How research is integrated in policy decisions on labour market reforms

By Professor Bernd Brandl from Issue 15

The framework within which employees and employers operate is fundamental to the success of companies, industries and entire economies. Some of these framework conditions, such as the current global challenges from the economic and political crises, are largely given to companies, employees and policymakers, but others can be influenced and shaped to enable improvements. Such changeable framework conditions also include the legal and organisational regulations concerning the labour market. These include, among other things, regulations regarding wages and working conditions, as these not only strongly influence the life of workers but also have a direct impact on the success, i.e. the productivity and competitiveness, of companies, industries and economies. 

Given that labour market regulations and labour market policy measures can be changed and controlled, research is needed to ensure that the right and best regulations are designed.  

I’ve been working for more than two decades on the topic of defining and shaping labour market frameworks, such as in particular collective bargaining systems to optimise the interests of both employees and employers equally. This research includes, for example, how the interaction between management and employees should be structured and organised so that wages and working conditions can be best set. Specifically, how should wages and working conditions be regulated (or not) so that companies can prosper and increase their competitiveness, and employees are fairly compensated for their efforts and performance. My research also includes how labour market frameworks should be designed to increase the productivity of companies and make them technological innovators via vocational training and upskilling programmes. 

My research is therefore of practical relevance and attracts the interest of companies as well as of policymakers, including governments around the world and international organisations such as the International Labour Organization (ILO), the United Nations (UN), the European Commission (EC), and the Organisation for Economic Co-operation and Development (OECD). 

For this reason, I’m frequently consulted and invited by policymakers and governments when labour market reforms are being implemented in countries around the world. Past invitations to high-level policymakers’ meetings were in context of the implementation or revocation of policies suggested by the Troika in some European countries after the economic crisis of 2008 and 2009, as well as on the design and implementation of various European Union (EU) directives and policy strategies in the past and recently on the EU Minimum Wage Directive.   

Recently, I participated in highly policy-relevant meetings and discussions with the ILO and representatives of the Chilean government and administration on a labour market reform that’s centred by a reform of collective bargaining and the system of how trade unions and employers are organised in Chile. With the aim to increase the competitiveness of the Chilean economy, promote more order, and create an innovation-driven economy, I based my advice not only on a research project that was targeted on the specific Chilean context but also on my past research.   

Since I’ve been involved in such highly impactful research and policymaking for two decades, I was also able to publish a paper on the relationship between academic research and how it translates into impactful reforms. Specifically, in my article ‘Everything we do know (and don’t know) about collective bargaining’, I analysed and historically described the ‘Zeitgeist’ and changes in the policy-relevant debate on reforms to collective wage systems in recent decades. In the article I describe that despite clear scientific evidence, the advice isn’t being taken up by political decision-makers. As we all know from similar debates on the role of scientific evidence, the reasons for that are manyfold and also complex.  

Against this backdrop, it’s particularly interesting that the recent reform strategy of the Chilean government, as well as in other parts of the world such as recently in Australia, is guided by latest and detailed scientific evidence and advice. However, this scientific evidence suggests a change in the global trend on labour market reforms that was characteristic in the past two decades but a change in the global trend is becoming apparent. In this sense, the Chilean government is certainly doing pioneering work, but is encountering resistance that is immanent to institutional and organisational change in general. In fact, the ‘Zeitgeist’ shifts often very slowly and therefore rigorous academic research and advice is of fundamental importance in order to prevail in political and media discussions that come along.