Collective Bargaining and Wage Formation: Performance and by Hannu Piekkola, Kenneth Snellman

By Hannu Piekkola, Kenneth Snellman

This quantity considers the improvement of the salary formation and salary bargaining associations as a reaction to alterations within the bargaining surroundings. those alterations comprise a reduce point of inflation and the expansion in intraindustrial alternate as enterprises became extra specialized. The reaction to those adjustments depends upon the present associations and at the features of the bargaining process. usually there was a few circulate in the direction of decentralisation; the query is what can be bargained centrally and which concerns may be transferred to reduce degrees. a few of the contributions pay certain consciousness to Nordic regimes utilizing survey effects amassed from the Finnish labour marketplace partners.

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This implies that foreign wage formation becomes a stronger anchor for domestic wage formation. The importance of the "European" element in wage formation, that is, the increased focus on competitiveness following intensified integration is visible in all EU labour markets. In various countries a "European norm" has played an either explicit or implicit role in wage formation. An interesting example is the Belgian "law on competitiveness" from 1996, which explicitly linked wage increases to wage increases for its main competitors (Germany, the Netherlands and France).

For reasons outlined above, international product market integration is likely to increase the elasticity of labour demand, cf. (13), and the more elastic labour demand is the lower the wage demands are at any employment level. Accordingly, product market integration tends to induce wage moderation. Through this route product market integration may thus reduce wage "mark-ups", and this creates the potential for a higher steady state level of employment. g. Burda (1999) and Andersen et 24 Torben M.

While trans8 9 Strategic complementarity is defined as a positive relation between decision variables, cf. Cooper and John (1995). The case of a negative relationship between decision variables is denoted strategic substitutability. Wage norms or formulas like this have a long history, and were, for example, a core element of the so-called Scandinavian inflation model. International Product Market Integration and Wage Bargaining 27 national wage bargaining at present is an unlikely response, the initiatives are a way of trying to minimize the possible externalities involved in wage setting.

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