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 it’s 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 it’s 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, let’s 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 participatingPromoting gender equalityEgalitarian and extensive benefits levelsThe large magnitude of wealth redistributionLiberal 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 policyVery 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 America’s 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.