Abstract/Summary

This article explores the adjustment of wage bargaining institutions to international trade in Germany. Embracing IPE as opposed to CPE lenses yields a novel interpretation of change in the institution of wage bargaining. Export dependence of a sector, we argue, has destabilizing effects for industry-wide bargaining by sparking an intra-sectoral cleavage between domestic- and export-oriented enterprises. Specifically, the greater the degree of export dependence of a sector, the greater the degree to which domestic-oriented enterprises within that sector will abandon collective bargaining. We also explain how work-place employee representation through works councils mitigates this effect, such that the presence of works councils helps domestically-oriented firms to hold to collective bargaining agreements in the face of a sector’s deepening exposure to export markets. These claims find empirical support in the history of labor-relations developments in the metal industry and, especially, in extensive analysis of a cross-section of establishments. Our findings attribute major responsibility to the firms driving globalization for undermining collective bargaining institutions, and suggest that economic globalization is a cause of dualization. In all, the article provides fresh ammunition for a version of globalization-induced institutional conversion.