Anchored on scholarly literature on international competitiveness and the classical definition of competitiveness as net exports, policy making institutions support decentralized wage-setting mechanisms. The rationale is that decentralized wage-setting systems lower wages and unit labor costs (ULC) and, therefore, increase net exports. This paper contains a literature review on the wage-setting–ULC–net exports link and challenges conventional rationales by examining the co-evolution of Belgium’s real wages and net exports across wage percentiles and sectors. Belgium is a case in point, since the country experienced both increasing real wages and increasing net exports after recentralizing wage-setting mechanisms in 2008.
Pedro Fernandes, Ines
"Belgium’s 2008 recentralization of wage-setting mechanisms and the decentralization-unit labor costs-net exports link: Chronicle of a Death Foretold?,"
Undergraduate Economic Review: Vol. 15:
1, Article 13.
Available at: https://digitalcommons.iwu.edu/uer/vol15/iss1/13