Pay developments - annual update 1999

In this annual update, we review broad trends in pay across the European Union (plus Norway) in 1998 and 1999. We find that average collectively agreed pay increases ran at around 3% in 1998, falling slightly in 1999 - though with major variations between countries - and that there are suggestions of greater pay moderation and convergence in the countries of the "euro-zone". In sectoral terms, increases in metalworking generally exceeded those in banking and, to a greater extent, local government.

Pay, of course, is at the centre of collective bargaining and many other aspects of industrial relations. It is also an area where international comparisons are of considerable and growing interest for practitioners, policy-makers and researchers, not least as EU Economic and Monetary Union (EMU) proceeds (notably through the introduction of the euro single currency) and economic globalisation deepens. However, at the same time, pay is an area where meaningful international comparisons - always problematic in the area of industrial relations statistics - are particularly difficult. The differences in national systems of pay formation, industrial relations, taxation and social security, and the divergent ways in which pay-related statistics are collected and presented, mean that there is a formidable array of pitfalls awaiting those who attempt to draw comparisons between countries.

The aim of this annual update from the European Industrial Relations Observatory (EIRO), based on contributions from its national centres, is not to attempt to produce a fully scientific and comparable set of pay comparisons - such an endeavour must be left to statisticians and economists. Instead, we seek to provide a broad, general indication of trends in pay over 1998 and 1999 within the EU Member States (plus Norway), while at same time pointing out the problems, caveats and qualifications. The figures provided should be treated with extreme caution, and the various notes and explanations read with care.

Average collectively agreed pay increases

Collective bargaining plays a key role in pay setting in all the countries considered here. That said, the nature of this role differs widely between the countries, with different bargaining levels (intersectoral, sectoral, company etc) playing different parts, and bargaining coverage varying considerably. Furthermore, the importance of bargaining differs considerably between sectors of the economy and groups of workers. figure 1 below provides figures for average nominal collectively agreed basic pay increases in each country. Where possible, the figures cover the whole economy, though there are exceptions (see the notes below the figure). Figures are not yet available for 1999 in a number of cases, while only partial figures are available for some countries

The huge differences in national pay formation and industrial relations systems are illustrated by the varying ways in which the increases referred to in figure 1 are arrived at. Free collective bargaining, primarily (though not wholly in all cases) at sectoral level, plays the main role in Austria, Denmark, France, Germany, Greece, Italy, the Netherlands, Portugal, Spain and Sweden. National intersectoral agreements are responsible for setting the increases, or laying down guidelines for lower-level bargaining in Belgium (1999), Finland, Ireland and Norway. In the UK, it is company-level bargaining that is predominant. In Belgium, the figure for 1998 was set by a government-imposed pay limit. The role of the increases referred to in the figure also differs: in countries such as Austria, Denmark and Italy, the increases referred to are sectoral minima, subject to subsequent lower-level bargaining (or in the case of Austria, the application of actual pay increases agreed at sector level); while in countries such as the UK, the figures are more likely to represent actual increases.

Putting aside these and other caveats, the following points emerge from the figure (no figures are available for Luxembourg or for Sweden in 1999):

in 1998, nominal pay increases varied between 5.8% in Norway (though this figure include wage drift and "carryover" effects from previous years) and 1.3% in Denmark (though the Danish figure, which applies only to the industry sector, represents a minimum, built on by local bargaining). Increases of 4% and over were recorded in three countries, increases of 3%-4% in four countries, increases of 2%-3% in five countries, and increases of 1%-2% in three countries. The average increase stood at 3.1%;
in 1999, nominal pay increases varied between 4.8% in Norway (again including wage drift and "carryover") and 1.3% in Denmark (though see previous point). Increases of 4% and over were recorded in two countries, increases of 3%-4% in four countries, increases of 2%-3% in four countries, and increases of 1%-2% in four countries. The average increase stood at 2.8%;
the average increase thus fell by 0.3 points from 1998 to 1999, indicating a degree of moderation of nominal pay increases. Moreover, between 1998 and 1999, the rate of pay increase fell in 11 countries. However, two countries - Germany and Portugal - bucked this trend, quite considerably so in the case of Germany;
there seems to be relatively little convergence between the rates of pay increase in the various EEA countries.

Taking only the countries of the euro-zone (no figures are available for Luxembourg), the picture is rather different:

in 1998, nominal pay increases varied between 4.3% in Ireland and 1.7% in France. Increases of 4% and over were recorded in one country, increases of 3%-4% in two countries; increases of 2%-3% in five countries, and increases of 1%-2% in two countries. The average increase stood at 2.7%;
in 1999, nominal pay increases varied between 3.6% in Portugal and 1.6% in France. No countries recorded increases of 4% and over, while increases of 3%-4% were recorded in three countries, increases of 2%-3% in four countries, and increases of 1%-2% in three countries. The average increase stood at 2.5%;
these figures indicate that nominal pay increases are lower in the euro countries than in the EU/EEA more widely, that they converge more, and that they possibly display greater stability (though there were relatively large variations form 1998 to 1999 in some countries). This may be evidence of the effects of EMU.

Source: EIRO; * average of 15 countries; ** average of 14 countries.

The figures in figure 1 should be read in conjunction with the following notes.

Belgium: the 1998 figure represents an annual average of a two-year limit for pay increases of 6.1%, imposed by the government for the period 1997-8; the 1999 figure represents half of the maximum total labour cost increase of 5.9% (including indexation and other rises) set for 1999-2000 by intersectoral collective agreement.
Denmark: no general figures are available, and the figures used relate to the industry sector agreement, which operates the "minimum-wage" system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases; the figures for 1998 and for 1999 each represent half of the 2.6% increase agreed for the period from March 1998 to March 2000.
Finland: the figures are from Statistics Finland, index of wage and salary earnings.
France: the 1998 figure represents the annual change in basic monthly pay, up to the fourth quarter of 1998; the 1999 figure represents the annual change in basic monthly pay for all employees, up to the fourth quarter of 1999 (according to the ACEMO survey).
Germany: the figures (from the WSI collective agreement archive) cover the whole of Germany, with the separate figures for east Germany being 2.5% in 1998 and 3.0% in 1999, and for west Germany 1.7% in 1998 and 3.0% in 1999; the 1999 figures are provisional.
Greece: all figures are Institute of Labour (INE/GSEE-ADEDY) estimates; the figures relate to increases at current prices - increases at constant prices were 0.8% in 1998 and 1.6% in 1999.
Ireland: the figures include both the basic increase provided for in the P2000 national pay agreement (2.25% in 1998 and 1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in each year (2% in both 1998 and 1999); a further 1% pay increase, not included here, applies for the last three months of 1999 and first three months of 2000; these figures apply to the private sector, with different local pay arrangements applying in the public sector.
Norway: there are no reliable figures on collectively agreed basic pay increases for all employees; the figures given for 1998 and 1999 represent the mid-point of the range of annual pay increases (including wage drift and "carryover" effects from previous years) for blue-collar workers and public sector workers, groups whose pay is set mainly by collective bargaining.
Portugal: statistics from DGCT/MTS; the figure for 1999 relates to period from January to November.
Spain: statistics from Ministry of Labour and Social Affairs (MTAS) labour statistics publications; the figure for 1999 relates to the year to November 1999.
Sweden: no figures are available for average collectively agreed pay increases, and the 1998 figure represents an estimate based on the agreements concluded in the spring 1998 bargaining round.
UK: figures are for median second-quarter basic pay settlements, union-negotiated, whole-economy, produced by the Labour Research Department (LRD).

figure 1 above refers to nominal pay increases. To produce an indication of real pay increases, figure 2 below adjusts the increases for inflation, subtracting the annual average rates of inflation for December 1997-December 1998 and December 1998-December 1999 respectively, as calculated in line with Eurostat's Harmonised Index of Consumer Prices (HICP).

Source: EIRO; * average of 15 countries; ** average of 14 countries.

The figure indicates the following trends (no figures are available for Luxembourg):

the workers concerned received real pay increases in all countries in both 1998 and 1999, with the exception of Denmark (though again it should be noted that the figure used for this country represents only a minimum, built on by local bargaining) and Italy in 1999;
in 1998, the range of real pay increases was between 3.8% in Norway (including wage drift and "carryover") and 0% in Denmark (see previous point) - a somewhat smaller range than found for nominal increases. Increases of 3% and over were recorded in one country, increases of 2%-3% in four countries, increases of 1%-2% in seven countries, and increases of under 1% in three countries - indicating greater convergence than that for nominal increases. The average increase stood at 1.4%;
in 1999, the range of real pay increases was between 2.7% in Norway (including wage drift and "carryover") and -0.8% in Denmark (see previous point). No country recorded an increase of over 3%, while increases of 2%-3% were recorded in two countries, increases of 1%-2% in seven countries, and increases of under 1% in five countries - again indicating greater convergence than that for nominal increases. The average increase stood at 1.1%.
the average increase thus fell by 0.3 points from 1998 to 1999, indicating a degree of moderation of real pay increases. However, between 1998 and 1999, the rate of pay increase fell in nine countries, and rose in four countries, indicating a divergent trend.

Taking only the countries of the euro-zone (no figures are available for Luxembourg), the following points can be made:

in 1998, real pay increases varied between 2.2% in Ireland and 0.4% in Italy. Increases of 2% and over were recorded in two countries, increases of 1%-2% in six countries and increases of under 1% in two countries. The average increase stood at 1.3%;
in 1999, real pay increases varied between 2.4% in Germany and -0.3% in Italy. Increases of 2% and over were recorded in one country, increases of 1%-2% in five countries and increases of under 1% in four countries. The average increase stood at 1%;
these figures indicate that real pay increases are lower in the euro countries than in the EU/EEA more widely and that they converge more. Again, the effects of EMU may arguably be detected here.

Collectively agreed pay increases by sector

Turning from the whole economy to individual sectors, we provide figures below for collectively agreed pay increases in sectors selected to represent manufacturing industry (metalworking), services (banking), and the public sector (local government). While these more specific figures are probably more accurate than the overall average increases given in the previous section, extreme caution is again advised in their use, and the notes under each figure should be read carefully.

Factors which should be borne in mind when comparing the sectoral pay increase figures, often reflecting differences in national industrial relations systems, include the following:

the figures have been arrived at in a number of ways - usually the basic increase provided for in the most recent relevant sectoral agreement, but also in some cases through producing an average of a number of settlements at company (eg the UK) or multi-employer (eg Greece) level;
the definitions of sectors, and the structure of sectoral bargaining, vary considerably from country to country, so it is not always sure that like is being compared with exact like;
the extent to which actual pay reflects the collectively agreed increases referred to varies, with bonuses and additional payments of various sorts featuring more strongly in some countries than others;
pay rises are not always fully consolidated, with the use of one-off payments featuring in cases such as Germany metalworking (1999) or Belgian banking (1998);
automatic pay indexation may account for a considerable part of the pay increases recorded (as in Belgium and Luxembourg);
the relative roles of sectoral and company bargaining are again an important factor, with the sectoral agreements referred to in countries like Italy and Denmark providing only for minima, with subsequent lower-level bargaining;
the dates when the various collective agreements, and the relevant pay increases, come into force vary considerably and rarely run from the beginning of the calendar year;
in some countries, multi-year agreements apply (as in Denmark, Italy, Dutch banking or Sweden) with the pay increases not always being paid in equal tranches, distorting the annual figures (as in Italy). In some cases, the figures given may be a proportion of the increase awarded under a multi-year agreement (as in Danish and Swedish metalworking);
only one category of workers may be referred to in the figures where bargaining occurs separately for blue- and white-collar workers (as in Luxembourg and Swedish metalworking); and
in a few cases, the increases referred to in the figures are not bargaining outcomes but imposed unilaterally by employers (as in German banking, 1999). Pay increases in the Portuguese local government sector are set by governmental order, following consultation.

Comparing the three sectors, in both 1998 and 1999, the highest average nominal increases were found in metalworking (2.9% in 1998 and 1999), followed by banking (2.8% in 1998 and 2.6% in 1999) and local government (2.6% in 1998 and 2.5% in 1999). The lower increases found in local government might arguably reflect the increased pressure on public sector finances owing to the EMU convergence criteria. The differences in increases between the three sectors are, however, relatively small. A slight decrease in the average rate of increase was recorded in all sectors between 1998 and 1999. It is probably too early to speculate about the influence of the "European coordination rule" adopted by the European Metalworkers' Federation in December 1998 (DE9812283F) - whereby collectively agreed increases in metalworking should aim to offset inflation and retain a "balanced participation in productivity gains" for workers' incomes - or of bargaining coordination attempts in private sector services (TN9907201S).

Metalworking

In 1998, there was a very wide range of nominal pay increases awarded in the metalworking sector across Europe, with the highest being the 5.6% recorded in Norway (though the figure includes additional elements) and the lowest being the 0.9% recorded in Luxembourg. In 1999, the range of increases had fallen, with the highest pay rise being found in Luxembourg, at 4.6%, and the lowest in Denmark, at 1.3% (Luxembourg's rise from lowest to highest illustrates the distorting effect of multi-year agreements and indexation mechanisms on annual comparisons). The average pay increase remained virtually stable from 1998 to 1999, with the rate of increase rising in seven countries and falling in six.

Source: EIRO.

The figures in figure 3 should be read in conjunction with the following notes.

Austria: the figures relate to sectoral collective agreements running from 1 November 1997 to 30 October 1998 (1998 figure) and from 1 November 1998 to 30 October 1999 (1999 figure); the figures relate to increases in minimum pay rates - agreements also provide for increases in actual pay rates (2.9% plus a one-off payment of ATS 2,500 in 1998, 1.9% in 1999).
Belgium: the figure for 1998 represents an automatic indexation-related increase of 1.66%; the figure for 1999 represents an automatic indexation-related increase of 1.2%, plus a negotiated increase of 1.2%.
Denmark: the figures used relate to the industry sector agreement, which operates the "minimum-wage" system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases; the figures for 1998 and for 1999 each represent half of the 2.6% increase agreed for the period from March 1998 to March 2000.
Finland: the increases applied from January 1998 and January 1999 respectively; the figures are from Statistics Finland, index of wage and salary earnings.
France: there were no nationally agreed increases at sector level in either 1998 and 1999; in 1998, numerous sectoral agreements at départementand regional level provided for increases (some making up for previous years with no such increases) - the figure given for 1998 relates to the Paris ian regional agreement (the largest in terms of number of employees covered), which increased all pay rates from 1 January 1998 (an earlier agreement had increased the lowest pay scale by 1.78% from the same date); in 1999, only one sectoral agreement was signed at départementor regional level - that for Seine Maritime (Rouen-Dieppe) - and this agreement's increase is given as the 1999 figure.
Germany: the figures are from the WSI collective agreement archive; the 1998 figure relates to sectoral agreements applying from 1 April 1998 for nine months; the 1999 figure relates to sectoral agreements applying from 1 March 1999 for 12 months and is made up of a 3.2% consolidated increase, plus a 1% flat-rate one-off payment.
Greece: the figures, from the POEM trade union, represent the average of four sectoral agreements.
Ireland: the figures include both the basic increase provided for in the P2000 national pay agreement (2.25% in 1998 and 1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in each year (2% in both 1998 and 1999); a further 1% pay increase, not included here, applies for the last three months of 1999 and first three months of 2000.
Italy: the national sectoral collective agreement sets minimum pay rates, with nominal increases paid in tranches over the four-year duration of the agreement - these are the figures used here (relating to the agreement expiring in June 1999); there are no figures available relating to the decentralised pay bargaining which builds on the sectoral minima; the 1999 figure relates to the period January to September 1999.
Luxembourg: the figures relate to blue-collar workers only; the 1999 figure includes an automatic indexation-related increase of 2.5% plus half of a 4.2% increase agreed for the two-year period 1999-2000.
Netherlands: the 1999 figure relates to an increase applicable from 1 July 1999 (the relevant sectoral agreement also provides for an increase of 2.75% from 1 July 200, plus two bonuses each worth 0.5% of annual pay).
Norway: the figure for 1998 relates to hourly-paid workers only; the figure for 1999 relates to hourly-paid workers in manufacturing sector companies in the NHO employers' confederation; the figures include more than collectively agreed pay increases (eg wage drift).
Portugal: the figures relate to relevant national sectoral agreements, published in August 1998 and August 1999 respectively.
Spain: statistics from MTAS labour statistics publications; the figure for 1999 relates to the year to August 1999.
Sweden: the figures relate to a sectoral collective agreement applying from March 1998 to 31 January 2001; the figures for 1998 and 1999 represent proportions of the 8.5% increase agreed for the full duration of the agreement.
UK: figures produced by the Engineering Employers' Federation, relating to the average of settlements in the sector.

Banking

The range of nominal pay increases in the banking sector in 1998 was between 6.9% in Norway (though the figure includes additional elements) and zero in France and Italy (due in the first instance to a failure to conclude sectoral pay agreements, and in the second instance to the pay provisions of a four-year collective agreement, whereby an overall minimum pay increase was awarded in uneven tranches over the period). In 1999, the range of increases changed little, with Norway heading the list at 6.0% and no sectoral agreement again reached in France. The average increase fell slightly from 2.8% to 2.6% between 1999 and 1998, with the rate of increase rising in six countries and falling in seven.

Source: EIRO.

The figures in figure 4 should be read in conjunction with the following notes.

Austria: the figures relate to sectoral collective agreements running from 1 February 1998 to 31 January 1999 (1998 figure) and from 1 February 1999 to 31 January 2000 (1999 figure); the 1998 agreement also provided for a flat-rate monthly pay rise of ATS 10.
Belgium: the figure for 1998 includes automatic indexation-related adjustments of 1% (January 1998), 0.24% (March), 0.22% (May), 0.48% (July), 0.36% (September) and 1% (November); a flat-rate negotiated bonus of BEF 9,000 was also payable in September 1998; the figure for 1999 includes automatic indexation-related adjustments of -0.12% (January 1999), 0.23% (March), 0.36% (May), 0.22% (July) and -0.03% (November).
Denmark: the 1998 figure includes increases of 0.9% applicable from 1 April 1998 and of 1.0% from 1 October, plus an additional 0.25%, from August 1998, arising from a "regulation clause", whereby pay in banking is adjusted in line with the increase in actual earnings in the private sector; the 1999 figure includes a 2.9% increase applicable from 1 July 1999, plus 0.11%, from August 1999, resulting from the regulation clause.
Finland: increases applied from January 1998 and January 1999 respectively; the figures are from Statistics Finland, index of wage and salary earnings.
France: no sectoral pay agreements were concluded in 1998 and 1999; the most recent general pay increase was a 2% rise recommended by the sectoral employers' organisation from 1 February 1997.
Germany: the figures are from the WSI collective agreement archive; the 1998 figure relates to sectoral agreement applicable from 1 January 1998 for 12 months; no sectoral agreements were concluded in 1999, because of a dispute over Saturday working - the figure given relates to an increase awarded unilaterally by employers from April 1999.
Greece: figures from OTOE trade union.
Ireland: the figures include both the basic increase provided for in the P2000 national pay agreement (2.25% in 1998 and 1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in each year (2% in both 1998 and 1999); a further 1% pay increase, not included here, applies for the last three months of 1999 and first three months of 2000.
Italy: the national sectoral collective agreement sets minimum pay rates, with nominal increases paid in tranches over the four-year duration of the agreement - these are the figures used here (relating to the agreement expiring in July 1999); there are no figures available relating to the decentralised pay bargaining which builds on the sectoral minima; the 1999 figure relates to the period January to September 1999.
Luxembourg: the 1999 figure includes an automatic indexation-related increase of 2.5%; a one-off payment of EUR 372 was also paid in 1999.
Netherlands: the 1998 figure relates to an increase applicable from 1 July 1998 under a 1995-9 agreement; the 1999 figure includes increases of 1.75% applicable from 1 June 1999 and 1.5% applicable from 1 October 1999, under a 1999-2000 agreement.
Norway: the figures includes more than collectively agreed pay increases (eg wage drift).
Portugal: the figures relate to the most recent national multi-employer agreement, published in 1999.
Spain: statistics from MTAS labour statistics publications; the figure for 1999 relates to year to August 1999.
Sweden: the figures for 1998 and 1999 each represent half of a 5.4% increase awarded under a 21-month sectoral agreement concluded in August 1998.
UK: figures from the LRD Bargaining Report; the 1998 figure represents the average of 32 agreements in banking and finance, covering 188,000 workers; the 1999 figure represents the average of 31 agreements in banking and finance, covering 179,000 workers.

Local government

The range of nominal pay increases in the local government sector in 1998 was between 5.9% in Norway (though the figure includes additional elements) and 0.9% in Italy. In 1999, the range of increases changed little, with Norway heading the list at 4.9% and Belgium recording no increase. The average increase fell very slightly between 1999 and 1998, with the rate of increase rising in six countries and falling in six.

Source: EIRO.

The figures in figure 5 should be read in conjunction with the following notes.

Austria: the figures relate to sectoral collective agreements running from 1 January 1998 to 31 December 1998 (1998 figure) and from 1 January 1999 to 31 December 1999 (1999 figure); in 1999, a minimum monthly increase of ATS 300 was awarded, giving increases of 2.26% for lower-paid groups.
Belgium: the figure for 1998 represents an automatic indexation-related increase of 2%.
Denmark: the figures relate to increases for 1997-8 (1998 figure) and 1998-9 (1999 figure).
Finland: increases applied from January 1998 and January 1999 respectively; the figures are from Statistics Finland, index of wage and salary earnings.
France: the increases referred to arise from a 1998-9 pay agreement concluded in February 1998; the 1998 figure includes a 0.8% increase applicable from 1 April 1998 and an increase of 0.5% applicable from 1 November 1998; the 1999 figure includes a 0.5% increase applicable from 1 April 1999 and an increase of 0.8% applicable from 1 December 1999.
Germany: the figures are from the WSI collective agreement archive; the 1998 figure relates to the public services agreement applicable from 1 January 1998 for 12 months; the 1999 figure relates to the public services agreement applicable from 1 April 1999 for 12 months.
Greece: figures from ADEDY trade union federation.
Ireland: the figure for 1998 represents the basic increase of 2.25% provided for in the P2000 national pay agreement (unlike the private sector, there was no scope for additional local pay increases in this year); the figure for 1999 includes the basic increase of 1.5% provided for by P2000 in the first nine months of 2000, plus the maximum increase of 2% allowed under local bargaining; a further 1% pay increase, not included here, applies for the last three months of 1999 and first three months of 2000.
Italy: the national sectoral collective agreement sets minimum pay rates, with nominal increases paid in tranches over the four-year duration of the agreement - these are the figures used here (relating to the agreement expiring in November 1998); there are no figures available relating to the decentralised pay bargaining which builds on the sectoral minima; the 1999 figure relates to the period January to September 1999.
Luxembourg: the 1998 figure represents an increase in the "13th-month bonus"; the 1999 figure represents an increase in the 13th-month bonus, plus an automatic indexation-related increase of 2.5%.
Netherlands: the 1999 figure relates to an agreement running from 1 April 1999 to 1 October 2000, and includes increases of 2% applicable from 1 April 1999 and 1% from 1 October 1999.
Norway: the figure includes more than collectively agreed pay increases (eg wage drift).
Portugal: the increases are set by governmental orders, following consultation.
Spain: the statistics, from MTAS labour statistics publications, refer to public administration generally (local government figures not available); the figure for 1999 relates to year to November 1999.
Sweden: the figures relate to a three-year agreement for 420,000 blue-collar worker in municipalities concluded in April 1998; the figures for 1998 and 1999 are proportions of the 9.2% pay increase awarded for whole three-year period.
UK: figures from Pay and Benefits Bulletin 462, December 1998, and LRD Bargaining Report 197, September 1999 (in 1999, the figure for Scotland was 3.3%).

Average earnings

So far, we have examined collectively agreed pay increases, based mainly on the contents of agreements. A clearer indication of the actual development of workers' incomes is provided by earnings figures, usually based on a survey of individuals' earnings and including elements such as bonuses and overtime pay. figure 6 below provides data on increases in average earnings in 1998 and 1999 (though figures are not always available yet for both years, and some 1999 figures are partial).

Once again, extreme caution is advised and the notes below the figure should be read closely. The nature of the statistics and the definitions of earnings vary considerably from country to country, and in some cases (such as Belgium and Denmark), the figures cover only particular groups of workers.

The range of average earnings increases in 1998 was between 6.2% in Norway and 0.7% in Luxembourg, while in 1999 the extremes were Greece, at 4.8%, and Sweden and Germany, at 2.0% (though there are more gaps in the national data for this year). The average rate of increase across the countries examined rose from 3.1% in 1998 to 3.4% in 1999 (though the latter average is based on a significantly smaller number of countries).

When compared with the data for collectively agreed pay increases, the earnings figures help to iron out to some extent the distortions caused by, for example, the fact that the relevant collective agreements in Denmark provide only for minima, which are built on by local bargaining (the increases in earnings thus stands at over 4%, rather than the 1.3% collectively agreed increases). Increases in earnings are also appreciably higher than agreed pay increases in Finland, Ireland and the UK (though lower in countries such as Germany and Spain). Overall, the average increases in earnings are greater than agreed pay increases.

Taking only the countries of the euro-zone, the average increases in earnings, at 2.3% in 1998 and 2.9% in 1999, are both at least 0.5 percentage points lower than in the whole group of countries.

Source: EIRO; * average of 15 countries; ** average of 11 countries.

The figures in figure 6 should be read in conjunction with the following notes.

Belgium: the figure for 1999 relates to the increase in gross hourly wages received by one specific group of industrial workers, for the year to October 1999, calculated by the National Institute for Statistics.
Denmark: the figures relate to private sector workers and cover the years to August 1998 and August 1999 respectively; the figures for the public sector are 2.8% for 1996-7 and 4.0% for 1997-8.
Finland: the figure for 1999 relates to the period January to September 1999; the figures are from Statistics Finland, index of wage and salary earnings.
France: the figure relates to the increase in employees' remuneration, and was calculated by DARES.
Germany: the figures are from from the Federal Statistical Office.
Greece: statistics from the Ministry of National Economy and Bank of Greece; the figures relate to increases at current prices - increases at constant prices were 1.0% in 1998 and 2.3% in 1999.
Luxembourg: the figure is calculated as half of the 1.3% increase recorded over the two-year period 1997-8.
Norway: annual pay increases calculated by the Technical Calculation Committee for Income Settlements (TBU), drawing on various sources - mainly Statistics Norway and also including some figures produced by employers' organisations; these are the most accurate available statistics, though some groups are not included and the figures are not based on changes in individual income.
Portugal: statistics from the DETEFP/MTS earnings survey.
Spain: figures are taken from National Employment Institute (INE) pay surveys and represent average monthly earnings per worker (including overtime); the 1999 figure applies to the period from January to September 1999.
Sweden: the figures given are those produced by Statistics Sweden for average pay rises for blue-collar workers (preliminary figure for 1999) - the figures for white-collar workers are 4.5% in 1998 and 3.0% in 1999 (preliminary figure).
UK: statistics from average earnings index produced by Office for National Statistics; the figures relate to the years to July 1998 and August 1999 respectively.

Minimum wages

Eight of the 16 countries considered have a national minimum wage, set either by law or by a national intersectoral agreement (Ireland is due to introduce a statutory minimum wage in 2000). figure 7 below provides data on the increases in the minimum wage in 1998 and 1999 for seven countries - the UK minimum wage was introduced only in 1999. These minimum wages are generally increased through some kind of indexation mechanism, plus in some countries through political decisions.

Minimum wage increases ranged from 5.4% (Greece) to nil (Luxembourg) in 1998, and from 3.9% (Portugal) to 1.2% (France) in 1999. The overall average rate of increase rose slightly from 2.6% in 1998 to 2.7% in 1999. The increases in minimum wages generally lagged behind the average collectively agreed increases in pay, though with exceptions such as France in 1998, the Netherlands in 1999 and Portugal in both years.

Sou rce: EIRO.

The figures in figure 7 should be read in conjunction with the following notes.

Belgium: the increase for 1998 applied from October 1997; the increase for 1999 applied from 1 June 1999.
France: the increase for 1998 applied from 1 July 1998; the increase for 1999 applied from 1 July 1999.
Greece: the figures given (from the Ministry of National Economy and the Bank of Greece) are for annual increases - increases occur every six months; the figures relate to increases at current prices - increases at constant prices were 0.6% in 1998 and 1.0% in 1999.
Luxembourg: the figure given for 1999 includes a 1.3% increase applied by law on 1 January 1999 and a 2.5% automatic indexation increase awarded on 1 August 1999.
Netherlands: the figures given are for annual increases - increases occur every six months.
Portugal: the increases were applied by law in February 1998 and February 1999

Page last updated: 28 February, 2000

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About this document

ID: TN0002401U
Author: Mark Carley, SPIRE Associates
Country: EU Countries
Language: EN
Publication date: 28-02-2000