How can competitiveness be achieved in post-crisis Europe: deregulating employment relations or enhancing high performance work practices?

The recent Eurozone crisis has reinvigorated neoliberal policies and brought to the fore an academic and policy debate over the deregulation of employment relations' institutions 'in the name of competitiveness'. In the context of this debate, we ask the following question: have firms with employment relations institutions been less able to improve productivity during the crisis? We consider this question by examining data from the European Company Survey. We also look into different models of capitalism to gauge whether there are context-specific institutional effects that may mediate firm-level outcomes. Contrary to the dominant neoliberal discourse, we do not find any strong evidence that employment relations institutions are negatively associated with productivity increases. Instead, we find that certain high performance work practices are positively and significantly associated with productivity increases across EU-15 and in particular institutional contexts. Taken together these results challenge the neoliberal 'low road' policies that are focused on dismantling employment relations institutions and suggest shifting the attention towards context-sensitive 'high road' policies and practices.