The Effect of Globalisation on Labour Market Institutions in Europe

Is there a significant deregulation? What are its effects?
This article aims at participating in the discussion about the effects of globalization on labour market institutions. Most surveys show that globalisation brings about a greater flexibility in the organization of labour, higher wage dispersion and social dumping. According to these surveys, globalisation has two basic outcomes. First of all, it sharpens the risk of layoff for the low-skilled workers, as labour market requires more qualified employees and product and process innovations, in order to face the world competition. Second, globalisation provokes a huge institutional change in the labour market. Namely, the increased capital mobility sparks off a re-allocation of resources, amplified by the trade integration, towards countries where Trade Unions are less powerful and taxation is lower. Actually, shareholders may decide where to invest and where to locate firms; therefore they have gained a strong bargaining power: policy makers may mitigate the threat of relocation or instead encourage labour market deregulation in order to avoid capital flight. Applying the approach known as “Grounded Theory” we analyse ad hoc data, in order to find out whether or not key changes in the labour market institutions have taken place. In addition, we aim at finding out which is the role of institutional context in shaping the reform of the labour market. Finally, some policy suggestions are provided