This article discusses developments in collectively agreed wages in the European Union in 2016, putting them into the perspective of developments over the past 15 years. The tendency for growth in both nominal and real collectively agreed wages from 2015 continued. In two countries (Belgium and Malta), collectively agreed pay in real terms was still not above the pre-crisis level. Belgium was the only country where collectively agreed pay fell in real terms in 2016.
Wages are a significant part of working conditions. Last year’s review by Eurofound of developments in collectively agreed pay found that real collectively agreed wages started to recover in 2013, with progressive increases over 2014 and 2015. A similar trend was reported for average wages, with the report, Benchmarking working Europe 2017, from the European Trade Union Institute (ETUI) stating that real wages have been recovering in the past two years. In some countries (particularly Croatia, Greece and Hungary), however, this growth has not yet fully compensated for the decline of real wages during or after the crisis. Moreover, a working paper from ETUI shows a divergent trend in wages between Germany and central and eastern European countries such as the Czech Republic, Hungary and Poland. While German wages have increased in the period since the onset of the economic crises, wage growth in the Czech Republic, Hungary and Poland slowed down or even stopped. This development shows that the convergence in wages between newer and older Member States remains far from complete.
Collective wage bargaining determines, to a significant extent, wage growth in many Member States. Around two-thirds of workers in the EU are covered by some form of collective agreement, according to the 2015 Eurofound report, Pay in Europe in different wage-bargaining regimes. Although this points towards the importance of wage bargaining for macroeconomic outcomes, the impact of collective wage bargaining varies between countries depending on the collective bargaining coverage. The way in which wage change is determined in collective wage bargaining also differs between countries, reflecting their history and collective bargaining tradition.
This topical update provides a brief glimpse into the important discussions and changes in collective wage bargaining round that took place in 2016. It discusses the developments in collectively agreed wages in the EU in 2016, putting these data within the perspective of changes over the past 15 years.
Changes in collectively agreed wages
Only 13 EU Member States have data available on collectively agreed wage increases in 2016 (Figure 1). France will have data available later in 2017; other countries have no databases containing this information.
The highest nominal wage increases were in the Czech Republic (3%) and Slovakia (3.6%). The highest nominal increases in the older Member States were in Germany (2.4%) and the UK (2.5%). However, the lowest nominal increases were in the older Member States of Belgium, Finland and Italy (all 0.6%).
In terms of real wage increases (that is, wage increases taking into account the change in the level of prices), Slovakia had the highest increase (4.1%), followed by the Czech Republic (2.4%) and Germany (2%). The lowest real increases were observed in Finland (0.2%) and Malta (0.3%), while the real collectively agreed wage actually fell in Belgium by -1.2%.
Figure 1: Nominal and real collectively agreed wage change in the EU, 2016
Note: * Only agreements with nominal wage changes agreed. ** Private sector only.
Real wage increase calculated using Harmonised Indices of Consumer Prices from Eurostat (variable prc_hicp_aind).
Source: Austria Index of minimum collectively agreed wages | Belgium Indice des salaires conventionnels/Index van de conventionele lonen | Czech Republic Information System on Working Conditions | Finland Index of negotiated wages | Germany WSI Collective Bargaining Archive | Italy Contractual wages and salaries | Malta Economic survey | Netherlands StatLine | Portugal Weighted average change between salary tables | Slovakia Information System on Working Conditions 2016 | Spain Statistics on labour collective agreements | Sweden National Mediation Office's data on wage increases in central agreements | UK Labour Research Department's Payline database