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The Impact of European Integration on Labour Market Institutions in Germany and Denmark

Paper co-authored by professor Jette Steen Knudsen awarded 2015 European Union studies association conference best paper prize

"Winning the Battle or Losing the War: The Impact of European Integration on Labour Market Institutions in Germany and Denmark," written by Anke Hassel, Fletcher Professor Jette Steen Knudsen and Bettina Wagner, has been awarded the 2015 European Union Studies Association Conference Best Paper Prize.

The paper explores two different models for how countries seek to protect employment in the face of EU market liberalization in the form of the free movement of goods, services, capital and people. EU market liberalization is typically seen as a challenge for models of national capitalism. EU market liberalization, it is argued, erodes national employment regimes and social protection. 

However, other scholars highlight the ability of national institutions to reinvent themselves. The paper assesses these claims by exploring an extreme case of labor market pressure driven by EU market liberalization. Focusing on the meat production sector, the authors show that the industrial relations systems in Germany and Denmark have shaped very different responses to the use of migrant labor. Low-wage labor migration from Eastern Europe has affected employment conditions in the meat production sector in Germany and Denmark in different ways: dualization has made Germany a destination country for low-wage work; in contrast, union solidarity in Denmark has kept wages high and included immigrants. However, because of the high wages Danish meat producers have outsourced work to Germany. While Danish workers may have won the battle in the form of continued high wages their jobs are rapidly disappearing. Migrant workers in Germany are not covered by the German wage bargain agreements and until recently could work for wages as low as EUR 1.5. Germany has now adopted a minimum wage of EUR 8.5 as a way of protecting workers from exploitation. Germany has “won the war” in the sense that job employment in meat production remains high. However, in the long term Denmark may be the real winner as meat production workers have shifted to other forms of employment that are more secure and that pay well.

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