Wage Moderation in Corporatist Scandinavia: During the Postwar Period or during the Neoliberal Age?

An influential analysis, within economic history as well as political science, of the strong growth performance of Western Europe in the 1950s and 1960s stresses the importance of class cooperation and wage moderation on behalf of trade unions. This paper tests the idea of wage moderation in postwar Western Europe on three countries, Sweden, Denmark and Norway. These countries are important to the corporatism argument as they all had strong union movements and centralized wage bargaining, two factors that are commonly identified in the literature as conducive to wage moderation, during the period. Using 72 to 106 years of data for the three countries, regressions are run that show that nominal wage increases in manufacturing were not lower in the postwar period than one would expect from fundamentals such as inflation, unemployment and productivity. This is especially true for Sweden, which seems to have had a union movement militant in its wage policy as well as politically radical in the 1950s, 1960s and 1970s. The Norwegian development is less radical, however, with more of a neutral wage performance during the 1950s and the 1960s, with something inbetween for Denmark. In all three countries, however, has there been more wage moderation during the 1980s and 1990s – the “neoliberal period” – than during the postwar period. Therefore the corporatism argument is rejected for Scandinavia. Instead a power resources approach to wage setting is supported.