Extension through dilution?

In May 2004 the European Union accomplished the largest enlargement of its history. Eight of the new members had made the transition to a democratic market economy following the collapse of communism. This transition and preparation for EU membership brought political, social and institutional changes, many of which affected the regulation of production and labour markets. Privatisation, lifting of price controls, opening markets to foreign investors, restructuring of production and soaring unemployment came with attempts to introduce or reform labour market institutions like trade unions, collective bargaining and works councils. This chapter is about that institutional extension of the EU to the new member states (NMS). In order to place this process in a proper perspective, it is necessary to include developments in labour market institutions in the EU-15 in this survey. ² It would be misleading to see these institutions as static or to simply project CEE as converging on the pattern set in the West. Labour market institutions in the EU-15 vary, reflecting different models of coordination and state–market interactions (Crouch 1993; Hall and Soskice 2001). Moreover, European labour markets and institutions have changed in past decades, not least due to product market integration and enlargement.