Institute for Research on Labor and Employment

In the quest for economic growth, rich democracies’ governments have embraced the goal of creating labor market flexibility. To that end, they have pursued simultaneous changes in the three main institutional realms structuring modern welfare capitalism – the industrial relations system, the set of labor market regulations and the welfare state. While commonly framed as the removal of workers’ social protections, the politics of labor market adjustment continue to differ in unexpected ways across diverse national contexts. This paper introduces the analytical tools for a comparative analysis of the quest for labor market flexibility in the United Kingdom, Germany and Denmark. Among a set of alternative perspectives on national variation during the last three decades, the paper stresses the importance of inherited institutional arrangements for social protection. Systems built around occupational status preservation tend to block measures that could increase labor market flexibility, while those offering universal provisions based on citizenship can help achieve flexibility in the labor market. This perspective puts into question the dominant frame of associating the achievement of labor flexibility with the removal of social protections. It indicates that – even in today’s post-Keynesian world – social protection does not have to be economically harmful. If substantiated by further research, these findings have obvious implications for the United States, another rich democracy.