|
The following OECD assessment and recommendations summarise Chapter 4 of the Economic Survey of Finland 2006 published on 4 May 2006.
Contents
Centralised collective agreements have probably resulted in aggregate wage moderation, but this has been at the cost of reducing relative wage flexibility. Wage compression, especially at the lower end, is strong because of high minimum wage floors. Consequently, employment in low-skill industries is weak and unemployment is particularly high among the unskilled. Regional wage flexibility is also low despite wide and increasing disparities in employment performance across regions. The government has traditionally been involved in centralised wage negotiations, often making tax cuts contingent on the outcome. While the merits of such involvement is unclear the government should use any leverage (as through tax cuts) to promote greater wage flexibility in future central agreements. This could be achieved by making more use of the so-called “union allowance”, whereby employers and unions have greater flexibility in allocating a portion of the centrally-agreed wage increase at the local level. Also the use of opt-out clauses allowing for local wage agreements with lower wages than the central agreement if employers and employees agree should be made easier. To raise employment of younger and low-skilled workers, minimum wages, determined by collective wage agreements, could be better differentiated by age and skills. Future central wage agreements should avoid building in clauses allowing for supplementary wage increases contingent on CPI inflation surpassing a threshold in such a way that they would imply a risk of magnifying the consequences of an adverse supply shock, such as an oil price shock.
Minimum labour cost of younger workers and apprentices(1)
2004
1. The cost of labour is the sum of the wage level and the corresponding social security contribution paid by employers for a single worker. The minimum cost for younger workers includes exceptions by age or by contract.
Source: OECD, Minimum Wage and Taxing Wages databases.
How to obtain this publication
The Policy Brief (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.
The complete edition of the Economic Survey of Finland 2006 is available from:
-
SourceOECD for subscribing institutions and many libraries
-
-
OLISnet, under "Publication Locator", for government officials with accounts (suscribe)
-
Additional information
For further information please contact the Finland Desk at the OECD Economics Department at webmaster@oecd.org. The OECD Secretariat's report was prepared by Dave Turner, Asa Johansson and Laura Vartia under the supervision of Peter Hoeller.
|
