Shrinking collective bargaining coverage, increasing income inequality: A comparison of five EU countries

Wage‐setting institutions can play a crucial part in containing the socio‐economically destabilizing growth of income inequality. Using an analytical framework that distinguishes between protective and participative standards, the author examines their respective effects on the incidence of low‐paid employment and income inequality under the wage‐setting systems of Belgium, France, Germany, Sweden and the United Kingdom. His comparative focus on the interplay of statutory minimum wages and collective wage bargaining shows that while the latter is more effective than the former at reducing inequality, both require state intervention, with particular emphasis on participative standards to counter the erosion of industrial relations institutions.