics of European Varieties of Capitalism through the examples of

Germany and the United Kingdom

TABLE OF CONTENTS

I I

Presenting the suspect : the VoC paradigm The culprit’s history : literature review

Criticism and limits

Can convergence be expected ?

It’s complicated ! Varieties of Capitalism and the EU

The Investigation : Hypothesis and Methodology

Taping off the crime scene : choosing countries and fields of study

Collecting evidence : the methodology

C C

I I

I I

R R

Theoretical thinking : differences in labour relations in CMEs and LMEs

Industrial relations in the UK : history and recent developments

Germany and the post-war roots of labour coordination

Trends of the new millennium : When Trade Unions meet the EU

An overall decline in Trade Unions ?

The creation of the European Trade Union Confederation

Relations under influence ? : Europe and Trade Unions

C C

II II

V V

T T

E E

Which education for which economy ? The Varieties of Capitalism ap- proach to vocational training

Vocational training today : the OECD’s Skills Beyond Schools Reports The situation in the UK

The German school system