Wage determination and labour market adjustment : the lessons of alternative wage fixing systems / Glenn Withers.

Abstract

Wage determination and labour market adjustment under alternative wage-fixing systems are reviewed. It is found that the Australian arbitration-based wagefixing system does not produce a more egalitarian wage structure than other systems. Similarly the Australian system does not produce relative wage flexibility divergent from overseas systems. Indeed, no system examined is found to be particularly responsive to disaggregate market pressures. But at the aggregate wage level major differences do emerge, with U.S. and U.K. absolute wages being relatively inflexible in relation to labour market adjustment pressure and Swedish and Japanese wage levels being more flexible than Australia. Consensus and co-operative approaches to improved labour market performance, along Swedish or Japanese lines, are reviewed. Should consensus fail in Australia, the need for a wage-inflation tax is outlined.