Pay developments - annual update 2000

In this annual update, we review broad trends in pay across the European Union (plus Norway) in 1999 and 2000. We find that average collectively agreed pay increases ran at around 2.9% in 1999 and 3.0% in 2000 - though with major variations between countries. Following a fall in the average increase from 3.1% in 1998 to 2.9% in 1999, this suggests that pay moderation may be coming under pressure in some countries. However, taking into account increases in prices and productivity, it seems that moderation has persisted and even deepened. Suggestions of greater pay moderation and convergence in the countries of the "euro-zone" have not yet found consistent support from the figures. In sectoral terms, increases in chemicals generally exceeded those in retail and the civil service in 1999, but the latter two sectors "caught up" in 2000.

The aim of this annual update from the European Industrial Relations Observatory (EIRO), based on contributions from its national centres, is to provide a broad, general indication of trends in pay increases over 1999 and 2000 within the EU Member States (plus Norway). We do not attempt to produce a fully scientific and comparable set of pay comparisons, given that EIRO is not a statistical service and that pay is an area where meaningful international comparisons are especially difficult. Differing 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 comparisons between countries are hard to draw. Nevertheless, given the key importance of pay (not least in the context of EU Economic and Monetary Union, EMU), we provide these general indications of recent developments while 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.

The macroeconomic significance of pay developments in the EU today is summarised thus by a recent EIRO comparative study (TN0007402S): "The introduction of EMU has created new macroeconomic conditions with significant implications for wage policy. Since EMU deprives the EU Member States concerned of exchange rates and interest rates as a means of adjusting to imbalances in economic performance, wage policy might have to bear the main burden of compensating for such imbalances. Moreover, wage policy has a significant responsibility in ensuring the smooth functioning of EMU. While wages which are 'too high' might cause inflationary pressures, wages which are 'too low' might lead in the opposite direction, resulting in a deflationary spiral."

Since the start of stage two of EMU in 1994, the European Commission and the European Council have adopted annual "Broad Economic Policy Guidelines (BEPGs)" which include recommendations on what they see as "appropriate wage developments" within the new euro single currency area. According to the Council's June 2000 Recommendations on the broad guidelines of the economic policies of the Member States and the Community, it is necessary to:

In addition, the European Council meeting held in Cologne on 3-4 June 1999 adopted a Resolution on a European employment pact, which aims at the "coordination of economic policy and improvement of mutually supportive interaction between wage developments and monetary, budgetary and fiscal policy through macroeconomic dialogue aimed at preserving a non-inflationary growth dynamic" (EU9906180N).

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). Data are not yet available for 2000 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, Finland, Ireland and Norway. In the UK, it is company-level bargaining that is predominant. Automatic pay indexation represents a significant proportion of the increases in Belgium and Luxembourg. 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 figure 1 (no figures are available for Greece or for Norway in 2000):

  • in 1999, nominal pay increases varied between 4.9% in Norway (though this figure include wage drift and "carryover" effects from previous years) and 1.6% in France. Increases of 4% and over were recorded in two countries, increases of 3%-4% in six countries, increases of 2%-3% in five countries, and increases of 1%-2% in three countries. The average increase stood at 2.9%;
  • in 2000, nominal pay increases varied between 5.5% in Ireland (the limit laid down by a national agreement) and 1.6% in France. Increases of 4% and over were recorded in two countries, increases of 3%-4% in five countries, increases of 2%-3% in five countries, and increases of 1%-2% in two countries. The average increase stood at 3.0%;
  • the average increase thus increased very slightly by 0.1 points from 1999 to 2000, indicating an overall continuation (if slowing down) of the moderation of nominal pay increases recorded from 1998 to 1999 (when there was a 0.3-point fall). However, the picture varied widely, with the rate of pay increase rising between 1999 and 2000 in nine countries, falling in three and remaining stable in two. This contrasts with a widespread trend for the rate of pay increase to fall from 1998 to 1999 (applying to 11 countries). Pay moderation appears to have come under most pressure in Ireland and the Netherlands; and
  • there still seems to be relatively little convergence between the rates of nominal pay increase in the various EEA countries.

Taking only the countries of the euro-zone, the picture is rather different:

  • in 1999, nominal pay increases varied between 3.8% in Luxembourg and 1.6% in France. Increases of 4% and over were recorded in no countries, increases of 3%-4% in four countries; increases of 2%-3% in four countries, and increases of 1%-2% in three countries. The average increase stood at 2.7%;
  • in 2000, nominal pay increases varied between 5.5% in Ireland and 1.6% in France. Two 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 two countries. The average increase stood at 3.1%;
  • these figures indicate that while nominal pay increases in 1999 were lower in the euro countries than in the EU/EEA more widely, in 2000 they slightly exceeded the overall figure. The possibly greater convergence and greater stability witnessed between 1998 to 1999 was less evident from 1999 to 2000.

 

Source: EIRO; * average of 16 countries; ** average of 14 countries.

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

  • Austria: figures from Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB).
  • Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 1.0% in 1999 and 3.3% in 2000); figures represent total of collectively agreed pay increases (1.34% in 1999, and 1.17% in 2000), automatic pay indexation and effects of reduction of working time; figures, from Ministry of Labour and Employment, are for years to September 1999 and 2000.
  • Denmark: no general figures available, and 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 figure for 1999 represents the increase from March 1999 and the 2000 figure the increase from March 2000.
  • Finland: figures based on annual change in Statistics Finland contractual salary index; figure for 2000 is preliminary.
  • France: figures represents the annual change in basic monthly pay for all employees (according to the ACEMO survey); the 2000 figure is for the year to 30 September.
  • Germany: figures from the Institute for Economics and Social Science (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) collective agreement archive and represent the annual average increase in collectively agreed pay.
  • Greece: all figures are Institute of Labour (INE/GSEE-ADEDY) estimates; figures relate to increases at current prices - the increase at constant prices was 1.6% in 1999.
  • Ireland: the 1999 figure includes both the basic increase provided for in the 1997-2000 Partnership 2000 (P2000) national pay agreement (1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in 1999 (2%); a further 1% pay increase, not included here, applied for the last three months of 1999 and first three months of 2000; the figure applies to the private sector - in the public services, the local bargaining clause did not apply until July 1999. The 2000 figure represents the first-phase payment under the new Programme for Prosperity and Fairness (PPF) national agreement for both private and public sectors; there was also a separate one-off "catch-up" pay award of 3%, not included here, for some groups of public servants.
  • Italy: figures from National Institute of Statistics (Istituto Nazionale di Statistica, Istat).
  • Luxembourg: no official statistics available; figures represent average of estimated range of pay increases, plus 2.5% automatic pay indexation in each year.
  • Netherlands: figures taken from Labour Foundation (Stichting van de Arbeid, STAR) and collective agreements.
  • Norway: there are no reliable figures on collectively agreed basic pay increases for all employees; the figures given, from the Technical Calculation Committee for Income Settlements (Teknisk Beregningsutvalg, TBU), represent an estimate of the 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: figures from Ministry of Labour and Solidarity's Department of Labour, Employment and Vocational Training Statistics (Departamento de Estatística do Trabalho, Emprego e Formação Profissional, DETEFP); the figure for 2000 relates to the year to August.
  • Spain: provisional figures from Ministry of Labour and Social Affairs (MTAS) labour statistics publications; the figure for 2000 does not include the effect of any inflation-linked pay revision clauses.
  • Sweden: no figures available for average collectively agreed pay increases, and figures represent an estimate based on the three-year agreements concluded in the spring 1998 bargaining round.
  • UK: figures are based on data from independent pay analysts Incomes Data Services (IDS) and Industrial Relations Services (IRS) and the union-linked Labour Research Department (LRD); the 2000 figure is for April.

Real pay increases

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 1998-December 1999 and December 1999-December 2000 respectively, as calculated in line with Eurostat's Harmonised Index of Consumer Prices (HICP). For the EU 15 as a whole, 1999 was a year when inflation started to increase, nearly doubling from an average of 1.1% over December 1998-December 1999 to an average of 2.1% over December 1999-December 2000. As figure 2 shows, this ate into the nominal collectively agreed pay increases in many countries.


 

Source: EIRO; * average of 16 countries; ** average of 14 countries.

The figure indicates the following trends (no 2000 figures are available for Belgium, Greece and Norway):

  • the workers concerned received real pay increases in all countries in 1999 (as they had in 1998), but in 2000, those in six countries (Belgium, Denmark, Finland, France, Italy and Spain) saw their nominal pay increase swallowed up by inflation (although in some cases, the pay increase figures used represent minima, built on by subsequent bargaining);
  • in 1999, the range of real pay increases was between 2.8% in Norway and Luxembourg (where automatic pay indexation occurs) and 0.1% in Italy (where sectoral agreements set minimum rates) - a somewhat smaller range than found for nominal increases. Increases of 2% and over were recorded in four countries, increases of 1%-2% in seven countries, and increases of under 1% in five countries - indicating somewhat greater convergence than that for nominal increases. The average increase stood at 1.4% (as it had in 1998);
  • in 2000, the range of real pay increases was between 2.3% in the UK and -0.7% in Italy (see previous point). Only the UK recorded an increase of over 2%, while increases of 1%-2% were recorded in two countries, increases of 0%-1% in five countries, and decreases of up to minus 1% in six countries - again indicating somewhat greater convergence than that for nominal increases. The average increase stood at 0.4%.
  • the average increase thus dropped by one percentage point from 1999 to 2000, indicating that - despite a slight upward trend in nominal pay increases - inflation meant that real pay increases fell appreciably. The cross-European nature of this trend is indicated by the fact that between 1999 and 2000, the rate of real pay increase fell in all countries apart from the Netherlands and the UK.

Taking only the countries of the euro-zone, the following points can be made:

  • in 1999, real pay increases varied between 2.8% in Luxembourg and 0.1% in Italy. Increases of 2% and over were recorded in two countries, increases of 1%-2% in five countries and increases of under 1% in four countries. The average increase stood at 1.2% (slightly lower than the overall EU/EEA average of 1.4%);
  • in 2000, real pay increases varied between 1.1% in the Netherlands and -0.7% in Italy. There were no increases of 2% and over, while increases of 1%-2% were recorded in one country, increases of under 1% in five countries, and decreases of up to minus 1% in five countries. The average increase stood at under 0.1% (compared with the overall EU/EEA average of 0.4%);
  • these figures indicate that (as in 1998-9) real pay increases are lower in the euro countries than in the EU/EEA more widely and that they converge more. They also fell slightly more from 1999 to 2000. The highest real pay increases in 2000 were both in non-euro-zone countries (Sweden and the UK). The effects of EMU may arguably be detected here.

Use of distributive margin

In recent years, some trade unions have taken an increasing interest in the extent to which collective bargaining outcomes use up the "distributive margin" of the total sum of inflation and productivity growth. For example, the "Doorn group" of trade unions from Belgium, Germany, Luxembourg and the Netherlands (DE9810278F) have agreed to seek "collective bargaining settlements that correspond to the sum total of the evolution of prices and the increase in labour productivity", and they assess each year the extent to which they have used up this full "distributive margin". It is accounted a success for trade unions if pay rises equal or exceed the total of the increase in inflation and productivity. The Doorn unions are aware that there are many methodological and statistical difficulties in comparing pay developments in this way and that bargaining has other non-pay outcomes which can be difficult to calculate in terms of their cost effects. However, this measure does provide a useful indication in evaluating bargaining outcomes, as it takes into account productivity as well as inflation.

Table 1 below assesses pay bargaining outcomes in 1999 and 2000 in the light of this distribution formula. It should be treated with extreme care, given the often disparate, partial and hard-to-compare nature of the statistics, and the notes should be read carefully.

Table 1. Pay bargaining outcomes in the EU and Norway, 1999-2000 (%)
Country Year Inflation (A)* Productivity (B)** Distributive margin (A B = C) Pay rise (D)*** Utilisation of margin (D - C = E)
Austria 1999 0.5 0.3 0.8 2.1 1.3
. 2000 2.0 nd - 2.5 -
. 1999/2000 2.5 - - 4.6 -
Belgium 1999 1.1 1.2 2.3 2.6 0.3
. 2000 2.9 1.3 4.2 2.8 -1.4
. 1999/2000 4.0 2.5 6.5 5.4 -1.3
Denmark 1999 2.1 1.6 3.7 2.5 -1.2
. 2000 2.7 2.4 5.1 2.4 -2.7
. 1999/2000 4.8 4.0 8.8 4.9 -3.9
Finland 1999 1.3 1.6 2.9 1.8 -1.1
. 2000 3.0 nd - 2.8 -
. 1999/2000 4.3 - - 4.6 -
France 1999 0.6 2.5 3.1 1.6 -1.5
. 2000 1.8 2.5 4.3 1.6 -2.7
. 1999/2000 2.4 5.0 7.4 3.2 -4.2
Germany 1999 0.6 0.9 1.5 3.1 1.6
. 2000 2.1 3.0 5.1 2.3 -2.8
. 1999/2000 2.7 3.9 6.6 5.5 -1.2
Greece 1999 2.3 4.1 6.4 4.1 -2.3
. 2000 2.9 2.9 5.8 nd -
. 1999/2000 5.2 7.0 12.2 - -
Ireland 1999 2.5 8.4 10.9 3.5 -7.4
. 2000 5.3 nd nd 5.5 -
. 1999/2000 7.8 - - 9.0 -
Italy 1999 1.7 0.3 2.0 1.8 -0.2
. 2000 2.6 1.8 4.4 1.9 -2.5
. 1999/2000 4.3 2.1 6.4 3.7 -2.7
Luxembourg 1999 1.0 2.2 3.2 3.1 -0.1
. 2000 3.8 2.0 5.8 4.5 -1.3
. 1999/2000 4.8 4.2 9.0 7.7 -1.4
Netherlands 1999 2.0 1.7 3.7 2.7 -1.0
. 2000 2.3 2.0 4.3 3.4 -0.9
. 1999/2000 4.3 3.7 8.0 8.1 -1.9
Norway 1999 2.1 0.6 2.7 4.9 2.2
. 2000 3.0 1.8 4.8 nd -
. 1999/2000 5.1 2.4 7.5 - -
Portugal 1999 2.2 1.1 3.3 3.7 0.4
. 2000 2.8 2.2 5.0 3.5 -1.5
. 1999/2000 5.0 3.3 8.3 7.2 -1.1
Spain 1999 2.2 2.2 4.4 2.7 -1.7
. 2000 3.5 2.5 6.0 3.0 -3.0
. 1999/2000 5.7 4.7 10.4 5.7 -4.7
Sweden 1999 0.6 3.3 3.9 3.0 -0.9
. 2000 1.3 4.0 5.3 3.0 -2.3
. 1999/2000 1.9 7.3 9.2 6.0 -3.2
UK 1999 1.3 0.8 2.1 3.0 0.9
. 2000 0.8 2.6 3.4 3.1 -0.3
. 1999/2000 2.1 3.4 5.5 6.1 0.6
Average 1999 . . . . -0.7?
. 2000 . . . . -1.9??
. 1999/2000 . . . . -2.6***

* Average rates, December 1999-December 1999 and December 1999-December 2000.

** Notes on productivity figures: Austria - source WIFO; Belgium - source Federal Planning Bureau; Denmark - source Statistics Denmark, 2000 figure first three quarters only; Finland - source Statistics Finland; France - source DARES (apparent labour productivity per hour), 2000 figure estimate based on first half year; Germany - source Federal Statistical Office (labour productivity per working hour); Greece - source European Commission; Ireland - source Central Statistical Office (industrial workers' output per hour), first quarter; Italy - source central bank, 2000 figure first half year only; Luxembourg - source Doorn group; Netherlands - source Central Statistical Office (1999), Doorn group (2000); Portugal - source Banco Espirito Santo, 2000 figure estimated; Spain - Ministry of Economics; Sweden - source Statistics Sweden; UK - source ONS (output filled per job, second quarter).

*** See notes to figure 1 above.

? Average of 16 countries; ?? average of 11 countries.

The table indicates that trade unions across Europe have faced great difficulties in achieving bargaining settlements that use up the full distribution margin. Figures are available for 11 of the countries over the whole 1999-2000 period, and these show an average total shortfall of 2.6 percentage points between pay rises and the sum of inflation and productivity increases. The gap widened considerably between 0.7 points in 1999 and 1.9 in 2000 (though the latter figure includes substantially fewer countries). For the four countries where unions operate the Doorn formula, the gap is smaller than average, at 1.4 points over 1999-2000, and the margin was exceeded slightly in 1999.

Over the full two-year period, only the UK managed to exceed the distribution margin, by 0.6 points, with Portugal and Germany coming closest elsewhere. The biggest shortfalls were registered in Spain and France. In 1999, Austria, Belgium, Germany, Norway, Portugal and the UK all exceeded the margin, but no countries for which figures are available did so in 2000. Between 1999 and 2000, the utilisation of the margin fell in all countries for which figures are available except the Netherlands.

The figures confirm that pay moderation continued and even deepened in 2000, taking productivity as well as inflation into account.

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 (chemicals), services (retail), and the public sector (the central civil service). 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 table 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 level (eg the UK);
  • 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 Belgian retail;
  • automatic pay indexation may account for a considerable part of the pay increases recorded (as in Belgium and Luxembourg), while the Spanish figures for 2000 exclude the effects of index-linked pay revision clauses;
  • the relative roles of sectoral and company bargaining are again an important factor, with the sectoral agreements referred to in countries like France, 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 Belgium, Denmark, Finland, Ireland, Italy and Sweden) with the pay increases not always being paid in equal tranches, distorting the annual figures;
  • only one category of workers may be referred to in the tables where bargaining occurs separately for blue- and white-collar workers (as in Belgium); and
  • in the civil service, the increases referred to in the tables are in some cases not bargaining outcomes but imposed by governmental order, though often following consultation (as in Germany and Portugal).

Comparing the three sectors, in 1999, the highest average nominal increases were found in chemicals at 3.0%, followed by retail at 2.8% and the civil service at 2.7%. However, in 2000, the average increase in all three sectors was 3.0% (also the whole-economy average), indicating stability in chemicals but a rising trend in the other two sectors. It might be expected that increases in the civil service might be pushed downwards by the increased pressure on public sector finances owing to the EMU convergence criteria, but if this was true to some extent in some countries in 1999 it was not visible in 2000.

Chemicals

In 1999, there was a very wide range of nominal pay increases awarded in the chemicals sector across Europe, with the highest being the 5.5% recorded in Greece and the lowest being the 0.4% recorded in France (which refers only to minimum rates). In 2000, the range of increases remained the same, with the highest pay rise being found in Ireland, at 5.5% (including automatic pay indexation), and the lowest again in France, at o.4%. The average pay increase remained virtually stable from 1999 to 2000 at 3.0% - very similar to the whole-economy average figures (see figure 1 above) - with the rate of increase rising in four countries, falling in seven and remaining unchanged in three (no data for either year are available for Belgium and Norway) (see figure 3 below).

In 1999, chemicals workers in Greece, Luxembourg, the Netherlands and the UK received collectively agreed pay increases notably (one percentage point or more) higher than their national average increase for all sectors, while those in France received a notably lower increase. In 2000, a notably above average settlement was recorded in Finland and a notably-below average award again in France.


 

Source: EIRO; * 1999, 2000 average of 14 countries.

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

The data are sorted in order of increase (highest to lowest) for 2000. Where there is no 2000 figure, the country is ranked by its 1999 figure (in comparison with the 2000 figures for the other countries).

Source: EIRO; * average of 14 countries.

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

  • Austria: figures (from ÖGB) relate to sectoral collective agreements running from 1 January to 31 December 1999 (1999 figure) and from 1 January to 31 December 2000 (2000 figure).
  • Belgium: agreements provide for cash increases, rather than percentage rises; for blue-collar workers, hourly pay increased by BEF 3 from February 2000 and BEF 3 from July 2000; for white-collar workers, monthly pay rose by BEF 750 from January 2000 and BEF 750 from April 2000; figures from Ministry of Labour and Employment.
  • Denmark: 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 figure for 1999 represents the increase from March 1999 and the 2000 figure the increase from March 2000.
  • Finland: the increases applied from 1 January 1999 and 23 March 2000 respectively; figures are from Statistics Finland.
  • France: the increases applied from 1 March 1999 and 1 March 2000 respectively and refer to minimum rates.
  • Germany: figures, from the WSI collective agreement archive, apply only to west Germany; the 1999 figure relates to a sectoral agreement applying from June/July 1999 for 13 months; the 2000 figure to a sectoral agreement applying from June/July 2000 for 12 months; for east Germany, sectoral agreements provided for increases of 3.7% (12 months from January 1999) and 2.8% (12 months from June/July 2000).
  • Greece: figures are from the POEPDHV trade union.
  • Ireland: the 1999 figure includes both the basic increase provided for in the 1997-2000 P2000 national pay agreement (1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in 1999 (2%); a further 1% pay increase, not included here, applied for the last three months of 1999 and first three months of 2000; the figure applies to the private sector - in the public services, the local bargaining clause did not apply until July 1999. The 2000 figure represents the first-phase payment under the new PPF national agreement for both private and public sectors; there was also a separate one-off "catch-up" pay award of 3%, not included here, for some groups of public servants.
  • Italy: figures from Istat.
  • Luxembourg: figures relate only to Du Pont de Nemours, Luxembourg's largest chemicals concern, and include an automatic indexation-related increase of 2.5% in each year.
  • Netherlands: figures from STAR and relevant collective agreements.
  • Portugal: figures from the FEQUIMETAL trade union.
  • Spain: provisional figures from MTAS labour statistics publications; the figure for 2000 does not include the effect of any inflation-linked pay revision clauses.
  • Sweden: no figures available for average collectively agreed pay increases, and the figures represent an estimate based on the three-year agreements concluded in the spring 1998 bargaining round.
  • UK: approximate average of range of settlements reported by IDS for oil, chemicals and pharmaceuticals.

Retail

The range of nominal pay increases in the retail sector in 1999 was between 4.9% in Norway (though the figure includes additional elements) and zero in France. In 2000, the range of increases changed little, with Ireland heading the list at 5.5% and Austria and France bringing up the rear with 1.8%. The average rose appreciably from 2.8% to 3.0% between 1999 and 2000, with the rate of increase rising in seven countries, falling in three and remaining stable in four (no data are available for either year for Belgium, and no data for 2000 for Norway) (see figure 4 below). Retail pay increases were below the whole-economy average in 1999, but equalled it in 2000.

In 1999, retail workers in France and Luxembourg received collectively agreed pay increases notably (one percentage point or more) lower than their national average increase for all sectors, while in no countries did retail workers receive notably higher increases. In 2000, the only settlement which differed notably from the national average was the low increase in Luxembourg.


 

Source: EIRO; * 1999 average of 15 countries; 2000 average of 14 countries.

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

  • Austria: figures (from ÖGB) relate to sectoral collective agreements running from 1 January to 31 December 1999 (1999 figure) and from 1 January to 31 December 2000 (2000 figure).
  • Belgium: agreements provide for cash increases, rather than percentage rises; in the supermarket sector, monthly pay rose by BEF 300 from October 1998 and BEF 500 from July 1999, plus one-off payments of BEF 1,000 in both May 1998 and May 1999; figures from Ministry of Labour and Employment.
  • Denmark: figures are for unskilled workers, with the increases for skilled workers standing at 2.3% in 1999 and 2.2% in 2000; the figure for 1999 represents the increase from March 1999 and the 2000 figure the increase from March 2000.
  • Finland: increases applied from 1 January 1999 and 1 March 2000 respectively; figures are from Statistics Finland.
  • France: from April 2000, there are separate minimum monthly pay scales for companies with under 20 employees which have not yet implemented a 35-hour working week, and for companies which have implemented the 35-hour week; the second pay scale cannot be compared with previous rates, so the 2000 figure represents the difference between the first new minimum pay scale and the previous (transitional) pay scale, implemented in 1998; the figure is an average of a range of increases of between 1.1% and 2.5%, depending on job;
  • Germany: figures are from the WSI collective agreement archive; the 1999 figure relates to a sectoral agreement applicable from July 1999 for nine months, and the 2000 figure to a sectoral agreement applicable from May 2000 for 11 months.
  • Greece: the 1999 figure includes increases of 2% from 1 January and 1.7% from 1 July; the 2000 figure includes increases of 2.7% from 22 February and 1.7% from 1 July (based on a mediation decision); figures from Greek Federation of Private Employees.
  • Ireland: the 1999 figure includes both the basic increase provided for in the 1997-2000 P2000 national pay agreement (1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining in 1999 (2%); a further 1% pay increase, not included here, applied for the last three months of 1999 and first three months of 2000; the figure applies to the private sector - in the public services, the local bargaining clause did not apply until July 1999. The 2000 figure represents the first-phase payment under the new PPF national agreement for both private and public sectors; there was also a separate one-off "catch-up" pay award of 3%, not included here, for some groups of public servants.
  • Italy: figures from Istat.
  • Luxembourg: no figures available, but estimated that increases were close to zero, apart from an automatic indexation-related increase of 2.5% in each year.
  • Netherlands: the 1999 figure relates to an increase applicable from 1 January 1999 and the 2000 figure to an increase applicable from 1 July 2000 (an additional 1.5% was paid on 1 January 2001); figures from STAR and relevant collective agreements.
  • Norway: figure, from TBU, includes more than collectively agreed pay increases (eg wage drift and carryover effects).
  • Portugal: 1999 and 2000 figures relate to 1998-9 and 1999-2000 increases respectively; figures from FETESE trade union.
  • Spain: provisional figures from MTAS labour statistics publications; the figure for 2000 does not include the effect of any inflation-linked pay revision clauses.
  • Sweden: no figures available for average collectively agreed pay increases, and the figures represent an estimate based on the three-year agreements concluded in the spring 1998 bargaining round.
  • UK: data from IDS for retail and distribution.

Civil service

The range of nominal pay increases in the central civil service sector in 1999 was between 4.7% in Norway (though the figure includes additional elements) and 0.5% in France. In 2000, the range of increases widened somewhat, with Ireland heading the list at 8.5% (including a 3% "catch-up" award) and France still at the bottom with 0.5%. The average increase rose appreciably from 2.7% in 1999 to 3.0% in 2000, with the rate of increase rising in seven countries, falling in five and remaining stable in three (no 2000 data are available for Norway) (see figure 5 below). Civil service pay increases were below the whole-economy average in 1999, but equalled it in 2000.

In 1999, civil servants in the UK received a pay increase notably (one percentage point or more) higher than their national average increase for all sectors, while those in France and Greece received a notably lower increase. In 2000, notably above average settlements were recorded in Ireland (due to a special "catch-up" award for civil servants) and the UK and notably below-average awards in Austria, France and Italy.


 

Source: EIRO; 1999 average of 16 countries; 2000 average of 15 countries.

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

  • Austria: figures (from ÖGB) relate to sectoral collective agreements running from 1 January to 31 December 1999 (1999 figure) and from 1 January to 31 December 2000 (2000 figure).
  • Belgium: no collectively agreed increases in either year; the figures represent only automatic indexation-related increases of 2% in both June 1999 and September 2000; figures from Ministry of Labour and Employment .
  • Denmark: the 1999 and 2000 figures relate to increases from 1 April 1999 to 31 March 2000, and from 1 April 2000 to 31 March 2001 respectively.
  • Finland: increases applied from 1 January 1999 and 1 March 2000 respectively; the figures are from Statistics Finland.
  • France: the figure for 1999 relates to an increase applicable from 1 November 1998 (under a 1998 agreement); the 2000 figure refers to an increase awarded from 1 December 2000 (pay negotiations are still under way in early 2001).
  • Germany: figures are from the WSI collective agreement archive; the 1999 figure relates to a sectoral agreement applicable from April 1999 for 12 months, and the 2000 figure to a sectoral agreement applicable from August 2000 for 13 months; the figures refer to the collective agreement for non-civil servant public sector staff - civil servants' pay increases are determined by law, but usually in line with the public sector agreement.
  • Greece: figures from ADEDY trade union federation.
  • Ireland: the 1999 figure includes both the basic increase provided for in the 1997-2000 P2000 national pay agreement (1.5% in the first nine months of 1999) plus the maximum increase allowed under local bargaining from July 1999 (2%); a further 1% pay increase, not included here, applied for the last three months of 1999 and first three months of 2000; the 2000 figure represents the first-phase payment under the new PPF national agreement for both private and public sectors; plus a separate one-off "catch-up" pay award of 3% for some groups of public servants, including civil servants.
  • Italy: figures from Istat.
  • Luxembourg: figures include an automatic indexation-related increase of 2.5% in each year.
  • Netherlands: the 1999 figure relates to an increase applicable from 1 August 1999 and the 2000 figure to an increase applicable from 1 August 2000 (an additional 0.5% was paid on 1 January 2001); figures from STAR and relevant collective agreements.
  • Norway: figure, from TBU, includes more than collectively agreed pay increases (eg wage drift and carryover effects).
  • Portugal: the increases are set by governmental orders (for 2000, order No. 80/2001 of 8 February), following consultation.
  • Spain: provisional figures, from MTAS labour statistics publications, apply to the public administration; the figure for 2000 does not include the effect of any inflation-linked pay revision clauses.
  • Sweden: no figures available for average collectively agreed pay increases, and the figures represent an estimate based on the three-year agreements concluded in the spring 1998 bargaining round.
  • UK: approximate average of range of settlements across civil service departments, as reported by IDS.

Average earnings

The above analysis examines 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 1999 and 2000 (though figures are not always available yet for both years - or either year in the case of France and Portugal - and some 2000 figures are partial).

Once again, extreme caution is advised and the notes below the table 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 1999 was between 4.9% in Norway and 2.0% in Germany, while in 2000 the extremes were Ireland, at 8.1%, and Germany, at 1.5% (though there are more gaps in the national data for this year). The average rate of increase across the countries examined rose from 3.5% in 1999 to 3.7% in 2000 (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 some countries provide only for minima. Increases in earnings are thus appreciably higher than agreed pay increases in Denmark, Finland, Ireland, Italy, 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 (and those for which figures are available), the average increases in earnings, at 3.1% in 1999 and 3.6% in 2000, are lower than in the whole group of countries, but this gap narrowed considerably from 0.4 percentage points in 1999 to 0.1 points in 2000 (though the average for the latter year is based a significantly smaller number of countries).


 

Source: EIRO; 1999 average of 14 countries; 2000 average of 10 countries.

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

  • Austria: figures from Statistik Austria.
  • Belgium: figures relate to blue-collar workers only; increases for white-collar workers were 1.0% in 1999 and 3.3% in 2000; 1999 figure covers September 1998-September 1999 and 2000 figure covers September 1999-September 2000; figures include automatic pay indexation, collectively agreed increases and the effects of working time reduction; figures from Ministry of Labour and Employment.
  • Denmark: figures relate to private sector workers and cover the years to August 1999 and August 2000 respectively; the figures for the state sector are 4.8% for 1998-9 and 2.8% for 1999-2000; figures for the local government sector are 3.8% for 1998-9 and 3.5% for 1999-2000; figures are from Statistics Denmark.
  • Finland: the figures are from Statistics Finland, annual salary change index; the 2000 figure is preliminary
  • Germany: figures from Federal Statistical Office (Statistisches Bundesamt Deutschland).
  • Greece: figures from Ministry of National Economy; figures relate to increases at current prices - increases at constant prices were 2.3% in 1999 and 1.6% in 2000.
  • Ireland: figures from the Central Statistical Office.
  • Italy: figures from Istat; figures relate to the increase in gross nominal earnings; the 2000 figure includes only industrial firms with over 500 employees.
  • Luxembourg: the 1999 figure is calculated as half of the 3.1% increase recorded over the two-year period 1998-9, plus automatic pay indexation of 2.5%.
  • Netherlands: figures from Central Statistical Office (Centraal Bureau voor de Statistiek, CBS) .
  • Norway: annual pay increases calculated by 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.
  • Spain: provisional figures taken from MTAS pay surveys represent average monthly earnings per worker (including overtime); the 1999 figure applies to the year to the fourth quarter of 1999, and the 2000 figure to the year to the third quarter of 2000.
  • Sweden: figures, from Statistics Sweden, relate to the private sector only; the 2000 figure is for the year to October.
  • UK: statistics from average earnings index produced by Office for National Statistics.

Minimum wages

Nine of the 16 countries considered have a national minimum wage, set either by law or by a national intersectoral agreement. Figure 7 below provides data on the increases in the minimum wage in 1999 and 2000 for eight countries - the Irish minimum wage was introduced only in 2000. These minimum wages are generally increased through some kind of indexation mechanism, plus in some countries through political decisions.

Minimum wage increases ranged from 4.1% (Portugal) to 0.02% (Belgium) in 1999, and from 4.1% to 0.02% in the same countries in 2000. The overall average rate of increase rose very slightly from 2.9% in 1999 to 3.0% in 2000. The increases in minimum wages generally lagged behind the average collectively agreed increases in pay, though with exceptions such as France in 2000, the Netherlands in 1999 and Portugal in both years.


 

Source: EIRO.

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

  • Belgium: the increase for 1999 applied from June; the increase for 2000 applied from September.
  • France: the increase for 1999 applied from July 1999; the increase for 2000 applied from July 2000; the 2000 increase applied to the hourly rate (which applies to those who do not yet work a 35-hour week - FR0007177N).
  • Greece: figures given are for annual increases - increases occur every six months; figures relate to increases at current prices - increases at constant prices were 1.0% in 1999 and 0.5% in 2000.
  • Luxembourg: the figure given for 1999 includes a 1.3% increase applied by law in January 1999 and a 2.5% automatic indexation increase awarded in August 1999; the 2000 figure includes only an automatic indexation increase awarded in July 2000 (there was subsequently a 3.1% increase in January 2001).
  • Netherlands: the 1999 figure includes a 1.63% increase awarded on 1 January and a 1.33% increase awarded on 1 July; the 2000 figure includes a 1.26% increase awarded on 1 January and a 1.73% increase awarded on 1 July.
  • Portugal: increases were applied by law in January 1999 and January 2000.
  • Spain: increases were applied by law in January 1999 and January 2000.
  • UK: minimum wage first introduced in April 1999; first increase awarded in October 2000.

Germany has no statutory or agreed national minimum wage. However, the collectively agreed minimum wage in the construction sector has been extended by the Ministry of Labour to cover the whole industry, and thus acts as a form of statutory minimum wage for the sector. In 2000, the rate was increased by 2%.

Labour costs

Labour costs do not of course include just what the employee earns, but also indirect costs such as employers' social contributions and taxes connected to employment. Below in figure 8, we provide Eurostat figures for increases in total nominal hourly labour costs for 1999 and 2000 - no data are available for Greece, Ireland and Portugal. The statistics include: employees' gross earnings (including the value of any social contributions, income taxes, etc payable by the employee, even if actually withheld by the employer and paid directly to social insurance schemes, tax authorities, etc on behalf of the employee); social contributions; and employment-related taxes. (Mark Carley, SPIRE Associates)


 

Source: Eurostat.

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