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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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European Foundation for the Improvement of Living and Working Conditions (Dublin Foundation)

 

PAY IN EUROPE IN THE 21^st CENTURY [5 March 2014]

http://www.eurofound.europa.eu/publications/htmlfiles/ef1388.htm

or
http://www.eurofound.europa.eu/pubdocs/2013/88/en/3/EF1388EN.pdf
[full-text, 186 pages]

 

Author:

Aumayr‑Pintar, Christine; Cabrita, Jorge; Fernández‑Macías, Enrique; Vacas‑Soriano, Carlos

Summary:

The issue of wages has attracted particular attention at European level since the onset of the economic crisis. Changes in economic governance, notably within the European semester, have prompted discussions on wage‑setting mechanisms. While, overall, wage‑bargaining regimes have remained relatively stable over time in many countries, the most substantial changes were seen in Member States facing more difficult economic circumstances. This report provides comparative time series on wage‑bargaining outcomes across the EU Member States and Norway, discussing pay developments against the background of different wage‑bargaining regimes and looks into the link between pay and productivity developments. It also investigates the different systems and levels of minimum wages in Europe at present, carrying out an accounting exercise through a hypothetical scenario of a minimum wage set at 60% of the median national wage (with some alternative scenarios as well for comparison) in order to benchmark and evaluate minimum wage levels and systems in Europe, and to discuss the possibilities and difficulties of coordination in this matter. An executive summary is also available.

CONTENTS

Executive summary 1

Foreword 5

Part 1: Pay outcomes and wage bargaining regimes 6

Introduction 7

1 — Policy background 9

The treaties 9

EMU and macroeconomic policy coordination 9

2 — Positions and views of the European social partners 17

Trade unions 17

Employer organisations 18

The consultation meeting 19

3 — Theoretical background and empirical evidence 21

Links between wages and labour productivity 27

Wage‑bargaining regimes, pay and economic outcomes 28

Wages, profits and growth 32

4 — Pay developments in the 21st century 35

Wage‑bargaining regimes 1998–2012 35

5 — Major trends in pay developments 41

Pay and its links to the business cycle 41

Pay across bargaining regimes 42

Collectively agreed pay and actual wage developments: Wage drift 48

6 — Pay developments and labour productivity 51

Nominal unit labour costs – wage‑related competitiveness 54

Real unit labour costs – the distributional side 56

Wage bargaining regimes and pay–productivity links 58

Sector‑related collectively agreed pay 61

7 — Summary and conclusions 63

Policy background 63

Empirical findings 63

Bibliography (Part 1) 67

Annex 1: Methodological notes 71

Annex 2: Tables and figures 73

Annex 3: Contributing authors 81

Part 2: Minimum wage policies and levels in Europe: an accounting exercise 82

 

 

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