Focus: European wages and collective bargaining under pressue

Abstract

Across Europe there is increasing direct political intervention into collective bargaining INTERNATIONAL union rights Page 17 Volume 20 Issue 4 2013 TORSTEN MÜLLER is Senior Researcher and MAGDALENA BERNACIAK is Researcher with the European Trade Union Institute (ETUI) in Brussels the country-specific recommendations issued in the framework of the European Semester; since these recommendations were formulated for the first time in 2011 they have been applied to 12 EU Member States. The second being the bilateral agreements concluded by national governments either with the International Monetary Fund (‘IMF’) and the European Union (‘EU’) or with the European Commission, the European Central Bank (‘ECB’) and the IMF (collectively known as the Troika). In these ‘Memoranda of Understand-ing’, or ‘Stand-by Arrangements’, national governments commit themselves to carry out the required reforms in return for direct financial support. The third instrument involves the purchase of state bonds by the ECB in exchange for policy reforms. The formal distinctions among these three intervention instruments notwithstanding, the general policy intention remains the same, namely , the implementation of substantial labour market reforms. These, as a rule, include the demand for moderate wage developments and the decentralisation of the collective bargaining system. Decentralisation and dismantling of multiemployer collective bargaining Even though the current crisis has reinforced the decentralisation of wage-setting and collective bargaining institutions throughout Europe, this process was most pronounced in the countries subject to direct political intervention by the Troika and the IMF/EU. Figure 1 provides an overview of the procedural changes to the collective bargaining systems undertaken in these so-called ‘programme countries’ in return for financial support. Two of them, Romania and Ireland, saw a complete breakdown of national-level collective bargaining structures that had been in place before the crisis. In the case of Ireland, the employers withdrew from the social partnership agreement at the end of 2009, which after 22 years of crosssectoral wage coordination brought the return to company-level bargaining. In Romania, national cross-sectoral collective bargaining was abolished in 2011 by the Social Dialogue Act, implemented unilaterally by the government. Since at the same time the Act re-organised branch-level bargaining structures and introduced stricter criteria for the representativeness of social partner organisations as a precondition for negotiations, the bargaining process virtually came to a standstill. In effect, the collective bargaining coverage rate has gone down from 90 percent to an estimated 20 percent. In Greece, Portugal and Spain, sectoral bargaining structures have formally remained intact, but they have been hollowed out by legal T he neoliberal reform policies pursued by European and national policy-makers to come to terms with the crisis have far-reaching implications on collective bargaining throughout Europe – both in terms of bargaining outcomes and procedures. In a nutshell, their impact manifests itself in three ways: first, in the continuing pressure for moderate wage developments ; second, in the growing decentralisation of collective bargaining processes; and third, in the increasing direct political intervention into collective bargaining in order to ensure the effective implementation of the policies of wage moderation and decentralisation. Before we look at each of these processes in more detail, it is worthwhile to examine the role of wages within the reform policies. The policies of wage restraint and decentralisation of collective bargaining are part of the broader strategy of the IMF and the political elites in the EU to solve what they view as being first and foremost a debt and cost competitiveness crisis. As a consequence , their crisis management is heavily based on austerity policies which aim to reduce public expenditure and to consolidate state budgets, and on the pursuit of so-called ‘structural reforms’ designed to improve national competitiveness. In both approaches, wages play a crucial role as an adjustment variable. In the case of austerity policy , cuts and freezes of public sector wages, alongside the abolition or reduction of fringe benefits for public sector employees, have been part and parcel of governments’ efforts to reduce public spending. The neoliberal structural reforms in the field of collective bargaining are based on the assumption that macroeconomic imbalances between surplus and deficit countries are attributable primarily to differing developments of wages and unit wage costs...