Social pacts at the national level in European countries

Social pacts are an outcome of successful social dialogue. Social dialogue at the national level is dialogue among representatives of governments, employers and workers, on issues of common interest relating to economic and social policy. In some countries, such dialogue includes other interested parties, such as churches, representatives of farmers and of civil society. It includes all types of information sharing, consultation, negotiation and concertation (joint decision making). Social pacts deliver consensus, after the parties have examined the trade-offs and reconciled different interests through social dialogue.

Social dialogue at national level has been widely practised in many European countries after the Second World War. Many countries have agreed on tripartite or bipartite income policy agreements, which are conceptually synonymous with social pacts. Social pacts per se are, hence, not a new phenomenon. Among the European Union Member States, however, social dialogue on national economic and social policies has evolved in a new direction in the past two decades. Social dialogue became an important instrument in dealing with the economic and social challenges of globalisation, economic integration and the preparation for the introduction of the single currency (EURO). In the late 1990s, following the transition to European Monetary Union, the focus of social dialogue was broadened towards devising more general strategies to enhance economic competitiveness and social justice.

Presented here are summaries of social pacts, mainly concluded in the 1990s in selected Western European countries. Only those countries where more than one social pact was concluded are covered. For each country, there is an introductory page describing briefly the background and characteristics of the social pacts, with links to summaries and texts.

Social pacts in Europe: Common characteristics

The social pacts presented here take many different forms and have different content. However, there are some common features:

• substantial involvement and sharing of responsibility of social partners and (sometimes) government in negotiation and decision making processes with the involvement of government differing from country to country (see below);
• agreements cover a wide range of social and economic issues and contain major trade-offs in policy issues e.g. wage restraint in return for job retention/creation, reflecting the bargaining process among social partners with different interests.

The countries covered here have different forms of social dialogue reflecting their traditional systems of policy concertation or industrial relations. Hence the mechanisms and processes of social dialogue resulting in social pacts are unique for each country. The involvement of government in the negotiation of social pacts varies from country to country. The following three types of social pacts can be identified:

• Tripartite: In Ireland, Italy and Portugal, the government is heavily involved in the negotiation, signing, launching and sometimes the follow-up of social pacts.
• Bipartite: in the Netherlands and Finland, signatory parties of social pacts are normally bipartite between the peak organisations of social partners. However, in Finland, the government’s involvement in social pacts is more substantive than in the Netherlands. For example, the representatives of government take part in the negotiations. Sometimes the agreements were concluded with the support of or pressure from the government, with the government undertaking to implement necessary measures set out in the agreements. In the Netherlands, formal social pacts are generally agreed between social partners with the support of the government. Upon reaching agreement, the government issues an informal or a formal statement to support social pacts and undertake necessary measures, including the enactment of specific legislation.

The mixed mode: this is the case of Spain where the majority of social pacts are agreed between peak workers’ and employers’ organisations (interconfederal agreements). As in the case of Finland and the Netherlands, the government supports the agreements through necessary policy measures. There are, however, other significant agreements reached with the direct involvement of government. For example, the Agreement on the Rationalisation of the System of Social Security and the Agreement on Part-Time Employment Contracts agreed to by the government and workers’ organisations.

In all three cases, there is formal or informal involvement of all three parties, the government and workers’ and employers’ organisations, in the process of negotiating, implementing and managing social pacts.