Incomes Policy for Europe? or Will Pay Bargaining Destroy the Single European Market?

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Abstract
With European economic and monetary union, pay bargaining encounters a new set of constraints: devaluation is no longer available to compensate for inflation, and economic restructuring for the Single Market will place great strain on wage structures. The article analyses the problems posed to pay bargainers, and argues that, instead of pressing for more centralized bargaining, greater encouragement should be given to pay systems that favour more flexible use of labour and reduce the tendency to transmit inflationary pressures from one group to another. Joint regulation has a critical part to play in the effectiveness of these systems.