Pay developments - 2004

  • Observatory: EurWORK
  • Topic:
  • Agreements,
  • Collective bargaining,
  • Relazioni industriali,
  • Retribuzione e reddito,
  • Date of Publication: 19 Aprile 2005



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This review of trends in pay in 2003 and 2004 finds that average collectively agreed nominal wage increases across the EU 25 fell from 4.2% in 2003 to 4.0% in 2004 (though with major variations between countries), continuing a steady downward trend. Taking into account inflation, the rate of real increase fell more sharply, from 1.8% in 2003 to 1.0% in 2004. In the 'old' EU 15, the average agreed nominal wage increase remained unchanged in 2004 at 3.1%, while in the 10 new Member States that joined in May 2004, it fell from 5.9% in 2003 to 5.4% in 2004. The overall picture is of a continuing trend towards wage moderation. This review also looks at collectively agreed pay increases in selected sectors (chemicals, retail and the civil service), increases in average earnings and minimum wages (plus minimum wage rates), and the gender pay gap.

This annual report (or update) from the European Industrial Relations Observatory (EIRO), based on contributions from its national centres, aims to provide a broad, general indication of trends in pay increases over 2003 and 2004 across the EU Member States, two candidate countries (Bulgaria and Romania) and 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 in industrial relations, 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.

Average collectively agreed pay increases

Collective bargaining plays a significant role in pay setting in all countries considered here (TN0401101F). The share of the workforce of the extended EU that have their pay and conditions set, at least to some extent, by collective agreements stands at around two-thirds - though considerably lower in many of the new Member States (eg Estonia and Latvia) and the UK, and higher in some of the EU 15 (eg France, Belgium, Sweden, Finland and Italy). The role of bargaining in pay determination differs widely between the countries. Notably, the different bargaining levels (intersectoral, sectoral, company etc) play different parts, while the importance of bargaining in pay determination differs considerably between economic sectors and groups of workers.

Figure 1 below provides figures for average nominal collectively agreed basic pay increases in each country (or a broadly equivalent indicator, where these are not available). Where possible, the figures cover the whole economy, though there are exceptions (see the notes below the figure). Data are not yet available for the whole of 2004 in a number of cases. Variations in the 2003 figures from those appearing in the EIRO pay update for 2003 (TN0403103U) are explained mainly by the replacement of provisional or partial figures with more reliable ones, plus in some cases changes in the data used, where more appropriate sources have been identified. (In this and subsequent figures, the data are sorted in order of increase [highest to lowest] for 2004. Where there is no 2004 figure, the country is ranked by its 2003 figure in comparison with the 2004 figures for the other countries.)

The 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, Cyprus, Denmark, France, Germany, Italy, the Netherlands, Norway, Portugal, Slovakia, Spain and Sweden. National intersectoral agreements are responsible for setting the relevant increases, or laying down guidelines for lower-level bargaining in Belgium, Finland, Greece, Ireland, Romania (2003), Slovenia and Spain. In the UK and the majority of the new Member States and candidate countries, it is company-level bargaining (or bargaining at lower levels within the company) that is predominant. In several central and eastern European countries - Bulgaria, Estonia, Latvia, Lithuania and Poland - low levels of bargaining coverage and/or lack of systematic data collection make it impossible to produce figures for average collectively agreed pay increases (other indicators are thus used in figure 1). 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, France 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 decentralised-bargaining 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. First we consider the 15 pre-May 2004 EU Member States and Norway (no 2004 data are yet available for France).

  • In 2003, nominal pay increases varied between 4.5% in Norway (though this figure is for total pay increases and includes more than general collectively agreed increases) and 2.1% in Belgium. Increases of 4% and over were recorded in three countries, increases of 3%-4% in five countries, and increases of 2%-3% in eight countries. The average increase stood at 3.1% (3.0% in the EU 15 alone).
  • In 2004, nominal pay increases varied between 6.0% in Greece (this figure refers to the increase in minimum rates laid down in an intersectoral agreement) and 1.3% in the Netherlands. Increases of 4% and over were recorded in two countries, increases of 3%-4% in five countries, increases of 2%-3% in six countries, and increases of 1%-2% in two countries. The average increase stood at 3.1% (3.0% in the EU 15 alone).
  • The average increase thus remained unchanged from 2003 to 2004. This followed a fall from 3.8% in 2001 to 3.5% in 2002 and 3.1% in 2003. There trend towards wage moderation, which began in 2002, thus appeared to continue in 2004, though it flattened out.
  • In terms of possible convergence, the range between the highest and lowest increases fell from 5.4 percentage points in 2001 to 3.6 points in 2002 and 2.4 points in 2003. However, it increased to 4.7 points in 2004. In 2003, the increases in all countries apart from Norway were within 1 percentage point of the overall average rise, while in 2004 this was true of 11 countries for which information is available.
  • Averaging the annual increases over the five-year period 2000-4, the 16 countries can be divided into: 'low' nominal pay-increase countries - those where pay increases have averaged 2%-3% (Austria, Denmark, Finland, Germany and Italy); 'medium' nominal pay-increase countries - those where pay increases have averaged 3%-4% (Belgium, France, the Netherlands, Portugal, Spain, Sweden and the UK); and 'high' nominal pay-increase countries - those where pay increases have averaged over 4% (Greece, Ireland, Luxembourg and Norway). The overall average annual pay increase over the five-year period was 3.3%.
  • There are divergent trends in pay increases in the various countries. While the average increase fell from 2003 to 2004 in nine of the 15 countries for which figures are available for both years (with pay moderation appearing most evident in the Netherlands, Finland, Norway, Spain and Germany), following the overall downward trend, the rate of increase rose in five countries (most notably Greece and Belgium) and remained stable in one. Looking at the five-year period starting in 2000, the average overall trend - for increases to rise from 2000 to 2001 before dropping off over 2002-4 - has been mirrored to varying extents in Austria, France, Luxembourg, the Netherlands and Portugal. This was also true of Belgium and Ireland until 2003, but both of these countries bucked the overall downward trend in 2004. Sweden and, to a lesser extent Denmark, maintained a high degree of stability over the whole period. Otherwise, few countries have displayed a clear trend in nominal pay increases, with most varying up and down from year to year. In terms of the size of the variations in annual increases over 2000-4, it seems that the countries with the greatest stability are Sweden, Denmark, the UK, Austria, Luxembourg, Spain, Germany and Italy (in all cases the variation between the highest and lowest annual increases is lower than 1 percentage point), while the least stable are Ireland, the Netherlands and Greece.

Taking only the 12 countries of the euro-zone (no data are available for France for 2004), the following picture emerges.

  • In 2003, nominal pay increases varied between 4.0% in Ireland and Luxembourg and 2.1% in Belgium. Two countries recorded increases of 4% and over, while increases of 3%-4% were recorded in three countries and increases of 2%-3% in seven countries. The average increase stood at 3.1%.
  • In 2004, nominal pay increases varied between 6.0% (the increase in minimum rates set by a national agreement) in Greece and 1.3% in the Netherlands. Increases of 4% and over were recorded in two countries, increases of 3%-4% 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 the average nominal pay increase in the euro countries was the same as in the EU 15/Norway more widely in both years, but slightly higher (by 0.1 point) than the EU 15 average.

Turning to the 10 new Member States that joined the EU in 2004, the key points are as follows.

  • In 2003, nominal pay increases varied between 10.9% in Latvia and 1.5% in Cyprus. Increases of 10% and over were recorded in one country, increases of 5%-10% in five countries, increases of 2%-5% in three countries, and an increase of under 2% in one country. The average increase stood at 5.9%
  • In 2004, nominal pay increases varied between 9.4% in Latvia and 1.6% in Malta. No countries recorded increases of 10% or over, while six experienced increases of 5%-10%, three increases of 2%-5%, and one an increase of under 2%. The average increase stood at 5.5%.
  • The average pay increase in the 10 new Member States thus considerably exceeded that in the 'old' EU (plus Norway) in both 2003 and 2004. However, the differential fell from 2.8 percentage points to 2.4 points. In 2002, the average increase in the then accession countries (excluding the Czech Republic and Lithuania, for which no information was available) had stood at 6.5% - 3.0 points above the 'old' EU average. Overall, pay trends in the new Member States thus seem be converging downwards towards those in the old EU.
  • Despite the 0.4-point fall in the average wage increase in the new Member States between 2003 and 2004, the downward trend was by no means uniform, with the rate of increase rising in Poland, Cyprus, Lithuania and Hungary. The strongest downward tendency was recorded in Estonia (but the 2004 figure used for this country is incomplete, with the final level of increase likely to be higher), Slovenia and Latvia. In both 2003 and 2004, increases in Cyprus and Malta were below the EU 15 average.

Bulgaria and Romania are not expected to join the EU until 2007. Bulgarian increases were slightly above the average for the new EU Member States in both 2003 and 2004, while those in Romania (whose pay trends seem to be out of step with those countries that joined the EU in May 2004) were considerably higher, especially in 2003 (though inflation was very high in this year).

Considering the expanded EU 25 as a whole, the average agreed pay increases were 4.2% in 2003 and 4.0% in 2004, having stood at 4.4% in 2002 (Czech Republic and Lithuania excluded), indicating a steady downward trend. The inclusion of the new Member States has pushed the Union's average increase upwards, but the differential between the EU 15 and EU 25 figure narrowed slightly from 1.2 percentage points in 2003 to 1.0 points in 2004, suggesting that the effect is becoming less pronounced over time.

Finally, the average increases for all countries examined (28 in 2003 and 27 in 2004) stood at 5.6% in 2003, falling to 4.4% in 2004.

Figure 1. Average collectively agreed pay increases, 2003 and 2004 (%)

Figure 1. Average collectively agreed pay increases, 2003 and 2004 (%)

Source: EIRO. * 2004 figure excluding France.

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

  • Austria: figures, from Statistik Austria index of agreed minimum wages, refer to most collective agreements concluded in the autumn of each year.
  • Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 1.9% in 2003 and 2.2% in 2004); figures represent total of collectively agreed pay increases - 0.4% in 2003 and 1.4% in 2004 for blue-collar workers (0.1% in 2003 and 0.9% in 2004 for white-collar workers) - plus automatic pay indexation and effects of reduction of working time; figures, from Federal Public Service for Employment, Labour and Social Dialogue (SPF Emploi, Travail et Concertation sociale/FOD Werkgelegenheid, Arbeid en Sociaal Overleg), are for years to December.
  • Bulgaria: no figures available for average collectively agreed pay increase (bargaining coverage is patchy); the statistics provided, from the National Statistics Institute (NSI), are for the average increase in earnings; 2004 figure is for the first nine months.
  • Cyprus: 2003 figure from Pancyprian Federation of Labour (PEO); 2004 figure is estimate (range of 2.0%-2.2%) by Employers and Industrialists Federation (OEB).
  • Czech Republic: figures, from Information System on Working Conditions (ISWC), refer to nominal increases in enterprise-level collective agreements (the more prevalent bargaining level); the Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS) estimates the average nominal increase in higher-level collective agreements signed by its affiliates in 2004 at 4.0%.
  • Denmark: no general figures available, and figures used relate to the key industry sector agreement, which operates the 'minimum-wage' system, whereby sectoral agreements set only minimum rates, with subsequent local bargaining producing further increases; the figures represent the minimum hourly increases from March each year.
  • Estonia: no figures available for average collectively agreed pay increases (data collection is still being developed, and bargaining coverage is low); the statistics provided are the increases recorded in a wages survey by the Statistical Office of Estonia (Statistikaamet, ESA); 2004 figure is the increase in first three quarters, compared with first three quarters of 2003 - the annual figure will be higher, as increases are generally greater in the fourth quarter.
  • Finland: figures refers to the average annual labour cost impact of the 2003-4 central incomes policy agreement, which provided: in 2003 for a general pay rise of EUR 0.17 per hour or EUR 28.39 per month from March, with a minimum increase of 1.8%, plus an additional 0.8% for sectoral distribution and an 'equality item' of 0.3%, payable according to the gender balance in each sector; and in 2004 for a general rise of EUR 0.16 per hour or EUR 26.72 per month from March, with a minimum increase of 1.7%, plus an additional 0.5% for sectoral distribution.
  • France: figure, from the Ministry of Employment's Office for Research and Statistics (Direction de l'animation de la recherche, des études et des statistiques du ministère de l'Emploi, DARES), refers to the weighted average increase in sectoral collective agreements' pay scales (the equivalent figure for 2002 was 3.1%); the median increase in sectoral collective agreements' pay scales in 2003 was 2.8% (2.6 % in 2002).
  • Germany: figures, from the Institute for Economics and Social Science (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) collective agreement archive, represent the annual average increase in collectively agreed pay per employee.
  • Greece: figures refer to increases in minimum rates as set out in 2002-3 and 2004-5 National General Collective Agreements.
  • Hungary: data from Ministry of Employment and Labour (Foglalkoztatáspolitikai és Munkaügyi Minisztérium, FMM).
  • Ireland: the 2003 figure refers only to the private sector and represents the first 3% increase under the first 18-month Sustaining Progress (SP) national wage agreement, (2003-4) covering the first nine months of the deal, plus half of the 2% increase for the next six months of the deal; the 2004 figure refers only to the private sector and represents the second half of the second 2% increase under the first SP deal, plus the final 2% increase, plus the first 1.5% awarded under the second SP deal (which also awarded low-paid workers an additional 0.5%); different pay arrangements apply under national agreements in the public sector, with average increases totalling 5.0% in 2003 and 11.5% in 2004.
  • Italy: figures, from National Institute of Statistics (Istituto Nazionale di Statistica, Istat), based on the contents of national sectoral collective agreements (include basic pay, shift allowances, monthly bonuses and other bonuses regularly paid during the course of the year); 2004 figure represents the January-November increase compared with same period in 2003.
  • Latvia: no figures available for average collectively agreed pay increase; the statistics provided, from the Central Statistical Bureau (Centrālā statistikas pārvalde, CSP), are for average increases in the net wages and salaries of employees; 2004 figure is for year to third quarter.
  • Lithuania: no figures available for average collectively agreed pay increase; the statistics provided, from Lithuanian Statistics (Lietuvos statistikos departamentas), are for increases in gross earnings; 2004 figure is for year to third quarter.
  • Luxembourg: no official statistics available; figures represent average of estimated range of pay increases, plus 2.5% automatic pay indexation in each year (from August 2003 and October 2004).
  • Malta: figures, from the Economic Survey by the government's Economic Policy Division, refer to the 12 months to September in each year.
  • Netherlands: figures from Labour Inspectorate (Arbeidsinspectie).
  • 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 the total annual pay increase (including wage drift and 'carryover' effects from previous years); 2004 figure expressed by TBU as 3¾%.
  • Poland: no figures available for average collectively agreed pay increase; figures provided, from the Central Statistical Office of Poland (Główny Urząd Statystyczny, GUS), refer to increases in average earnings; 2004 figure is for year to third quarter.
  • Portugal: figures, from Ministry of Social Security and Labour's Directorate General for Employment and Labour Relations (Direcção Geral do Emprego e das Relações de Trabalho, DGERT), refer to collective agreements published in each year.
  • Romania: 2003 figures refer to the increase set out in the tripartite 'single national collective agreement', which provides a minimum basic framework for employment conditions; 2004 figure refers to national minimum wage increase imposed by government (after bargaining over single national collective agreement failed).
  • Slovakia: 2003 figure is EIRO estimate; 2004 figure from Information System on Working Conditions, Trexima Bratislava.
  • Slovenia: figures, from Official Journal of the Republic of Slovenia (Uradni list Republike Slovenije), refer to private sector only; equivalent figures for public sector were 5.0% in 2003 and 1.2% in 2004.
  • Spain: figures, from Ministry of Labour and Social Affairs (MTAS) labour statistics publications, refer to January-December 2003 and January-November 2004.
  • Sweden: figures represent an estimate based on the three-year agreements concluded in the 2001 and 2004 private sector bargaining rounds, including 0.5% as estimated effect of working time reduction in each year; no official figures available for average collectively agreed pay increases, but employer-based data from the Mediation Authority (Medlingsinstitutet) put pay rises for blue-collar and white-collar workers across the whole economy at 3.5% in 2003 and 3.2% in 2004.
  • UK: figures. from Labour Research Department (LRD) Workplace Report, are for the 12 months to October each year.

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 rates of inflation for December 2002-December 2003 and December 2003-December 2004 respectively, as calculated in line with Eurostat's Harmonised Index of Consumer Prices (HICP).

Similar inflation figures are not available for Bulgaria and Romania, so national sources are used (National Statistics Institute and Institute of National Statistics respectively). For the EU 25 as a whole, 2004 saw inflation start to rise, from an average of 1.9% over December 2002-December 2003 to an average of 2.4% over December 2003-December 2004. The EU 15 witnessed a similar rise, from 1.8% to 2.2%.

Figure 2. Average collectively agreed pay increases, adjusted for inflation, 2003 and 2004 (%)

Figure 2. Average collectively agreed pay increases, adjusted for inflation, 2003 and 2004 (%)

Source: EIRO and Eurostat. * 2004 figure is for November 2003-November 2004. ** 2004 figure excluding France.

Looking first at the EU 15 and Norway, figure 2 indicates the following trends.

  • The workers concerned received real pay increases in all countries except Italy in 2003 (although the Italian pay increase figure used represents minima, built on by subsequent bargaining). In 2004, inflation outstripped the nominal pay rise in three countries - Austria, Germany and Spain.
  • In 2003, the range of real pay increases was between 4.4% in Norway (though it should be noted that this figure is for total pay increases and includes more than general collectively agreed increases) and -0.3% in Italy - a wider range than found for nominal increases. Increases of 2% and over were recorded in one country, increases of 1%-2% in 10 countries, increases of under 1% in four countries and decreases of up to -1% in one country. The average increase stood at 1.3%. However, if non-EU Norway, which had a particularly high increase in 2003, is excluded, the range of real increases was only between 1.9% (in the UK) and -0.3% (in Italy), and the average increase only 1.0%.
  • In 2004, the range of real pay increases was between 2.9% in Greece and - 0.4% in Austria - a rather narrower range than in 2003 and less than that found for nominal increases in 2004. Four countries recorded increases of 2% and over, four countries recorded increases of 1%-2%, four recorded increases of 0%-1% and three had decreases of up to -1%. The average increase stood at 1.0% (0.9% without Norway)
  • The average real increase thus fell by 0.3 percentage points from 2003 to 2004, compared with no change in nominal pay increases - indicating a slightly greater degree of moderation in real terms. The fall in the rate of real increase marked the end of an upward trend that began in 2001. The rate of real pay increase fell from 2003 to 2004 in nine countries (most notably in Norway and Germany), but rose in six (most notably in Greece, Sweden and Belgium). Over the five-year period 2000-4, there are few discernible trends in real pay increases across the countries considered. In terms of the size of the variations in annual increases over 2000-4 - which tend to be considerably larger than for nominal pay increases - it seems that the countries with the greatest stability are Portugal and the UK (where the variation between the highest and lowest annual increases is 1 percentage point), while the least stable are Germany, Ireland and Norway (3 percentage points or more).
  • Averaging the annual real pay increases over the five-year period 2000-4, the 16 countries can be divided into: 'negative' real pay-increase countries - those where pay increases have averaged below zero (Italy and Spain); 'low' real pay-increase countries - those where pay increases have averaged under 1% (Austria, Denmark, Germany, the Netherlands and Portugal); 'medium' real pay-increase countries - those where pay increases have averaged 1%-2% (Belgium, Finland, France, Greece, Ireland, Luxembourg, Sweden and the UK); and 'high' real pay-increase countries - those where pay increases have averaged 2% or over (Norway).

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

  • In 2003, real pay increases varied between 1.7% in Finland and -0.3% in Italy. Increases of 1% and over were recorded in seven countries, increases of under 1% in four countries and a decrease of up to -1% in one country. The average increase stood at 1.0% - lower than the overall EU 15/Norway average of 1.3%.
  • In 2004, real pay increases varied between 2.9% in Greece and -0.4% in Austria. Increases of 2% and over were recorded in two countries, increases of 1%-2% in two countries, increases of under 1% in four countries, and decreases of up to -1% in three countries. The average increase stood at 0.7%, again 0.3 percentage points below the overall EU 15/Norway average of 0.9%.
  • The average real increase thus fell by 0.3 percentage points from 2003 to 2004 (the same drop as in the overall EU 15/Norway average), compared with no change in nominal pay increases.
  • These figures indicate that in 2003 and 2004 (as over 1998-2002) real pay increases were lower in the euro countries than in the EU 15/Norway more widely.

Considering the 10 new Member States, the main features are as follows.

  • In 2003, real pay increases varied between 8.2% in Estonia and -1.8% in Slovakia. Increases of 5% and over were recorded in three countries, increases of 2%-5% in two countries, increases of up to 2% in three countries and decreases in two countries. The average increase stood at 2.9%.
  • In 2004, real pay increases varied between 4.5% in Lithuania and -1.8% in Cyprus. Increases of 2%-5% were recorded in in three countries, increases of up to 2% in five countries, and decreases in two countries. The average increase stood at 1.2%
  • Despite the overall fall in the average real wage increase in the new Member States between 2003 and 2004 (most substantial in Estonia and Latvia), the rate of increase rose in two countries (Hungary and Slovakia).
  • The average real pay increase in the 10 new Member States thus exceeded that in the EU 15 (plus Norway) in both 2003 and 2004. However, the differential narrowed considerably, from 1.6 percentage points to 0.2 points. This narrowing of the gap was already evident in 2002, the first year that EIRO started to include the Member States, suggesting that, as with nominal pay, real pay trends in the new Member States converged downwards towards those in the EU 15 as their accession approached and thereafter.

Of the two candidate countries included, real agreed pay increased very slightly in Bulgaria in 2003 and by more in 2004, with the figures not being unusual by EU standards. Romania experienced a very major rise in 2003, followed by a much smaller one in 2004.

Looking at the EU as a whole, the average collectively agreed pay increase, adjusted for inflation, stood at 1.8% in 2003 and 1.0% in 2004. The inclusion of the new Member States thus pushed the Union's average increase upwards by 1.0 points in 2003 but by only 0.1 points in 2004, suggesting that real pay increase convergence may be ahead of nominal pay increase convergence.

Finally, the average real increases for all countries examined (28 in 2003 and 27 in 2004) stood at 2.6% in 2003, falling to 1.2% in 2004.

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, Bulgarian chemicals, Cypriot retail, Czech retail, Maltese chemicals and retail);
  • 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 some cases. Furthermore, increases may be awarded as a fixed cash amount, which will result in a differing percentage increase in the pay of workers on differing wage rates (as in Finland, though there is a minimum percentage increase guaranteed);
  • automatic pay indexation may account for a considerable part of the pay increases recorded (as in Belgium and Luxembourg);
  • 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 generally 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, Bulgarian retail, Denmark, Finland, Ireland, Italy, the Netherlands 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 (eg in Belgian chemicals and retail); and
  • in the civil service, the increases referred to in the tables are in some cases not bargaining outcomes but imposed by law, as in Austria, Bulgaria, France, Poland and Romania.

Comparing the three sectors, in 2003, the average nominal increase across the current EU and Norway stood at 3.2% in chemicals (0.1 percentage points above the whole-economy average) and 2.8% in retail and the civil service (0.3 points below the overall average). In 2004, the average increase fell in chemicals, to 3.0%, and this sector was overtaken by both the civil service (3.2%) and retail (3.1%) - the whole-economy average stood at 3.1%. Over the six-year period 1999-2004, the average annual increase stood at 3.2% in all three sectors.

Turning to the the new Member States, in 2003, the average nominal increase was 6.5% in retail (0.6 percentage points above the whole-economy average), 5.3% in chemicals (0.6 points below the overall average) and 4.8% in the civil service (1.1 points below the average). In 2004, the rate of increase fell in all three sectors - to 4.6% in the civil service, and more sharply to 4.0% in chemicals and 3.9% in retail, in all three cases below the whole-economy average of 5.5%. In 2003, the average increase in the new Member States was 3.7 percentage points higher than that in the EU 15/Norway in retail, 2.1 points in chemicals and 2.0 points in the civil service. In 2004, the differentials had fallen to 0.8 points in retail, 1.0 points in chemicals and 1.4 points in the civil service.

In the EU 25 as a whole, in 2003, the average nominal increase was 4.0% in retail (0.2 percentage points below the whole-economy average), 3.8% in chemicals (0.4 points below the overall average) and 3.3% in the civil service (0.9 points below the average). In 2004, the rate of increase fell to 3.3% in both retail and chemicals, but rose to 3.6% in the civil service, in all three cases below the whole-economy average of 4.0%

In all three sectors, pay increases in Bulgaria were not far from the norm for the new Member States. However, those in Romania are very far above this level, though falling between 2003 and 2004.

Chemicals

In 2003, the range of nominal pay increases awarded in the chemicals sector across the 'old' EU 15 and Norway (no data are available for Italy) was between 4.5% in Greece and 2.3% in Austria and Denmark - see figure 3 below. In 2004, the range of increases widened considerably, with the highest pay rise again being found in Greece, at 5.9%, and the lowest in the Netherlands at 0.6% (no data are available for Portugal). The average pay increase fell from 3.2% in 2003 (3.1% excluding Norway) - slightly above the whole-economy average figures (see figure 1 above) - to 3.0% in 2004 (the same as for the EU 15 only) - slightly below the whole-economy average. The rate of increase fell between 2003 and 2004 in seven countries (most sharply in the Netherlands), rose in five (most notably in Greece) and remained unchanged in two (as noted, data are not available for both years for Italy and Portugal).

In 2003, the increase in chemicals was equal to the national average increase for all sectors in five countries, higher in five countries (most notably in Belgium) and lower in five countries (most notably in France and Spain). In 2004, the increase in chemicals was higher than the national average increase for all sectors in only three countries (again most notably in Belgium), equal to the average in four countries and lower in seven countries (most notably in Spain).

The average chemicals increases of 3.2% in 2003 and 3.0% in 2004 compare with increases of 3.4% in 2002, 3.6% in 2001 and 3.0% in both 1999 and 2000. Since the sharp increase in 2001, the trend has thus been downwards.

With regard to the new Member States, no data on collectively agreed increases are available for Latvia, Lithuania or Poland. The average nominal increase in chemicals stood at 5.3% in 2003 and 4.0% in 2004 - above the EU 15/Norway averages in both years, but with a rapidly narrowing differential. In 2003, the highest increase was recorded in Estonia (9.0%, though this figure refers to wages generally, rather than agreed pay) and the lowest in Cyprus (2.5%). In 2004, Estonia again headed the list, along with Hungary (6.0%), and the lowest increase was in Malta (2.5%). The rate of increase fell between 2003 and 2004 in all countries apart from Cyprus. In 2003, the increase in chemicals was equal to the national average increase for all sectors in one country, higher in two countries and lower in four countries. In 2004, the increase in chemicals was higher than the national average increase in three countries and lower in four countries.

Considering the EU 25, the average pay increase in chemicals fell from 3.8% in 2003 to 3.3% in 2004. This was 0.7 percentage points higher than the EU 15 average in 2003 but only 0.3 points in 2004.

The average pay increase in chemicals in all the countries considered was 4.4% in 2003 and 3.9% in 2004. High increases in Romania in both years account for most of the difference from the EU 25 average.

Figure 3. Average collectively agreed pay increases in chemicals, 2003 and 2004 (%)

Figure 3. Average collectively agreed pay increases in chemicals, 2003 and 2004 (%)

Notes on averages: 'all countries' is for 23 countries in 2003 and 24 countries in 2004; 'whole EU' is for 21 countries; 'EU 15 and Norway' is for 15 countries; 'new Member States' is for seven countries.

Source: EIRO.

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

  • Austria: figures, from Union of Chemical Workers (Gewerkschaft der Chemiearbeiter,GdC) relate to sectoral collective agreements; increases applied from May each year.
  • Belgium: figures refer to blue-collar workers and include automatic pay indexation and effects of working time reductions; increases applied from December 2002 and December 2003 respectively; equivalent figures for white-collar workers were 2.7% in 2003 and 4.4% in 2004.
  • Bulgaria: no data available for 2003; no sectoral agreement for 2004, figure given is the average of increases awarded by enterprise-level collective agreements at Solvay, Soffarma and Balkanfarma, as reported by sectoral trade union.
  • Cyprus: approximate figures from 1 January each year, provided by Cyprus Industrial, Commercial, Press-Printing and General Services Workers' Trade Union (SEVETTYK-PEO).
  • Czech Republic: figures are the mid-point of the range of increases under relevant higher-level collective agreements, as estimated by ČMKOS; enterprise-level collective agreements (the more prevalent bargaining level) resulted in a 3.6% increase in 2004, according to ISWC data (no 2003 data).
  • Denmark: figures 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 figures represent the minimum hourly increases from March each year.
  • Estonia: no figures available for average collectively agreed pay increases; the statistics provided are the increases recorded in a wages survey by ESA and apply to manufacturing in general; 2004 figure is the increase in first three quarters, compared with first three quarters of 2003.
  • Finland: percentages given are minimum increases, with relevant agreement providing for cash increases of EUR 0.26 per hour or EUR 44 per month in 2003 and EUR 0.21 per hour or EUR 34 per month in 2004; increases applied from March each year.
  • France: figures from National Institute of Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE); 2003 figure represents average increase between September 2002 and September 2003, and 2004 figure average increase between September 2003 and September 2004.
  • Germany: figures from the WSI collective agreement archive; 2003 increase from June in western Germany and July in eastern Germany, where workers received an additional 2.8% as part of a process of adjusting their pay to western German levels
  • Greece: figures are estimates from Bank of Greece.
  • Hungary: data from FMM.
  • Ireland: figures represent pay increases under national agreement - see note to figure 1 above.
  • Italy: figure relates to sectoral collective agreement (include basic pay, shift allowances, monthly bonuses and other bonuses regularly paid during the course of the year) and to increase between November 2003 and November 2004; no data for 2003.
  • Luxembourg: figures are estimates and include automatic indexation-related increase of 2.5% in each year (paid in August 2003 and October 2004).
  • Malta: figures, from government Economic Policy Division, represent increases between September 2002 and September 2003 and between September 2003 and September 2004 respectively; figures based on a sample of company-level agreements.
  • Netherlands: figures based on a sample of collective agreements.
  • Norway: figures, from TBU, are for blue-collar workers and include more than collectively agreed pay increases (eg wage drift and 'carryover' effects); 2004 figure is for manufacturing in general and expressed by TBU as 3½%.
  • Portugal: figure relates to basic pay increase under sectoral collective agreements, valid for 12 months from January 2003.
  • Romania: figures relate to annual average increases under sectoral agreements for chemicals and petrochemicals signed in June 2003 and May 2004.
  • Slovakia: figures are average of range of company-level increases under terms of relevant sectoral collective agreements.
  • Slovenia: 2003 increase represents that agreed for whole private sector; 2004 figure refers to sectoral collective agreement, and to the increase in the average gross wage from August.
  • Spain: figures refer to chemicals sector collective agreement; 2004 increase expressed as the rise in inflation plus 0.5 percentage points.
  • Sweden: figures refer to national agreements for blue-collar, white-collar and professional workers in the 'allo-chemical' industry; the figures include 0.5 percentage points per year representing the effect of working time reduction.
  • UK: figures, from LRD Workplace Report, are based on a survey of agreements and refer to 'minerals and chemicals' in 2003 and 'manufacture of chemicals, minerals and metals' in 2004.

Retail

In 2003, the range of nominal pay increases awarded in the retail sector across the EU 15 and Norway (no data are available for Greece) was between 4.0% in Ireland and 1.0% in the Netherlands - see figure 4 below. In 2004, the range of increases grew, with the highest pay rise being recorded in Greece, at 6.6%, and the lowest in Germany at 1.8%. The average pay increase rose from 2.8% in 2003 (2.7% excluding Norway) - 0.3 percentage points below the whole-economy average figures (see figure 1 above) - to 3.1% in 2004 (3.0% excluding Norway) - the same as the whole-economy average. The rate of increase rose between 2003 and 2004 in six countries (most sharply in the Netherlands), fell in seven (most notably in Norway) and remained unchanged in two (as noted, data are not available for both years for Greece).

In 2003, the increase in retail was lower than the national average increase for all sectors in eight countries (most notably in the Netherlands), higher in four countries (most notably in Sweden) and equal to the average in two countries. In 2004, the increase in chemicals was again lower than the national average increase for all sectors in eight countries (most notably in Belgium, Denmark and Spain), equal to the average in two countries and higher in five countries (most notably in the Netherlands).

The average agreed pay increases in the retail sector of 2.8% in 2003 and 3.1% in 2004 followed increases of 3.6% in both 2002 and 2001, 3.0% in 2000 and 2.8% in 1999.

With regard to the new Member States, no data on collectively agreed increases are available for Latvia, Lithuania or Poland. The average nominal increase in retail stood at 6.5% in 2003 and fell sharply to 3.9% in 2004 - more than double the EU 15/Norway average in 2003 (largely due to the very high increase in Estonia), but much closer in 2004. In 2003, the highest increase was recorded in Estonia (14.5%, though this figure refers to wages generally, rather than agreed pay) and the lowest in Cyprus (3.3%). In 2004, the Czech Republic had the greatest increase (6.9%) and Estonia the lowest (1.6%). The rate of increase fell between 2003 and 2004 in four countries, remained stable in two and rose in only one (Slovakia). In 2003, the increase in retail was equal to the national average increase for all sectors in one country, higher in four countries and lower in two countries. In 2004, the increase in chemicals was higher than the national average increase in three countries and lower in four countries.

Considering the EU 25, the average pay increase in retail fell from 4.0% in 2003 to 3.3% in 2004. This was 1.3 percentage points higher than the EU 15 average in 2003 but only 0.3 points in 2004.

The average pay increase in chemicals in all the countries considered was 5.9% in 2003 and 3.7% in 2004. A particularly high increase in Romania in 2003 accounted for most of that year's difference with the EU 25 average.

Figure 4. Average collectively agreed pay increases in retail, 2003 and 2004 (%)

Figure 4. Average collectively agreed pay increases in retail, 2003 and 2004 (%)

Notes on averages: 'all countries' is for 24 countries in 2003 and 25 countries in 2004; 'whole EU' is for 21 countries in 2003 and 22 countries in 2004; 'EU 15 and Norway' is for 15 countries in 2003 and 16 countries in 2004; 'new Member States' is for seven countries.

Source: EIRO.

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

  • Austria: figures, from Federal Arbitration Board, relate to sectoral collective agreements; increases applied from January each year.
  • Belgium: figures refer to blue-collar workers and include automatic pay indexation and effects of working time reductions; increases applied from December 2002 and December 2003 respectively; equivalent figures for white-collar workers were 2.3% in 2003 and 3.7% in 2004.
  • Bulgaria: figures from sectoral trade union; 2003 figure is half of a 10% increase awarded under a 2002-3 collective agreement; 2004 figure is half of a 9% increase awarded under a 2004-5 collective agreement;
  • Cyprus: figures are the average of the range of increases awarded under the collective agreements for the largest enterprises in the sector, as reported by SEVETTYK-PEO; recent recruits received additional increases.
  • Czech Republic: figures, from ISWC, relate to enterprise-level collective agreements.
  • Denmark: figures, from Danish Commerce and Service (Dansk Handel & Service, DHS), represent the minimum hourly increases from March each year.
  • Estonia: no figures available for average collectively agreed pay increases; the statistics provided are the increases recorded in a wages survey by ESA and apply to wholesale and retail trade in general; 2004 figure is the increase in first three quarters, compared with first three quarters of 2003.
  • Finland: percentages given are minimum increases, with relevant agreement providing for a 1.2% rise plus cash increases of EUR 0.17 per hour or EUR 28.39 per month in 2003, and cash increases of EUR 0.21 per hour or EUR 34 per month in 2004; increases applied from March each year.
  • France: figures from INSEE; 2003 figure represents average increase between September 2002 and September 2003, and 2004 figure average increase between September 2003 and September 2004.
  • Germany: figures, from WSI collective agreement archive, are the mid-range of collective agreements in various bargaining regions providing for increases of 1.7%-1.9%.
  • Greece: no data for 2003; 2004 figure is the increase awarded by an arbitration decision (no. 51/2004).
  • Hungary: data from FMM.
  • Ireland: figures represent pay increases under national agreement - see note to figure 1 above.
  • Italy: figures relate to sectoral collective agreement (include basic pay, shift allowances, monthly bonuses and other bonuses regularly paid during the course of the year); 2004 figure refers to increase between November 2003 and November 2004.
  • Luxembourg: figures are estimates and include automatic indexation-related increase of 2.5% in each year (paid in August 2003 and October 2004).
  • Malta: figures, from government Economic Policy Division, represent increases between September 2002 and September 2003 and between September 2003 and September 2004 respectively; figures based on a sample of company-level agreements and refer to wholesale and retail in general.
  • Netherlands: figures based on a sample of collective agreements.
  • Norway: figures, from TBU, include more than collectively agreed pay increases (eg wage drift and 'carryover' effects).
  • Portugal: figures relate to basic pay increase under the Lisbon area retail collective agreement, valid for 12 months from January each year.
  • Romania: figures relate to annual average increases under the collective agreement for the trade sector, and take into account the effects of a provision in the agreement that minimum pay in this sector must be 5% higher than the national minimum wage.
  • Slovakia: figures relate to sectoral collective agreements; 2003 figure is a minimum increase.
  • Slovenia: 2003 increase represents that agreed for whole private sector; 2004 figure refers to sectoral collective agreement, and to the increase in the average gross wage from August.
  • Spain: figures, from MTAS labour statistics publications, refer to January-December 2003 and January-November 2004.
  • Sweden: figures refer to national sectoral agreements for blue-collar and white-collar workers.
  • UK: figures, from LRD Workplace Report, are based on a survey of agreements and refer to 'distribution, hotels etc' in 2003 and 'retail, wholesale, hotels and catering' in 2004.

Civil service

In 2003, the nominal pay increases awarded in the central civil service sector across the 'old' EU 15 and Norway (no data are available for the UK) ranged between 5.8% in Greece and zero in France (ie a pay freeze) - see figure 5 below. In 2004, the range of increases was even greater, with Ireland recording the highest pay rise, at 12.6%, and France again the lowest, at 0.5%. The average pay increase rose from 2.8% in 2003 (2.7% excluding Norway) - 0.3 percentage points below the whole-economy average figures (see figure 1 above) - to 3.2% in 2004 (the same as for the EU 15 only) - just above the whole-economy average. Much of the increase in the average was due to a major rise in Ireland in 2004. The rate of increase fell between 2003 and 2004 in six countries (most sharply in Denmark), rose in five (most notably in Ireland) and remained unchanged in three (as noted, data are not available for both years for the UK).

In 2003, the increase in the civil service was below the national average increase for all sectors in 11 countries (most notably in France) and higher in only four (most notably in Greece). In 2004, the increase in the civil service was lower than the national average increase for all sectors in nine countries (most notably in Belgium), equal to the average in one country and higher in five countries (most notably in Ireland).

The average increases in the civil service of 2.8% in 2003 and 3.2% in 2004 followed increases of 3.2% in both 2002 and 2001, 3.0% in 2000 and 2.7% in 1999.

With regard to the new Member States, no data are available for Latvia, Lithuania and Malta, or for Poland in 2003. The average nominal increase in the civil service stood at 54.8% in 2003 and 4.6% in 2004 - 2.0 percentage points above the EU 15/Norway average in 2003, but only 1.4 points above in 2004. In 2003, the highest increase was recorded in the Czech Republic (9.4%) and the lowest in Hungary (zero). In 2004, the Czech Republic again headed the list (9.4%), and the lowest increase was in Cyprus (zero). The rate of increase fell between 2003 and 2004 in three countries, rose in two and remained stable in one. In 2003, the increase in the civil service was above the national average increase for all sectors in two countries and lower in four countries. In 2004, the increase in the civil service was higher than the national average increase in only one country, lower in five countries and equal in one.

Considering the EU 25, the average pay increase in the civil service rose from 3.3% in 2003 to 3.6% in 2004. This was 0.6 percentage points higher than the EU 15 average in 2003 but only 0.4 points in 2004.

The average pay increase in the civil service in all the countries considered was 4.2% in 2003 and 4.3% in 2004. High increases in Romania in both years account for most of the difference from the EU 25 average, though increases in Bulgaria were also above average.

Figure 5. Average collectively agreed pay increases in the civil service, 2003 and 2004 (%)

Figure 5. Average collectively agreed pay increases in the civil service, 2003 and 2004 (%)

Notes on averages: 'all countries' is for 23 countries in 2003 and 25 countries in 2004; 'whole EU' is for 20 countries in 2003 and 22 countries in 2004; 'EU 15 and Norway' is for 15 countries in 2003 and 16 countries in 2004; 'new Member States' is for six countries in 2003 and seven countries in 2004.

Source: EIRO.

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

  • Austria: pay increases fixed by law; figures from Union of Public Employees (Gewerkschaft Öffentlicher Dienst, GÖD).
  • Belgium: figures refer to automatic indexation only in both years.
  • Bulgaria: increases agreed in the National Council for Tripartite Cooperation (NSTP) and imposed by cabinet decree.
  • Cyprus: figures from Pancyprian Union of Public Servants (PASYDY).
  • Czech Republic: figures, from ISWC, relate to enterprise-level collective agreements; statutory increases stood at around 7% in 2003 and 4% in 2004.
  • Denmark: 2003 figure is the sum of a 3.1% increase awarded in April and a 0.25% increase in October; 2004 figure is the sum of a 2.2% increase awarded in April and a 0.74% increase in October.
  • Estonia: no figures available for average collectively agreed pay increases; the statistics provided are the increases recorded in a wages survey by ESA and apply to public administration and defence in general; 2004 figure is the increase in first three quarters, compared with first three quarters of 2003.
  • Finland: percentages given are minimum increases, with relevant agreement providing for a cash increase of EUR 0.17 per hour or EUR 28.39 per month in 2003, and of EUR 0.16 per hour or EUR 26.72 per month in 2004; increases applied from March each year; in addition, renewal of the public sector payment system involved changes in contractual minimum wages in both years.
  • France: pay increases fixed by law.
  • Germany: figures from WSI collective agreement archive; 2003 figure refers to west Germany only; 2004 figure is for whole country and is the sum of a 1% increase awarded in January and a 1% increase in May.
  • Greece: figures are estimates from Bank of Greece.
  • Hungary: data from FMM.
  • Ireland: 2003 figure represents public sector pay increase under national agreement - see note to figure 1 above; 2004 figure represents public sector pay increase under national agreement, plus 'benchmarking' payments, and represents mid-point of 11.25%-14.0% range of total increases awarded to civil servants.
  • Italy: figures relate to sectoral collective agreements (include basic pay, shift allowances, monthly bonuses and other bonuses regularly paid during the course of the year); 2004 figure refers to increase between November 2003 and November 2004; data exclude managers.
  • Luxembourg: figures include automatic indexation-related increase of 2.5% in each year (paid in August 2003 and October 2004).
  • Netherlands: figures refer to increases awarded by collective agreement for civil service in December each year.
  • Norway: figures, from TBU, include more than collectively agreed pay increases (eg wage drift and 'carryover' effects); 2004 figure expressed by TBU as 4¾%.
  • Poland: 2004 figure represents the increase in the basic amount used as the basis for civil service pay determination (multiplied by a specific co-efficient for each group of civil servants), set annually by the State Budget Act; no data are available for 2003.
  • Portugal: figures represent increases awarded only to workers with monthly pay of less than EUR 1,000.
  • Romania: pay increases set by law rather than collective bargaining; no separate data available for central civil service - figures (which are annual averages) refer to wage increases in the whole state budget-financed sector.
  • Slovakia: figures relate to sectoral collective agreements; increases applied in July 2003 and August 2004.
  • Slovenia: figures refer to collective agreement for whole public sector; increases applied in January 2003 and July 2004.
  • Spain: figures, from MTAS labour statistics publications, are for 'public administration, defence and social security, extra-territorial bodies' and refer to January-December 2003 and January-November 2004.
  • Sweden: figures refer to national agreements for blue-collar, white-collar and professional workers in central government sector.
  • UK: figure, from LRD Workplace Report, is based on a survey of agreements and refers to 'public administration' as a whole; no 2003 figure available; there are well over 100 separate bargaining groups within the central civil service and settlements vary considerably.

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 2003 and 2004 (figures are not available for 2004 for the Netherlands and Portugal, and some 2004 figures are only 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), the figures cover only particular groups of workers.

In the EU 15 and Norway, the range of average earnings increases in 2003 was between 5.9% in Ireland and 1.2% in Germany, while in 2003 the extremes were Greece, at 5.5%, and again Germany, at 0.1%. The average rate of increase across these countries fell from 3.4% in 2003 to 3.2% in 2004. This continued a downward trend - the figure had stood at 3.9% in 2002 and 4.3% in 2001 (having risen since 1998). This appears to confirm the tendency already noted for average collectively agreed pay. The average earnings increase fell from 2003 to 2004 in eight countries (most sharply in Germany and Spain), remained stable in three, and rose in only three (Belgium, Italy and the UK).

When compared with the data for collectively agreed pay increases, the earnings figures help to iron out to some extent the distortions caused by factors such as 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 cases such as Denmark, Finland, Ireland, Sweden and the UK (though lower in countries such as Germany, Luxembourg and Spain). Overall, the average increases in earnings are slightly greater than agreed pay increases.

In the countries of the euro-zone, the average increase in earnings was slightly lower than that in the whole EU 15 and Norway in both 2003 and 2004.

In the 10 new Member States, the range of average earnings increases in 2003 was between 12.9% in Romania and 2.6% in Poland, while in 2003 the range was somewhat narrower, between 9.5% in Slovakia and 2.0% in Malta. The average rate of increase across these countries fell from 7.1% in 2003 to 6.2% in 2004. It fell in six countries (most notably Hungary and Estonia), remained steady in one, and rose in three (most sharply in Slovakia and Poland). The average increase was 2.1 times higher than that in the EU 15 and Norway in 2003 but only 1.9 times higher in 2004.

In the EU 25 as a whole, average earnings increased by 4.8% in 2003 and 4.5% in 2004. The inclusion of the new Member States thus pushes the Union's average increase upwards, but this differential narrowed from 1.5 percentage points in 2003 to 1.4 points in 2004. Considering all the countries examined, the average increase stood at 5.7% in 2003 and 5.2% in 2004, with substantial rises in Romania in both years accounting for most of the differential with the EU.

Figure 6. Increases in average earnings, 2003 and 2004 (%)

Figure 6. Increases in average earnings, 2003 and 2004 (%)

Notes on averages: 'all countries' is for 28 countries in 2003 and 26 countries in 2004; 'whole EU' is for 25 countries in 2003 and 23 countries in 2004; 'EU 15 and Norway' is for 16 countries in 2003 and 14 countries in 2004; 'EU 15' is for 15 countries in 2003 and 13 countries in 2004; 'euro-zone' is for 12 countries in 2003 and 10 countries in 2004.

Source: EIRO.

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

  • Austria: figures from Austrian National Bank (Österreichische Nationalbank, ÖNB).
  • Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 1.9% in 2003 and 2.2% in 2004); figures represent total of collectively agreed pay increases plus automatic pay indexation and effects of reduction of working time; figures, from Federal Public Service for Employment, Labour and Social Dialogue are for years to December.
  • Bulgaria: figures from NSI; 2004 figure is for first nine months.
  • Cyprus: figures from European Commission; 2004 figure is provisional.
  • Czech Republic: figures from Czech Statistical Office; 2004 figure is for first nine months.
  • Denmark: figures, from Ministry of Finance, for increase in hourly pay, private sector.
  • Estonia: figures from ESA wages survey; 2004 figure is the increase in first three quarters, compared with first three quarters of 2003 - the annual figure will be higher, as increases are generally greater in the fourth quarter.
  • Finland: figures from Statistics Finland; 2004 figure is for year to third quarter.
  • France: figures, from INSEE, refer to increases in year to June each year.
  • Germany: figures, from Federal Statistical Office (Statistisches Bundesamt, Destatis), refer to annual increase in gross wages and salaries per employee.
  • Greece: estimates from Bank of Greece.
  • Hungary: figures from Central Statistical Office (Központi Statisztikai Hivatal, KSH); 2004 figure is for January to November.
  • Ireland: figures, from the Central Statistical Office, refer to average weekly earnings for all employees (industrial, clerical and managerial); 2003 figure is for year to September.
  • Italy: figures, from Istat, are provisional; 2004 figure is for January to September.
  • Latvia: figures, from CSP, are for average increases in the net wages and salaries of employees; 2004 figure is for year to third quarter.
  • Lithuania: figures, from Lithuanian Statistics, are for increases in gross earnings; 2004 figure is for year to third quarter.
  • Luxembourg: figures are estimates and include automatic pay indexation of 2.5% in each year.
  • Malta: figures, from government Economic Policy Division, are for increase in nominal average weekly earnings; figures for year to September.
  • Netherlands: figure, from CBS, includes overtime working.
  • Norway: figures, from TBU, represent the total annual pay increase (including wage drift and 'carryover' effects from previous years); 2004 figure expressed by TBU as 3¾%.
  • Poland: figures, from GUS, refer to increases in average earnings; 2004 figure is for year to third quarter.
  • Portugal: figure based on survey data from Ministry of Labour and Solidarity's Department of Studies, Statistics and Planning (Departamento de Estudos Estatística e Planeamento, DEEP).
  • Romania: figures based on INS data; 2004 figure refers to first 11 months of year.
  • Slovakia: 2003 figure from Ministry of Labour, Social Affairs and Family; 2004 figure is forecast from Slovak Statistical Office (Štatistický úrad Slovenskej republiky, ŠÚ SR).
  • Slovenia: figures from Institute of Macroeconomic Analysis and Development (Urad RS za makroekonomske analize in razvoj, UMAR), based on Statistical Office of the Republic of Slovenia (Statistični urad Republike Slovenije, SURS) data; 2004 figure is an estimate.
  • Spain: figures, from National Statistical Institute (Instituto Nacional de Estadística, INE), refer to the increase in wage costs per worker; 2003 figure is for the year to the last quarter; 2003 figure is for the year to third quarter.
  • Sweden: figures, from Mediation Authority, are for blue-collar and white-collar workers across the whole economy.
  • UK: figures based on Office for National Statistics average earnings index.

Minimum wages

Twenty of the 28 countries considered have a national minimum wage, set either by law or by a national intersectoral agreement (Cyprus has has a system of statutory minimum wages that applies to only six specific occupations - sales staff, clerical workers, auxiliary healthcare staff and auxiliary staff in nursery schools, crèches and schools - and is not included in this group). Figure 7 below provides data on the increases in the minimum wage in 2003 and 2004 for these countries. These minimum wages are generally increased through some kind of indexation mechanism, plus in some countries through political decisions.

Taking the nine EU Member States concerned, minimum wage increases ranged from 7.1% in the UK to zero in Ireland in 2003, and from 10.0% in Ireland to zero in the Netherlands in 2004. The overall average rate of increase rose sharply from 3.5% in 2003 to 5.0% in 2004 (the average was 3.5% in 2002, 4.9% in 2001, 2.8% in 2000, 2.9% in 1999 and 2.6% in 1998). The average increase in minimum wages was thus a little higher than the average increase in collectively agreed wages in 2003, but markedly higher in 2004, and displayed an overall upward trend (particularly notable in the Ireland, Spain and the UK) in contrast to the stability in agreed wages. At national level, increases in the minimum wage lagged behind the average collectively agreed increases in pay in 2003 in Belgium, the Netherlands, Portugal and Spain and - more notably - in Ireland, while they exceeded the agreed increase in France, Luxembourg and, most markedly, the UK. In 2004, the increase in the minimum wages lagged behind average increases in Belgium, Luxembourg, the Netherlands and Portugal and exceeded them to a notable extent in Ireland, Spain and the UK.

All the new Member States, apart from Cyprus (see above), have a national minimum wage. In 2003, the highest increase, at 16.8% was found in Estonia, while the minimum wage was frozen in Hungary. In 2004, the greatest rise was in Latvia, at 14.3%, while the lowest, 1.4%, was in Malta. The general tendency was for minimum wage rises to exceed the collectively agreed increases in these countries, often by a wide margin. The average increase fell slightly from 8.4% in 2003 to 7.3% in 2004. The differential between the 'old' EU on one hand and the new Member States on the other was considerably higher for minimum wage increases than for collectively agreed wage increases in 2003, but lower in 2004.

Across all 18 countries of the expanded EU that have a minimum wage, the average increase rose from 5.9% in 2003 to 6.2% in 2004. Including Bulgaria and Romania pushes the average rise up to 7.9% in 2003 and 6.6% in 2004, largely due to the scale of the increase in Romania (especially in 2003, though it should be noted that the absolute level of the minimum wage in this country is very low by EU standards - see table 1 below).

Figure 7. Increase in national minimum wage (adult rate), 2003 and 2004 (%)

Figure 7. Increase in national minimum wage (adult rate), 2003 and 2004 (%)

Notes on averages: 'all countries' is for 20 countries; 'whole EU' is for 18 countries; 'EU 15' is for nine countries; 'new Member States' is for nine countries.

Source: EIRO.

The statistics in figure 7 should be read in conjunction with the following notes.

  • Belgium: increase for 2003 applied from June; increase for 2004 applied from October.
  • Bulgaria: increases, agreed in NSTP and imposed by cabinet decree, applied from January each year.
  • Czech Republic: increases, applied by government resolution, applied from January each year.
  • Estonia: increases, set by government decree based on consensus among the social partners, applied from January each year.
  • France: increases applied by the government from July each year; increases given refer to hourly minimum wage, which applies to those workers (around 1 million) still working a 39-hour week; for all other workers on the minimum wage, the rises are lower (as low as 2.1% from July 2004), depending on when their company changed over to the 35-hour week.
  • Greece: figures refer to increases in minimum rates as set out in 2002-3 and 2004-5 National General Collective Agreements.
  • Hungary; no increase in 2003; 2004 increase applied from January.
  • Ireland: no increase in 2003; 2004 increase applied from February.
  • Latvia: increases, applied by government regulation, applied from January each year.
  • Lithuania: increases applied by the government upon submission of a proposal by the Tripartite Council of the Republic of Lithuania (Lietuvos Respublikos Trišalė taryba, LRTT); increase for 2003 applied from September; increase for 2004 applied from May.
  • Luxembourg: 2003 figure includes a 3.5% increase awarded by law in January 2003, plus an automatic indexation increase of 2.5% awarded in August; 2004 figure represents only an automatic indexation increase awarded in October.
  • Malta: increases applied by government order from January each year.
  • Netherlands: 2003 figure includes a 1.41% increase awarded in January and a 1.25% increase awarded in July; no increase awarded in 2004.
  • Portugal: increases applied by law in January of each year.
  • Romania: figures refer to annual average increases, applied in January of each year.
  • Slovakia: increases awarded in October of each year.
  • Slovenia: 2003 figure includes a 6.5% increase awarded in August (reflecting adjustment to real growth in GDP), plus a 1.0% increase applied in December; 2004 increase was applied in August.
  • Spain: 2003 increase applied by law in January; 2004 increase is sum of rises applied by law in January (2.0%) and July (6.57%).
  • UK: figures refer to adult hourly rate; increases awarded in October of each year.

Table 1 below provides the actual rate - hourly, monthly etc, as relevant - of national minimum wages in national currency in 2003 and 2004, See the notes to figure 7 for the dates from which rates applied (if there was more than one increase in the year, the rate given in the table is that after the final one).

Table 1. National minimum wage (adult rate), 2003 and 2004, in national currency*
Country 2003 2004
Belgium
Monthly EUR 1,186.31 EUR 1,210.00
Bulgaria
Hourly BGN 0.65 (EUR 0.33) BGN 0.71 (EUR 0.36)
Monthly BGN 110.00 (EUR 56.44) BGN 120.00 (EUR 61.43)
Czech Republic
Hourly CZK 36.90 (EUR 1.16) CZK 39.60 (EUR 1.24)
Monthly CZK 6,200.00 (EUR 194.69) CZK 6,700.00 (EUR 210.09)
Estonia
Hourly EEK 12.90 (EUR 0.82) EEK 14.60 (EUR 0.93)
Monthly EEK 2,160.00 (EUR 138.05) EEK 2,480.00 (EUR 158.50)
France
Hourly EUR 7.19 EUR 7.61
Monthly EUR 1,215.59 EUR 1,286.09
Greece .
Daily EUR 23.59 EUR 25.01
Monthly EUR 528.28 EUR 559.98
Hungary
Hourly HUF 288.00 (EUR 1.14) HUF 305.00 (EUR 1.21)
Daily HUF 2,304.00 (EUR 9.08) HUF 2,440.00 (EUR 9.70)
Weekly HUF 11,500.00 (EUR 45.34) HUF 12,000.00 (EUR 47.68)
Monthly HUF 50,000.00 (EUR 197.14) HUF 53,000.00 (EUR 210.60)
Ireland
Hourly EUR 6.35 EUR 7.00
Latvia
Hourly LVL 0.415 (EUR 0.65) LVL 0.474 (EUR 0.71)
Monthly LVL 70 (EUR 109.26) LVL 80 (EUR 120.26)
Lithuania
Hourly LTL 2.67 (EUR 0.77) LTL 2.95 (EUR 0.85)
Monthly LTL 450 (EUR 130.33) LTL 500 (EUR 144.81)
Luxembourg
Hourly EUR 8.11 EUR 8.31
Monthly EUR 1,402.96 EUR 1,438.01
Malta
Weekly MTL 53.13 (EUR 124.69) MTL 53.88 (EUR 125.89)
Netherlands
Monthly EUR 1,264.80 EUR 1,264.80
Poland
Monthly PLN 824.00 (EUR 187.29) PLN 860.00 (EUR 189.98)
Portugal
Monthly EUR 356.60 EUR 365.60
Romania
Hourly ROL 14,591.47 (EUR 0.39) ROL 16,342.44 (EUR 0.40)
Monthly ROL 2,500,000 (EUR 66.58) ROL 2,800,000 (EUR 69.12)
Slovakia
Hourly SKK 35.00 (EUR 0.84) SKK 37.40 (EUR 0.93)
Monthly SKK 6,080.00 (EUR 146.54) SKK 6,500.00 (EUR 162.41)
Slovenia
Monthly SIT 111,484.00 (EUR 476.73) SIT 117,500.00 (EUR 491.45)
Spain
Daily EUR 15.04 EUR 16.36
Monthly EUR 451.20 EUR 490.80
UK
Hourly GBP 4.50 (EUR 6.50) GBP 4.85 (EUR 7.14)

* Conversions into EUR, where necessary, on basis of annual average rates for 2003 and 2004 calculated by European Central Bank.

Source: EIRO.

The rates in table 1 should be read in conjunction with the notes to figure 7 above, plus the following.

  • Belgium: rates given apply to workers aged 21 and above; workers aged 21.5 and above with six-12 months' service received EUR 1,219.01 in 2003 and EUR 1,243.36 in 2004; workers aged 21.5 and above with over 12 months' service received EUR 1,233.64 in 2003 and EUR 1,258.18 in 2004.
  • France: see note to figure 7 for meaning of rate given; monthly rate based on 169 hours.
  • Netherlands: figure is gross rate - net rates were EUR 1,030.00 in 2003 and EUR 1,051.00 in 2004.
  • Romania: figures are gross rates; net hourly rates were ROL 12,105.67 in 2003 and ROL 13,539.01 in 2004; net monthly rates were ROL 2,074,100 in 2003 and ROL 2,319,680 in 2004.

Youth rates

The minimum wage increases and rates examined above are the full adult rates. However, 10 countries apply lower rates to younger or less experienced workers. Brief details are provided in table 2 below.

Table 2. National minimum wage - lower rates for younger and less experienced workers, 2004
Country % of full rate Applicable to
Belgium (see note to table 1 above for details of additional rates based on age/experience) 94% Workers aged 20
88% Workers aged 19
82% Workers aged 18
76% Workers aged 17
70% Workers aged 16 and younger
Czech Republic 90% Workers aged 19-21 in first six months of employment
80% Workers aged 18 and younger
Ireland 90% Workers aged under 18/workers aged over 18 and undergoing final third (lasting one month to one year) of a course of authorised training or study
80% Workers aged 18 and over in first year of employment/workers aged over 18 and undergoing second third (lasting one month to one year) of a course of authorised training or study
75% Workers aged over 18 and undergoing first third (lasting one month to one year) of a course of authorised training or study
70% Workers aged 18 and over in second year of employment
Latvia Special hourly rate Workers aged 15-18, who may only work up to 35 hours a week
Luxembourg 80% Workers aged 17
75% Workers aged 15 and 16
Malta 94.60% Workers aged 17
92.34% Workers aged under 17
Netherlands 85% Workers aged 22
72.5% Workers aged 21
61.5% Workers aged 20
52.5% Workers aged 19
45.5% Workers aged 18
39.5% Workers aged 17
34.5% Workers aged 16
30% Workers aged 15
Poland 90% Second year of employment
80% First year of employment
Slovakia 75% Workers aged 16-18
50% Workers aged under 16
UK 84.54% 'Development rate' for workers aged 18-21 inclusive, plus workers aged 22 and above during first six months in a new job with a new employer and who are receiving accredited training
61.86% Workers aged 16 and 17, other than apprentices

Source: EIRO.

Gender pay differentials

The explicit pay terms of the collective agreements and minimum wage laws considered above are presumably gender neutral - they do not provide for differing pay rates or increases for women and for men (to do so would, of course, breach EU and national equal pay law). However, the fact remains that women in all the countries covered here earn, on average, less than men. Figure 8 below indicates this gender pay gap by showing women's average pay as a percentage of men's.

In the EU 15 and Norway, the gender wage gap is widest in Austria (at 26%) and narrowest in Luxembourg (at 11%). Other countries with a notably narrow gender wage differential include Ireland, Norway, France and Denmark, while those with a comparatively wide gap include Portugal, the Netherlands and Finland. The gender wage gap averages 17.4% across the EU 15 and Norway - a slight reduction from the 18.6% found in our 2003 review of the data, and the 19.2% and 20.4% found in our 2002 and 2001 reviews. Year on year upward and downward variations seem to be a feature of gender pay statistics, and the fall is unlikely to be significant over such a short period, while some variations in the figures are explained by changes in the source/nature of the data used. Nevertheless, where individual country data are available for several years, these often show small decreases in the gender pay gap - as in Belgium, Denmark, Finland, Ireland and the UK

In the new Member States, the gender wage gap is widest in the Czech Republic (at 25.1%) and narrowest in Malta (at 3.6%). Other countries with a notably narrow gender wage differential include Slovenia and Hungary, while those with a comparatively wide gap include Estonia, Cyprus and Slovakia. With the caveats noted above, the gap appears to be narrowing at present in countries such as the Czech Republic and Malta. The average differential in the new Member States stands at 17.4% - the same gap as in the EU 15 and Norway.

The average gender wage gap in the expanded EU 25 stands at 17.5%, and across all 28 countries examined at 17.3%.

While the above figures provide a broad picture of the situation, differences in calculation methods between countries highlighted in the notes below should be noted. The considerable problems in compiling and comparing gender pay statistics are examined in a 2001 EIRO comparative study - TN0201101S. (Mark Carley, SPIRE Associates)

Figure 8. Women's average pay as % of men's, latest figures

Figure 8. Women's average pay as % of men's, latest figures

Notes: figures are for 2004 except * 2002, ** 2000, *** 2003, **** 1998, ***** 2001 ; figures refer to average hourly pay unless indicated otherwise in the notes below.

Source: EIRO.

The figures in figure 8 should be read in conjunction with the following notes.

  • Austria: figure from Austrian Institute of Economic Research (WIFO), expressed as 81%-83%.
  • Belgium: figure, from INS/NIS, refer to average primary monthly wage of full-time workers in private sector.
  • Bulgaria: figure, from NSI, refers to average women's wage as a % of men’s over first nine months of year.
  • Cyprus: approximate figure from Statistical Service of Cyprus.
  • Czech Republic: figure, from Ministry of Labour and Social Affairs, refers to first six months of the year.
  • Denmark: figure, from Statistics Denmark, refers to private sector - equivalent figure for state sector was 89.7% and for local government 87.9%.
  • Estonia: figure based on data from Statistical Office of Estonia hourly wages and salaries survey.
  • Finland: figure, from Statistics Finland, includes public sector teachers (79.6% excluding this group) and assumes working hours to be the same for male and female teachers.
  • France: figure from INSEE.
  • Germany: figure, from Federal Statistical Office, refers to blue-collar workers only - equivalent figure for white-collar workers was 70.5%.
  • Greece: figure is Eurostat estimate.
  • Hungary: figure is average of various estimates.
  • Ireland: figure, from CSO, is for September 2004.
  • Italy: figure, from Bank of Italy, refers to annual income.
  • Latvia: figure, from CSP, refers to average monthly gross salary.
  • Lithuania: figure, from Lithuanian Statistics, is for gross earnings in the third quarter of the year.
  • Luxembourg: figure from Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques/International Networks for Studies in Technology, Environment, Alternatives, Development (CEPS/INSTEAD).
  • Malta: figure from National Statistics Office.
  • Netherlands: figure from Labour Inspectorate.
  • Norway: figure is average for full-time employees in most sectors, based on wage statistics from Statistics Norway.
  • Poland: figure from GUS employment and earnings survey.
  • Portugal: figure from former DETEFP.
  • Romania: figure, from INS, refers to the monthly average gross wage in October.
  • Slovakia: figure from Slovak Statistical Office.
  • Slovenia: figure, from UMAR based on SURS data, refers to women’s average monthly earnings (gross) as % of men’s.
  • Spain: figure from INE pay structure survey.
  • Sweden: figure, from Sweden Statistics, refers to monthly pay.
  • UK: figure, from ONS annual survey of hours and earnings, refers to full-time women’s average hourly pay (excluding overtime) rather than earnings; for full-time workers’ (weekly) earnings, the figure would be 77.5% in 2004.
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