Local Bargaining and Employers' Co-operation Options

Abstract

Finnish employers want the locally bargained wage share to be approximately half of the total wage rise, which is significantly more than the locally bargained share in the current centralised wage agreement. However, employers' attitudes towards local bargaining vary a lot depending on firm characteristics. The aim of this paper is to explain employers' opinion of the proper locally bargained share of contract wages and also about who they think should decide on this wage share. It is shown that employers in large firms and in the financial services sector demand the largest locally bargained share of contract wages. When low competition in the product market is considered a challenge, employers may favour centralised wage setting instead of local bargaining. Employers are willing to involve employees in local bargaining decisions when the firm size is 30–299 employees or when the firm is profitable and operates in the service sector.

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 Labour Institute for Economic Research. We would like to thank Roope Uusitalo and Antti Kauhanen for very helpful comments, and seminar participants at the University of Jyväskylä for comments on an earlier draft. The usual disclaimer applies.