Impact of the Crisis on Wages and Collective Bargaining across Europe ETUI Conference: Getting Europe back to work – alternatives to austerity Brussels, 06 November 2013 Dr. Torsten Müller / Dr. Magdalena Bernaciak European Trade Union Institute - ETUI

Structure of presentation 1. Role of wages in EU reform policy 2. Overview of quantitative wage developments 3. Overview of qualitative changes in collective bargaining structures and procedures ETUI – Getting Europe back to Work; 06 November 2013

Wages as a key adjustment variable Starting point: debt and cost competitiveness crisis Remedy: Austerity policy and structural reforms 1.) Pay freezes and cuts in order to reduce public expenditure and consolidate state budgets 2.) Increasing downward flexibility of wages in order to reduce labour costs (“internal devaluation”) and improve (cost) competitiveness ETUI – Getting Europe back to Work; 06 November 2013

Forms of political intervention into collective bargaining 1. New European System of Economic Governance: European Semester and its Country-Specific Recommendations 2. Memorandum of Understanding and Stand-by Arrangements signed with “Troika” or IMF/EU 3. ECB intervention on sovereign bonds secondary markets ETUI – Getting Europe back to Work; 06 November 2013

New European Wage Policy Interventionism (2011 – 2013) ETUI – Getting Europe back to Work; 06 November 2013 Country-specific recommendationsEuropean SemesterTroika / IMF Moderate wage developmentsBG, FI (2012), IT, SL Moderate minimum wage developmentsFR, SL Freezes/cuts of minimum wageEL, IE, LV, PT, RO Freezes/cuts of public sector wagesEL, IE, HU, LV, PT, RO Freezes of private sector wagesEL Higher wage dispersion at the lower end of the wage scale SE Wage developments in line with productivityDE, FI (2013) Decentralisation of collective bargainingBE, ES, ITEL, PT, RO Stricter rules for extension of caEL, PT, RO Reform/abolition of wage indexationBE, CY, LU, MTCY (since 2013) Total18 out of 28 countries received specific recommendations

Wage Cuts and Freezes in Public Sector ETUI – Getting Europe back to Work; 06 November 2013 Troika/IMF countries Other countries General wage freeze (since 2009/2010) EL, ES, IE, IT, CY, HU, PT, RO CZ,DK, EE, F, LT, PL, SK, SL, UK Pay cuts between 5% and 10%ES, IE, IT, PTCZ, EE, SL Pay cuts between 15% and 30%EL, LV, HU, ROLT Abolition of bonusesEL, ES, HU, PT, RO, LV DK, EE

Wage developments in public administration ETUI – Getting Europe back to Work; 06 November 2013 Source: DG Employment: Industrial Relations in Europe 2012, p.140

Development of real minimum wages during the crisis ETUI – Getting Europe back to Work; 06 November 2013

Development of real wages in the EU 2010 – 2013 (%)*

Decentralization of collective bargaining systems in EU countries under EU, ECB and/or IMF surveillance Measures:Affected countries Abolition/termination of national collective agreements Ireland, Romania Facilitating derogation of firm-level agreements from sectoral agreements or legislative (minimum) provisions Greece, Portugal, Hungary, Italy, Spain General priority of company agreements/ abolition of the favourability principle Greece, Italy, Spain More restrictive criteria for extension of collective agreements Greece, Portugal, Romania Reduction of the ‘after-effect’ of expired collective agreements Greece, Spain Possibilities to conclude company agreements by non-union group of employees Greece, Hungary, Portugal, Romania, Spain

Individualisation of industrial relations CountryChange in the number of collective agreements (%) Change in the number of workers covered by collective agreements (%) Spain- 43%-41% Portugal-71%-84% Latvia-35%-43% Estonia-44%n.a. ETUI – Getting Europe back to Work; 06 November 2013 Source: country reports and EIRO database. Note: Data for Spain and Portugal for , for Estonia and Latvia for

Conclusions ● General trend towards deregulation already before the downturn BUT ● Crisis brings in a new tool: political intervention to CB outcomes and processes => abrupt de-collectivisation and de-centralisation in “problem countries”; downward pressures on wages across the EU ● Continental “core” vs. southern and eastern “peripheries” ● Alternatives to wage competition? ETUI – Getting Europe back to Work; 06 November 2013

Thank you very much for your attention!!! Dr. Torsten Müller Dr. Magdalena Bernaciak European Trade Union Institute Bld. du Roi Albert II, Brussels ETUI – Getting Europe back to Work; 06 November 2013 Impact of the crisis on wages and CB across Europe