How the Employment Relationship is regulated How the Employment Relationship is regulated in Different Varieties of Capitalism Institutions, which are widely accepted bodies and sets of societal rules, regulate the employment relationship, with different results in different countries. (remember, some major institutions: family, education, religion, the economy and work, government and health care) Legal systems (common law versus civil law); government by non-legal means; trade unions, through their collective bargaining and political functions; employers’ associations; works councils which is common in Western Europe; employment agencies; associations of HR professionals. They often set (binding) rules that organizations (must) follow These different results have produced ‘varieties of capitalism’ – a powerful tool for explaining how and why the regulatory practices among different groups of countries result in a variety of employment relationships. Liberal market economies (LMEs), coordinated market economies (CMEs), Mediterranean economies (MEs) Varieties of Capitalism and the Employment Relationship Varieties of Capitalism: LMEs LMEs are based on the predominant norm of firm autonomy, short-term returns and maximizing shareholder value through economic gain. Firms in LMEs coordinate their activities primarily via competitive market arrangements and demand and supply conditions. Firms raise funds through stock markets, exerting a big influence on company policies in relation to employment costs. Firms have loose relationships to the state – less likely to have government ownership or part-ownership and they are not normally involved in tripartite arrangements with governments and national-level trade unions. Relations with other firms are generally weaker and mergers and acquisitions of one company by another are much more common than in other varieties of capitalism. Firms generally bargain on pay at company level and have no employers’ associations…