Industrial relations and social dialogue in the Baltic states - crisis, conflict and compromise

This chapter analyses the intersection of global recession with the viability of social dialogue between labour and capital in post-communist states. It examines the crisis in a region where its effects have been most pronounced, the Baltic countries of Estonia, Latvia and Lithuania, formerly Soviet republics and now full members of both NATO and the European Union (EU). The ‘shock’ of global economic and financial recession has had severe impacts on Baltic economies and, therefore, has also demanded radical changes on the part of governments. Through an analysis of responses to the crisis, this chapter attempts to assess the inherent strengths or weaknesses of social dialogue in the region. We suggest that trade unions have failed to influence the course of governmental crisis response measures. This is the result of the inherent weaknesses of post-communist trade unions, which have permitted governments to introduce fiscal policies largely unopposed. These measures have provided the primary means of adjustment to spiralling budget deficits in Latvia and Lithuania. In Estonia, which had previously succeeded in maintaining one of the lowest budget deficits in the EU, the crisis response measures were motivated as much by the determination to avoid the same predicament as its Baltic neighbours, as by the attempt to mitigate the almost as severe economic impacts of the crisis.