Role of Government

1. Role of Government, Ideologies
and Political Approaches
Focus on Liberalism and Corporatism

2. Role of Government
• • Regulator – setting labor laws, minimum
wage policies, and workplace safety standards.
• • Arbitrator – resolving disputes between
employers and employees.
• • Employer – directly employing in the public
sector.
• • Policy-Maker – adopting economic and
social policies shaping labor markets.

3. Ideologies and Political Approaches
• Government approaches are guided by
broader ideologies that define the balance
between state intervention, market freedom,
and social partnership.
• Two dominant approaches:
• • Liberalism
• • Corporatism

4. Liberalism
• • Core Belief: The market, not the state,
should allocate resources.
• • Government Role: Minimal intervention;
regulator of fair competition.
• • Key Characteristics:
• - Flexible labor markets
• - Weak trade unions
• - Individual responsibility for welfare
• - Preference for deregulation & privatization

5. Corporatism
• • Core Belief: Cooperation between
government, employers, and employees
ensures stability.
• • Government Role: Active intervention;
mediator in industrial relations.
• • Key Characteristics:
• - Strong trade unions with centralized
bargaining
• - Extensive social welfare policies
• - Emphasis on collective responsibility

6. Comparison: Liberalism vs.
Corporatism
Aspect Liberalism (LMEs) Corporatism (CMEs)
Government Role Minimal; regulator of fair
competition
Strong; mediator and
partner in dialogue
Labor Market Flexible, deregulated Regulated, protected
Trade Unions Weak, decentralized
bargaining
Strong, centralized
bargaining
Social Welfare Limited, individual-focused Extensive, collective-
focused
Example Countries USA, UK, Australia Germany, Sweden, Austria