Employment regulation, game theory and weak employee voice in liberal economies

Publication Date01 Dec 2017
International Labour Review, Vol. 156 (2017), No. 3–4
Copyright © The authors 2017
Journal compilation © International Labour Organization 2017
Employment regulation, game theory
and weak employee voice
in liberal economies
Eugene HICKLAND**** and Jimmy DONAGHEY*****
Abstract. This article analyses the impact of information and consultation regu-
lations – specically the European Information and Consultation Directive – on
worker participation or “employee voice” in liberal market economies (LMEs),
providing both empirical and theoretical insights to complement existing research
on the Directive. Using game theory and the prisoner’s dilemma framework, and
empirical data from 16 case studies, the authors explain why national legislation
implementing the Directive is largely ineffective in diffusing mutual-gains cooper-
ation in the United Kingdom and Ireland. Three theoretical explanatory propos-
itions advance understanding of the policy impact of information and consultation
regulations in LMEs.
This article considers the multi-level institutional governance interface
(Jackson and Deeg, 2012) between European public policy, national
legal transposition and employment relations responses at the organization
level, focusing on the impact of the “European Information and Consulta-
tion Directive” on employee voice in the liberal market economies (LMEs)
of the United Kingdom (specically, Northern Ireland) and the Republic of
What effect the Directive has on employer decision-making powers
and employee voice rights is an important and under-researched area.
* Bangor Business School, Bangor University, email: a.dobbins@bangor.ac.uk (correspond-
ing author). ** Alliance Manchester Business School, University of Manchester, email: tony.
dundon@manchester.ac.uk. *** Queens University Management School, Queens University
Belfast, email: n.cullinane@qub.ac.uk. **** Dublin City University Business School, Dublin
City University, email: eugene.hickland@dcu.ie. ***** Warwick Business School, University of
Warwick, email: jimmy.donaghey@wbs.ac.uk. This work was funded under a bilateral research grant
from the Irish Research Council (IRC) and the Economic and Social Research Council (ESRC),
RES-062-23 -1139, for which the authors express their appreciation.
Responsibility for opinions expressed in signed articles rests solely with their authors, and
publication does not constitute an endorsement by the ILO.
1 Directive 2002/14 EC was adopted by the European Parliament and the Council of the
European Union in 2002 (See European Communities, 2002).
International Labour Review396
Employee voice at work is also a vital ingredient of what the ILO calls “rep-
resentation security”.2
We set out theoretical and empirical insights concerning policy and prac-
tice in the area of worker participation rights, utilizing the prisoner’s dilemma
concept from game theory. While the scant existing studies on Directive 2002/14
offer substantial empirical contributions regarding diffusion and emerging prac-
tice (Taylor et al., 20 09; Cullinane et al., 2014; Hall et al., 2013 and 2015), they do
not provide sufcient theoretical conceptualization to explain why the Directive
has been largely ineffective in providing employee voice in LME contexts. In
particular, the ILO’s representation security indicators are designed to measure
the effectiveness of the legal and regulatory framework for diffusing employee
voice, and the existence at organizational level of collective representative bod-
ies to which workers can belong (see footnote 2). Against this background, this
article seeks to complement existing research by assessing why the Directive
and the transposed national employee voice regulations in the United Kingdom
and Ireland have failed to generate “representation security” and sustainable
mutual-gains cooperation at the micro level.
The remainder of the article is organized into six sections. The rst pro-
vides an overview of the literature on the regulation of information and con-
sultation in LMEs, and advances three theoretical propositions to explain why
minimalist macro regulatory design has inhibited mutual-gain outcomes at the
workplace level. The second section describes the research methodology we
use. In the third section, the three propositions are assessed, based on data
from 16 case-study organizations and using insights from game theory and the
prisoner’s dilemma concept in labour economics (Leibenstein, 1982; Trif and
Brady, 2013). The fourth section assesses the empirical data against the prop-
ositions, the fth discusses the social policy implications of Directive 2002/14,
and the sixth section presents our conclusions.
Literature review and theoretical propositions
In this section we provide an overview of the relevant literature on: the design
of information and consultation regulations; game theory and asymmetrical
outcomes; and uncertainty, risk and sustainability. For each of these three areas,
a theoretical proposition is advanced in order to explain why minimalist macro
regulatory design has inhibited mutual-gain outcomes at workplace level (see
box 1). In contrast to the “hard” scientic testing of hypotheses, these explana
tory propositions are used rather to frame our analysis.
Design of information and consultation regulations
Directive 2002/14 was introduced with the aim of strengthening dialogue and
promoting mutual trust between management and labour (European Commis-
sion, 2013). It had three explicit social policy aims. First, to establish minimum
2 For more information on the ILO’s Representation Security Index, see http://www.ilo.org/
sesame/SESHELP.NoteRSI (accessed 15 September 2 017).

To continue reading

Request your trial