Collective bargaining and wage growth

The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has published a new analysis of developments in collective wage agreements across Europe in 2016.

Wages are a significant part of working conditions, says the report. It finds that recent recovery in collectively agreed wages has not compensated for the decline of real wages during or after the crisis, especially in countries like Croatia, Greece and Hungary.

Moreover, it highlights evidence of a divergent trend in wages between Germany and central and eastern European countries such as the Czech Republic, Hungary and Poland. While German wages have increased since the onset of the economic crisis, wage growth in the Czech Republic, Hungary and Poland slowed down or even stopped. In the view of the ETUC, this is further proof that wage convergence across Europe needs to accelerate, with significant pay rises in the newer Member States.

Collective wage bargaining is important to wage growth in many Member States, says Eurofound. Around two-thirds of workers in the EU are covered by some form of collective agreement, according to its 2015 report, Pay in Europe in different wage-bargaining regimes. But the impact varies between countries depending on collective bargaining coverage, as well as historical factors and national collective bargaining traditions.

Real wage increases – taking account of price levels – were highest in Slovakia (4.1%), the Czech Republic (2.4%) and Germany (2%); and lowest in Finland (0.2%) and Malta (0.3%), and Belgium (-1.2%).
Nominal and real collectively agreed wage changes in the EU, 2016

Read the full report on Developments in collectively agreed pay 2016, Eurofound, Dublin, 2017.