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FRIHUMSAM-Fri hum og sam

Bringing in the state: The politics of wage regulation and low-wage employment

Alternative title: Politisk regulering av lønninger og lavtlønnet arbeid

Awarded: NOK 8.0 mill.

The project analyses the policies that states use to deal with low-wage employment. In particular, it seeks to explain why states differ in the tools they use to address low-wage employment. Working for very low wages has become more common in many developed countries. States have various tools to address this situation. They can introduce minimum wages by law, they can pay public benefits to top up low wages, or they can try to strengthen collective wage bargaining between trade unions and employers. This project compares to what extent developed countries use these tools, and it seeks to explain the differences. At the same time, the project develops a new, general understanding of how states influence wage setting and the wage distribution. The project uses quantitative methods, examining as many developed countries as possible, as well as qualitative methods to study a few European countries in more detail. The project started in December 2018. As of November 2022, we have measured and analysed the variation of policies across developed democracies, we have deployed quantitative methods to explain the differences we found, and we are currently conducting case studies on the politics of low-wage employment in select cases (Norway and the United Kingdom).

Low pay and in-work poverty are major challenges to our societies. This project will illuminate how states react to these challenges as well as the politics determining their choice of action. In doing so, the project will devise a new conceptual framework that brings the state into the analysis of wage regulation. It will assess whether and, if so, why the role of the state in wage setting has increased over the last decades. While wages are often regulated through collective bargaining between trade unions and employers, research has neglected the influence of the state and the politics behind it. After all, the state can regulate wages directly, for example through statutory minimum wages, or indirectly, for example by regulating collective bargaining or through public benefits that affect wage levels. The surge of low-wage employment results from rising service employment, new information technologies, declining collective bargaining, global economic competition, and low-skill immigration. Governments have three main options of responding: (1) legal rules to strengthen collective bargaining, (2) public benefits to supplement low wages, or (3) minimum wages to establish a legal wage floor. This project therefore deals with the policies that affect the worst off in the labour market. The project will first analyse the use of these policies descriptively across developed states. It will then explain their variation. The main descriptive hypothesis is that direct state regulation through statutory minimum wages has increased. The main explanatory hypothesis is that this trend is driven by the weakness of trade unions and employer associations, a weakness that consists not only of declining membership but of weakening ties between these organizations and political parties. Consequently, the new politics of wage regulation is increasingly shaped by political parties.

Funding scheme:

FRIHUMSAM-Fri hum og sam