In Search of Successful Reform: The Politics of Opposition and Consensus in OECD Parliamentary Democracies

Abstract

Why are some governments able to undertake controversial policy reforms and others are not? Conventional wisdom argues that single-party majority governments are best able to implement reforms because there are fewer veto actors within the government that can block the reforms. However, these accounts fail to consider the veto power of societal actors and particularly of trade unions, which can stall reform even in the presence of a unified executive. This paper argues that controversial reforms require broad societal and, consequently, political consensus, which are easier to achieve under minority governments or governments of broad coalitions. Evidence from 22 OECD parliamentary democracies over 35 years shows that minority and large coalition governments have been more successful in reducing social security contributions and pensions than narrower majority governments. This is especially true in countries where trade unions are militant and often resort to industrial action.

Acknowledgements

I would like to thank the Economic and Social Research Council for their support of the project, which was initiated while I was an ESRC Postdoctoral Fellow at the University of Warwick. Many thanks go to Julia Gray, Jude Hays, Nita Rudra, Daniela Donno, and Mark Hallerberg, as well as to the participants of the 2008 ECPR joint sessions workshop in Rennes and to former colleagues at the University of Warwick for helpful feedback.

Notes

1. On May 2012 angry labour union activists in Poland threatened to disrupt the European football championships due to the government’s proposal to increase the retirement age (Cienski 2012).

2. Consensus governments are defined as minority governments and coalition governments with large parliamentary majorities.

3. According to Lehmbruch corporatism is an ‘institutional pattern of policy formation in which large interest organizations cooperate with each other and with public authorities not only in the articulation and even intermediation of interests, but also in the authoritative allocation of values and the implementation of policies’ (in Molina and Rhodes 2002: 307). A more recent definition of corporatist practices is ‘macro policy concentration (i.e., forms of routinized bargaining between governments, employers, and trade unions)’ (Molina and Rhodes 2002: 306).

4. However, an exception among scholars who employ the veto player approach is Immergut et al. (2007). The authors, who developed a comprehensive theoretical analysis regarding the role of veto players in pension reform, conclude that veto players cannot alone explain policy stability and that political competition is a critical modifying factor in policy reform.

5. This does not mean that policy change is always possible under minority governments. Cooperation on controversial labour market and social security reform was minimal under the minority Liberal coalition, because the Liberal government was hesitant in passing such reforms without the consent of the Social Democrats and the trade unions. However, such consent came at a high policy price for the Liberal government, so the results of negotiations were minimal (Green-Pedersen 2001: 14).

6. This is nicely illustrated in the Danish case by Green-Pedersen (2007). The author shows that the direction of policy reforms and whether the particular issue is ‘owned’ by Social Democrats or the Liberal coalition are important factors in predicting cross-party cooperation (Green-Pedersen 2007). Similarly, Schludi (2005: 79–88) shows that cooperation of the opposition is a function of the ideological distance between the opposition and government parties as well as of the external electoral conditions that determine the ‘positional conflict’ with the government. For simplicity, I endogenise the positional conflict to the type of government and party system and I do not address questions of ideological distance between the government and the opposition or questions of issue ownership.

7. In Italy about half of the union members are pensioners (Schludi 2005: 58).

8. OECD Revenue Statistics have been directly extracted from the ‘Quality of Government Social Policy Dataset’ (Samanni et al. 2010). They span 1970 to 2004 for social contributions across 22 OECD parliamentary democracies and for pension generosity across 18 OECD parliamentary democracies.

9. This score is the standardised value, based on the mean value of the indicator in 1980. The upper and lower bounds of the scores are truncated to +/– 2, and then 2 is added to make the scale 0–4. Finally, the scores of the six indicators are summed and multiplied by the take-up rate (the population above the retirement age receiving a pension).

10. All these data are obtained by Armingeon et al. 2011.

11. The variable weights the degree of authority or vertical coordination in the union movement with the degree of union concentration or horizontal coordination, taking into account the multiple levels at which bargaining can take place and assuming a non-zero division of union authority over different levels.

12. Graph is available upon request.