ABSTRACT
This chapter examines developments of the past decade or so with regard to the main features of national wage-setting institutions and wage policy in the private sector in the European Union (EU). In most of Western Europe, in the postwar decades, a so-called ‘solidaristic wage policy’ was adopted in pursuit of a fair distribution of income between capital and labor as well as within labor groups (Schulten 2002). This solidaristic wage policy translated into two main aims (ibid, p.74): (a) equal pay for work of equal value, implying that wages should not depend on individual company circumstances alone but should be standardized in multiemployer collective agreements, while pay raises should be in line with growth of the overall economy, enabling benefits to be shared between capital and labor in a manner ensuring that all workers participate in economic progress; and (b) a more egalitarian wage structure, reducing pay differences between higher and lower wage groups and counteracting market forces that result in increased wage differentiation. Since the 1980s, wage policy became increasingly market-driven and competition-oriented, including features such as wage moderation, a distribution of income between capital and labor that favors the former, and increased inequality within the labor force at large (Brandl and Traxler 2011). This development follows the displacement of Keynesianism with monetarist and neoliberal thought, in a context of expanded market relations (commodification) and increased global competition (Streeck and Thelen 2005).
