Browsing by Subject "wage rigidity"

Goals: It’s been stated that one possible reason for faster revival of Swedish economy compared to Finnish after financial crisis could be found in the differences of wage formation and Sweden’s more flexible wages. The essential difference in wage formation between the countries is in meaning of wage norm that is reference point in Sweden and minimum raise in Finland. The goal of this thesis is to provide new data of wage flexibility in Sweden and also compare wage flexibility between Finland and Sweden during 1996‒2018. Aim is also to ponder whether Finland could learn something from Swedish wage formation model. Methods: Swedish data set belong to IFAU and it consists wage information of workers between 15- and 65-years-old. R. Uusitalo has given the Finnish numbers for this thesis, and they are from Statistics Finland data set that covers workers of all ages. The used analysis are surveying the basic statistics and distribution graphs, and regressions. Analysis only include full-time workers. Results: Waged were found rigid in both countries during 1996‒2018, and especially downward rigidity was pronounced. Distributions were skewed to the right, and there were more extreme values than in normal distribution. Finnish wages were more flexible than Swedish ones during the whole survey period: distributions were wider, kurtosis smaller and extreme values were higher. More over Swedish wage changes centered much more tightly towards median wage change. After financial crisis Swedish wage changes clustered even more around median wage increase and phase of wage increases decelerated in a manner that allowed median wage change to stay above inflation rate, and real wage growth continued during 2010’s. Median wage change fluctuated considerably more in Finland according to economic situation and inflation. There was some clustering around median after financial crisis, but not as much as in Sweden. There was a positive and powerful connection between companies’ economic success and wages in both countries. There was also a connection between companies’ economic success and wage change in both countries, but coefficients and coefficients of determination (R2) were so modest that practically wage changes seem to be quite rigid regarding companies’ economic success. Conclusions: It’s possible that stricter wage discipline and rigidity in Sweden found in this thesis has actually assisted Sweden to recuperate economically from financial crisis. It seems that Finland has not been able to follow the benchmark such as set in Sweden. It appears that there is even grated wage solidarity in Sweden after financial crisis, and that is something Finland could learn and take advantage in the future.