Finnish Wage Bargaining — Actual Behaviour and Preferences

Abstract

Wage changes at the industry level are examined and it is shown that differences in wage increases at the industry level are linked to the level at which bargaining on wages takes place. Non-participation in the centralised agreement has been associated with, on average, almost one per cent higher wage increases than participation. Wage drift has, to some extent, compensated employees in participating industries for lower bargained wage rises. In industry-level bargaining rounds there seem to have been fewer systematic variations both in bargained wages and in wage drift across industries. Survey responses do not indicate economically significant differences in opinions concerning the bargaining process corresponding to the differences in behaviour.

This is part of the research project “Rules of the game in the labour market: Industrial relations, the bargaining system and income policies in the 2000s”, financed by the Finnish Work Environment Fund, and carried out jointly by ETLA, The Research Institute of the Finnish Economy and the Labour Institute for Economic Research. I am grateful for helpful comments from Steinar Holden, Jukka Lassila, Hannu Piekkola, Ralf Ramm-Schmidt and Roope Uusitalo on an earlier draft.