Power, flexibility, and the breakdown of centralized wage bargaining - Denmark and Sweden in comparative perspective

Highly corporatist countries such as Denmark and Sweden have recently moved away from centralized wage bargaining. A general sectoral coalition model explains the decentralization of wage bargaining as the outcome of a cross-class realignment between employers and wage earners in response to changes in the political, economic, and technological environment of wage bargaining. This realignment is aimed at increasing wage flexibility while containing cost pressures and is associated with greater inequality and the reorientation of macroeconomic policies away from full employment. A contrast of Denmark and Sweden with Austria and Norway, where wage bargaining institutions have not been changed, supports the argument.