Business and welfare

Industrial Relations research argues increasingly that, although necessary in order for business to be effective in fostering its policy agenda, collective action among companies cannot be taken for granted and, at the same time, there is not much academic writing on the manner in which this cooperation occurs. Compared to the 1990s, the landscape of European business structure (and interests) is increasingly diversified around Europe and needs, preferences and profiles of companies are quite different. Deindustrialization and technological change reduce firms’ need for specific skilled workers, whilst the labour market is increasingly polarized/dualized between workers in highly productive (often export-oriented) and low productivity (often offering services for the internal market) industries. This increasingly complicated and heterogeneous economic environment makes it harder for companies to act collectively. Moreover, employer associations are hit worse by these economic changes than other actors, as companies are much more empowered to respond to these variations independently instead as through associational action. 

It follows that among the theories related to the role of business towards the welfare state, we have to shift our attention from the Power Resources approach to other theories. We have therefore decided to adopt here as a starting point a mix of theories based on the varieties of capitalism (VoC), within-business cleavages and the national institutional context. In particular, VoC is useful for its reference to employers’ interest on skills’ formation and retention, whereas Factions of Capital theories focus on cleavages within the business community (in terms of size, needs of skills, exposure to international trade, sector innovation, etc.) determining firms’ and clusters of firms’ preferences, as well as theories which focus on labour market coordination mechanism, institutions related to policy making process, forms and rules of interest representation provide useful insights to describe and explain the role of business in welfare state politics.