Swedish Rehn-Meidner Pro-Labor Developmental Policy

Discussion

(context: a comparison of Polish and Hungarian populist policies)

Marek Naczyk and Edgars Eihmanis:

"With Poland and other East-Central European (ECE) countries having been “global leaders” in economic liberalization in the 1990s and 2000s (Appel and Orenstein, 2018: 11), this kind of developmentalist discourse is unprecedented. Implicitly, it defines the contours of a wage-led growth strategy in which MW increases should drive up productivity and aggregate demand and, ultimately, growth (Bondy et al. in this special issue; Lavoie and Stockhammer, 2013; Schulten, 2012). Kaczyński’s discourse is also reminiscent of aspects of the Rehn–Meidner model—an economic policy blueprint developed in the 1950s by two economists from the Swedish Trade Union Confederation and subsequently adopted by the Swedish Social Democratic Party—which posited that “solidaristic” wage compression could be used as a tool for technological upgrading (Erixon, 2010; Meidner, 1986; Pontusson, 1992). The model postulated that, at the bottom of the wage distribution, wage increases would squeeze the profit margins of less efficient, typically small, firms in sheltered sectors thereby forcing them to modernize or to go out of business. By contrast, wage restraint at the top of the wage distribution would free up the profits of more efficient, typically larger, export-oriented firms thereby promoting their expansion. Active labor market policies (ALMPs) would help reskill workers and reallocate them from low-productivity towards high-productivity firms. Granted, reforms introduced by Law and Justice have lacked other core elements of the Rehn–Meidner model—including wage restraint for top earners and massive spending on ALMPs, but the party’s emphasis on MW increases as a tool of technological upgrading is remarkable in and of itself."

(https://journals.sagepub.com/doi/epub/10.1177/10245294231213417)