A new model for wage formation in Iceland
Iceland is recovering after a severe crisis, which is an impressive turnaround by any standard. However, the improvement of the economy has led to a rising wage growth, which, if it continues, may lead to another boom-bust cycle. Persistent high wage growth is likely to induce the central bank to ra...
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ftzbwkiel:oai:econstor.eu:10419/202632 2023-12-24T10:17:45+01:00 A new model for wage formation in Iceland Holden, Steinar 2019 http://hdl.handle.net/10419/202632 eng eng Oslo: University of Oslo, Department of Economics Series: Memorandum No. 03/2019 gbv-ppn:166242387X http://hdl.handle.net/10419/202632 http://www.econstor.eu/dspace/Nutzungsbedingungen ddc:330 J5 Collective bargaining wage leadership model doc-type:workingPaper 2019 ftzbwkiel 2023-11-27T00:41:40Z Iceland is recovering after a severe crisis, which is an impressive turnaround by any standard. However, the improvement of the economy has led to a rising wage growth, which, if it continues, may lead to another boom-bust cycle. Persistent high wage growth is likely to induce the central bank to raise the interest rate, so as to prevent inflation from exceeding the inflation target. A combination of high wage growth and a monetary tightening would likely lead to appreciation of the Icelandic krona, which would weaken the competitive position of Icelandic firms. To ensure that wage growth is reduced down to sustainable levels, Iceland would benefit from adopting a wage leadership model, also referred to as a pattern bargaining model, like the Norwegian "frontfag-model". Establishing a wage leadership model requires three steps. - Develop a common understanding among the labour market parties about the challenges and the need for sustainable wage growth - Establish a wage leader which negotiates first and thus sets the norm for the wage growth in other parts of the labour market. - Ensure that the norm for the wage growth is followed elsewhere in the labour market. Report Iceland EconStor (German National Library of Economics, ZBW) Krona ENVELOPE(12.432,12.432,65.827,65.827) |
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EconStor (German National Library of Economics, ZBW) |
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ftzbwkiel |
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English |
topic |
ddc:330 J5 Collective bargaining wage leadership model |
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ddc:330 J5 Collective bargaining wage leadership model Holden, Steinar A new model for wage formation in Iceland |
topic_facet |
ddc:330 J5 Collective bargaining wage leadership model |
description |
Iceland is recovering after a severe crisis, which is an impressive turnaround by any standard. However, the improvement of the economy has led to a rising wage growth, which, if it continues, may lead to another boom-bust cycle. Persistent high wage growth is likely to induce the central bank to raise the interest rate, so as to prevent inflation from exceeding the inflation target. A combination of high wage growth and a monetary tightening would likely lead to appreciation of the Icelandic krona, which would weaken the competitive position of Icelandic firms. To ensure that wage growth is reduced down to sustainable levels, Iceland would benefit from adopting a wage leadership model, also referred to as a pattern bargaining model, like the Norwegian "frontfag-model". Establishing a wage leadership model requires three steps. - Develop a common understanding among the labour market parties about the challenges and the need for sustainable wage growth - Establish a wage leader which negotiates first and thus sets the norm for the wage growth in other parts of the labour market. - Ensure that the norm for the wage growth is followed elsewhere in the labour market. |
format |
Report |
author |
Holden, Steinar |
author_facet |
Holden, Steinar |
author_sort |
Holden, Steinar |
title |
A new model for wage formation in Iceland |
title_short |
A new model for wage formation in Iceland |
title_full |
A new model for wage formation in Iceland |
title_fullStr |
A new model for wage formation in Iceland |
title_full_unstemmed |
A new model for wage formation in Iceland |
title_sort |
new model for wage formation in iceland |
publisher |
Oslo: University of Oslo, Department of Economics |
publishDate |
2019 |
url |
http://hdl.handle.net/10419/202632 |
long_lat |
ENVELOPE(12.432,12.432,65.827,65.827) |
geographic |
Krona |
geographic_facet |
Krona |
genre |
Iceland |
genre_facet |
Iceland |
op_relation |
Series: Memorandum No. 03/2019 gbv-ppn:166242387X http://hdl.handle.net/10419/202632 |
op_rights |
http://www.econstor.eu/dspace/Nutzungsbedingungen |
_version_ |
1786206099418906624 |