UPDATE ON WAGE DEVELOPMENTS AND DISCUSSIONS MAY 2015 ETUC CCCB COMMITTEE

ETUC ANALYSIS OF THE COUNTRY REPORTS Commission is in the business of promoting mutual wage competition: France versus Germany and versus Spain Belgium: « wage setting is a structural shortcoming » By focussing on (relative) competitive positions, Commission ignores that very low wages imply very low inflation/deflation. Wages as a « nominal anchor » or as a « rigidity » that threathens profit margins Minimum wages: A difficult relationship Wages as beneficial constraint?

ZERO WAGES IMPLY LOW INFLATION/DEFLATION

UNIT LABOUR COST 2015 MOSTLY MYCH BELOW 2% INFLATION TARGET

ETUC ANALYSIS:WHAT ABOUT INEQUALITIES ?

MEMBER STATES DO NOT ALWAYS AGREE WITH THE COMMISSION Informal EPSCO: Discussion on decentralisation of collective bargaining Commission is « one size fits all ». Forgets about causality running from wages to productivity. Low minimum wages are not a long term vision. Bad experience with decentralisation. Leads to wage competition. ‘Erga omnes’ is a big impulse to bargain at sector level, no competition on wages inside the sector, prevents segmentation if high unemployment regions. EMCO peer review on ‘implementation of last years CSR’s Wrong recommendations should not be implemented by the MS Commission exagerates negative jobs impact of MW, especially from very low levels

ETUC INPUT INTO EMCO CONSULTATION ON IMPLEMENTATION OF 2014 CSR’s Introduction of MW in Germany did NOT cause 900,000 jobs to be lost. Experience not unique, other examples AND research pointing to no negative effects of MW on jobs. Trend of rising inequalities. Wages staying behind productivity Wage competitiveness is relative. EMCO should do a Euro Area ‘implementation’ study.

« FOUR PRESIDENT’S NOTE » : DANGEROUS WAYS OF THINKING Sees root financial crisis in « rigid » labour markets triggering wage explosions undermining competitiveness. Hence, concrete/stronger mechanisms to deliver reforms Ongoing ‘sherpa’ discussion (next one end May). Aim: Deliver report for June Council Divided views from MS Social dimension missing from discussion. If invoked, it’s not at all about putting social limits to the powers of economic governance. Broad discussion on euro area «fiscal capacity » Worrying proposals from « academia »: Bruegel and Conseil d’Analyse Economique. Establish national wage competitiveness councils supervised by a European/Commission led one. Bad karaoke of Belgian law on competitiveness.

COMMISSION AND MINIMUM WAGES : THE PECULIAR CASE OF PORTUGAL Despite a freeze between 2011 and 2013, the MW has risen significantly faster than the average wage since 2008 (18.5% vs. 3.5% in the period) Despite a freeze The MW has become more binding The MW has become more binding The MW is among the highest in the EU in relative terms The MW is among the highest in the EU

Increasing at a fast pace

Becoming more binding Proportion of employees earning the minimum wage

Not so small Proportion of the minimum wage on the median wage, 2013

POSSIBLE KEY MESSAGES Downwards wage competition is promoted by the Commission taking the country with the lowest wage dynamics as the standard of reference. This is pushing the economy to the brink of deflation but the Commission fails to to warn against zero wages ending up in deflation. No balance. Always keen and very clear to weaken wages and bargaining system. Vague and absent when it’s about strengthening such bargaining systems. Failure of the Commission’s analysis fails to identify the systematic redistribution from labour to profits that is ongoing in an increasing number of member states. Overall distrust against minimum wages in almost all of the country reports, despite lack of evidence