Within Austria's collective bargaining system, since the early 1980s the agreements concluded for the metal industry have set the guiding framework for agreements negotiated in other sectors, and this pattern-setting approach also applies to pay policy. Two features should be mentioned in relation to the metal industry's role. First, it takes its cue from overall economic requirements; this is evident from the fact that the rates of pay negotiated do not fully exploit the metal industry's own productivity increases. Since the metal industry operates in the exposed sector, this prompts it to give high priority to the maintenance of international competitiveness. The criteria and priorities established between pay-setting and external forces in this industry are then reflected in the pay-setting processes in other sectors. Austria's hard-currency policy would not, for example, have been possible without a complementary pay policy which takes account of the effects on labour costs of fluctuations in exchange rates. Second, the metal industry's pay framework-setting role is confined to average rates of increase; there is no attempt to impose an egalitarian pay structure policy. This approach, too, is also followed in other sectors. As a result, wage formation in Austria combines two features which are generally seen as incompatible: a high degree of macroeconomic co-ordination and a high degree of pay differentiation and flexibility.

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.