The Nordic model of wage coordination at a crossroads

Strong coordination of wage setting has been maintained in Nordic countries through pattern bargaining. The tradables sector sets the first agreement, which then serves as the nationwide norm for subsequent wage increases. This column outlines that a key motivation for this model is to maintain international competitiveness and keep the wage share constant over time. This approach may come into conflict with the future needs of labour reallocation, for example due to ageing populations and higher demand for military personnel. An independent body of experts could help the pattern setting become more flexible and recommend changes to address labour market imbalances.