Coordination of collective bargaining

Coordination of collective bargaining at European level is the consequence of a political rationale resulting from European Monetary Union and aims to counter downward pressure on wage costs. In particular, the objective of cross-border bargaining coordination is to avoid competitive bargaining strategies of national trade unions and a ‘race to the bottom’ concerning wage costs of different national trade unions, in an attempt to increase international competitiveness.

Coordination of collective bargaining at European level parallels the coordinated national bargaining practised in some Member States. In these cases, centralised national bargaining has been replaced by more decentralised systems of bargaining, but there is still a role for the national level. The process is sometimes called ‘centrally coordinated decentralisation’ or ‘organised decentralisation’. The coordination of European collective bargaining reflects this Member State experience, by attempting at EU level to coordinate national and sub-national levels of collective bargaining.

In 1999, the European Trade Union Confederation (ETUC) set up a ‘committee for the coordination of collective bargaining’ in order to draw up guidelines on the coordination of collective bargaining, with three main objectives:

1. To allow trade unions at European level to provide a general indication of wage bargaining developments in response to the European Commission’s broad economic policy guidelines and the European Central Bank (ECB) guidelines, and generally to influence the macroeconomic dialogue at European level;

2. To avoid situations which might lead to social and ‘wage dumping’ and wage divergence in Europe;

3. To coordinate wage claims in Europe, and especially in countries that form part of the eurozone, and to encourage an ‘upward convergence’ of living standards in Europe.

The guidelines contained a formula for pay claims:

• nominal wage increases should at least exceed inflation, while maximising the proportion of productivity allocated to the rise in gross wages in order to secure a better balance between profits and wages;
• any remaining part of productivity should be used to fund other aspects in collective agreements, such as ‘qualitative aspects of work, where these are quantifiable and calculable in terms of cost’.

The ETUC has continued to be active in the area of collective bargaining coordination over the past decade. In December 2009, for example, it issued a resolution (PDF) on the coordination of collective bargaining for 2010, in the context of the crisis. In this resolution, it urges trade unions in Europe to resist wage freezes and wage cuts, maintaining that this will kill a fragile recovery. It also urges trade unions to resist wage cuts in line with falls in productivity, arguing that this is a temporary and cyclical phenomenon. It argues for wage bargaining that reflects productivity trends and medium-term inflation.

With regard to bargaining coordination at inter-regional level, the best known example is probably the Doorn group. This represents a cross-sectoral initiative established in 1998 to bring together trade union confederations and major sectoral trade unions from the Benelux countries and Germany. Data collection into a database enabled progress to be monitored in all the countries involved. This is widely seen as a pioneer in terms of European collective bargaining coordination. The Doorn initiative was also influential in stimulating the ETUC in building cross-border bargaining coordination across the wider EU. For this purpose, the ETUC supports the establishment of inter-regional trade union councils (IRTUC) in areas where economic, territorial, monetary and social conditions are similar.

Sectoral bargaining coordination

Sectoral coordination of collective bargaining aims to maintain the purchasing power of employees in the sector and to achieve a balanced participation in productivity increases. It is defined by the European Metalworkers’ Federation (EMF) as something that must ‘offset the rate of inflation and … ensure that workers' incomes retain a balanced participation in productivity gains', based on a ‘commitment to safeguard purchasing power and to reach a balanced participation in productivity’.

Most of the agreements and texts relating to sectoral bargaining in the EU are to be found in the metalworking and construction sectors. For example, the European Metalworkers Federation (EMF, now part of IndustriAll Europe) first agreed on a ‘wage norm’ for the metalworking industry in 1998 at its collective bargaining conference in Frankfurt. The aim was to strengthen collective bargaining coordination between trade unions in different European countries and to prevent a downward wage spiral in the context of increased globalisation and the introduction of the euro single currency, which was a particular preoccupation at that time.

The EMF’s role is particularly important in the European context, since the metalworking sector often sets the pattern for collective bargaining in Member States. The EMF’s 1998 wage norm formed the basis for the development of a collective bargaining network involving four European trade union industry federations – Eucoban – which provides unions in the metalworking, chemicals, textiles, and food, agriculture and tourism sectors with information on bargaining in individual European countries. A joint website for the relevant European industry federations aims to strengthen the visibility and impact of trade union collective bargaining at European level.

Other sectors have also initiated attempts to coordinate collective bargaining at EU level. For example, the graphical section of UNI-Europa also adopted a wage coordination rule based on inflation and national productivity, with the objective of obtaining as large a share of productivity increases as possible.

However, a major problem with the European trade unions’ policy of coordination of collective bargaining is that, so far, this is a wholly unilateral initiative, based on cross-border trade union cooperation. There is no evidence of an employer response to engage with such an exercise in wages, or any other form of coordination. While the EU-level employer organisation in the metalworking sector, the Council of European Employers of the Metal, Engineering and Technology-Based Industries (CEEMET), has not issued any formal position on the Eucoban network of the EMF, in 2006 it issued a statement in reaction to the European Commission’s preparatory document on an optional European framework for transnational collective bargaining. In this statement, CEEMET expresses its strong opposition to the idea of an optional framework for transnational collective bargaining, noting that so-called hard issues (such as pay and working time) ‘remain almost exclusively the subject of national collective bargaining at sector and/or company level’.

As with the European social dialogue, the question for trade unions is therefore how they can stimulate an employer response that will help them to achieve the goal of developing an operational EU industrial relations system of coordinated collective bargaining.

Difficulties also arise from the different collective bargaining systems found across Europe. One particular challenge, for example, is that of applying policies of sectoral coordination of collective bargaining in countries with single employer-based bargaining systems. In general, trade union strategies to coordinate bargaining at sectoral level have to face the growing importance of company-level bargaining in most EU Member States. As a consequence, the implementation of the objectives of bargaining coordination at EU level becomes more complicated.

Another problem with cross-border bargaining coordination is enforceability. As the coordination initiatives are essentially voluntary, compliance is largely dependent on trade unions’ voluntary commitment to adhere to agreed positions.

See also: coordination of collective bargaining; cross-border trade union cooperation; Doorn group; European industry federations; EU system of industrial relations; sectoral employer federations; transnational industrial action; tripartite concertation.