Differences emerge over wage moderation

Download article in original language : ES0209108NES.DOC

In October 2002, negotiations began over a new central agreement laying down guidelines for Spanish collective bargaining in 2003, to succeed the deal reached for 2002. The talks got off to a difficult start. Whereas the government and the employers are in favour of maintaining wage moderation, the trade unions have announced that they will demand higher pay increases to prevent the loss of purchasing power, foster domestic demand and stimulate the economy.

In October 2002, employers' organisations and trade unions started negotiations for the renewal of the central agreement which laid down guidelines for collective bargaining in 2002 (ES0201207F). On this occasion, according to the unions, the obstacles to achieving a new agreement are greater than they were when the current framework was agreed in December 2001. The main problems are that:

  • in May 2002, the government broke with the social dialogue approach by unilaterally introducing a reform of unemployment benefit, supported by the employers' organisations (ES0206210F), leading the trade unions to call a one-day general strike on 20 June (ES0207201N); and
  • the main trade union confederations - the Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT) - have stated that they will demand pay increases of close to 4% for the coming financial year, whereas the employers' organisations and the government believe that pay increases should be more moderate in order to avoid inflationary tendencies.

Wage moderation has been a constant in Spain in recent years despite the increase in inflation. The provisional figures for 2001 show that the average agreed pay increase was 3.48%, rising to 3.6% with the incorporation of wage revision clauses. This increase was higher than government's inflation forecast (2%) but coincides with the real average annual increase in the Consumer Prices Index, so the gain in purchasing power in 2001 was zero.

The tendency towards wage moderation was maintained in the current central framework agreement, which is in force until 31 December 2002. In this accord, the employers' organisations and trade unions stress the positive contribution of wage moderation to the competitiveness of companies and job creation. They therefore recommended using as a reference for wage increases the government's inflation forecast (2% for 2002), allowing higher increases within the limits of increased productivity (estimated as 1.1% on average for the whole of Spain). The first figures on collective bargaining during the first half of 2002 show that wage moderation has continued, though inflation is already far higher than the forecast of 2%.

For collective bargaining in 2003, the unions consider that higher pay increases must be demanded in order to stimulate consumption and domestic demand, and to facilitate investment and job creation. Behind this position is a tacit criticism of the employers' organisations, which have allegedly failed to contain prices and create jobs in exchange for wage moderation, and an open criticism of the government's economic policy, which requires wage moderation but has failed to curb inflation.

The differences over pay also show the serious obstacles to the social dialogue that arose after the government introduced its unilateral reform of the unemployment protection system in May 2002. At present, the decree-law implementing the reform is going through parliament and the People's Party (Partido Popular, PP) government has for the first time shown some willingness to modify some of the tougher aspects that have been severely criticised by the trade unions.

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment