Wage Staggering and Wage Leadership in Austria – Review and Implications

This study examines the importance of wage staggering and wage leadership in the Austrian system of collective bargaining. Collective wage agreements in Austria generally remain valid for one year and are staggered; the highest concentrations of new agreements can be found in the months of January, May and November each year. The relevant literature describes Austrian wage bargaining as a system of wage leadership, with the agreement reached by the metal workers, which usually goes into effect in early November of each year, setting a precedent for wage agreements reached by other sectors in the ensuing months. Through an analysis of detailed individual series from the Index of Agreed Minimum Wages, it is actually possible to provide empirical evidence for the existence of wage leadership. The results also show that the wage-leading metal sector is substantially more sensitive to macroeconomic forecasts than the other sectors are. This phenomenon and the rapid transmission to the sectors that follow are probably key reasons why empirical evidence of high real wage flexibility has been found in Austria.