Minimum wages through collective bargaining

Minimum wages in Nordic countries

None of the Nordic countries has a statutory minimum wage.

Denmark and Sweden use collective agreements as their only mechanism for setting minimum wages, while Finland, Iceland and Norway have also started to use extension mechanisms to cover all workers at industry level.

Minimum wage agreements are often differentiated by age, skill or seniority. Higher wages will be subject to further negotiations at the enterprise level. In Denmark and Sweden, the collective agreements are binding only for those parties that have signed them. This system covers around 89% of employees in Sweden, and about 84% in Denmark. In Norway, EU enlargement in 2004 caused these practices to be supplemented by an extension of collectively agreed wage rates in industries that absorbed many migrant workers from the new member states. Even so, the coverage rate is only about 67%. Finally, in both Finland and Iceland, coverage of collective agreements is widespread, of about 90% of workers. Finland extends all national collective agreements that have an industry coverage exceeding 50%. In Iceland negotiated wages apply to all employees who perform work of similar type.

Sources: Eldring L. and K. Alsos (2012). European Minimum Wage: A Nordic Outlook (Fafo, Norway). Adapted from pp. 71–73 and 78. ILO (2015) Trends in collective bargaining coverage: stability, erosion or decline? Issue Brief No. 1 – Labour Relations and Collective Bargaining.