ETUC launches fair wages campaign across Europe

The European Trade Union Confederation (ETUC) recently launched its fair wages campaign, aimed at highlighting the fact that about 30 million workers in Europe receive low wages. In addition to the ethical issue associated with low pay, ETUC argues that the ending of wage moderation is a major requirement to create more jobs. In fact, given the current global economic climate, the trade unions believe that continued low pay could lead to recession.

Wage developments in the EU

On 20 April 2008, the European Trade Union Confederation (ETUC) launched its European fair wages campaign, entitled ‘On the offensive for fair wages’. The campaign follows the decision taken at ETUC’s annual congress in Seville in 2007 to make pay a key theme.

ETUC points out that in many European countries wages have either stagnated or, in severe cases, even fallen. Statistics presented by the trade union confederation show that this development applies to the so-called ‘old’ 15 EU Member States (EU15 – prior to enlargement in 2004), as well as to the current 27 EU Member States (EU27 – the EU25 and the two new Member States, Bulgaria and Romania, that joined the EU in 2007). In the case of the EU15, for example, the share of wages in gross domestic product (GDP) declined from about 60% to just over 57% between 1995 and 2007. This represents an almost 3% decrease in employees’ purchasing power over the past 12 years.

According to the key economic institutions, particularly the European Central Bank (ECB), wage moderation is required to offset the rising cost of oil, as well as the current high value of the euro measured against the US dollar. The last point is viewed as potentially threatening European exports. In fact, it is argued that moderate wage increases, currently estimated to be about 2.6%, help to ensure that Europe remains an interesting option for investors.

ETUC, however, questions the logic promoted by ECB that wage moderation encourages employers to hire new personnel. The trade union confederation maintains that, at present, no evidence exists to support such a position. On the contrary, trade unions suggest that moderate pay claims are shown to have led to an increase in profits for shareholders and higher salaries for top-level managers.

ETUC underlines that no correlation currently exists between a rise in profits and job creation. In fact, ETUC claims that wage moderation could lead to recession, in particular if, as ECB suggests, European exports to third countries are under threat by a buoyant euro. For this reason, ETUC recently argued in one of its Collective bargaining information bulletins (119Kb PDF) that

the reality right now is that the European economy is in urgent need of a new driver for economic growth… The only driver remaining that could take over is private consumption.

This clearly represents a different position from that promoted by ECB – ETUC’s stance instead closely links the creation of new jobs to an increase in the purchasing power of workers.

Demonstration in Ljubljana

As part of its fair wages campaign, ETUC held a demonstration in Slovenia’s capital city, Ljubljana, on 5 April 2007. The demonstration was organised to coincide with the Economic and Financial Affairs Council (ECOFIN) meeting; the council comprises the EU27 finance ministers, as well as representatives of ECB and national banks, who meet to coordinate European economic policy. An estimated 35,000 trade unionists from 30 different countries converged on the streets of the Slovenian capital to call for better pay (SI0804019I) and demand that European economic policymakers will undertake to:

• raise real wages;

• support the introduction of minimum wages;

• promote equal pay;

• oppose social dumping;

• implement fair wages for the public sector, temporary and mobile workers;

• support lifelong learning;

• place a cap on what top managers can earn.

ETUC’s fair pay campaign is also designed to highlight the poor situation of certain groups of workers, including women, young people and migrant workers. For instance, ETUC indicates that the pay gap between men and women remains constant at around 15% in the EU. With European trade unions recording a rise in female membership rates, ranging from 0.2% to 2.5%, equal pay is becoming a central theme that trade unions cannot afford to ignore.

Commentary

After many years of wage moderation across EU Member States, European trade unions are now demanding a more equal redistribution of profits. Although ETUC is leading the fair pay campaign, national trade unions are slowly becoming more confident in demanding better pay agreements in their countries. In particular, trade unions seem to believe that their demands, especially in countries still without a national minimum wage, are now justified.

Michael Whittall, Technical University Munich