(2 May 2014) The ETUC used the first day of the EPSCO informal employment ministers’ meeting in Athens on 29 April to challenge the EU institutions’ obsession with wage flexibility and warn of the risks of deflation. A number of the key elements of the ETUC’s arguments are also set out in the latest EPSU briefing on austerity and the alternatives: The fairy tale of structural reforms.
The ETUC’s submission to the EPSCO council, A different course for Europe: wages and collective bargaining as engine for growth and stability, challenges the argument that wage developments have been excessive and contributed to the crisis. On the contrary, the ETUC argues, real wages have been trailing behind productivity growth for several years and have been outpaced by increasing profits.
There is further evidence to support this in the EPSU briefing which notes that unit profit costs increased one and a half times faster than unit labour costs between 1998 and 2011. The briefing also analyses the role of wages in competitiveness making it clear that innovation and quality are the essential elements behind the successful export performance of countries like Germany and not wage moderation.
EPSU deputy general secretary Jan Willem Goudriaan said: “The ETUC analysis gives the lie to those arguing for further wage cuts and freezes. Wage developments are about maintaining demand in the economy and ensuring decent living conditions. If the European Commission and European Central Bank stick to their obsession with downwards wage flexibility they risk undermining the early signs of a fragile economic recovery and even creating the conditions for deflation.”
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