Centralised Wage Bargaining: Theoretical Considerations and Some Norwegian Experiences*

Are centralised systems of wage setting good or bad for economic performance? The theoretical literature gives no clear answer. Multiple factors contribute to good economic performance, and different wage bargaining systems may affect each one of these factors differently. While centralised bargaining might be good for unemployment by restraining unions’ wage demands and creating better incentives for investment, it may lead to lower work effort and greater conflicts over work organisation compared to a system with local bargaining. Against this background the performance of the Norwegian system of centralised wage bargaining is investigated. It is argued that although this system has performed quite favourably in sustaining low unemployment rates, it is facing major pressure for change as a result of growing internationalisation, and changes in occupational structure and production techniques. * This is a revised version of a paper originally prepared for the course ‘Comparative Perspectives on Work and Organisation’, Oslo Summer School in Comparative Social Science. I thank Richard Brooks, Arne L. Kalleberg and Kalle Moene for helpful comments on earlier drafts of the paper.