Alexander Hijzen, Pedro Martins, and Jante Parlevliet
INTERNATIONAL MONETARY FUND
Since the global financial crisis, sector-level bargaining has come under renewed scrutiny.
While in Southern Europe, the crisis raised concerns about the role of collective
bargaining as an obstacle to labor market adjustment, in Northern Europe it was perceived
more favourably and, according to some, may even have helped to weather the fallout of
the crisis more easily. This paper seeks to contribute to a deeper understanding of
sector-level bargaining systems and their role for labor market performance. We compare
two countries with seemingly similar collective bargaining systems, the Netherlands and
Portugal, and document a number of features that may affect labor market outcomes,
including: i) the scope for flexibility at the firm or worker level within sector-level
agreements; ii) the emphasis on representativeness as a criterion for extensions; iii) the
effectiveness of coordination across bargaining units; and iv) pro-active government
policies to enhance trust and cooperation between the social partners.