European low pay policy

Thorsten Schulten of the WSI trade union research institute in Germany introduced the debate on low pay with an outline of arguments in favour of adopting a policy on minimum wages across Europe.

Thorsten set the scene by setting out what institutions like the International Labour Organisation and European Union have to say about minimum or “decent” pay. He then explained how minimum wages can be important in creating a more egalitarian pay structure and can reduce the gender pay gap.

Beyond that a policy that focuses on improving the lowest pay rates is important in counteracting downward pressure on pay through competition and a solidarity-based pay policy can help stabilise and even boost domestic demand.

Thorsten went on to provide an overview of the level of legal minimum wages and how they are set in the 17 member states of the European Union which have statutory minimum wages along with Bulgaria and Romania. He then briefly explained how high levels of collective bargaining provide minimum wages in Austria and the Scandanavian countries while the Italian constitution includes a guarantee for minimum pay.

Germany, where the coverage of collective bargaining has been falling, has neither a legal minimum wage nor any other mechanism to replace it and this is why the services union ver.di and the food and catering union NGG are both arguing for the introduction of a statutory minimum wage there.

Thorsten then went on to explain how his own institute, the WSI, has co-operated with research bodies from France (IRES) and Switzerland (Denknetz) in developing a proposal for a European minimum wage policy. He pointed out that official figures indicate 15% of employees across the EU are low paid, with national percentages ranging from 8.6% in Denmark to over 19% in the UK.

The three institutes argue that trade unions should set themselves a target of getting minimum wage rates - both legal minimum rates and those set in collective agreements - increased so that they are at least 60% of national average earnings. Acknowledging the challenge this poses in some countries the researchers have suggested 50% as a short-term target.

The European statistical agency Eurostat defines low pay as less than 60% of median earnings and so it makes sense to set a target at that level. It provides a recognisable focus and rallying point and a basic trade union demand that no collective agreement should leave workers classified as “low paid.”

This would involve co-ordinating collective bargaining policy, the setting out of national action plans and appropriate systems to monitor and assess initiatives taken.

Richard Pond then presented the key points from a draft EPSU policy paper on low pay which had been distributed to all participants.

He pointed out that the public sector in most countries had a relatively good record on low pay and pay equality. However, this was under pressure from the threat of outsourcing and the introduction of more market-based pay systems.

Low pay was recognised as an issue by EPSU affiliates with recent negotiations in several countries focussing on the need to provide higher pay increases for the lower paid or reforming their pay systems to remove some of the lowest pay rates - UK, Denmark and Sweden.

It was also apparent that in both their collective bargaining and in political campaigning around legal minimum wages, some EPSU affiliates set themselves specific targets. These may be related to earnings in the private sector or overall national average earnings.

The 2004 Congress identified low pay as a key issue for EPSU’s collective bargaining over the next five years and the draft policy paper argues that it should be a priority for 2006 and the following years. The action points at the end of the paper outline a potential campaign around low pay. This would have two elements - one focussing on co-ordinating collective bargaining activity and the other looking to get EPSU affiliates involved in campaigning for higher legal minimum wages where these already exist.

The aim would not be to establish a European minimum wage nor to campaign for statutory minimum wages in countries which don’t have them, unless this is the agreed policy of local EPSU affiliates.

The idea would be to agree a target for minimum pay, whether in collective agreements in the public services or as set by a legal minimum wage). The paper suggests a target of 60% of the median national wage for any statutory minimum wage and a target of 70% of the median for minimum rates in collective agreements.

In some countries these would be long-term targets bearing in mind the low levels of minimum wages.

In a wide-ranging discussion conference delegates raised several questions about the nature of targets and the extent to which “cost-of-living” measurements should be taken into account.

It was also pointed out that training and improving skills were important elements in tackling low pay as they provide the means to people to move on to higher-skilled and better-paid jobs.

The issue of tax credits and other forms of state support for low-paid workers were raised but an EPSU working group on collective bargaining had discussed this earlier in the year and agreed that it was too complex to take these into account in these initial discussions on the problem of low pay.

There was some uncertainty about how the targets would work in different countries and how relevant they would be, particularly where minimum wage rates were well below (or, in the case of a few collective agreements, already above) the suggested targets. There was also concern that such targets would not be compatible with other longstanding targets and comparisons used in collective bargaining.

However, it was also argued that co-ordination along the lines being suggested would be possible and that a framework for a campaign could be outlined which could then be adapted to fit in with particular national circumstances.

The secretariat agreed to take account of the range of viewpoints when amending the draft policy document. They would also add more flesh to the bare bones of the proposed campaign bearing in mind the concerns raised by some delegates.

The secretariat’s view was that a campaign around low pay would send out a powerful and positive message about what public service unions are trying to achieve. It would also link in with the planned campaign around quality public services.

Outsourcing

Richard Pond presented the revised paper on outsourcing and collective bargaining which had first been published in January 2005 following the 2004 collective bargaining conference.

The impact of outsourcing on collective bargaining has been discussed in a number of EPSU meetings over the last 18 months beginning with a seminar for the utilities sector in May 2004. It has been the agenda at the utilities standing committee for the past three meetings and a general discussion at last year’s collective bargaining conference agreed that it should be raised in other EPSU sectors.

The updated version of the EPSU paper on outsourcing contains some new material on latest developments in outsourcing plus summary details of further responses to the EPSU questionnaire on outsourcing.

The survey showed that in quite a few cases EPSU affiliates had managed to ensure that there was full consultation over the process of outsourcing and had won some guarantees on workers’ pay and conditions. However, in a significant minority of cases it was clear that pay and conditions had deteriorated or that unions were not in a position to confirm what had happened following outsourcing.

An important part of the debate on outsourcing has been about how the issue could be taken up in the social dialogue. The secretariat drafted a code of conduct that might form the basis of negotiations with Eurelectric, the employers’ organisation in the electricity sector.

There was some scepticism in the standing committee about how this would work but further consultation with all EPSU affiliates in the electricity sector is taking place to see if the code has potential.

In the meantime the secretariat has also drafted a checklist on the key issues that unions should attempt to address when faced with outsourcing. Developing and distributing this checklist may also be a useful way of co-ordinating action on outsourcing.

Conference participants responded positively to the draft checklist and made several suggestions about how it could be improved, including:

• Adding a commitment to bring services back in-house if already outsourced;
• Negotiating over which services should excluded from outsourcing completely;
• Clarifying the commitment to job security and to not creating a two-tier workforce;
• Taking action to improve productivity and the quality of service before outsourcing becomes a real threat; and
• Getting improvements to training to help boost productivity and quality of service.

It was also pointed out that the more general philosophical argument against outsourcing should not be forgotten. There is a reason for maintaining publicly provided public services as the private sector cannot be relied on to deliver them in the same way.

Jan-Willem Goudriaan said that the secretariat would revise the checklist to take account of the comments and suggestions made by participants and would see if it would be possible to get the background document, currently only available in English, translated into at least the main EPSU languages.

Reluctant employers and an unreliable Commission - Developments in the intersectoral social dialogue 2005

Unions are facing a major challenge in the intersectoral social dialogue, according to ETUC general secretary Maria Helena Andre. Kicking off the fourth EPSU conference on social dialogue and collective bargaining, she said little progress had been made during the year. There is no pressure on employers to strike any agreements and the European Commission has become almost a bystander.

There is virtually nothing in the Commission’s social agenda and its business orientation means that it will not put pressure on the employers to come to an agreement. This reflected a major shift in approach from four or five years ago.

Maria Helena reported that negotiations over the work programme for 2006-2008 had stalled with the range of proposals seen by unions as a minimum but regarded by employers, as more than the maximum they would agree to. The ETUC also wanted greater flexibility in what could be discussed whereas UNICE, the employers’ organisation, was insisting on keeping only to the issues in the work programme.

Her view of the 2003-2005 was that it had been very difficult but some progress had been made. Gender equality had been an interesting debate according to Maria Helena and she felt that there had been a “balanced outcome”, bearing in mind the employers’ reluctance to tackle many issues.

The evaluation of the framework of actions on lifelong learning and qualifications had proved disappointing. The information in the national reports made it impossible to evaluate properly and overall the impression was that it had not been taken up seriously in all countries.

Some key new discussions had been launched on undeclared work as well as the implications of an ageing workforce. This latter subject is particularly broad. While employers want to focus narrowly increasing retirement ages, unions are keen to extend the debate to cover issues such as migrant workers and mobility.

Employers have also been very negative about revisions to the European Works Council Directive. The one bright spot here, however, was at least getting the employers to support a joint statement about the positive role European works councils can play.

And Maria Helena thought that the employers were also playing a positive role in supporting social dialogue in the New Member States and agreeing on the need to establish strong and independent social partners.

Implementation of the telework and stress agreements had raised a range of different issues. With telework part of the problem has been that this is not seen as a priority in many industries. Eight Member States had endorsed the agreement at national level, three New Member States had put it into effect via legislation and eight were in the middle of negotiations. The real issue, however, was how to go beyond this and find out what were the problems of implementation at sectoral and local level.

Two key problems with the telework agreement were that it had been produced in English only and its description as a “voluntary” agreement had been misinterpreted by the employers as meaning they could take it or leave it.

Less progress had been made on the stress agreement. While it had been translated into more languages there was a problem with making it widely known among unions and some had only become aware of it as a result of an ETUC seminar. The ETUC had been active in producing a guide to the agreement in English and French and was planning a conference in October 2006 to evaluate implementation of the agreement.

For the coming period, 2006-2008, the ETUC said it wanted to discuss access to lifelong learning, access to the labour market for disadvantaged workers and the transnational framework for collective bargaining as proposed by the European Commission. It also wanted to conclude at least one framework agreement and was hoping to get some other issues on the agenda - flexibility and security, productivity and macro-economic policy. More generally the social dialogue needs to establish clear procedures for the implementation of agreements and how they are implemented at national level. Terminology needs to be clarified and some form of mediation should be set up to resolve disputes over how agreements are put into effect. Unfortunately, the employers are reluctant to talk about any of this.

Maria Helena concluded by saying that this was a critical period for the social dialogue with the credibility of the social partners at stake. She pointed out that this was a unique forum for consultation and more should be made of this.

The employers’ view was that the social dialogue should be kept alive. So while there wasn’t a risk of a complete breakdown it was vital to give the process more impetus. Maria Helena stressed in particular the importance of dialogue at European level reflecting the key issues and debates that were taking place at national level.

Collective bargaining in 2005 - an overview

Maarten Keune, ETUI-REHS

Maarten provided some economic background to the results of the latest ETUC survey of collective bargaining.

Growth rates were still modest in the EU15 although stronger in most of the new member states. In 2002-2005 average growth was below 2% for nine countries, while it was at 3% or higher for 15 countries.

Unemployment has remained high at around 9% over the past two years.

Inflation has been reasonably stable. In the majority of countries it remains below an average of 3% yearly over the 2002-2005 period.

The real value of wages agreed in collective agreements has been under considerable pressure. In the period 2002-2005, in only seven of the 21 countries covered in the survey was the average yearly wage increase resulting from collective bargaining above 1%, while in Luxembourg and Slovenia this average was actually negative. Moreover, there is a clear downward trend

In 2005, only three countries show wage growth above 3%, while in six countries growth remains below 1%. Wage growth is again highest in some of the new member states (Czech Republic, Hungary) and in candidate country Bulgaria.

In most European countries (14 out of 20 countries), over the four-year period, real wage growth remains below productivity growth.

In most countries, in the period 2002-2005, average annual wage growth was higher in the public sector than in the private sector (in 13 of the 19 countries in the table). In half of the countries the difference between the two sectors remains small however, i.e. below 1%.

In 2002-2005, in all countries with a statutory minimum wage that are included, the growth of the statutory minimum wage was equal to inflation (Belgium and Portugal) or higher than inflation (the rest). Hence, the real value of the minimum wage was safeguarded everywhere and in most countries it increased. Minimum wage growth has been particularly strong in the new member states, in Ireland and the UK, and in the candidate countries.

The overall impression on working time is that, with few exceptions, in the EU15 working time reductions have come to an end and in several cases a tendency towards extending working time can be observed.

While there have been some examples of longer working hours, the survey suggests that working time flexibility has been increasing around Europe. The trend in Germany to longer hours has spread to the public sector in the West. Although the deals, in both the private and public sectors, are not “free lunches” and involve some concessions from employers too.

The increased complexity in working time arrangements means that trade unions have a very important role to play in the controlling moves to greater flexibility.

The decelerating trend in wage growth raises fears of a downward wage spiral.

The decline in wage growth results both from slow economic growth and increasing difficulties for unions in getting productivity improvements translated into wage growth in the context of high unemployment and fears about job security.

Employers and often also governments argue for wage moderation for the sake of international competitiveness and the threat of relocation is becoming part and parcel of bargaining strategies. This is also true of working time, where there is heavy pressure for both working time extensions and increased working time flexibility.

To avoid being played off against each other, workers and trade unions should be aware of these general trends and react to them not only at the national but also at the transnational level, by exchanging information and coordinating their strategies and activities. In this way, unions could attempt to avoid negative competition on wages and working conditions. Acting together at European level they may also join in the calls for changes to economic policy that are needed at national and European level in order to achieve a better growth performance.

Annual Report

Richard Pond presented the draft EPSU annual report on collective bargaining and social dialogue.

The political complexion of governments across Europe remains mainly centre-right with elections during the year producing a shift to the right in Germany and Poland. Norwegian unions were able to celebrate a new centre-left government and the general election in Portugal resulted in a victory for the Socialist Party. However, EPSU affiliates in Portugal have found the new government is intent on reforms that include an increase in retirement age for public sector workers, pay restraint and cuts in public services.

The general economic climate remains difficult with slow growth, particularly in the biggest economies in Europe, and stubbornly high unemployment.

The main concern for the European trade union movement continues to be limited prospects for growth with low levels of domestic demand particularly in Germany, Europe’s biggest economy. Output in the EU25 grew by 1.6% in the third quarter of 2005 compared to the same period last year.

The latest figures from Eurostat show inflation averaging 2.5% in the Eurozone countries and 2.4% in the EU25. These are only slightly higher than the 2.4% and 2.3% recorded in the same period last year.

Unemployment over the last 12 months has been relatively stable. The latest figure for the EU25 is 8.6%, slightly down on the 9.0% recorded in September 2005. However, four of the biggest EU countries have above-average unemployment rates - Poland (17.7%), France (9.4%), Spain (9.3%) and Germany (8.7%).

The EPSU annual report includes brief notes on the key developments in collective bargaining in the public services in most European countries but the presentation was limited to the major ones.

In Germany the year saw the implementation of a new collective agreement signed by the federal and local government employers but still so far rejected by regional government that is intent on increasing weekly working hours. The new, completely revised agreement includes a much clearer and simpler pay structure. Many of the complex range of allowances have been scrapped and a key part of the lengthy negotiations have focussed on making it free of sex discrimination.

Public sector unions in France and Italy are facing challenging times. In France the public services minister is reluctant to even agree to proper pay negotiations while in Italy the unions thought they had clinched a long overdue pay agreement back in May but have found the government is refusing to draw up a budget that will include the money for the increases.

In the UK one of the most positive developments has been further progress towards regulations which will bring to an end the “two-tier” workforce in private contractors. News from Spain and Sweden was also positive with Spanish public sector unions achieving a real increase in pay and making progress on other key issues in a new collective bargaining structure. While in Sweden the main municipal collective agreement again provided higher increases for the lower paid.

The state and municipal sector agreements in Denmark were both renewed for another three years. The state sector deal included a range of measures to improve equal treatment while the municipal agreement ensures protection of pay during the process of local government reorganisation.

In the Netherlands, a period of pay restraint continued although this did not stop a strike by municipal workers over the summer which resulted in a higher pay offer from the employers.

Some of the common themes during the year included pensions (affecting Belgium, UK and Portugal in particular), decentralisation and reorganisation (UK, Ireland, France and Denmark) and temporary workers (Spain and Finland).

The overall picture on pay increases was still not completed but information supplied by EPSU affiliates so far suggested that seven out of 10 negotiations were producing real increases in pay - consistent with the trend over the last three years.

Several countries had seen major strikes and demonstrations across the public sector. In France a number of demonstrations were also co-ordinated with the private sector on pay and working time. While in Belgium too the national strikes in October over pensions were across all sectors. The national strike in Italy in March led to a negotiated deal in May but unions had to resort to strike action again in November to keep the pressure on the government to provide funding for the pay increases.

There had been important developments in the sectoral social dialogue with significant progress towards a formal committee in the hospitals sector and resolution of the issue of trade union representation in national administration. The electricity social dialogue was continuing to work on a number of important issues including equality, skills and social dialogue in South East Europe. The local government committee was still only in its second year as a formal committee and a vital part of its work during the year involved work on improving social dialogue in the new Member States.

The main focus for collective bargaining in the public services in early 2006 would be about resolving outstanding disputes in a number of countries - in particular Greece, Portugal and Italy - while unions in France will be continuing to press for proper negotiations over pay.

Some of the key agreements up for negotiation in the first half of the year include the UK health service (expiry date 31 March), the German energy sector (28 February) and national and local government in Norway (30 April).

Working time

There was a brief introduction to the main issues on working time before the conference split into three working groups.

The two key issues were the Working Time Directive and recent examples of employers pushing for longer working hours.

Despite the European Parliament’s decision to back abolition of the opt-out from the Working Time Directive the Council of Ministers appeared to be favouring the position advocated by the UK government to retain it. There were also fears that the Commission would maintain its proposal for a redefinition of working time despite European Court judgements that established on-call time at work as working time.

In terms of collective bargaining, the key developments had been the increase in working hours negotiated by a number of employers in Germany and in particular the public sector employers. Federal employees were now on 39 hours a week across Germany which means a 30-minute a week increase for those in the west and a one-hour reduction for those in the east.

Regional public sector employers were also determined to introduce longer working hours while civil servants at federal and regional level had already had longer hours imposed.

The three working groups discussed broadly similar issues with all three establishing that working hours varied between 35 and 40 a week but there was not currently a major call from employers for longer hours. Employers in the utilities sector in some new member states had exerted some pressure for longer hours but a general trend was not evident.

It was pointed out, however, that there were other pressures to work longer hours. Low pay, particularly in some of the new member states, meant that employees had to work longer hours to boost their income. There was also evidence of tighter monitoring of performance creating pressure on employees to work longer to fulfil all their duties.

Rather than longer hours, conference participants reported that often employers wanted greater flexibility and the challenge for unions was to try to control this.

There was some discussion about whether EPSU should adopt some specific targets for collective bargaining such as ensuring collective agreements all fell below a maximum number of annual working hours - as adopted by the European Metalworkers’ Federation. However, the general feeling was that this was not the right focus and that it would be more appropriate to develop policies on flexibility and particularly on how increased flexibility might impact on gender equality.

It was also argued that it was more important to concentrate on the health effects of longer working hours and to draw up policies that reflected the different pressures faced by different occupations within the public services. This would be tied in with length of working life as well.

Jan-Willem Goudriaan said that the secretariat would take on board the main suggestions from the discussion with the focus on work-life balance, the health effects of long working hours and the impact in particular sectors. More information on developments in particular countries and particular sectors would be useful background to update EPSU policy and provide a draft document for discussion at the 2006 conference.

Migrant workers

Jenneke van Pijpen of the ABVAKABO public services union in the Netherlands and member of the EPSU executive introduced the discussion on migrant workers. The aim was to have a brief initial debate on the issue to provide a general guide to the work the secretariat should undertake in the coming year to prepare a more detailed draft policy for discussion at the 2006 conference.

Jenneke said that it was vital that unions responded to the challenge of organising migrant workers. Faced with higher levels of unemployment, low pay and other forms of exploitation, migrant workers clearly need the support of trade unions to tackle these issues and help integrate them into the workforce.

By developing collective bargaining policies on vocational and language training aimed specifically at migrant workers, unions could help substantially improve their chances of integrating into society and ensure better treatment at work and a safer working environment.

The conference participants backed Jenneke’s call for action in these areas referring to their own experiences of supporting migrant workers and tackling the racism often generated by restrictive immigration policies. It was also noted that the ageing populations of most of the European Union meant that migrant workers would provide a much-needed source of labour in the coming years.

Young workers

Richard Pond introduced the discussion on young workers. He briefly outlined the main challenges facing young workers in order to generate a debate on how EPSU should be developing its policy in this area.

Young workers often faced precarious employment conditions, low pay and were more vulnerable to accident and injury at work. Improvements to the working conditions of young people in the public services would contribute to improving the image of the public sector and helping boost much needed recruitment of younger employees.

Public service unions would also benefit from increased recruitment of young members as they were facing up to a real crisis in membership among younger workers.

Conference participants provided many examples backing up these main points, arguing in particular that unions need to consider how they could take account of the views of younger workers in drawing up collective bargaining policy.

Policies that tackled low pay and precarious employment conditions would benefit young workers, but specific policies were also needed on training and apprenticeships to improve the level of skills among younger workers.