When floors fall: decentralisation and the inversion of the wage premium

State-led decentralisation of collective bargaining may not only affect wages; it changes what a bargaining category means. In 2010–2013, Greek legislation suspended the favourability principle, withdrew extension of sectoral agreements, cut the statutory minimum wage, and opened firm-level bargaining to a new, non-union employee body. Using two decades of survey evidence alongside the hand-coded universe of sectoral and firm-level agreements, we estimate wave-specific, covariate-adjusted wage gaps and set the collective-bargaining estimates against the contracts that generated them. Our findings document a premium inversion: the firm-level wage gap, larger before the reform, collapses among small firms after it, while the sectoral gap rises and concentrates among lower-paid workers. Large firms retain a firm-level gap throughout, independent of the contractual floor. The contract data show why: post-reform firm-level floors converged on the statutory minimum, while the surviving sectoral gap reflects pre-crisis floors rather than renewed bargaining. Extension, favourability, and representation rules functioned as institutional complements; removing them together converted firm-level bargaining into an instrument of wage reduction and left a sectoral premium signalling inertia, not power.