Under the Surface of Individual and Differentiated Pay in Sweden: A Zero-Sum Game of Performance-Based Pay?

Abstract

Wage formation in Sweden has been decentralized, and the introduction of individual performance-based pay has increased employer discretion. This article explores practices of local-level wage determination and argues that existing analyses still have too much focus on the formal (regulatory) institutions to explain what that is going on under the surface. Drawing on interviews with HR, managers, employees and union representatives from both public and private sector organizations, the study concludes that individual and differentiated wage-setting is delimited locally by small budgets and the actors’ cultural–cognitive and normative expectations. Even though there have been radical changes in collective agreements and policies, we find strong elements of path dependency in local wage determination practices.