Wages and Wage-Bargaining Institutions in the Emu : A Survey of the Issues

A perceived need to increase nominal wage flexibility as a substitute for domestic monetary policy and a tendency to less wage moderation are likely to promote bargaining coordination and social pacts in the EMU. But such coordination is not likely to be sustainable in the long run, as it conflicts with other forces working in the direction of decentralization and deunionisation. Although monetary unification will strengthen the incentives for higher-level transnational coordination of wage bargaining, such a development is improbable because of the coordination costs involved. If transnational coordination develops, it is most likely to occur within multinational firms