Production Regimes and the Quality of Employment in Europe Duncan Gallie Nuffield College, University of Oxford, Oxford OX1 1NF, United Kingdom; email: duncan.gallie@nuffield.ox.ac.uk Annu. Rev. Sociol. 2007. 33:85–104 First published online as a Review in Advance on March 19, 2007 The Annual Review of Sociology is online at http://soc.annualreviews.org This article’s doi: 10.1146/annurev.soc.33.040406.131724 Copyright c 2007 by Annual Reviews. All rights reserved 0360-0572/07/0811-0085$20.00 Key Words varieties of capitalism, quality of work, participation, job security, skills Abstract Production regime theory has been one of the most innovative and influential recent contributions to neo-institutional debates about the varieties of capitalism. This review takes issue with its claim that there are major differences in the quality of work be- tween the two principal regime types that are held to characterize European societies—coordinated market economies and liberal mar- ket economies—by examining the evidence for Denmark, Finland, Germany, Sweden, and the UK. Although the broad pattern of skill differences corresponds reasonably well to the arguments of the the- ory, the evidence does not confirm the other claims about work and employment conditions, in particular with respect to employee job control, autonomous work teams, organizational participation, and job security. Rather, it points to the distinctiveness of the Scandina- vian countries and hence to the importance of factors that lie outside the explanatory framework of the thesis. 85 Annu. Rev. Sociol. 2007.33:85-104. Downloaded from www.annualreviews.org by Ball State University on 04/21/13. For personal use only.
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Production Regimes andthe Quality of Employmentin EuropeDuncan GallieNuffield College, University of Oxford, Oxford OX1 1NF, United Kingdom;email: [email protected]
Annu. Rev. Sociol. 2007. 33:85–104
First published online as a Review in Advance onMarch 19, 2007
The Annual Review of Sociology is online athttp://soc.annualreviews.org
This article’s doi:10.1146/annurev.soc.33.040406.131724
varieties of capitalism, quality of work, participation, job security,skills
AbstractProduction regime theory has been one of the most innovativeand influential recent contributions to neo-institutional debatesabout the varieties of capitalism. This review takes issue with itsclaim that there are major differences in the quality of work be-tween the two principal regime types that are held to characterizeEuropean societies—coordinated market economies and liberal mar-ket economies—by examining the evidence for Denmark, Finland,Germany, Sweden, and the UK. Although the broad pattern of skilldifferences corresponds reasonably well to the arguments of the the-ory, the evidence does not confirm the other claims about work andemployment conditions, in particular with respect to employee jobcontrol, autonomous work teams, organizational participation, andjob security. Rather, it points to the distinctiveness of the Scandina-vian countries and hence to the importance of factors that lie outsidethe explanatory framework of the thesis.
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INTRODUCTION
In the continuing debate between univer-salist theories of convergence and neo-institutionalist theories of difference inadvanced capitalist societies, an influential re-cent contribution has come from writers fromthe “varieties of capitalism” or “productionregimes” perspectives. Although rooted in thelate 1980s, this came of age primarily from themid- to late 1990s.1 By 2003, Howell was ableto argue that, in the analysis of the institu-tional organization of capitalism, the varietiesof capitalism approach has “achieved a level oftheoretical sophistication, explanatory scope,and predictive ambition that has rapidly madeit close to hegemonic in the field” (Howell2003, p. 103).2 As its key contributors con-tinued to extend its scope to cover new coreissues, such as sex inequalities in employment,its arguments have become steadily morepivotal to discussions about differences inEuropean social structure.
Theories of production regimes are per-haps most naturally seen as heirs of thecorporatism tradition, but shifting the focusfrom national level to meso (Soskice 1999,Estevez-Abe et al. 2001, Hall & Soskice2001b, Soskice 2005). Whereas earlier dis-cussions had focused above all on politicalstructures at the national level (the natureof state–interest group integration in theo-ries of corporatism) or on the characteris-tics of welfare states, theories of productionsystems underlined the central importance ofpatterns of employer coordination and thestructure of skill-formation regimes in creat-ing distinctive country patterns of economicorganization.
1Over a brief span of years, it came to centrally informthree major edited volumes (Kitschelt et al. 1999, Iversenet al. 2000, Hall & Soskice 2001b), several ambitious mono-graphs (Mares 2003, Thelen 2004, Iversen 2005), anda wide range of articles (see, for instance, Social Politics,Vol. 12, 2005).2As Howell (2003) notes, influence is particularly evidentin the foci of discussion in conferences: “A glance at papersand panels at recent conferences makes clear the extent towhich this framework has come to dominate discussion.”
The production regimes framework gives aparticularly central role to the policies of, andrelationships between, employers (Soskice1999, pp. 103–104; Thelen 2004). The cen-tral argument is that quite different employ-ment dynamics can be found between cap-italist societies depending on the way thatfirms try to solve their coordination prob-lems with respect to industrial relations, vo-cational training, corporate governance, in-terfirm relations, and the cooperation of theiremployees. Very broadly, it is suggested thatthere is a critical difference between liberalmarket economies, which coordinate their ac-tivities primarily in terms of hierarchies andcompetitive market arrangements, and co-ordinated market economies, which dependmore heavily on nonmarket arrangements.
Although there are variants of coordinatedmarket economies, those in which coordina-tion takes place through the industrial sector(industry-coordinated economies) are charac-teristic of certain European societies. WithinEurope, the countries that are closest to theideal-typical coordinated model are Germanyand the Scandinavian countries. Although ini-tially a distinction could be drawn betweena centralized egalitarian model of coordina-tion more characteristic of the Scandinaviansocieties and a flexibly coordinated modelmore characteristic of the Germanic coun-tries, there has been subsequent convergenceon a single flexibly coordinated model. Thecountries closest to the ideal-typical liberalmarket economy are Britain and Ireland. Anotable feature of the argument is that it se-lects its critical examples and evidence from arelatively small number of European societiesand is not fully clear whether others are to beunderstood as less pure examples of the dom-inant classification or as reflecting the logic ofa rather different ideal-type that has yet to befully elaborated (Hall & Soskice 2001a, p. 21).Important examples of this problem of con-ceptual assimilation are the cases of France,Italy, Spain, Portugal, and Greece.
In developing their argument, theoristsof production regimes, with their strong
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emphasis upon the centrality of the employ-ers’ role, placed themselves in conscious op-position to a rival approach that had held thefield in comparative analyses of European so-cial structure. This earlier approach sought toaccount for variations in institutional struc-tures in terms of a power resources perspec-tive, which emphasized the relative organiza-tional capacity of employers and labor and theway this was mediated through the state. Thiswas clearly closely related to earlier Marxiantheories of class formation and class conflict,but it gave the tradition a distinctive twistthrough its emphasis on the way in whichdemocratic institutions could provide a non-violent channel for class forces to modify cap-italist social structure. Perhaps the most sys-tematic development of this approach was byKorpi (1978, 1983), although it informed agood deal of analysis of welfare state develop-ment, in part from other Nordic researchers(Palme 1990, Kangas 1991), but also fromwider afield (see, in particular, Stephens 1979,Esping-Andersen 1990, Fligstein & Byrkjeflot1996).
A potentially attractive feature of pro-duction regime theory is that it provides anaccount of the interlinkages of many dif-ferent institutional characteristics, affectingdiverse spheres of social interaction. The na-ture of a country’s production regime is heldto have important consequences for a widerange of economic and social processes, in-cluding skill acquisition, relations betweenowners and managers, subcontracting rela-tions, product and innovation strategies, in-dustrial relations, and welfare regimes. Thisreview, however, focuses on one specific argu-ment derived from the wider theory: that thenature of the production regime affects sev-eral aspects of work experience that are crit-ical for the quality of employment and thathave important consequences for worker’smotivation, job satisfaction, and psychologi-cal health. The implications for work experi-ence are particularly important with respect toskill level, the degree of job control, participa-tion at work, and job security. The argument
is most systematically presented by Soskice(1999).
Many of the factors crucial for employeewell-being are held to be substantially betterin coordinated market economies. To beginwith, countries with this type of productionregime emphasize product market strategiesbased on complex “diversified quality prod-ucts” (Streeck 1992) that “depend on skilledand experienced employees” (Soskice 1999,p. 113). There will be a need to foster, throughstrong initial vocational training systems, spe-cialized skills across the broad spectrum of theworkforce (skilled manual workers, techni-cians, and engineers). Such skills will combineboth industry-specific technological knowl-edge and company-specific knowledge of or-ganization, processes, and products.
Higher skill levels in turn reinforce otherinstitutional characteristics that are usually as-sociated with a higher quality of employment.Complex products favor the devolution ofdecision-making responsibilities to employ-ees. Devolved responsibility will be reinforcedby new forms of work organization. Thistype of production requires its skilled employ-ees “to work in ways (especially autonomousgroup environments) that are costly for man-agement to monitor and impossible to expli-cate contractually” (Soskice 1999, p. 115).
The fact that, with high skill levels and newforms of work organization, employees them-selves possess key problem-solving knowledgehas major implications for industrial relations.Unilateral control over decisions is less effi-cient than consensus-based approaches to de-cision making. The process of production incoordinated market economies requires “co-operative company-level industrial relations,to ensure cooperation from highly skilled andhence powerful employees” (Soskice 1999,p. 109), with employee-elected bodies playinga significant role in company decision mak-ing. There will be effective works councils(or other employee representational bodies)within the company linked to industry unionsoutside it that themselves play an importantpart in the industrial relations system.
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Finally, skill specificity will make employ-ers reluctant to casually hire and fire employ-ees because of the cost of training to developcompany-specific skills and the market powerof those with industry-specific skills. Cooper-ative industrial relations also require the abil-ity of companies to commit to long-term rela-tions with employees and hence are conduciveto greater employment security. Employmentsecurity is reinforced by the fact that relianceon more specialized skills is thought to haveimplications for welfare systems: The needto encourage investment in industry-specificskills is conducive to the creation of strongwelfare safety nets that protect income in theevent of unemployment (Estevez-Abe et al.2001, Iversen & Soskice 2001, Mares 2003,Iversen 2005).
In most respects, liberal market economiesare held to provide a mirror image of theemployment conditions of the coordinatedeconomies. Although in early formulations ofthe theory, these were described as societiesbased on a low-skill equilibrium, more re-cent discussions characterize them in termsof a highly polarized skill structure. Thelack of a strong vocational training system atthe postcompulsory secondary education levelmeans that lower-level workers have espe-cially weakly developed skills. But, given thatthis production system is more oriented tointernationally competitive service provisionand innovative development of complex sys-tems (such as telecoms and defense), the lib-eral market economy also requires significantnumbers of highly trained and mobile profes-sionals. The emphasis on rapid technologicalinnovation encourages organizational struc-tures that allow high levels of unilateral man-agerial control and the consequent marginal-ization of unions, while the need to takeadvantage at short notice of new skills on thelabor market requires a regulative system thatallows employers to hire and fire employeesat low cost.
At the time that the theory of produc-tion systems was initially formulated, therewas very little rigorous comparative evidence
available about country differences in types ofwork and employment conditions. The argu-ments were mainly derived from impression-istic comparisons of national evidence largelyrelating to the formal character of institu-tional arrangements. More recently, with thegrowth of cross-national surveys primarilyfunded by the European Union, we are in amuch better position to assess whether thework experiences of employees in differentcountries are indeed differentiated in the waythat would be expected given the logic of thesearguments. The models are, of course, ideal-typical rather than descriptive, but if they failto illuminate broad patterns in the evidence,their utility must be in some doubt.
SKILLS AND TRAINING
Differences in systems of skill formation andtheir implications for the distribution of skillsare given central explanatory place in theargument. Coordinated market economiesshould be characterized by two features: ahigher proportion of intermediate comparedwith nonskilled occupations and a higher skilllevel within intermediate occupations. Thethesis places a strong emphasis on the im-portance of vocational training in generat-ing higher skills. But a notable feature of thediscussion is that it focuses almost entirelyaround initial vocational training. This con-trasts with the growing concern in many coun-tries with the issue of lifetime skill renewal andhence with the strength of continuing voca-tional training.
A major program of research to assess thedifference in skills between Britain and otherEuropean countries has been a series of stud-ies carried out by the National Institute ofEconomic and Social Research, initially underthe direction of Sig Prais.3 These studies ar-gued powerfully for the much better quality oftraining of skilled manual workers and manual
3In this as in most other sections, most of the relevantresearch for the UK has been carried out in Great Britain.
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supervisors in countries such as Germany andFrance, which had more developed appren-ticeship schemes. Matched case studies in me-chanical and electrical engineering showedthat whereas two-thirds of shop floor work-ers in the French manufacturing plants helda craft qualification, this was the case foronly one in six of their British equivalents(Steedman 1988). Comparisons with France,Germany, and Japan showed that Britain wasmuch less likely to train both specialized en-gineers and craftsman (Prais 1989). Indeed,compared with Germany, Britain fell behindin all skilled categories. The training deficitwas evident not just in manufacturing butequally in the service sector. Matched casestudies showed that workers in the Germanhotel industry were twice as likely to havecraft-level qualifications than those in Britain(Prais et al. 1989). In the retail sector, thenumbers attaining qualifications each yearas salespersons in France were about ninetimes greater than in Britain. Moreover, rec-ognized vocational qualifications in Britainwould have been regarded as prevocationalin France ( Jarvis & Prais 1989). In a reviewof studies carried out on the finance sectorin Britain and Germany, Lane (1987) showedthat not only were the skill profiles much moreweighted to highly qualified clerical workersin Germany, but also the introduction of tech-nological change in the sector had very dif-ferent consequences; it was associated withdeskilling and tighter control in Britain butwith enlarging of skills in Germany.
Research also confirmed that these skilldifferences were integrally linked to differ-ences in productivity and in the capacity toproduce higher quality, more customized pro-duction. More highly trained engineers wereable to respond more flexibly to changesin markets, technologies, and supply chains(Mason & Wagner 2005). The poor qual-ity of training of office and retail workerscould help account for the chronic problemsof delivery delays in British industry (Prais &Wagner 1983). Higher average levels of work-force skills contributed to higher productiv-
ity through better maintenance of machinery,greater consistency of product quality, lowermanning levels, and greater workforce flexi-bility as a result of shorter learning time onnew jobs (Mason et al. 1992).
One may object that case studies do notcapture representative patterns; further, muchof the research relates to the 1980s. There isstill a scarcity of good evidence on compara-tive skill profiles across European societies.One of the more ambitious studies to datehas been the attempt by Aoyama and Castellsto provide standardized data for broad oc-cupational categories across the G7 coun-tries (Castells & Aoyama 1994, Aoyama &Castells 2002). The evidence they provideon the UK and Germany is particularly rel-evant to the discussion here. In their ini-tial analysis of occupational structures in thelate 1980s/early 1990s, some of the conclu-sions were consistent with the expectationsof production regime theory. They empha-sized the strong differentiation of the occu-pational structures of these similarly informa-tional societies. Germany was distinctive inthat it combined a strong growth of profes-sional and technical occupations while retain-ing a higher proportion of its workforce inhigher-level manual occupations than was thecase in the UK (or the United States). Japanis characterized as an info-industrial modelin which manufacturing retains a more cen-tral place in the production system. How-ever, their evidence fitted less well the expec-tation of the production regime thesis thatliberal market economies would be charac-terized by greater skill polarization. Althoughthe proportion of workers in the broad cate-gory of managerial-professional occupationswas higher in the UK than in Germany, therewas little difference in the proportions insemi- and unskilled occupations. The authorsconcluded that, while there was indeed sub-stantial variation in skill developments—withGermany (together with Japan) distinctivewith its larger skilled manual working class—there was little evidence of polarization in theAnglo-American economies.
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When Aoyama and Castells returned laterto examine changes across the 1990s, theyemphasized more strongly common trendsin social structural development—in partic-ular the strong growth in all countries ofthe professional-managerial-technical occu-pations. Although the more skilled manualworker categories retained a greater sharein Germany, their numbers had been re-morselessly reduced. Their evidence also nowpointed to some polarization of the occupa-tional structure. The decade had seen not onlya growth in the highly skilled sector of theworkforce but also an (albeit small) expansionof the semi- and nonskilled categories. This,however, was not distinctive to the liberal mar-ket economies, but rather applied to all of theadvanced economies.
As Aoyama and Castells themselves pointout, the problems of aligning national cen-sus and labor force statistics for compara-tive analyses of occupational structure areformidable, given major national differencesin occupational classification schemes. For thepurpose of production regime comparisons,their work also has the disadvantage of exclud-ing the Scandinavian countries. An alterna-tive approach is to look at comparative surveydata for which a common coding frameworkhas been used. Leiulfsrud et al. (2005) haveused the European Social Survey to provide acomparison between countries in the termsof EGP (Erikson-Goldthorpe-Portocarero)occupational class.
As can be seen in Table 1 (upper panel), theoccupational profile in Germany is distinc-tive in two principal ways. There is a higherproportion of upper than of lower routinenonmanual employees, and there is a higherproportion of skilled manual workers than ofsemi- and nonskilled manual workers. Thisbroad pattern is precisely what one wouldexpect from the arguments about diversifiedquality production and its implications forskill. Britain has a particularly high propor-tion of upper professionals and administra-tors, which is also consistent with the depic-tion of the liberal market regime, although
it may reflect persistent coding problems inBritish data, due in part to a proliferation ofmanagerial-type job titles (Elias & McKnight1999). But it is less clear that Britain has a lessskilled intermediate and manual workforcethan the Scandinavian countries. Althoughthe balance between skilled and nonskilledmanual workers is more even in the Scandi-navian countries, nonskilled workers still con-stitute the largest category, as is the case inBritain. Moreover, among routine nonmanualemployees, the relative size of the less skilledcategory to that of the skilled is greater inSweden than in Britain.
Overall, the contrast between the UK andGermany in the relative sizes of occupationalclasses broadly corresponds to the expecta-tions of the production regimes literature.However, when comparing the UK with theother coordinated market economies—theScandinavian countries—the notable point istheir similarity, with the exception of thesomewhat smaller proportion of skilled man-ual workers in the UK.
Problems of international comparison re-late not only to the consistency of classi-fication systems but also to differences injob content within similarly classified occupa-tional groups. However, the European SocialSurvey of 2004 provided one relevant mea-sure: the number of years of postcompulsoryeducation or training that would be requiredif a person were applying now for the jobthey were doing. The broad picture is givenby the proportions reporting that no addi-tional education or training would be required(Table 1, lower panel). These data confirmthe general picture given by the case studyevidence but also point to a lower skill pro-file in Britain within each occupational class incomparison with both Germany and the Scan-dinavian countries. It is particularly notice-able that Britain has an exceptionally poorlyqualified skilled manual and upper routinenonmanual workforce—very much confirm-ing the continuing validity of the picture pre-sented by the case study work of Prais and hiscolleagues.
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Table 1 Occupational class and skill levels
Denmark Finland Germany UK SwedenOccupational class (%)a
Higher professional-administrative 14.1 14.2 10.8 19.6 15.2Lower professional-administrative 22.7 22.2 22.1 17.9 27.7Upper routine nonmanual 11.6 7.1 19.4 12.7 9.2Lower routine nonmanual 14.4 12.4 10.2 17.2 17.2Self-employed 6.1 11.6 7.4 6.9 6.8Manual supervisors 4.0 1.8 4.3 3.8 2.9Skilled manual workers 12.3 14.7 13.3 8.8 10.1Semi- and nonskilled manual workers 14.8 16.0 12.4 13.1 11.0Employees in jobs for which no postcompulsory education or
aData for occupational class are from the European Social Survey 2003, derived from (Leiulfsrud et al. 2005, p. 47).bData on education and training requirements are from the European Social Survey 2005 (author’s own analyses).
The broad picture given by the “varietyof capitalism” literature of the differences ininitial training between the ideal-typical lib-eral market economy and coordinated marketeconomies seems well confirmed. But a morerecent turn in the debate has been to questionwhether such initial vocational training is asimportant as it once was for the skill needs ofthe modern workplace. By emphasizing oneparticular source of skill, an emphasis on ini-tial skills could give a misleading picture ofthe overall distribution of relevant skills. Tak-ing account of in-career training may providea much higher skill profile than would be in-dicated by measures based on initial trainingalone (Finegold & Wagner 1999).
These arguments have been developedforcibly by Herrigel & Sabel (1999). Althoughthe German craft-type skill-formation sys-tem certainly provided more flexibility thanTaylorism, it also contained important formsof rigidity that, Herrigel & Sabel suggest,made transition to the most effective types ofproduction organization that were developing
in the 1990s difficult to achieve. The Germansystem had the considerable benefit of reunit-ing conception and execution at the level ofthe individual workers, providing the type ofbroad skills that enabled workers to use theirinitiative to find solutions to new problemsand ensuring the high levels of motivation andlearning needed for high-quality manufactur-ing. But at the same time, the German sys-tem created rigid distinctions between typesof skill rooted in strong skill identities. Thiswas likely to slow down workers’ adaptation tomajor changes in work patterns and in partic-ular was inimical to the type of multi-skilledteamwork and collective problem solving thatwas needed in conditions of very rapid prod-uct and technological change. The authorspointed rather to the merits of the Japaneseand American systems of lean production, inwhich employees were recruited with rela-tively little specialized knowledge and with-out fixed occupational identities and in which“[a]pprenticeship is replaced by participationin collective problem solving on the shop
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Table 2 Vocational training: annual participation rates, average hours, and costa
aSources: Figures are for employees. Participation figures adapted from Ok & Tergeist (2003, p. 10). Data from the ECHP are for the economicallyactive, and data from ESWC and CVTS are for employees. Data on hours spent (private sector enterprises) are from Bainbridge et al. (2004, p. 109);data on the percentage of total labor costs spent on training in 1999 are from Bainbridge et al. (2004, p. 111).
floor” (Herrigel & Sabel 1999, p. 89). Thisrigidity in the German system in turn mighthelp explain the decline in the 1990s in theproportion of German firms that provided ap-prenticeship training and in the number of ap-prentices within those firms that did train.
The view that the pace of technical andorganizational change is accelerating in an in-creasingly competitive international economyalso underlies the increased attention given tothe provision by firms of continuing training.Arguably, continuing training is likely to beparticularly important for the quality of em-ployees’ work life, as it provides the opportu-nities for skill renewal that safeguard againstlabor market marginalization in the later ca-reer phase, when the skills acquired in ini-tial training have become outdated. The rel-ative position of countries in terms of initialand continuing training may be very differ-ent. Although estimates of continuing train-ing from different sources have to be han-dled with considerable care (Ok & Tergeist2003, Bainbridge et al. 2004), there are threemain comparative sources for the later 1990s:the European Community Household Panel(ECHP), the Third European Survey onWorking Conditions (ESWC), and the Con-tinuing Vocational Training Survey (CVTS)(a survey conducted in 1999 of establishmentswith at least 10 employees).
As can be seen in Table 2, the patternthat emerges is reasonably clear. The evidencepoints to a particularly high in-career trainingparticipation rate in the Scandinavian coun-
tries, but a low rate in Germany. In this re-spect, Britain has significant training provi-sion, closer to the Scandinavian countries thanto Germany.
Evidence about participation rates clearlymust be treated with caution, as it does notaddress the issue of the quality of training re-ceived. There is still little reliable evidenceon this, but a survey of employers by theEuropean Center for the Development of Vo-cational Training gives information on theaverage hours spent per trainee (Bainbridgeet al. 2004). These data modify the picture forBritain in that average hours are relatively low(Table 2). Another estimate, using represen-tative surveys of employees in the EuropeanUnion in 1996 and 2001, concluded thatthere was little overall difference in continu-ing training intensity (taking account of bothparticipation and duration) between Britainand Germany, whereas Denmark, Sweden,and Finland had the strongest in-career train-ing provision of any of the EU-15 countries(Gallie & Paugam 2003). Differences betweenGermany and Britain on the one hand and theScandinavian countries on the other remainedhighly significant even when differences in oc-cupational class, industrial structure, and es-tablishment size had been controlled. Tak-ing account of quality, the main distinctionthen appeared to be between the Scandina-vian countries on the one hand and Britainand Germany on the other.
Finally, some of the contributors to theproduction regime approach have themselves
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come to highlight a major qualification to thevery general nature of the original argument(Estevez-Abe 2005, Soskice 2005). It was al-most entirely gender blind—assuming thatdifferent types of skill regime were equallybeneficial or negative for men and womenalike. But, as Estevez-Abe (2005) has argued,the emphasis on specific skills in the coor-dinated market economies may be primar-ily beneficial for men, while making women’sentry into private sector jobs, particularlyhigher-level jobs, considerably more difficultthan in liberal market economies. This re-flects the greater difficulty and lower incen-tives for women to acquire specific skills com-pared with general skills, given the likelihoodof career interruptions and a higher risk ofstatistical discrimination by employers reluc-tant to train employees who they think mayhave extended periods away from work. Theimplications of this for women’s labor marketparticipation, however, differ fundamentallybetween the Scandinavian countries and othercoordinated market economies. In the former,the state has taken an active role in expand-ing public sector employment, which providesgood employment opportunities for women(albeit at the cost of very marked sex segrega-tion in employment) and a level of child careprovision that makes it possible for womento take up such jobs. In contrast, in a countrysuch as Germany, the lack of private sector op-portunities is reflected in relatively low levelsof female participation in the labor market.
In short, although the so-called coordi-nated economies do share a strong empha-sis on initial vocational training, they differsharply with respect to continuing training,and any simple distinction between a lowtraining liberal market model and a high train-ing coordinated model must be treated withcaution. Only the Scandinavian countries canbe unambivalently classified as correspond-ing to a high training model on both criteria.Moreover, even with respect to initial voca-tional training, an emphasis on specific skillsappears to have very different implications forwomen’s labor market chances in a way that
cannot be easily accounted for without bring-ing in quite different explanatory factors thanthose that informed the original theory, in par-ticular the role of state policy.
AUTONOMY, TASK QUALITY,AND TEAMWORK
The coordinated market economies are pre-sumed to be associated with high degrees ofindividual employee control over the worktask, more developed teamwork, and job tasksthat provide greater variety and opportunitiesfor self-development.
It is a common assumption that the au-tonomy or task discretion of employees isprimarily determined by technological leveland hence should be similar across societieswith comparable levels of economic develop-ment. But cross-national case studies indicatethat employees in similar work settings canbe subject to very different forms of man-agerial control (Gallie 1978, Maurice et al.1986, Lincoln & Kalleberg 1990). How fardo such differences reflect the broader dis-tinction between coordinated and liberal mar-ket economies? Dobbin & Boychuk (1999),drawing on cross-national survey data fromthe 1980s, showed that there were very cleardifferences in job autonomy between employ-ees in the Scandinavian countries (Denmark,Finland, Norway, and Sweden) and those inthe liberal-oriented countries of Australia,Canada, and the United States. The pattern ofwidespread opportunities in the Scandinaviancountries for the use of individual employeediscretion at work is also confirmed by sur-veys of managers (Frohlich & Pekruhl 1996).In terms not dissimilar from those of the pro-duction regimes thesis, Dobbin & Boychuk(1999) suggest that national employment sys-tems (regulating management, training, bar-gaining, and unemployment) operate accord-ing to different logics. They may be primarilyoriented to skill-governed work, and in thesecases autonomy will be high, or they may beoriented to rule-governed work, in which casejob autonomy will be low.
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Table 3 Employee task discretion, union density, and perceived influence over work organizationa
aSources: Data for task discretion are from Gallie (2007) and the European Foundation’s ESWC, 1995 and 2000. Data on union density are fromVisser (2006). Perceived organizational influence is based on Eurobarometer 44.3. The task discretion index is based on average scores across thethree items. Influence over work organization refers to those reporting a great deal or quite a lot of influence. With the exception of union density,data for the UK refer to British employees. (n.d. = no data.)
But is this pattern primarily characteristicof the Scandinavian countries or of the co-ordinated market economies more generally?Analyses for the 1990s allow a comparison be-tween the Scandinavian countries (excludingNorway), Germany, and Britain. The ESWCconducted in 1995 and 2000 asked representa-tive samples of employees in all the EU mem-ber states: “Are you able, or not, to choose orchange 1) your order of tasks; 2) your methodsof work and 3) your speed or rate of work?”Aggregating the results of the two years toprovide a robust estimate of country differ-ences, one can see in Table 3 that employeesin Denmark, Finland, and Sweden were wellabove the overall EU mean on the index oftask discretion (Gallie 2007). But in sharp con-trast German employees had markedly lowerlevels of autonomy and were below the EUmean. Even more worrying for the view ofproduction regime differences is that Britishemployees had a level of control over theirjob tasks that was notably higher than that ofGerman employees.
Doubt as to whether it is sensible to groupGerman employees with those from the Scan-dinavian countries in terms of the quality ofjob tasks is reinforced by broader indicatorsof job task quality. Analyses of surveys com-missioned by the European Union in 1996(Gallie 2003) and 2001 (Gallie & Paugam2003) included a measure of job quality that
took account both of people’s sense of con-trol at work and of their reports of the vari-ety of their work and the opportunities thework task provided for new learning. Again,in both years, Denmark, Finland, and Swedenstood out as having very high levels of jobtask quality. In contrast, Germany was be-low average. Although well below the Scan-dinavian countries, job quality in Britain washigher than in Germany in 1996 and not sig-nificantly different from Germany in 2001.This pattern is found both for the job con-trol and the variety/new learning items. Thecontrast between Germany and the Scan-dinavian countries remained even after awide range of structural variables had beencontrolled.
Finally, coordinated market economies areheld by production regimes theory to be char-acterized by a particularly marked develop-ment of autonomous teamworking. Certainly,there is an extensive literature about the re-sources put into developing teamwork by theexemplar Scandinavian countries of Swedenand Norway (Gustavsen 1983, Gyllenhammar1987, Brulin 1995, Gustavsen et al. 1996).But in their overview of national literatures,Frohlich & Pekruhl (1996) underline the verylimited development of autonomous workgroups in Germany, involving little more thanbetween 2.2% and 3.9% of the employedworkforce.
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An explanation for this can be found in theargument by Herrigel & Sabel (1999) that thecraft skill tradition of Germany led to strongoccupational identities that reinforced dis-tinctions between types of skills and discour-aged teamwork. This argument is supportedby evidence from matched plant comparisonsof 36 industrial machinery manufacturers inthe United States and Germany (Finegold &Wagner 1999). The German plants with thehighest concentrations of skilled workers hadbeen the slowest to adopt multi-functionalteams. Whereas in the United States thehigher the proportion of skilled workers, thegreater was the prevalence of teamwork, inGermany the reverse was true, and teamworkwas more common in establishments withrelatively low proportions of skilled work-ers. German skilled workers were more likelyto resist moves to multi-functional teams, asthese threatened the specialized sets of skillsthat were an essential part of their identity. Acomparative study of 17 assembly plants fromthree automobile companies in the UnitedStates, the UK, and Germany ( Jurgens et al.1993) provides a broadly similar picture. Al-though hostility to new patterns of work teamparticipation was greatest in Britain, wherethe shop stewards effectively vetoed any suchdevelopment, workers in the German estab-lishments also showed much greater reluc-tance to adopt such practices than their equiv-alents in the United States. Skilled workerswere resistant to new forms of teamworkbecause they might involve them in havingto carry out tasks beneath their skill level.This was reinforced by management’s worriesabout loss of authority to work teams and bya concern on the part of the works councilsthat their own role might be undermined bythe creation of new participatory groups.
REPRESENTATION,PARTICIPATION, ANDCOMMITMENT
A vital factor that is expected to enhancethe quality of working conditions and con-
sequent motivation of employees in coordi-nated economies is that decision making at thecompany and workplace levels will be basedon consensus rather than on unilateral man-agement control. This partly reflects the ex-istence of effective institutions of workplacerepresentation, whether local union sectionsor works councils.
An important distinction between theScandinavian countries and Germany is thatunion organizations are the dominant formof workplace representation in the Scandina-vian countries, whereas works councils (whichare formally separate from the unions) havethe major role in Germany (Brulin 1995,Muller-Jentsch 1995, Kjellberg 1998). Buteven in Germany, the strength of workplaceunionism is of considerable importance forthe effectiveness with which works coun-cils can function and their ability to remainindependent from the employer (Klikauer2004).
In general, one can assume that the in-fluence of the unions at workplace levelwill be strongly related to the strength ofunion membership. But union density variessharply between the Scandinavian countriesand Germany. A recent comparative assess-ment of union membership (Visser 2006) thatadjusts for variations in membership crite-ria (by taking out of the count those whohave not paid, the retired, the unemployed,and the self-employed) shows that member-ship was exceptionally high in the Scandina-vian countries, where more than 70% of em-ployees were union members (see Table 3).In contrast, density levels were even lower inGermany (22.6%) than in the UK (29.3%).In short, although German unions still canexercise significant (if declining) influencein sectoral-level wage bargaining, their shopfloor strength is limited both legally and interms of membership. As Addison et al. (2006,p. 2) comment in their analysis of the parlousstate of the German unions, it “is now mootwhether union density fast approaching 20%is consistent with the corporatist model re-quiring encompassing unions.”
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Despite the suggestion of a convergencewithin the group of coordinated economies,this difference between the Scandinaviancountries and Germany has been growinggreater over time. As Visser (2006) has shown,between 1970 and 2003 union density in-creased by 22.8 percentage points in Finland,10.3 in Sweden, and 10.1 in Denmark, and al-though there had been a decline in Norway,this was relatively modest (–3.5). In contrastin Germany, the period saw a marked declinein union strength (–9.5%).
A final point to note is that the ratio of menand women union members is rather differentin the Scandinavian countries compared withGermany. Analyses of national data sets showthat women were more likely to be union-ized than men in Denmark (78% versus 73%),Finland (75% versus 69%), and Sweden (90%versus 83%), while they had similar unioniza-tion levels in Norway (58% for women, 57%for men). In contrast, in Germany men weremore likely to be union members than women(30% of men, but only 17% of women) (Visser2003). Not only, then, is the strength ofunions at the workplace level much weakerin Germany, but it is more strongly ori-ented to the defense of the interests of maleemployees.
The main factor influencing whetherGerman employees are represented in theworkplace is the effectiveness of the workscouncil system. German works councilscertainly have significant codeterminationrights—for instance with respect to workinghours, principles of pay, overtime, holidays,and health and safety. In principle, this shouldprovide rather comprehensive representationfor employees because works councils can beset up in any establishment with five or morepermanent employees. Moreover, proceduresfor implementing the legislation are relativelystraightforward (Addison et al. 2002). Overtime, the powers of works councils havebeen extended to enhance their control overchanges in work organization. Significantlegislation was passed in 2001 to facilitate thecoverage of works council representation.
There is a notable absence of official statis-tics on works councils, and the best estimateshave to be drawn from establishment sur-veys. These surveys suggest that the num-ber and coverage of works councils declinedin the 1980s and again after 2000 (Addisonet al. 2006). Using the IAB (Institute forEmployment Research) panel data, Addisonet al. (2002) found that the prevalence ofworks councils had become highly restrictedby the end of the 1990s. Only 16% of eligi-ble establishments had a works council (andin the private sector only 12.3%). Whetheror not establishments had works councilswas strongly related to organizational size(the conventional picture of representationfor Germany is one predominantly of largerestablishments). As a consequence, coveragerates for employees are higher than might besuggested by figures on prevalence in estab-lishments. Nonetheless, taking the workforceas a whole, only just over half of all Germanworkers (53%) have access to works councilrepresentation (and only 46% of those in theprivate sector).
Overall, the German works council sys-tem is unlikely to provide the level of work-place representation for employees availablethrough the high prevalence of union influ-ence in the Scandinavian countries. The pic-ture that emerges for Germany is rather one ofa segmented work force, in which employeesin medium or smaller firms have little rep-resentation in the workplace through eitherunions or works councils.
A different way of examining this is to lookat evidence about employees’ own perceptionsof their ability to influence decisions abouttheir work conditions (Gallie 2003). An EU-wide survey carried out in 1996, focusing onthe work environment and social inclusion,included the question: “Suppose there was tobe some decision made at your place of workthat changed the way you do your job. Doyou think that you personally would have anysay in the decision about the change or not?”As can be seen in the last column of Table 3,employees in the Scandinavian countries were
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much more likely to report that they had agreat deal or quite a lot of influence over workorganization than those in either Germany orBritain—indeed, they had the highest levelsof reported influence in the EU-15. What isparticularly striking, however, is not just thedegree of difference between countries withcoordinated regimes, but that employees inGermany felt even less control over their workenvironment than those in Britain. This con-flicts rather sharply with the expectations ofproduction regime theory.
In the production regime thesis, the em-phasis on the effectiveness of employee rep-resentation was premised on the view thatrepresentation was a prerequisite to ensuringcooperative and consensus-based company-level industrial relations. This would implythat employees feel a greater commitment totheir organizations in the coordinated mar-ket economies. There are very few stud-ies that have tried to measure directly suchcommitment across countries. But Hult &Svallfors (2002) have used survey data from1997 that includes a contrast between Britainand the United States as examples of lib-eral market economies and Sweden, Norway,and Germany as representatives of the co-ordinated market economies. An interest-ing initial finding is in relation to commit-ment to employment as such. As predicted,this was highest in Norway and Swedenand lowest in Britain. But in Germany em-ployment commitment was markedly lowerthan in the Scandinavian countries and in-deed little different from that in the UnitedStates. This confirms other evidence that haspointed to high employment commitmentin the Scandinavian countries but relativelylow commitment in Germany, particularly inwestern Germany (Gallie & Alm 2000). How-ever, the most striking finding by Hult &Svallfors (2002) is that organizational com-mitment is little different in any of the coor-dinated market economies than in Britain and,indeed, is lower than in the United States. Inshort, although there might be some supportfor the view that institutional factors encour-
age broader commitment to employment inthe Scandinavian countries, there is no evi-dence that they are conducive to either formof commitment in Germany.
JOB SECURITY AND THEWELFARE SAFETY NET
Job security was depicted as lying at the heartof the employment relationship characteris-tic of coordinated market economies, as it iscrucial both to skill development and to moti-vation. The notion of job security is complex,and a range of indicators have been proposedto capture it.
Perhaps the most commonly cited measureis that of average job tenure (OECD 1997).In the light of the production regimes thesis,coordinated economies should be character-ized by longer job tenures than liberal mar-ket economies. In their assessment of coun-try differences in job tenure, Auer & Cazes(2003) showed that Sweden is indeed distin-guished by exceptionally long tenure. Com-pared with other EU countries, it is high interms of average years of tenure, lower thanthe average in the proportion of employeeswho have been in their jobs for less than ayear, and above average for those who havebeen employed in the same job for 10 yearsor more. Finland and Germany are very closeto the EU average, with the exception thatGermany has a particularly low proportionwith very short tenure. All three countries,however, display considerably higher job du-rations than the UK. But no simple conclu-sion about the differences between coordi-nated and liberal market economies can bedrawn, because Denmark has a pattern of rel-atively low job durations very similar to that ofthe UK. The nature of employment protec-tion regulation clearly has an important effecton job durations, and this can be independentof the broader regime type. With its emphasison “flexicurity,” Denmark allows employerspowers of hiring and firing that provide levelsof job mobility close to those of the exemplarcases of a liberal market economy (Kongshoj
aSource: The score for perceived job security are from Eurobaromer 56.1 (author’s own analyses). Unemployment rates are from Employment inEurope 2005 (Eur. Comm. 2005).
Madsen 2003). Long job tenure thus appearsnot to be an inherent characteristic of coordi-nated market economies.
Taking job tenure as a measure of job secu-rity has the evident problem that it confoundsvoluntary with constrained quits. It is notablethat measures of tenure relate poorly to mea-sures of subjective job security (OECD 1997).Evidence from surveys carried out in 1996and 2001 shows that people’s perceived riskof dismissal for inadequate work performancewas very similar in Germany and Britain,whereas Danish, Finnish, and Swedish em-ployees had significantly higher levels of jobsecurity (Gallie & Paugam 2003). In terms ofself-reported job security, German employeesranked not only well below their Scandinaviancolleagues, but even somewhat below employ-ees in Britain (Table 4, column 1). Consistentwith other evidence (Kongshoj Madsen 2003),Danish employees had the highest subjectivejob security of workers in any of these coun-tries, despite the relatively weak constraintson employers’ rights to hire and fire.
One factor that is likely to affect percep-tions of job security is the level of, and trendsin, unemployment. A notable difference be-tween Germany on the one hand and boththe Scandinavian countries and the UK onthe other was the trend in unemploymentfrom the early 1990s (Table 4, columns 2–4).Between 1993 and 2004, Britain and the Scan-dinavian countries saw a marked decline inunemployment, whereas unemployment re-mained stably high in Germany between 1993and 2000 and even rose in the period 2000
to 2004 (Eur. Comm. 2005). The picture issimilar for long-term unemployment rates(12 months or more). Of the five countries,only Germany experienced an increase ratherthan a decrease in long-term unemploymentbetween 1993 and 2004, and in the period2000–2004 it had a long-term unemploymentrate twice that of the other countries.
The exceptionally high level of securityexperienced by workers in the Scandinaviancountries is also likely to be linked to thenature of welfare arrangements. Employeescould be expected to be less concerned aboutsecurity where there is a strong safety netto protect their income levels. Some writ-ers within the production regimes perspec-tive anticipate a strong relationship betweenthe industry-specific skill-formation systemsof the coordinated market economies and theexistence of strong welfare safety nets to pro-tect employees against the costs of unem-ployment (Estevez-Abe et al. 2001, Iversen &Soskice 2001). However, types of productionregime do not map easily onto types of welfarestate. The principles underlying unemploy-ment protection are fundamentally differentin Germany and the Scandinavian countries(Esping-Andersen 1990, Gallie & Paugam2000). Empirical analyses of the financial con-sequences of unemployment under differentwelfare regimes certainly confirm that the un-employed in Britain have higher poverty risksthan those in either Germany or the Scandi-navian countries. But equally they show thatthere is a great difference between Germanyand the Scandinavian countries in the efficacy
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of the unemployment safety net. Hauser et al.(2000) have shown that whereas 49% ofthe British unemployed and 41.7% of theGerman were in poverty in the mid-1990s,this was the case for only 30% in Sweden and7.6% in Denmark.
As Nolan et al. (2000) have shown, thesedifferences are to a considerable extent at-tributable to the relative generosity of welfaretransfers. Whereas the Scandinavian unem-ployment benefits systems are universalisticin nature, the German system is primarilygeared to the protection of those with rela-tively extended employment experience whohave been able to accumulate good insurancecover as a result of long contribution peri-ods. The German unemployed are therebysegmented between a relatively highly pro-tected group who benefit from unemploy-ment insurance (approximately half of the un-employed) and a much more disadvantagedgroup of those who have access only to means-tested benefits (McGinnity 2004). For a sub-stantial part of the German workforce, loss ofwork is likely to entail very severe reductionsin living standards. Overall, Korpi (2006) issurely correct that the attempt to explain thenature of welfare systems in terms of produc-tion regimes is unconvincing.
CONCLUSIONS
An important claim of production regime the-ory is that there are major differences in thequality of work between coordinated and lib-eral market economies, with the coordinatedmarket economies favoring higher skill lev-els, greater individual job autonomy, a greaterextension of teamwork, better workplace rep-resentation leading to consensual decisionmaking, and higher job security. The aimof this review is to examine how far thesearguments are supported by the much bet-ter empirical data that have become avail-able for comparing employment conditionsand employee experiences of work. The anal-ysis has focused on five European countriesthat represent in relatively pure form the dif-
ferent types of regime—Denmark, Finland,Germany, and Sweden for the coordinatedmarket economies and Britain for the liberalmarket economies.
In general, the view that there are sig-nificant differences in skill structure is wellconfirmed. With respect to the distribu-tion of employees between skill classes, thestriking difference—which is supported byquite diverse sources of evidence—is betweenBritain and Germany. The differences be-tween the Scandinavian countries and Britainare smaller, but skilled workers do representa higher proportion of all manual employ-ees in the Scandinavian countries. An evenmore notable difference, however, is in therelative quality of skills, taking as a measurethe length of full-time education or trainingrequired to enter jobs. At each occupationallevel, the British workforce is considerablyless skilled in these terms than that of eitherGermany or the Scandinavian countries. Animportant qualification, however, is that thisdoes not take account of upskilling that mayresult from in-career training, a factor thatmay be increasingly important in an era ofrapid technical change. The real divide withrespect to employer continuing training is be-tween the Scandinavian countries, which haveparticularly strong provision, and Britain andGermany, which have much weaker provision.
Although the broad pattern of skill differ-ences corresponds reasonably well to the ar-guments of production regime theory, the evi-dence does not confirm the other claims aboutwork and employment conditions. Rather,the major distinction between countries ap-pears to be between the Scandinavian coun-tries on the one hand and Germany andBritain on the other. Denmark, Finland, andSweden stand out as having exceptionally highlevels of individual task discretion, job vari-ety, and opportunities for self-development inthe job. The evidence on teamwork is morelimited, but generally it points to high lev-els of teamwork in Sweden but a more lim-ited development in Germany, where it con-flicts with strong craft identities. Employee
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workplace representation in the Scandina-vian countries, with their high levels of uniondensity, was clearly much stronger than inGermany, where the limited (and declining)coverage of works councils could not compen-sate for weak trade unions that were formallyexcluded from much workplace activity. It isnotable that, while the highest levels of work-place influence were reported in the Scandi-navian countries, German employees felt thatthey had even less say over workplace deci-sions than employees in Britain. Finally, whileScandinavian employees had high levels of jobsecurity, whether in terms of self-report mea-sures or unemployment rates, German em-ployees felt less secure than those in Britain,and this plausibly reflected the much higherrisks of unemployment, combined with a wel-fare system that provided a substantial part ofthe workforce with poor protection from therisk of poverty when unemployed.
Production regime theory makes a widerange of predictions about different aspectsof economic organization, and its empiricalweakness with respect to the issues that havebeen examined here does not necessarily un-dermine its usefulness with respect to others.But, given the argument’s emphasis on institu-tional interdependence, the inadequacy of itsassumptions about work quality and employ-ment conditions is problematic. Central to theargument is the view that the high-quality butflexible work systems that are held to providethe competitive advantage of the coordinatedmarket economies require a highly motivatedwork force. But the absence in Germany of theprincipal mechanisms that were supposed toensure such motivation raises questions aboutthe plausibility of the account of the produc-tion system in that society, or at least of itslonger-term sustainability. A new interpreta-tion is needed that, hopefully, will cast lightnot only on the past successes of the Germaneconomy, but also on its sluggish growth overthe past decade and its relatively high unem-ployment rate.
Further, the empirical pattern of differ-ences between countries in work and employ-
ment conditions highlights deficiencies in thebroader theoretical account of social structurethat underpins the argument. One of the fac-tors that doubtless led to considerable interestin the production regime thesis is that it pro-vided strong advocacy of a neo-institutionalistview of societal development. But it did so bytaking as its point of departure the role ofemployers in shaping institutional structure,albeit in the context of historically derivedconditions. In particular, a privileged place isgiven to employers’ decisions about systemsof skill formation. But the distinctive natureof the Scandinavian countries, and their dif-ference from Germany, points rather to thecapacity of governments and organized laborto constrain the actions of employers in theinterest of improving the quality of work lifeof employees.
Although there are strong grounds foraccepting the neo-institutionalist view thatthere are marked and persisting differencesin social processes between societies, the con-trast between Germany and the Scandinaviancountries suggests that the earlier “power re-source framework” provides a more convinc-ing explanation of differences of institutionalstructure than one focused predominantly onemployer preferences. These patterns accordwell with what is known about the policy im-portance given to quality of work programs inthe different countries, a factor that in turn islikely to reflect the influence in governmentof social-democratic parties and the strengthof organized labor.
A further advantage of a power resourcesapproach over a perspective that views so-cieties as instances of distinctive types withstable, mutually reinforcing systems of socialrelations is that it is more readily applicableto a wide range of societies and to the analysisof change over time. The current categoriesof production regime theory are easily appli-cable to only a limited number of Europeansocieties, and the location of others is a mat-ter of much debate. A theory premised on thecausal efficacy of the relative power resourcesof employers and organized labor, and the way
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this is mediated by state policy, avoids theboundary problems of strong classificatorytypes and is perhaps better placed to cast light
on major shifts in patterns of social relations—as occurred notably in the UK in the1980s.
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