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Wage Setting in Finland: Increasing Flexibility in Centralised Wage Agreements

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  • Åsa Johansson

Abstract

The centralised wage agreements have helped to contain inflation. There is evidence that wage increases were more moderate when a central agreement was concluded than in periods when no central agreement was reached. Nevertheless, there is also evidence that centralised wage setting has had some drawbacks in terms of reducing employment among low-skilled and younger workers because of high minimum wage floors. In the current wage setting system there are components that allow for greater relative wage flexibility. These should be used more extensively. The role of the government in future agreements should be to encourage greater relative wage flexibility within the current bargaining framework. This paper relates to the 2006 Economic Survey of Finland (www.oecd.org/eco/surveys/finland). Fixation des salaires en Finlande : Accroître la flexibilité dans les accords salariaux centralisés Les accords salariaux centralisés ont aidé à maîtriser l'inflation. On peut constater que les hausses de salaires ont été plus modérées lorsqu'il y avait accord centralisé que dans les périodes où on n'y était pas parvenu. Néanmoins, on constate aussi que la détermination centralisée des salaires a pour inconvénient, du fait du niveau élevé du salaire minimum, de réduire l'emploi chez les personnes peu qualifiées et les jeunes. Le système actuellement en vigueur comporte des éléments qui permettraient une plus grande souplesse salariale relative. Il faudrait les faire jouer davantage. Le rôle du gouvernement dans les accords futurs devrait être d'encourager une plus grande souplesse salariale relative à l'intérieur du système actuel de négociation. Ce document de travail se rapporte à l'Étude économique de la Finlande 2006. (www.oecd.org/eco/etudes/finlande).

Suggested Citation

  • Åsa Johansson, 2006. "Wage Setting in Finland: Increasing Flexibility in Centralised Wage Agreements," OECD Economics Department Working Papers 503, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:503-en
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    File URL: http://dx.doi.org/10.1787/873363738433
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    Cited by:

    1. Jutta Viinikainen & Katja Kokko & Lea Pulkkinen & Jaakko Pehkonen, 2010. "Personality and Labour Market Income: Evidence from Longitudinal Data," LABOUR, CEIS, vol. 24(2), pages 201-220, June.
    2. Asplund, Rita, 2007. "Finland: Decentralisation Tendencies within a Collective Wage Bargaining System," Discussion Papers 1077, The Research Institute of the Finnish Economy.

    More about this item

    Keywords

    coût du travail; fixation des salaires; labour costs; labour markets; marché du travail; salaire minimum; wage-setting;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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