Wage Bargaining, Labour Markets and Macroeconomic Performance in Germany and the Netherlands

Dutch economic performance in the 1990s has drawn envious attention from Germany: unemployment is low (6% in 1997 and falling), economic growth is strong, and its combination of low inflation and small budget deficit should allow it painlessly to meet Maastricht criteria for European Economic and Monetary Union. While similar economic results have also been achieved in the United States, the extent of deregulation implied by this approach has made it unpalatable to important actors in the Federal Republic of Germany including trade unions, Chancellor Helmut Kohl, and the management of many large firms. Hence, as Germany looks abroad for solutions to its own economic woes, the Dutch experience increasingly appears to offer a third way between business-as-usual and wholesale deregulation on the Anglo-Saxon model.