Party politics and the reemergence of social pacts in Western Europe

Conventional accounts of the reemergence of social pacts in Western Europe argue they are a governmental response to economic pressures, in particular the requirements for joining the European Monetary Union (EMU). The authors analyze three case studies-the Netherlands, Ireland, and Austria-to illustrate the usefulness of an alternative explanation centering on electoral calculations by political parties in choosing pacts. Parties forge social pacts not only to deal with economic problems but also when they perceive them to be helpful in reducing the potential electoral costs of economic adjustment and wage policies. Alternatively, parties may forgo negotiations with social partners for electoral gain. The authors extend the analysis to seven additional countries to apply the analysis more broadly. By combining the separate literatures on political economy and party politics, they are able to shed new light on the dynamics of social pacts in Western Europe.