Using centrally binding wage agreements

Description

Using centrally binding wage agreements involves establishing standardized wage levels and employment conditions across industries or sectors through collective bargaining at a national or regional level. This strategy aims to prevent wage dumping, reduce income inequality, and promote fair competition by ensuring uniform labor standards. It remedies issues such as exploitative pay practices, labor market fragmentation, and social unrest, fostering stable industrial relations and protecting workers’ rights while supporting economic stability and social cohesion.

Claim

If the market mechanism functions without hindrance, a large supply of labour in a given branch will cause the price of that labour to go down, so risking the security of income and employment of the worker.