TURI-seminar
IRES, Paris
28 September 2015
Output of CAWIE II Project
Collectively Agreed Wages in Europe
Grant: European Commission (DG Employment)
Coordination KULeuven-HIVA (Belgium) and WSI (Germany)
Research group:
14 Institutes from the TURI-Network
AIAS (Netherlands)
AK (Austria)
Associazione Bruno Trentin (Italy)
Fundacion 1 de Mayo (Spain
Instituto Ruben Rolo (Portugal)
Labour Institute for
Economic Research (Finland)
Guy Van Gyes & Thorsten Schulten
FAFO (Norway)
FAOS (Denmark)
IRES (France)
ESRITU (Hungary)
ETUI (EU)
LRD (UK)
28.09.2015
Main argument
built-up in the book
1. Critique of the dominating view on wages
and its policy implications
2. Negative implications of this dominating
view
3. Building an alternative strategy:
coordinating inclusive growth
Guy Van Gyes & Thorsten Schulten
28.09.2015
Wages in the crisis –
Dominating European policy view
■ Crisis is essentially seen as a
crisis of cost competitiveness
■ Imbalances are the result of
divergent unit labour costs development
■ Asymmetric view:
Wage developments in the deficit countries
were “too high” so that they lost competitiveness
■ Symmetric view:
Wage developments in the surplus countries
were “too low” (wage-dumping hypothesis)
Guy Van Gyes & Thorsten Schulten
28.09.2015
Wages and the crisis –
Empirical critique of the dominating view
Noélie Delahaie, Sem Vandekerckhove and Catherine Vincent
Chapter 2 Wages and collective bargaining systems in Europe during the crisis
■ TURI database of 10 countries with statistics on collectively-agreed wages
■ Dominant story based on evolutions of nominal unit labour costs
■ (Real) wage trends different (certainly when making abstraction of
Germany)
■ Wages (agreed and actual) grew in line with price increases
■ Prior to the crisis: almost all countries modest wage growth since the early
2000s when also taking productivity increases into account
■ Thus: Forgetting the demand-side: diminishing labour share in national
income
■ Plus: Need to take better into account the composition effect of a crisis
period (cf. Spanish wage development in the first crisis period => rise in
unemployment is not evenly distributed over the wage curve)
Guy Van Gyes & Thorsten Schulten
28.09.2015
Wages and the crisis –
Conceptual critique of the dominating view
Torsten Müller, Thorsten Schulten and Sepp Zuckerstätter
Chapter 7 Wages and economic performance in Europe
Narrow concept of competitiveness:
• exclusive focus on labour costs
• regardless of the structure of real economy
• regardless of non-price factors
• loose relation between wages and export performance
Narrow treatment of wages as cost factor:
• Ignorance of the role of wages for domestic demand –
wage-led demand growth model = Eurozone
Overestimation of the export sector
for the overall economic development
Guy Van Gyes & Thorsten Schulten
28.09.2015
Policy implications
of dominating view on wages
New European Interventionism:
Economic Governance:
• European Semester/European
Imbalances procedure
– Half of the EU Member States got already recommendations
since 2011
• Troika /Memorandum of Understanding
Policy measures:
•
•
Direct intervention into wage developments by cutting and
freezing public sector and minimum wages
Structural reforms of wage setting institutions
to increase downward flexibility of wages
Guy Van Gyes & Thorsten Schulten
28.09.2015
Main argument built-up
in the book
1. Critique of the dominating view on
wages and its policy implications
2. Negative implications of this
dominating view
3. Building an alternative strategy:
coordinating inclusive growth
Guy Van Gyes & Thorsten Schulten
28.09.2015
Implications of
current wage policy
Radical decentralisation and
deconstruction of collective
bargaining:
• Many countries of Southern
and Eastern Europe
Decrease of real wages in a majority of European
countries:
• Internal devaluation in the South
• German shadow in the North
• (Social) Cost(ly) strategy in the East
Guy Van Gyes & Thorsten Schulten
28.09.2015
Changes in collective bargaining
systems in EU countries under EU,
ECB and/or IMF surveillance
Abolition/termination of national collective
agreements
Facilitating derogation of firm-level
agreements from sectoral agreements or
legislative (minimum) provisions
General priority of company agreements/
abolition of the favourability principle
More restrictive criteria for extension of
collective agreements
Reduction of the ‘after-effect’ of expired
collective agreements
Possibilities to conclude company
agreements by non-union employees
Guy Van Gyes & Thorsten Schulten
Ireland, Romania
Greece, Portugal,
Hungary, Italy, Spain
Greece, Spain
Greece, Portugal,
Romania
Greece, Spain
Greece, Hungary,
Portugal, Romania,
Spain
28.09.2015
Deconstruction/decentralisation
Jesús Cruces, Ignacio Álvarez, Francisco Trillo and Salvo Leonardi
Chapter 3 Impact of the euro crisis on wages and collective bargaining
in southern Europe – a comparison of Italy, Portugal and Spain
Portugal
Spain
2008
2013
2008
2013
Agreements
295
94
5987
3161
Of which
company
95
48
4539
2274
Extension
137
9
1,8 million
242 thousand
12 million
8.5 million
Workers
covered
Guy Van Gyes & Thorsten Schulten
28.09.2015
Real compensation in the EU
2010-2014
Guy Van Gyes & Thorsten Schulten
28.09.2015
Low-cost strategy in the East –
Non-developing wage bargaining
Szilvia Borbély and László Neumann
Chapter 5 Similarities and diversity in the development of wages and collective bargaining in central
and eastern European countries – a comparison of Hungary, Slovakia and the Czech Republic
• Low-wage countries
• Wage and social harmonisation with rest of
Europe fading
• Income policy = government prerogative
• Taxes, minimum wage, social transfer
• Tripartite dialogue but political domination of agenda
• Mainly decentralised collective bargaining
• Decreasing organisational strength unions and
employers’ organisations
• Key example = Hungary
Guy Van Gyes & Thorsten Schulten
28.09.2015
Shadow of Germany in the North
Søren Kaj Andersen, Christian Lyhne Ibsen, Kristin Alsos, Kristine Nergaard and Pekka Sauramo
Chapter 4 Changes in wage policy and collective bargaining in the Nordic countries –
a comparison of Denmark, Finland, Norway and Sweden
Table 1 Mechanisms for determining wages in the Nordic countries
Extension of
collective
agreements
Regime
Denmark
Coverage of
collective
agreements in
the private
sector*
74%
No
Sweden
85%
No
Autonomous
Collective bargaining model
Norway
50%
Finland
85%
Yes, some since
2004
Yes, widespread
Iceland
95%
Yes, widespread
Figure 1. Developments of average wages and
collectively agreed wages in Finland and in
Germany 2001-2013: manufacturing (%).
Mixed model
Statutory regulations (and
strong unions
6
5
4
3
+ Social dumping in the
liberalising labour mobility
(construction, transport,
food industry)
2
1
0
-1
Average_wages_FI
Collectively_agreed_wages_FI
Average_wages_GER
Collectively_agreed_wages_GER
-2
-3
-4
2001
Guy Van Gyes & Thorsten Schulten
2002
2003
2004
2005
2006
2007
2008
2009
28.09.2015
2010
2011
2012
2013
Non-convergence: internal and external
imbalances/inequalities => less social inclusion
Maarten Keune
Chapter 8 Less governance capacity and more inequality: the effects of the assault on collective
bargaining in the EU
Odile Chagny and Michel Husson Chapter 9 Looking for an ‘optimal wage regime’ for the euro zone
• Growing divergence in demand, inequality,
poverty between countries
• Pre-crisis: see next presentation for details
• Non-convergence in productivity; real wages in the
service sector, inflation
• Since the crisis
• Deflation popping up around the corner; sluggish
growth
• Increased ‘beggar-thy-neighbour’ => high social cost
• Loss of a governance instrument
Guy Van Gyes & Thorsten Schulten
28.09.2015
Main argument
built-up in the book
1. Critique of the dominating view on wages
and its policy implications
2. Negative implications of this dominating
view
3. Building an alternative strategy:
coordinating inclusive growth
Guy Van Gyes & Thorsten Schulten
28.09.2015
What kind of wage policy
for inclusive growth?
Thorsten Schulten and Guy Van Gyes
Concluding remarks A transnational coordinated reconstruction of collective bargaining
as a precondition for inclusive growth in Europe
Inclusive growth strategy
• Reference in new economic discourse (EU 2020, OECD etc)
• Everyone should participate in economic development
• Reduction of inequality
• Better economic performance
What role for wage policy?
• Everybody a fair share
• Wage-led demand growth
• Unions and organised wage bargaining as countervailing power to
market/capital forces
• Coordinated wage bargaining (multi-employer, institutionally supported,
coordination by centralisation)
• = Belief in the own European model of a social market economy
Guy Van Gyes & Thorsten Schulten
28.09.2015
Towards an alternative view on wages?
Torsten Müller, Thorsten Schulten and Sepp Zuckerstätter
Chapter 7 Wages and economic performance in Europe
Stabilising and enforcing wage developments:
•
•
•
•
counter deflationary price developments
stabilise and increase private demand
counter income inequality
Pushing ‘smart’ productivity growth
Requires …
• stop of wage cuts and wage freezes
• wages increase at least in line with productivity and
target inflation
• more expansive wage developments in the surplus
countries
Requires … as STRUCTURAL REFORM
• Strengthening/reconstruction of wage setting institutions
Guy Van Gyes & Thorsten Schulten
28.09.2015
Towards an alternative view on wages?
Reconstruction of wage-setting institutions in
Europe requires as structural reform …
• No more restrictions and interventions
in autonomous collective bargaining
Jesús Cruces, Ignacio Álvarez, Francisco Trillo and Salvo Leonardi
Chapter 3 Impact of the euro crisis on wages and collective bargaining in southern Europe
– a comparison of Italy, Portugal and Spain
• Promotion of a higher bargaining coverage
Maarten Keune
Chapter 8 Less governance capacity and more inequality: the effects of the assault on collective
bargaining in the EU
• Promotion of multi-employer bargaining
“The impulse to collective industrial relations in the UK private sector has not
entirely disappeared and might be re-kindled under the right circumstances”
Lewis Emery
Chapter 6 Multi-employer bargaining in the UK – does it have a future?
Guy Van Gyes & Thorsten Schulten
28.09.2015
Reconstruction: European minimum
Wage Policy Thorsten Schulten, Torsten Müller and Line Eldring
Chapter 10 Prospects and obstacles of a European minimum wage policy
Current situation: rather low
MWs
at rather low level
FR
61
SL
PT
HU
LT
BE
DE
PL
RO
LV
IE
NL
UK
SK
EL
ES
LU
EE
CZ
Future: 60% of the median wage
28 million workers in the EU ! (2010)
61
56
54
52
50
50
50
50
48
48
47
47
46
45
Poverty
41
threshold
41
50%
38
36
0
10
20
30
40
Guy Van Gyes & Thorsten Schulten
50
60
Low-pay
threshold
66.67%
70
7
7
SE
FI
SK
PT
FR
IT
DK
BE
GR
CZ
HU
BG
SI
NL
MT
ES
AT
EU
RO
PL
CY
LU
IE
UK
EE
LV
LT
DE
8
8
8
10
10
10
11
11
12
12
13
13
13
13
15
16
16
16
16
17
18
19
19
22
24
24
0
5
10
15
28.09.2015
20
25
Institutional support: Can extension
mechanisms support the reconstruction
of collective bargaining ?
Thorsten Schulten, Line Eldring and Reinhard Naumann
Chapter 11 The role of extension for the strength and stability of collective bargaining in Europe
 A high bargaining coverage usually requires
some form of state support through extension or
functional equivalents
 Current attempts at national and European level to
reduce or even to abolish extensions lead to a
strong decline of the bargaining coverage
 European policy to strengthen collective bargaining
would require a European initative to promote
extension
Guy Van Gyes & Thorsten Schulten
28.09.2015
What next?
Macro-economic challenges
 A European Solidaristic Wage Policy:
Is there an optimal wage coördination (rule)
beyond the national?
 Macroeconomic Coordination:
How to coordinate Wage with
Monetary and Fiscal Policy?
Political challenges
 How to strengthen European wage coördination?
What actors? What instituions?
 How to bring economic democracy in
European governance
Guy Van Gyes & Thorsten Schulten
28.09.2015
Thank you very much
for your attention !
Free download:
http://www.etui.org/Publications2/Books/Wagebargaining-under-the-new-European-EconomicGovernance
Guy Van Gyes & Thorsten Schulten
Thorsten Schulten
Guy Van Gyes
WSI
HIVA
28.09.2015