ETUC collective bargaining committee debates minimum wages, short-time working and crisis in Ireland

(14 April 2010) The ETUC’s Collective Bargaining Committee met yesterday (13 April 2010) to discuss recent developments across Europe with a particular focus on a major agreement on short-time working in the German engineering industry and the continuing conflict in the public sector in Ireland. The committee also discussed how the ETUC should react to an initiative by the Belgian parliament to get minimum wage policy discussed under the forthcoming Belgian presidency.

Collective bargaining round-up

ETUC advisor Ronald Janssen outlined developments in collective bargaining, noting the recent downward trend in wages per head and also, although less pronounced, in collectively negotiated wages per hour. He gave examples from some national negotiations where the challenging economic situation meant that increases were relatively low and there were also cases of pay freezes and cuts. A summary of data from the metal sector highlighted some mixed bargaining outcomes with most cases resulting in low but real increases in pay. In conclusion, Ronald felt that unions were managing a damage limitation exercise with low increases in real terms but also where protection of employment had become a central issue.

German engineering industry short-time working agreement

News about a major agreement on short-time working in the German engineering industry had created considerable debate and the ETUC thought it would be useful to have Uwe Fink from the IG Metall engineering union to explain the background to and details of the agreement. The sector was facing a major crisis with 200,000 job cuts and the termination of contracts for 220,000 temporary agency workers. Production and orders had fallen by over 20% with some firms facing falls of over 50%. A temporary short-time working agreement had been agreed for two years which first required firms to take advantage of the statutory system, funded by employer social security contributions, and then applied arrangements negotiated for the sector. IG Metall estimated that the agreement had saved around 500,000 jobs. The union was also insistent on negotiating a pay deal and secured a EUR 320 lump sum payment for 2010 with a 2.7% increase from 1 April 2011.

Economic crisis in Ireland

Marie Sherlock, a researcher with the SIPTU general union, gave a comprehensive presentation on the crisis in Ireland and its impact on pay and collective bargaining. Public finances had been hit hard by a collapse in the property and construction sectors and the government had pulled out of the national, cross-sectoral agreement within months of signing it. The public sector had been hit with a pensions levy and actual pay cuts amounted to an effective 14% reduction in salaries and it was now looking likely that a possible deal to end a conflict between the government and unions would be rejected by public sector unions. Public sector workers were being used not just as the primary source for public spending cuts but also to set an example for the private sector. However, there was no evidence yet that the private sector would push through significant pay cuts and unions were angry that other sources for public spending cuts were not being investigated.

Minimum wages

Thorsten Schulten of the WSI trade union research institute in Germany provided an analysis of national minimum wages in 20 EU countries in terms of recent developments and value of minimum wages in terms of purchasing power and as percentage of average and median pay. Almost all minimum wages in Europe are set below international definition of low pay. Overall, according to Eurostat there are around 15 million low-paid workers in Europe. Recent trends have included minimum pay freezes in several countries, resulting in real decrease. In real terms, half saw real increase.

Thorsten examined particular cases and in particular Slovenia where union campaign and 30,000-strong demonstration called for, and won, a much larger increase (23%) in the minimum wage than originally proposed by the government (1.3%). In contrast, Spanish government failed to stick by its commitment to increase the minimum wage by 8.0% as part of a process of raising the minimum wage to 60% of average pay. The increase in the end was only 1.5%. In Switzerland unions are calling for a referendum on the introduction of a statutory minimum wage of CHFr 3500 a month as their campaigns around sectoral minima did not cover some sectors.

Thorsten pointed out that minimum wages don’t just play an important role in protecting against low pay and wage dispersion but also in maintaining levels of demand and consumption in the economy. These were key reasons for the ETUC to develop a policy on the co-ordination of minimum wage policy across Europe.

In the brief debate that followed there was a proposal that the ETUC should develop its policy in this area particularly in view of the initiative by the Belgian parliament to pass resolution calling on the Belgian government when it assumes the EU Presidency in July to raise a number of issues around a European minimum wage policy.

Ronald Janssen said that he would raise this with the ETUC political secretariat and that the ETUC’s usual memorandum to an incoming Presidency would highlight existing policy on the need to increase minimum wages, however they are set.

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