Collective bargaining, wage formation and unemployment in Russia : Effects of the degree of centralisation in wage bargaining among trade unions in 10 sectors

Abstract: Calmfors and Driffill in 1988 argued that there is a humpshaped relation between the degree of centralisation in wage bargaining structures within an economy and unemployment. They collected aggregate economic data from 17 different OECD economies and ranked them according to their relative degree of centralisation to prove their model. The model was further developed by Rowthorn who in 1992, using individual data from the same countries, concluded that there is a negative linear relationship between the degree of centralisation in wage bargaining structures and wage dispersion. During the past two decades the Russian economy, as well as the Russian trade union movement, has transformed greatly. Membership rates in trade unions have fallen and bargaining leverage of trade unions vis-á-vis employers has decreased. Using data from ten sectors within the Russian economy (collected in interviews with trade union representatives in Moscow, June 2006) this essay questions whether the theoretical assumptions above hold in the Russian context. By ranking the sectors according to their relative degree of centralisation in wage bargaining structures and using these rankings as explanatory variables in econometric analyses with unemployment rates and wage dispersion rates as dependent variables, this essay finds little proof that the theoretical framework of Calmfors and Driffill holds within the Russian economy. However, Rowthorn’s model of centralisation and wage dispersion seems to be more valid.