Introduction: Methodological and Theoretical Issues

We start with a biological principle as methodological premise. Structural reform is to small open democracies what alcohol is to children: the impact of such reform is far more immediate and profound in small countries than in larger ones. This is because these political economies have small internal markets, narrow export bases and reduced economies of scale, all of which offer them less insulation and protection from the vagaries and vicissitudes of global market shifts. This is especially the case in the field of labour relations because attempts to remain internationally competitive usually require reducing input factor costs, the most obvious (and internally controllable) being labour costs. Raw material and other value-added factors depend on external market demand and remain relatively constant in price structure (even if different across countries), so the relative price of labour is often the edge upon which international competitiveness is made. For this reason, labour policy is central to any country’s development strategy in an age of globalisation of production, especially in the circumstances described above.