Eurofound – European Foundation for the Improvement of Living and Working Conditions

www.eurofound.europa.eu

Industrial relations and wage-setting under

pressure

Academy on National Tripartite Social Dialogue

Turin - 19 September 2014

Christian Welz

1. Overview

2. Actors u n d e r p r e s s u r e

3. Processes u n d e r p r e s s u r e

4. Outcomes u n d e r p r e s s u r e

5. Crisis vs. megatrends

6. Conclusions / discussion

Table of content

• Karl Marx

1867, Capital, vol. 1

chapter 6: The Buying and Selling of Labour-Power

• “labour-power can appear upon the market as a commodity,

only if, its possessor, the individual whose labour-power it is,

offers it for sale, or sells it, as a commodity

prologue

• “By viewing labour as a commodity, we at once get rid of the

moral basis on which the relation of employer and employed

should stand, and make the so-called law of the market the

sole regulator of that relation.” (Dr John Kells Ingram, address to the British TUC in Dublin 1880)

• Clayton Anti-Trust Act 1914 (section 6)

• 'that the labor of a human being is not a commodity or article

of commerce'.

Samuel Gompers – leader of the American Federation of Labour for

20 years was inspired by Dr. Ingram

prologue

• Treaty of Versailles (article 427)

first principle of the new ILO pro- claimed ‘ that labour should not

be regarded merely as a commodity or article of commerce

introduced by British delegation

Gompers > personal defeat

• ILO DECLARATION OF PHILADELPHIA (10 May 1944)

labour is not a commodity

prologue

1. Overview

• reorganisation of

• public IR

actors

• social

partners

• developments in

density rates

• abolishment of old

actors

• emergence of new

actors

• government

unilateralism

• new balance of

power

• changes

• CB levels

• wage setting

mechanisms

• opening

clauses

• extensions

• indexation

• expiry of CA

• minimum pay

• industrial action

• dispute resolution

• no. and length of

agreements

• inconclusive

outcomes

• pay provisions

• working time

• work organisation

ACTORS OUTCOMESPROCESSES

2. actors

Impact Countries

successful tripartite negotiation (8-10) BE, BG, CZ, EE, FR, LT, LV, NL, PL, PT

breakdown of tripartite negotiations (10---) BE(2011/12), ES, FI, GR, HR, HU, IE, IT,

LU, PL(2011/12), SI

reorganisation of public actors and bodies ES, GR, HR, HU, IE, LU, RO

decline in trade union density CY, BG, DK, EE, LT, LV, SE, SI, SK, UK

halt in trade union density decline/increase

in trade union density

AT, CZ, DE, EE (for transport), LT

changes to membership of employer bodies CY (increase), DE (increase in members

not bound by CA), LT (first decline then

increase)

Source: EIRO national reports 2013.ACTORS - SUMMARY

2. actors

Impact Countries

decreasing influence and visibility BE, DK, EE, HU, IE, LV, NL

increased cooperation between the social

partners

DE, HU, LT, NL

emergence of new social movements ES, GR, PT, SI

increase government unilateralism BE, BG, EE, ES, GR, HR, IE, PL, PT,

SI

new power balance among actors BG, EE, ES, GR, LT, LV, PT

Source: EIRO national reports 2013.ACTORS - SUMMARY

Trade union density _ 2011 v 2012 EIRO/ETUI 2013

FR LT PL EE HU LV CZ SK ES NL DE PT BG UK SI EU IE AT HR RO LU IT BEM

TDK SE FI GR CY

2011 8 10 12 11 11 12 16 16 15 21 22 20 18 26 27 31 34 34 35 40 37 36 52 59 67 70 68 28 50

2012 8 9 10 11 11 12 14 15 16 17 18 20 22 26 27 29 31 33 35 35 37 37 50 57 67 70 74 0 0

0

10

20

30

40

50

60

70

80% of workforce 2011 2012

Employer density _ 2012 v 2013 EIRO 2013/14

LT PL EE HR SK LV UK CZ BG EU DK IT FR FI BE LU SI SE NL AT

2011 15 20 25 28 33 34 35 41 42 54 58 58 60 70 76 80 80 87 90 100

2012 15 20 25 28 30 41 35 48.6 0 56 58 0 75 71 80 80 80 86 85 100

0

20

40

60

80

100

120% of employees in companies members of an EO

2011 2012

3. processes

PROCESSES -

SUMMARY

Type of change Countries

Main level(s) of bargaining:

Decentralisation AT BG CY EL ES FR IE IT RO SI

Recentralisation BE FI

Horizontal coordination across bargaining

units

AT ES HU IE RO SE SK

Linkages between levels of bargaining

Ordering between levels EL ES PT

Opening and opt-out clauses AT BG CY DE EL ES FI FR IE IT NO PT

SE SI

Extending bargaining competence EL FR HU PT RO

Reach and continuity of bargaining

Extension procedures EL IE SK PT RO

Increased / changed use of existing

procedures

BG DE IT

Continuation beyond expiry EE EL ES HR PT

Minimum wage setting and indexation

mechanisms

Country Multi-employer (MEB) or Single-employer (SEB) bargaining prevalent

2008 2011

Austria MEB MEB

Belgium MEB MEB

Bulgaria Mixed Mixed

Croatia MEB MEB

Cyprus Mixed Mixed

Czech Republic SEB SEB

Denmark MEB MEB

Estonia SEB SEB

Finland MEB MEB

France MEB MEB

Germany MEB MEB

Greece MEB MEB

Hungary SEB SEB

Ireland MEB SEB

Italy MEB MEB

Latvia SEB SEB

Lithuania SEB SEB

Luxembourg MEB MEB

Malta SEB SEB

Netherlands MEB MEB

Norway MEB MEB

Poland SEB SEB

Portugal MEB MEB

Romania MEB SEB

Slovakia Mixed Mixed

Slovenia MEB MEB

Spain MEB MEB

Sweden MEB MEB

United Kingdom SEB SEB

Company level

Sector level

National level

AT

CY

EL

IT

BG

ES

FR

FI

IE

LT

ROSI

Trends in main levels of CB

Source: Eurofound 2014

BE

PT

• changes in EL, ES, PT

• continental Western, central Eastern and Nordic IR regimes have applied the ‘favourability’

principle to govern the relationship between different levels of CB

CAs concluded at lower levels can only improve on standards established by higher levels

exceptions: IE and the UK > reflecting their different legal tradition based on voluntarism

• (FR)

FR made changes already in 2004 (loi Fillon)

• ES

2011 law inverted the principle as between sector or provincial agreements and company agreements

EL

2011 law inverts the principle as between the sector and company levels for the duration of the

financial assistance until at least 2015

• PT

2012 Labour Code inverts the principle, but allows EOs and TUs to negotiate a clause in higher-level

CA reverting to the favourability principle

Ordering / favourability principle

opening clauses in sector and/or cross-sector CAs provide scope

for further negotiation on aspects of wages at company level

whereas opt-out clauses permit derogation under certain

conditions from the wage standards specified in the sector and/or

cross-sector CA

changes in opening clauses 6 MS

AT, DE, FI, IT, PT, SE

changes in opt-out clauses 8 MS

BG, CY, EL, ES, FR, IE, IT, SI

•

Changes in opening/opt-out clauses

• changes in: EL, FR, HU, PT and RO.

• EL

under 2011 legislation, CAs can be concluded in companies with fewer than 50

employees with unspecified ‘associations of persons’ these must represent at

least 60% of the employees concerned

•

• RO

legislation from 2011 introduces tougher criteria for trade TU representativeness

where unions do not meet the new criteria at company level, employers can now

negotiate CAs with unspecified elected employee reps

Extension of CB competence

Extension mechanisms

of the 28 MS

> 23 MS have extension mechanisms or a functional

equivalent (IT)

no legal procedure for extending collective agreements in

CY, DK, MT SE and UK

changes to either extension procedures or in their use

in 8 MS

BG, DE, EL, IE, PT, RO, SK, IT

clauses providing for agreements to continue to have effect

beyond the date of expiry until a new agreement is concluded

are intended to protect workers should employers refuse to

negotiate a renewal

they are found in a 9 MS at least

AT, DK, EE, EL, ES, HR, PT, SE, SK

changes have been made to such provisions in 5 MS

EE, EL, ES, HR, PT

Continuation of CAs beyond expiry

4. outcomes

Impact Countries

inconclusive outcomes BG, CY, CZ ES, MT, NL

decrease in number of agreements CY, CZ, EE, LV, MT, PT, RO, SI

increase in duration of agreements AT, DE

decrease in duration of agreements BG, CY, DK, GR, LV, ES, SE

decrease in the level of pay increases AT, ES, FI, NL

pay cuts or freezes AT, BE, BG, DE, DK, ES, FI, GR,

HU, IE, IT, LT, LU, LV, NL, PL, PT,

SI, SK, UK

working time reduction/short-time working AT, BE, BG, DE, FR, HU, IT, LT, NL,

PL, SI, SK

non-renewal of agreements BG, CY, EE, ES

OUTCOMES –

SUMMARY

Statutory minimum wage and indexationEIRO 2014

AT BE BG CY CZ DE DK EE EL ES FI FR HR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK

m-wage

change

indexat.

change

existing

no

change

existing

no

change

No. of CAsEIRO 2014

AT BE BG CY CZ DE DK EE EL1 EL2 ES FR IT LT LU LV MT NL PL PT RO SE SK UK

2008 2009 2010 2011 2012 2013

sector CA200

164 166 115 46 46

company

CA

95 87 64 55 39 48

total CA 295 251 230 170 85 94

extension 137 102 116 17 12 9

coverage /

in 1000 pers.

1,894 1,397 1,407 1,236 327 242

No. of newly concluded CAs in PT

5. Crisis vs. megatrends

Trend Origin

Restructuring of actors Megatrend

Decline in trade union density Megatrend

Public Sector Reform Megatrend

Decentralisation of collective bargaining Megatrend (crisis

accelerated)

Increase in opt-out clauses Crisis-induced trend

Increase in opening clauses Crisis-induced trend

Decrease of extensions Crisis-induced trend

Shorter duration of collective agreements Crisis-induced trend

Drop in volume of bargaining Crisis-induced trend

Drop in quality of bargaining Crisis-induced trend

Shorter continuation of CAs upon expiry Crisis-induced trend

Reforms in wage-setting mechanisms Crisis-induced trend

More adversarial industrial relations Crisis-induced trendSource: EIRO 2013

• change has been concentrated amongst 6 MS, whose WSMs

have each undergone multiple changes

CY, EL, ES, IE, PT, RO

been in receipt of financial assistance packages from the ‘troika’

changes in WSMs were required in all except ES

• in a further 4 MS there have been some changes to WSMs

HR, HU, IT and SI

change primarily driven by domestic actors > governments or SP

• in a majority of 18 MS WSMs have seen few or no changes

since 2008

6. Conclusions

• impact of the ‘troika’ in inducing changes to WSMs

amongst those countries receiving financial

assistance packages is clear

• government-imposed measures in these countries

have substantially reconfigured WSMs

6. Conclusions

• influence of Country Specific Recommendations (CSRs) under the

European semester is variable

12 MS have been issued with CSRs on wage setting or wage policy

in some of the 12 MS changes seem consistent with the respective CSR

in others, changes fall somewhat short of the respective CSR

in yet other countries, CSRs would seem to have had no discernible

effect

6. Conclusions

• amongst the programme MS the broader effect of multiple,

government-imposed changes has been to reconfigure WSMs

by weakening or removing key state support for MEB

favourability principle

extension procedures

continuation of agreements beyond expiry

• capacity of MEB to comprehensively regulate wages has been

weakened

•

6. Conclusions

• EU’s new economic governance regime seems primarily to be

aimed at ‘marketising’ collective wage setting

involves WSMs becoming more sensitive to the market circumstances of

companies through (further) decentralisation

• CSRs have mostly been targeted at countries with MEB rather

than SEB bargaining regimes

6. Conclusions

• EU Member States with the tripartite systems

more scope for a joint response to the crisis

• IR systems of Nordic and Central countries contain more

potential flexibility in terms of the actors and the processes

enabling them to adapt more readily to changes

more solid linkages between IR levels and overall less adversarial IR

may well have contributed to their resilience during the crisis

• IR systems of Mediterranean MS have changed them most

• “East Europenisation of IR”

6. Conclusions

• Clayton Anti-Trust Act 1914 (section 6)

• 'that the labor of a human being is not a commodity or article

of commerce'.

• wage setting in the crisis and the new economic governance

towards a re-commodification of labour ?

epilogue

• towards a re-commodification of labour ?

• Labour is not a commodity > clause not in the Treaties

• yet Albany case (1996)

• Albany used the competition rules in Article 81(1) EC (now

Article 101(1) TFEU) claiming that mandatory pension

scheme compromised their competitiveness

•

epilogue and discussion

• ECJ

• “ social policy objectives pursued by CAs would be seriously

undermined if management and labour were subject to

Article 85(1) “

• Advocate General Jacobs

• “ CAs enjoy automatic immunity from antitrust scrutiny”

• Art. 153 (5) TFEU

• The provisions of this Article shall not apply to pay, the right of

association, the right to strike or the right to impose lock-outs.

epilogue and discussion

thank you !

for further information:

http://www.eurofound.europa.eu/eiro/studies/tn1301019s/index.htm

http://www.eurofound.europa.eu/eiro/

http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/

christian.welz@eurofound.europa.eu