This paper presents an overview of industrial relations in Nordic countries. Key features are a high degree of centralisation, high levels of unionisation, a tripartite approach to government decision making and a keen interest in employee participation. The last decade has seen the onset of more turbulent economic forces, moves to decentralisation and a shift in wage determination towards a greater role for enterprise bargaining. Several parallels with Australian experience are explored. A critical difference is that Nordic unions have escaped the significant falls in membership suffered by Australian unions.

The Swedish industrial relations system has undergone significant changes in the past decade, as employers have vigorously pursued a strategy to decentralise the collective bargaining process. Issues of co-worker agreements and pay equity dominated the 1993 bargaining round, with employers seeking to limit the unions’ role to the enterprise level. Union membership levels, however, have remained high and there has been greater cooperation between blue and white collar union groups. The return of a Social Democratic led Government may see greater support for national agreements and representative forms of participation.

In this paper, changes in Norwegian bargaining and participation since the end of the eighties are discussed in a twenty year perspective. It is argued that a corporatist bargaining structure has been reinstated as a pragmatic measure to handle a difficult economic situation. This is contrary to the general political sentiments which have prevailed since the beginning of the eighties. However, a new constellation of actors are emerging on the organisational level who may irreversibly change the bargaining structure. With regard to participation, the laws and institutions that were introduced during the 1970s are still in place. However, their content is changing from democratisation as a value by itself to a focus on productivity-improvement as the ultimate goal.

Direct participation in Denmark has been facilitated by agreements between employers and unions as well as a prevailing consensus about the value of cooperative arrangements. A revised Cooperation Agreement was achieved between the central union and employer organisations in 1986. It seeks to improve efficiency as well as enhancing employees’ welfare and security. This agreement has had a positive influence on the spread of participation in Danish industry. The paper examines, in greater detail, the experience of the banking and metal industries. Although Danish employers have generally advocated greater decentralisation, the Danish industrial relations system has retained a centralised framework within which direct participation has occurred.

The era of incomes policy agreements appears to have ended in Finland, with negotiations focused at sectoral and local levels, although this could change with a return to a Social Democratic-led Government. While representative systems of participation have not been abandoned, the authority of unions delegates at the workplace appears to have declined. There has also been a growth in direct forms of participation, initiated by management, and associated new forms of work organisation.

There has recently been intense debate about the relative merits of a centralised wage-setting system vis-a-vis a decentralised system. Most of the theoretical and empirical works on this issue focus on the static or current macroeconomic performance in terms of employment and inflation and microeconomic efficiency resulting from enhanced labour market flexibility. Following Lancaster’s work and subsequent extensions by Schott and Vartiainen, this paper regards wage bargaining as a dynamic game involving conflict over the distribution of current and future income. It is argued that the intertemporal decision makings of both workers and employers are influenced by so-called prisoners’ dilemma. In such situations, it is claimed that centralised or corporatist wage negotiations system leads to higher investment rates. This claim is corroborated with evidence from selected OECD countries.

As the process of corporatisation and privatisation of both State and Federal Government Business Enterprises gathers pace, increasing attention is being placed on the way in which these organisations are regulated. The Prices Surveillance Authority has recently proposed a change in the way it conducts surveillance of prices from a cost based system to a price cap system. Price capping, as a form of regulation, has been used extensively in the UK and the US for some time. The article argues that the lesson of this international experience is that price caps may not be the answer to the traditional problems associated with cost based regulation and that price caps may have additional disadvantages, particularly incentives for under investment, although it may have some other advantages. Some alternative regulatory options are then examined, mainly involving modifications to both cost based and price cap regulation.

This paper explores the relationship between unionism and quits. Three channels of influence are investigated: unions-collective voice-quits; unions-training-quits; unions-job dissatisfaction-quits. Estimates of each model, using data from the Australian Longitudinal Survey, indicate that unions reduce the probability of quitting via the training effect by 0.5 percentage points, they reduce the probability of quitting via the collective voice effect by 4 percentage points and they increase the probability of quitting via the job dissatisfaction effect by 1.2 percentage points. The net effect of unions is, therefore, to reduce the probability of quitting by around 3 percentage points.

This analysis examines the impact of the Australian Council of Trade Unions’ (ACTU) application to the 1994 National Wage Case, on economic indicators such as employment, inflation, business investment, gross domestic product, interest rates and the current account balance by using the well respected econometric model devised by Mr Chris Murphy. The economic impact is assessed by inputting specific shocks to the Murphy Model along the lines of the wage increases proposed by the ACTU.

This paper examines the differences in outcomes between arbitrated wages increases and wage movements consistent with market conditions. Given the likely detrimental effect of wage increases sanctioned by tribunals, particularly on unemployment, there are a number of policy implications. These policy implications will also be examined.

In a recent paper in this Review, Rimmer and Watts (1994) are critical of our attempt to relate trade union activity to the only data on workplace productivity generated by the Australian Workplace Industrial Relations Survey [AWIRS], Crockett, Dawkins and Mulvey (1993). Their criticism is based on the fact that the data on productivity were gathered by asking managers to rank the productivity of their workplace relative to other workplaces in the industry on a five point scale ranging from ‘a lot higher’ through ‘average’ to ‘a lot lower’.

At issue in this debate is whether the relative productivity question in the Australian Workplace Industrial Relations Survey (AWIRS) can give reliable data for the dependant variable in Crockett, Dawkins and Mulvey’s equations. We claim it cannot; they claim it can.

Their Comment suggests the argument turns on four points:

1. (i) Does the distribution of responses suggest effects which might pollute the data?

2. (ii) Did the ‘subjective’ nature of the productivity estimates leave scope for ‘error’?

3. (iii) Are the likely statistical effects of this ‘error’ important?

4. (iv) Do independent and informed authorities support their judgement that the data is useable?