You are on page 1of 3

All over the world, different wage bargaining systems are produceing different effects that

influence economy. Of all systems, the Nordic countryies are famous because they have
implemented the concept of centralized wage bargaining (and solidaristic wage policy)
compared to most of countryies with local wage bargaining.
In their paper, Moene and Wallerstein (1995) are trying to analize the different consequences
that different wage bargaining systems can bring. In their opinion, a country with a centralized
wage bargaining will show sustainable economic growth compared to a country with a local
wage bargaining.
An relevant example, Norway, was not affected that much by the financial dezaster that hit the
European Union (first of all, because its not a member of the European Union), but also
because of a strong economy and exports which made this country one of the richest in the
world. Norway is still having the most constant and sustainable economic growth, and its
resources (oil and gases especially, cars, technological equipment, fish, ships, chemical
products etc.) are exploated very rational, beeing and attraction for investors. The oil export,
mainly has stabilized the growth economy of this country. Also, in Norway, the public sector
provision of welfare services has been more dominant than anywhere else.
But the big question is what did this country, and the other Nordic countryies (Sweden,
Denmark, Iceland, Finland) in order to achieve this economic status, because having rich
resources is not enough.
First of all, lets compare the centralized wage bargaining system ( and solidaristic wage
bargaining) to the local wage bargaining system in order to highlight the main differences.
The wage bargaining are disscusions between representatives of employees and of employers
in order to agree leves of pay. (according to English dictionary)
When we talk about centralized / solidaristic wage bargaining countryies we think of:
Maximizing labor force participating
Promoting gender equality
Egalitarian and extensive benefits levels
The large magnitude of wealth redistribution
Liberal use of expansionary fiscal policy.
Equal opportunities, social solidarity and security for all.
Everyone is entitled to equal acces to social and health services, education and culture.
Strong ties between welfare and labour market policy
Very strong unions

Observation: The welfare system is mainly founded by taxes, relative high, but which
everyone has to pay it.

In other words, we are talking about a society with strong moral values, where every
individ that works (no matter in what work field) is entitled to equal benefits as
everybody else, where the manager and the waiter share the same social status ( with
small wage differences), and where every citizen, regardless of gender, religion, age,
nationality, disabilities or ethnic origins is respected.

On the other side, local wage bargaining is all about:

The wage is determined by a lot of elements such as: work field, hierarchy position,
working hours, qualification, experience in business etc. So, there is a very big wage
difference between a waiter for example and a business manager, or between the
workers in the private sector versus the public sector.( a relevant example is Americas
extreme inequality )
Small preference for the male labor force (the gender equality is not fully accomplished)
Non-egalitarian benefits ( the benefits are influenced by the work field, position, etc)
Non-suportive tax system
Non solidaristic wage policy.
High levels of corruption.
Small percentage of workers belonging to a union.
Very few partnerships between the employers, trade unions and the government.
So, the question is: Can the centralized wage bargaining (and solidaristic wage policy) produce
higher productivity and higher employment relative to a system with local wage bargaining ?
In my opinion yes, it can. There are some factors that influence the productivity and the rate of
employment which the concept of centralized wage bargaining seized and appropriated. We
can fiind this important factors in the countryies which are part of the Scandinavian model:
1. Social and political factors:
The level of professional training of the workers is very high, that is why the relationships
between the unions and the employers are very closed. The employee are part of a
union which follows very closely regulations on labor protection, and the employee is
feeling very secured. A society who is investing a lot in education and in the professional
training of the workers will have qualified personal which will increase the productivity.
Also, this influences the level of unemployement which will be very low. Compared to the
local wage bargaining, there, the relation between unions and employers are not very
closed a fact that influences the productivity / employement.

2. Psyhological and psychosocial factors:
Due to small wage differences indiferent of the working field, the employee is very
productive knowing that no matter what his job is, he has the almost the same wage and
social status as everyone else. ( the motivation is very high). Also, we can talk about the
transformational leadership as the most common style. The relationship between the
employer and the personal is based on mutual trust and respect, working toghether as
one team and not as two different teams, both of them having benefits.
In the local wage bargaining system the motivational element is very low, especially to
the lower-midlle class which have a very small wage. Also, the most common
leadership style is the transactional one, where the CEO and the employee are two
different teams, and the only motivational factor is the wage.

3. Natural , technical and economical factors:
It is not a secret that other important factors that influence high productivity and high
level of employement are the natural resources, geographic, weather conditions, the
infrastructure of a country, the technical equipement that is available, and so on. That is
why we cand observe that the centralized wage bargaining is found especially at the
Nordic countryies which are considered rich due to oil gases resources and strong
maritime relations.

To sum up, I believe that centralized wage bargaining (and solidaristic wage policy) can
create higher productivity and higher employement.