but the establishment of an integrated market for products and services, in
which process the introduction of a single currency represents a significant
step. Together with a strong political authority, many expected social union
to be a ‘spill over’ effect of economic union, reflecting the so-called ‘neo-
functionalist’ approach associated with such founding fathers of the EU as
Schumann and Monnet (Rosamond, 2000: 51–2).
Simultaneously, however, EMU has also fuelled debate about the implications
for different national systems of the developments associated with increasingly
globalized competition and the highly restrictive monetary regime EMU has
ushered in. EMU, it is argued, has increasingly set industrial relations systems in
competition with each other, both at the macro level and at the micro level, with
policy makers and practitioners in different countries under pressure to make their
arrangements as ‘competitive’ as they can to secure investment (Streeck, 1992).
Far from encouraging the development of a coherent European system, EMU is
expected to lead to the fragmentation and eventual ‘Americanization’ of indus-
trial relations. In effect, this means the break-up of the inclusive structure of multi-
employer bargaining (i.e. benefits are extended across a country or throughout a
sector and are not just the preserve of the well organized), a reduction in welfare
arrangements and an emphasis on supply side policies (Martin, 1998).
In the event, in the words of Social Affairs Commissioner Diamantopoulou
(quoted in Smith, 2000), rather than the ‘two extremes of social union versus a
completely deregulated free-for-all’, a complex multi-level system appears to be
emerging. Like the multi-level governance system of the EU polity itself, this
multi-level industrial relations system reflects a history of informal and gradual
development as well as deliberate institution building. It has developed and
continues to develop relatively autonomously rather than by design, as a range
of actors seek to exploit the available means to grapple with the implications of
the ‘regime competition’ that EMU is promoting. Significantly, too, this multi-
level system cannot simply be defined in hierarchical terms or as relations
between the EU and the member states, with a Community level added on top
of national systems and decisions cascading down. Critically, cross-national
(horizontal) influences mix with national (vertical) ones and involve the sector
and Euro-company levels as well as the community level. Furthermore, this
multi-level system is an intervening as well as dependent variable. In other
words, it is not just something to be explained in terms of ‘globalization’ or
‘Europeanization’. The system’s evolving patterns of regulation, ‘policy net-
works’ and opportunities for mutual learning are also having an impact on
existing processes and structures. Its particular significance lies in the fact that,
in bringing about a measure of convergence within companies and sectors
betweennational systems, the multi-level system is also simultaneously leading
to greater diversity betweencompanies and sectors withinnational systems.
The rest of this chapter expands on this argument. Section 2 begins by
highlighting the features of the emerging multi-level system of industrial
relations. Section 3 then goes on to describe the key effects that such a system
434 International Human Resource Management