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Bargained Wages in Decentralized Wage-Setting Regimes

Collective wage agreements still play an important role in the German wage bargaining system. However, there is a critical debate in Germany whether collective agreements deliver the flexibility needed by firms to adjust to the needs of international competition and technological change. In recent years, the social partners in some industries have responded to this possible lack of flexibility by introducing so called opening clauses into their collective bargaining agreements. These allow firms to deviate from their collective agreement under certain conditions. The aim of this paper is to empirically analyze the prevalence of opening clauses in the German manufacturing sector and their impact on the wage structure. To provide a basis for the empirical analyses, a survey on the existence and intensity of opening clauses in central collective agreements has been conducted. Thereby, these sectoral data about opening clauses are exactly combined with those from the German Structure of Earnings Survey 1995 and 2001, a linked employer-employee dataset from German official statistics. The results show the number of collective bargaining agreements containing opening clauses increasing remarkably since 1991. Furthermore, the implementation of opening clauses into collective contracts creates significant effects on wages.

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File URL: http://www.uni-hohenheim.de/RePEc/hoh/papers/276.pdf
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Paper provided by Department of Economics, University of Hohenheim, Germany in its series Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim with number 276/2005.

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Length: 24 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:hoh:hohdip:276
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Web page: http://www.uni-hohenheim.de/institution/institut-fuer-economics-11
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  1. Fitzenberger, Bernd & Franz, Wolfgang, 1999. "Der Flächentarifvertrag: Eine kritische Würdigung aus ökonomischer Sicht," ZEW Discussion Papers 99-57, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Alda, Holger & Bellmann, Lutz & Gartner, Hermann, 2005. "Wage structure and labour mobility in the West German private sector 1993-2000," IAB Discussion Paper 200518, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Wolfgang Franz & Friedhelm Pfeiffer, 2006. "Reasons for Wage Rigidity in Germany," LABOUR, CEIS, vol. 20(2), pages 255-284, 06.
  4. Gerlach, Knut & Stephan, Gesine, 2005. "Wage distributions by wage-setting regime," IAB Discussion Paper 200509, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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