Towards Europeanization of Wage Policy

Abstract

Conventional wisdom regards wage regulation as uncoordinated across Europe. In relation to advanced economic integration, this implies a `suboptimal' wage area, which led to many conjectures about its consequences, ranging from disorganization of collective bargaining to adverse macro-economic effects. This article tests the wage linkages between Germany and the Nordic countries on time series data for the metal industry. The findings show that organized, transnationally coordinated wage policies characterize these countries: Convergence in pay rates results from both economic developments and coordination of transnational bargaining through the pattern-setting role of the German bargainers. These transnational wage policies require the consequences of European integration to be reconsidered for wage regulation and its economic effects.