"This article discusses wage setting in SMEs in eight European countries, how wage setting in small firms differs from that in larger firms and how trade unions address the issue. The context is the increased decentralisation of wage setting. Wage setting is analysed at four different levels: the workplace, the regional, the industry and the national level. The main finding is that trade unions' ability to secure higher wages for workers in SMEs depends not upon workplace organisation, but upon well functioning industrial relations institutions. That is, if workers in SMEs earn less than employees in larger companies, this is due not to the size of the company but to the absence of a comprehensive collective bargaining system that encompasses SMEs. "

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