When floors fall: decentralisation and the inversion of the wage premium

Nicholas Giannakopoulos (), Ioannis Laliotis, Vassilis Monastiriotis and Andreas Moustakas

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: State-led decentralisation of collective bargaining may not only affect wages; it changes what a bargaining category means. In 2010–2013, Greek legislation suspended the favourability principle, withdrew extension of sectoral agreements, cut the statutory minimum wage, and opened firm-level bargaining to a new, non-union employee body. Using two decades of survey evidence alongside the hand-coded universe of sectoral and firm-level agreements, we estimate wave-specific, covariate-adjusted wage gaps and set the collective-bargaining estimates against the contracts that generated them. Our findings document a premium inversion: the firm-level wage gap, larger before the reform, collapses among small firms after it, while the sectoral gap rises and concentrates among lower-paid workers. Large firms retain a firm-level gap throughout, independent of the contractual floor. The contract data show why: post-reform firm-level floors converged on the statutory minimum, while the surviving sectoral gap reflects pre-crisis floors rather than renewed bargaining. Extension, favourability, and representation rules functioned as institutional complements; removing them together converted firm-level bargaining into an instrument of wage reduction and left a sectoral premium signalling inertia, not power.

Keywords: collective bargaining; decentralisation; wage premia; wage floors; minimum wage; Greece (search for similar items in EconPapers)
JEL-codes: J31 J51 J52 J58 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2026-08
New Economics Papers: this item is included in nep-eur
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Related works:
Working Paper: When Floors Fall: Decentralisation and the Inversion of the Wage Premium (2026)
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