Social Pacts

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It is difficult to define precisely the concept of 'social pact' as it is rooted in the political, economic, social and industrial relations culture of the specific country. Social pacts vary significantly in form, content and outcomes from country to country and over time. However, there are some characteristics that are common to social pacts and which distinguish them from collective bargaining and collective agreements. First, the state or public authorities - at national, regional or local level - are actors alongside employers' and workers' organisations. In some cases, other actors, such as NGOs, can also be involved. Second, the focus is usually on macroeconomic and social policy related issues rather than terms and conditions of employment which are the domain of collective bargaining between employers' and workers' representatives. Third, social pacts usually represent a consensus between the actors on the main directions of economic and social policy.

There is no standard format of social pacts. Indeed, at one end of the spectrum, one can find social pacts that are just a memorandum or a declaration of intent. At the other end, some social pacts list details of policy measures and methods to tackle social and economic problems faced by a country.

Social pacts have been effective in some countries in reconciling different interests particularly when a country is facing major economic and social challenges. For example, many member states of the European Union agreed social pacts during the 1990s when they had to prepare for the introduction of the single currency (EURO). In a number of central and eastern European countries, social pacts were agreed to deal with specific aspects of the transition from a planned to a market economy. There are also some examples of social pacts in Asian, Central and Latin American as well as African countries which were agreed when these countries were facing challenges arising from financial crises, structural adjustment programmes etc. Social pacts have been used effectively to manage social and economic problems in a way which balances the social and economic dimensions. They can be an important opportunity for more intensive involvement of employers' and workers' organisations in public policy processes.