Prominent trade union leader questions wage restraint

In June 1998, Fritz Verzetnitsch, the president of Austria's ÖGB trade union confederation and of the European Trade Union Confederation, appeared to all intents and purposes to declare wage restraint a failure: unemployment levels in the EU do not vindicate the experiment.

In a press release dated 9 June 1998, Fritz Verzetnitsch, the president of the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB), and also the president of the European Trade Union Confederation (ETUC), said that he had lost faith in wage restraint as a means of promoting employment in Europe. He said that European trade unions had exercised considerable pay restraint over the last 10 years in an effort to aid employment creation. "In the face of 18 million unemployed in the European Union I have lost faith in the experiment," he was quoted as saying. He added that over the same period, productivity growth had exceeded wage increases by about one percentage point.

On various other occasions, Mr Verzetnitsch and other top officials of the ÖGB have referred to recent productivity advances and to the very healthy balance sheets of a number of large enterprises in connection with calls for further wage restraint by employers and economists. Forecasters, however, are predicting that productivity gains will benefit wages even less in the near future than they do now. They claim that the around 50% of productivity gains currently going to wages will decline to only 30% or 35% in a few years' time. In the 1980s, at least in Austria, wages appropriated close to 100% of gains in productivity. The ÖGB has not stated the share of productivity increases that it thinks should go to wages. In word and deed, however, it is tending to differentiate its demands, that is, to ask for more where profitability is high and to exercise restraint where current employment might be at stake. The flexibility of Austrian wage settlements in regard to macroeconomic conditions is well known. It is now being amended by a concern for conditions at sub-industry level.

The ETUC president also demanded an end to tax competition between EU members in efforts to attract investment. He argued that in every relocation one country had to pay for the loss of the plant and the other for its gain.