Aspects of Relative Wage Flexibility in Greece

Abstract

Abstract. Flexibility in relative wages can be either competitive or non‐competitive. In Greece, in the period 1966–1988, wage and employment regulation as well as developments in industrial relations did not favour competitive flexibility and provided an environment conducive to non‐competitive flexibility. With the noticeable exception of the period 1967–74, during which competitive forces emerged and played a dominant role, in 1966–88 the manufacturing labour market operated under the influence of industry‐specific factors. Non‐competitive flexibility associated with industry‐specific changes in productivity in the long run and industry‐specific rates of strike activity in the short run, influenced manufacturing relative wages. Furthermore, in 1977–88, the asymmetric response of industry wages to changes in industry productivity hindered employment growth.