By Luca Visentini
Why have wages in Europe collapsed in the last decade? Because of the combined impact of globalisation, the financial crisis and, above all, the austerity measures that followed it. Wage cuts and the dismantling of collective bargaining and minimum wage systems have been the principal – and badly chosen – tools of economic adjustment.
Today, after almost a decade of pain for workers, we can say with sadness but absolute confidence that they have not worked. Instead of recovery, we face ongoing stagnation, high levels of unemployment, and a fall in demand.
This was due in turn to a drop in the value of wages, along with rising inequality, in-work poverty and even more pressure on welfare systems.
A general pay rise for all workers across Europe would boost economic recovery by supporting demand and growth. A pay rise for workers would make growth more sustainable and inclusive.
They best way to increase wages is through trade union membership and collective bargaining. But we have witnessed a systematic dismantling of collective bargaining in many EU countries.
National sectoral bargaining and collective agreements covering all workers need to be restored and relaunched, extended where they still work, and created where they do not exist.
Collective bargaining is needed in big and multinational enterprises to bring up wages in low-wage countries. It is not acceptable that in the EU there are countries where the hourly wage is one tenth that of other countries. This is pure exploitation.
Statutory minimum wages must also be increased to become living wages, and trade unions need to be fully involved in setting those rates.
That is the challenge for Europe and for the trade union movement.
The European Commission, the OECD, and even the IMF admit we have a problem with wage levels and inequality. So they should stop urging EU countries to cut wages and dismantle collective bargaining. They should start recommending the opposite.
Employers too must recognise that higher wages and stronger collective bargaining benefit the economy and their own businesses: if workers have more money they will spend it on goods and services.
The European trade union movement is, as a matter of absolute urgency, opening a dialogue with EU institutions, national governments and employers on the need for a pay rise and how it can be achieved