Greek Employment Relations in Crisis

Problems, Challenges and Prospects

Horen Voskeritsian, Panos Kapotas, Christina Niforou, Horen Voskeritsian, Panos Kapotas, Christina Niforou

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781315462479
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Greece's economy and society have undergone important structural changes in recent years as a result of the financial crisis and consequent austerity policies that have been implemented. The Greek labour market and employment relations system have been subject to immense pressures, leading to fundamental changes both in the structure of institutions and in the behaviour of the main employment relations actors.

The present volume constitutes a first attempt to appreciate the consequences of a decade of austerity politics on the Greek labour market. Offering a multidisciplinary perspective and building on original research by leading Greek scholars in the fields of labour economics, employment relations and the sociology of work, it will discuss the impact of the crisis and the resulting policies on the Greek labour market and employment relations.

This volume will be of interest to policy makers, researchers and students interested in the past, present and future of Greek employment relations and the impact of austerity on Greece.

1 Power, institutional change and the transformation of Greek employment relations

Horen Voskeritsian and Andreas Kornelakis

1 Introduction

The institutions governing the Greek labour market have undoubtedly gone through a period of sustained and comprehensive change in the course of the Greek crisis. Although institutional change in the pre-crisis era followed the pattern of incremental erosion and path-dependence, the period of the crisis has been marked by a significant shift in this pattern. The changes that were engineered in the institutional framework of employment relations were abrupt, severely contested by labour market actors, and unilaterally imposed by the state, which in turn was compelled to abide by the conditions of the bailout agreements. The purpose of this chapter is to examine the changes in the employment relations institutions against the backdrop of literature and theories on institutional change and emphasise the new power dynamics unleashed by these changes.

The literature on institutional change has focused primarily on the way institutions are transformed and on the reasons behind such transformations (Hall and Thelen 2009; Streeck and Thelen 2005; Thelen 2009). Yet, the question of how institutional change impacts the actual behaviour of actors is still underdeveloped. It is generally assumed that the changing institutional structure will trigger some feedback responses from the actors, who will adjust their strategies and behaviour to the new environment. Path dependency is promoted as the main explanation for the observed changes: prior institutional experiences, and the paths that these have carved into the social nexus, largely determine the direction and path of change. However, sometimes, the inductive nature of this approach cannot be reconciled with some empirical observations. For instance, the transformation of German industrial relations in the early 1990s diverged from the path that had been followed up until then (Doellgast and Greer 2007; Hassel 1999).

Moreover, institutional change may generate a variety of responses, some of which may not have been anticipated by the change instigators themselves. This depends on the type of intervention said change introduces in the institutional framework. Thus, some institutional changes may be of a compulsory nature and have universal applicability, whereas others may widen the range of options available and leave the final choice of their implementation to the discretion of the actors. In this latter case, the take-up of the changes by individual actors depends on the actors’ needs and a recalculation of their expected benefits. For example, a change in the redundancy regulations (e.g. the procedure that needs to be followed or the level of severance payment) has immediate and direct effects on a firm’s redundancy strategy. In other words, a company cannot choose not to follow these regulations, as they replace previous regulations and there are no other options. On the other hand, the flexibilisation of the labour market through the broadening of the range of atypical forms of employment does not mean that firms will necessarily move towards hiring more employees on atypical contracts. Instead, this change will widen the range of options, but the take-up will vary from firm to firm. Whether employment will become more flexible or not, therefore, depends not only on the institutional framework but on other factors as well.

The different ways in which institutional change is perceived and interpreted by societal actors is, therefore, an open question. Institutional change may, in theory at least, generate a variety of actors’ responses. The main argument of this chapter is that the actors’ responses to institutional changes will be mediated through the power dynamics in a specific employment relations system. In other words, the two main employment relations’ actors (capital and labour in this case) renegotiate the transition from one institutional arrangement to another as a function of their relative power in the employment relationship.

Although we do not view capital and labour as monolithic actors, we follow Korpi (2006) in assuming that the class-related interests of the two actors are more important analytically than the intersectional conflicts. Thus, although different interests may exist in between and within different employers and employees, what matters is the general class-related interest. Analytically, we employ a power resources model (Korpi 2006; Wright 2015) to account for the strategic behaviour of the two actors in the labour market. We argue that the institutional changes impacted employment relations practices through a modification of the parties’ interests and a reallocation of power from labour to capital. The reallocation concerned not only the possession of power resources, but also the quality of the actors’ resources, the actors’ ability to exercise this power, as well as the effectiveness of their power. Against the backdrop of these institutional changes and power dynamics, new strategic games in the workplace were triggered, which eventually led to new (albeit temporary) equilibria in the employment relations system.

Overall, the aim of this chapter is twofold: first, to develop a conceptual framework that integrates the power dynamics in the theories and analyses of institutional change, and second, to show how the economic crisis and the institutional changes that were initiated as a result of the adjustment programmes altered the power dynamics in Greek employment relations and highlighted the behaviour of the employment relations actors both at the sectoral and firm levels. To this end, the chapter is structured as follows. The second section introduces a novel conceptual framework of power relations that emphasises the inter-dependence between institutional change and power dynamics in the employment relations system. The third section considers institutional changes in the Greek employment relations’ framework through the lens of the power-based framework. The fourth section is the conclusion.

2 Power, institutional change, and employment relations: towards a conceptual framework

Power has been central in the study of employment relations since the 1970s, usually discussed in relation to conflict. Hyman (1975) was among the first to elaborate on the importance of power struggles in understanding the industrial relations phenomena, in contradistinction with the then predominant systemic view of industrial relations (Clegg 1972; Flanders 1970). Recent research has focused on trade union power (Gumbrell McCormick and Hyman 2013), especially in the context of mobilisation (Kelly 1998) and the revitalisation of the trade union movement (Frege and Kelly 2003; Heery et al. 2003). In what follows, we expand our focus to appreciate the relationship between institutions and power in the employment relations arena. We adopt the classic definition of power as an actor’s ability to pursue its interests by controlling or limiting other actors’ actions (Dahl 1957; Korpi 2006; Reed 2013). Moreover, we define power dynamics as the inter-relationship between the allocation of power in the employment relations’ arena and its possession by the relevant actors, the ability to exercise power, and the decision to deploy power to pursue one’s interests. In this sense, power is a relational concept, as its successful deployment depends on how power will be received by the party towards which it is being deployed.

Furthermore, the relational character of power dynamics implies that power does not have an a priori transformational essence, in the sense that power deployment does not necessarily guarantee a change in another actor’s behaviour. More specifically, the level of power an actor holds and the quality of its resources depend on the societal structure and the institutional framework in which power is being manifested. Hence, changes in the external environment and institutional framework governing the relations between labour market actors may alter any of the three components of power dynamics (i.e. the allocation of power, the ability to exercise power, and the decision to deploy power). However, a change in the components does not guarantee a change in behaviour, because a change in behaviour depends both on each actor’s interests and on how each actor evaluates the power resources of the other actor. To better understand how this relational concept can be utilised, we now turn to define the components of power dynamics.

2.1 The allocation and possession of power in the context of employment relations

According to Mann (1986), the sources of an actor’s power can be economic, political, cultural, or (in the case of states) military. Economic power stems from one’s structural characteristics and the position one occupies in a certain social structure. In employment relations, the economic power of capital depends on its structural characteristics (e.g. the size of the company and its capital base) and its position in the economy and society (the industry in which it operates, its monopolistic position, or its importance in the functioning of the economy). Similarly, labour’s economic power depends on its structural characteristics, such as organised versus unorganised labour, the size of organised labour (what Gumbrell McCormick and Hyman (2013) call “associational power”), its financial strength, the internal coherence of the labour movement, its scarcity (i.e. low supply of labour), or its skills (Kimeldorf 2013). Finally, labour’s position in the labour process is important, as it may increase its “disruptive potential,” which is the possibility of creating a disruption that will be considered important enough to merit counter-action by the other party – see Perrone et al. (1984).

Political power, on the other hand, depends on the networking structure one controls, or has access to, at the state level. There is an interdependency between the economic and political sphere, as people who occupy a certain class position have better access to the corridors of power than others (Savage 2015). Although this is true for individuals, it may not necessarily be true for collective organisations, such as trade unions or employers’ associations. The economic power of a trade union or an employers’ association may facilitate the “access to the state,” but the type of state and the political orientation of the ruling party may guarantee privileged access to actors with political power.

The power each actor enjoys depends on the historical context in which this power is exercised. The socio-historical environment provides social legitimacy (Haugaard 2008) to the allocation and use of power, and hence, it provides meaning to it, whereas the legal environment provides normative legitimacy (or legality or lawfulness) to an actor’s actions. Social and normative legitimacy define the limits one’s power may reach. This depends on the dominant values in a specific society and on the consequent rights that one enjoys within this structure. Thus, acts of power that were considered legitimate in the past may have lost their legitimacy in the present, without this necessarily implying that the sources of power have changed as well. Legitimacy is important as it empowers the actor (i.e. provides them with a power to act in a specific way [Göhler 2013]). For example, collective bargaining could not take place, and would not be meaningful, if any of the parties did not enjoy the legitimacy prescribed to them by the socio-historical and legal context in which they operate. Similarly, the use of child labour or forced labour lacks legitimacy in the current historical period, but this was not the case in other eras. Legitimacy is what differentiates the use of power, as discussed here, from the use of violence – i.e. the exercise of physical power determined primarily by a party’s natural power (Haugaard 2008).

2.2 The ability to exercise power

Possessing power is different from the ability to exercise power (Perrone et al. 1984). This ability depends on one’s possession of power as well as on the context in which this power is exercised. In other words, the broader environment (social, economic, political and technological) and, specifically, the institutional framework create legal rules and conditions that may either constrain or enhance the ability to exercise power. For instance, workers may possess power depending on their structural position in the labour process or in the market (Wallace et al. 1989). However, as Griffin argues, “the disruptive potential of workers in ‘central’ industries may be thwarted, at least in the short run and during periods of economic slack, by the prior stockpiling of non-perishable goods” (cited in Perrone et al. 1984: 425). This is an example of labour not being able to successfully exercise its potential power due, first, to the power of capital to shape the production process in such a way as to undercut labour’s power and, second, due to external circumstances (i.e. the economic slack) that define the context in which power is exercised. In practical terms, the ability to exercise power refers to an actor’s opportunities to successfully mobilise its power sources to achieve an outcome. Successful mobilisation depends on an actor’s organisational capacity (i.e. on its ability to successfully utilise and deploy the power sources – see Gumbrell McCormick and Hyman 2013; Kelly 1998) – and on the sphere (or spheres) in which power will be exercised. Wright (2015) identifies three such spheres: the sphere of politics, the sphere of exchange, and the sphere of production.

In the sphere of politics, capital and labour may try to influence the formation and implementation of policies through access to the corridors of power. As previously mentioned, the state tradition and the ideological orientation of the political party in government shape the historical evolution of national industrial relations systems (Crouch, 1993). Exercising power at this level changes the institutional restrictions on the function of the capitalist economy and the labour market more specifically. The sphere of exchange refers to the market in which capital and labour interact and collectively regulate the industrial relations system (through national, sectoral, or occupational collective bargaining or through their participation in social dialogue initiatives). Finally, the sphere of production refers to the firm level and it is the only sphere where capital may interact with individual and unorganised labour.

Overall, labour market actors pursue their interests and exercise their power across all three spheres, which operate at different levels and provide access to different sources of power. The choice of the sphere in which power will be exercised depends largely on the strategic choices of the actors and their perceived likelihood to achieve the desired outcomes. Hence, if an option exists, an actor will choose to operate in a sphere where it has or can accumulate more power or where it can inhibit the effectiveness of its opponent’s power. This decision is shaped by the institutional framework that defines the actors that may participate in a specific sphere and the extent of this participation. For example, a firm may wish to determine wages in the sphere of production, but this may not be possible due to institutional constraints (e.g. the structure of collective bargaining may not allow firm-level wage determination). If, however, such an option exists, a firm may decide to engage into the sphere of production instead of the sphere of exchange because it may enjoy greater power in the former. Moreover, the firm’s interlocutor in the sphere of production may be less powerful than the one in the sphere of exchange, hence making the choice of the former sphere more attractive.

2.3 The decision to deploy power

Possessing power, retaining the ability to exercise power, and eventually deciding to deploy power are three different things. Deploying one’s power resources depends on one’s evaluation of the possibility of satisfying one’s interests by using their power (what Leap and Grigsby 1986: 205 refer to as potential versus enacted power). The value one attributes to this possibility depends on several factors, one of which is the legal, social, economic, and political environment one operates in. Changes in this environment may alter an actor’s interests and priorities, thus leading to a decision to act in order to satisfy the new set of interests. Moreover, changes in the environment may also alter the power sources of an actor, thus creating new expectations regarding the achievement of one’s interests (Korpi 1974a). Another factor is an actor’s perception about the other party’s power potential an...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• About the contributors
• Introduction
• 1. Power, institutional change and the transformation of Greek employment relations
• 2. Collective bargaining decentralisation and wage adjustment for internal devaluation
• 3. Sectoral returns in the Greek labour market over 2002–2016: dynamics and determinants
• 4. Firm-level bargaining and wage adjustments before and during the crisis: evidence from the 2011 industrial relations reform
• 5. Mind the (twin) gap: job quality in Greece in comparative perspective
• 6. The rise of involuntary non-standard employment in Greece during the great economic depression
• 7. Unemployment experiences and coping strategies of the unemployed in crisis-ridden Greece
• 8. Too poor to leave the nest? The Greek family as a safety net for young adults before and during the crisis
• Conclusion
• Index