Abstract

The development of Austrian wages was for a long time guided by productivity and inflation, which has been described as the „Benya-Formula“. Since the mid 1980s there has been a certain decoupling of wages. We follow up on this question and argue, based on seven hypothesis, that this decoupling is a result of shifts in the power relations between capital and labour. We conclude that economic factors, such as rising unemployment rates and increased trade openness, as well as institutional factors – changes in the employment structure, declining union density and a shrinking influence of the social-democratic party – have contributed to a decline in bargaining power for workers and therefore resulted in lower wage growth.