Collectively agreed wages in Belgium Guy Van Gyes, Sem Vandekerckhove HIVA-KU Leuven CAWIE KICK OFF MEETING January 2012, Leuven 1

Wage formation in Belgium Cumulative system –National > sector > company > (employee) Always in joint committees Trade unions: ABVV, ACLVB, ACV Employers: VBO, Farmers’ association, small entrepreneurs, social profit Juridic significance Covering almost all employees (extension) 2

National level National council of labour (NAR) –Minimum wage Collective labour agreements (CAO) Welfare fixed Ad hoc raises (last: October 2008) –Broad lines of employment conditions Eco-cheques: net benefits to spend on ‘green’ products and services Non recurring performance pay Central council for the economy (CRB) –Wage norm Inter-sectoral agreement (IPA) Upper limit for wage raises Two year period Usually in percentage, exception: (250 EUR) –Training, etc. 3

Sector level Joint labour committees and subcommittees –Following an IPA –Collective labour agreements (CAO) –Index mechanism Year to year (monthly to every two years) 2% indexation –Margin for company agreements: Normal agreements: indexation + real wage increase All in agreements: real wage increase depends on indexation Enveloppe systems: composition of earnings to be decided at the company level (e.g. net benefits/cheques versus gross raises) 4

Company level and below Company agreements –Agreement is generally not registrered –Supplementary to sector agreements –Implementing sector agreements –Replacing sector agreements: de facto when a company classification system is used Employee agreements –Rare for most employees –Generally a bonus, extra days off, working times, … –Employees with individual bargaining power: fringe benefits (car, shares, …) 5

Measuring collectively agreed wages Holding institution: ministry of labour (FOD WASO) Index of conventional wages (ICL) –Since 1958 –Published monthly based on CAO’s Statistic –By employee class (blue/white collar), for the whole economy and by sector –Sector figures are derived from joint committees Components –Indexation –Wage change relative to the average of wage scales in the base year –Change in working time (blue collar only) Company agreements are excluded 6

Centralization DegreeJoint committee 1Inter-sectoral218, 305, 318, 319, 329 2Sector, company exceptions 106, 118, 119, 121, 124, 130, 140, 201, 226, 303, 304, 314, 317, 327 3Sector, company additions112, 120, , , 202, 214, 311 4Sector, company implementation105, 111, 209, 224 5Sector, company suppletion115, 116, 207, 220, 310 6Company100, 104, 200, 210 7

Components of conventional wages 8

Quirks Note Esteban Martinez Company level remains a black box –  Select company agreements > 3000 white/blue collar workers Composition effects unknown –Changing jobs distribution –Changing age distribution (seniority effect) –  Profile shifts could be followed per sector Moving of wage components from salary to extras –To avoid surpassing the wage norm –  Linear bonuses could be included Sum of white and blue collar collective wages skewed by working time –  Measuring white collar working time Best option: collecting individual conventional wage information 9