European Commission targets wages

On 30 May, the Commission published a series of policy recommendations for member states, many of which have implications for wages and wage determination systems.

In the framework of economic governance and the EU 2020 strategy, the Commission is calling on countries to address issues of competitiveness, public and private sector indebtedness and labour market flexibility.

The Commission recommendations will be put to the European Council for endorsement.

The ETUC has analysed the the policy advice and its implications for the specific domain of wages, wage formation systems and collective bargaining systems. The file below is the full analysis along with a table providing a detailed overview of the different wage recommendations issued for individual member states.

In summary, the ETUC highlights the following:

- Seventeen out of 27 member states have a recommendation on wage policy, wages and wage formation systems.

- The focus is on wages as an instrument of economic adjustment and should become more flexible so as to regain competitiveness and revive job creation.

- Wage indexation systems are challenged.

- The intention is that wages are more closely aligned to productivity with no allowance for inflation.

- This also means taking account of differences in productivity at local and plant level. In other words, the Commission is openly arguing in favour of higher wage inequalities, as is done for example in the case of the recommendation for Sweden (‘more wage flexibility especially at the lower end of the wage scale’).

- There is a negative bias in the fact that member states in which wages have been stagnating over the past are not really being targeted.

- Minimum wages are also targeted in the drive for flexibility with France, Slovenia and Hungary receiving specific recommendations to control or avoid growth in minimum wages.

- The big absentee in the Commission documents is profits with no assessment of whether they are going into dividends, bonuses, capital pay outs or investments.

- The Commission makes sure that every recommendation on wage reform is accompanied by the standard reference that reform should be carried out in consultation with the social partners and that national systems need to be respected. However, there is a clear contradiction between what the Commission does (putting member states under high pressure to reform in a certain way) and what the Commission says it is doing (respecting national systems of wage bargaining).

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