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14 March 2017

Benchmarking working Europe 2017: High time for new approach to wage policy

Benchmarking working Europe - wages and collective bargaining

The current approach of driving down wages, decentralizing collective bargaining systems and restricting trade union and workers’ rights to tackle the economic and financial crisis has failed according to the findings in the new ETUI/ETUC ‘Benchmarking working Europe’ report launched on Monday 13 March in Brussels. The report advocates an economic re-orientation towards a wage-led growth model and a new wage policy based on appropriate minimum wages, all-encompassing collective bargaining systems and strong trade unions.

Here are some of the main findings of the third chapter on wages and collective bargaining (read chapter 3 of the Benchmarking for more analysis and data):

  • Despite the lip service paid to the importance of social issues, the EU’s country-specific recommendations (CSRs) 2016-2017 remained ‘business as usual’ continuing with the same old strategy of internal devaluation.
  • Real wages have been picking up in 2016 but this is due mainly to very low inflation rates. Real wages increased substantially in central and eastern European countries (e.g. Romania +8.94% and Czechia +3.01%), but stagnated in Italy (0%), Greece (0.1% and France (0.25%). Belgium is the only country where real wages actually decreased in 2016 (by 0.94%).
  • Looking at wage developments over the long run, it is clear that the EU’s austerity policies have had a negative influence on wages with repercussions also on domestic demand.
  • Wage growth also applied to minimum wages but in most EU countries these minimum wages are still very low.
  • The trend of a decrease in collective bargaining coverage continued and was very pronounced in southern and eastern European countries.

The figures in the Benchmarking confirm that in order to have a real economic recovery, the EU needs to switch to wage-led growth model. Even the European Commission and the ECB have recognised this in recent speeches but the actual policy implementation seems to lag behind.

This is the reason the European Trade Union Confederation (ETUC) declared 2017 ‘the year of the pay rise for European workers’ and started a special pay rise campaign. In a press release issued on 13 March, ETUC confederal secretary Esther Lynch said: “It’s time for a real recovery. Workers across Europe need a pay rise. Wages are beginning to pick up but there is a lot of catching up to do.”

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