Wage Leadership in Austria

This paper investigates whether the Austrian system of wage determination, despite enormous changes in the economic environment in recent decades, still follows a wage coordination by the leading bargaining agreement of the metal sector. Using a quantitative econometric analysis based on detailed collectively bargained wage data, it is shown that the wage-setting process is still best explained by the wage leadership of the metal sector. Moreover, the wage coordination function of the metalworkers' agreement has probably been strengthened by an increasing concentration of collective bargaining agreements starting in January. A shorter time lag to the metal sector's agreement could ensure that the signaling effect of the leading agreement increases and that economic developments, which become more important with a longer time lag, have less impact.