Firms in Finland struggle to adjust wages, leading to employment cuts.
The article looks at how wages in Finland have changed since the 1990s. They found that wage differences between companies increased in the late 1990s, but after that, most of the wage differences happened within companies. Real wage rigidity has stayed high, and during the financial crisis, it became harder for wages to adjust. Firms mostly adjust wage costs by changing employment, rather than other ways like cutting hourly wages or overtime. When employment goes down, wage cuts are delayed and not as big as wage increases.