Pay developments - annual update 2001

In this annual update, we review broad trends in pay across the European Union (plus Norway) in 2000 and 2001. We find that average collectively agreed nominal pay increases rose from around 3.2% in 2000 to 3.5% in 2001 - though with major variations between countries. The rate of increase has been rising steadily since 1999, suggesting that pay 'moderation' may have come under sustained pressure in some countries (this was especially the case in the 'euro-zone' in 2001). However, taking into account increases in prices and productivity, it seems that moderation has generally persisted, though it is lessening. In sectoral terms, increases in metalworking and banking were well ahead of those in local government in 2000, but local government 'caught up' in 2001.

With the introduction of euro notes and coins in the 12 'euro-zone' countries from January 2002, EU Economic and Monetary Union (EMU) has entered a new stage, in which pay developments are taking on ever greater significance. The deepening of economic integration over recent years has had major implications for wage policy in the Member States (TN0007402S), as euro-zone countries have no longer been able to use exchange and interest rates as a means of adjusting to imbalances in economic performance, and pay has had to take on an increasingly important role in compensating for such imbalances. Moreover, within EMU, the development of wage levels is a key factor in whether or not the EU economy is heading in an inflationary or deflationary direction. The introduction of euro notes and coins has, furthermore, added a greater degree of transparency to comparisons of wage levels.

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 euro-zone. The June 2001 Recommendations on the broad guidelines of the economic policies of the Member States and the Community state that sustained wage moderation has contributed to a favourable investment climate and steady employment creation, and call for this wage moderation to be sustained. However, it is noted that 'wage pressures have arisen in some Member States, sparked by emerging labour market bottlenecks and demands for compensation for the recent increase in headline inflation and past moderation.' Those Member States where 'overheating risks and inflationary pressures prevail' should be ready to 'tighten budgetary policy, to pursue wage moderation and to advance further structural reforms aiming at reducing inflation and contributing to an appropriate macroeconomic policy mix at national level'.

In general, the 2001 BEPGs recommend that:

Wage developments in Member States should reflect different economic and employment situations. Governments should promote the right framework conditions for wage negotiations by social partners. For wage developments to contribute to an employment-friendly policy-mix, social partners should continue to pursue a responsible course and conclude wage agreements in Member States in line with the general principles set out in the broad economic policy guidelines. It is necessary that:

In this context, 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 2000 and 2001 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, 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 key role in pay setting in all the countries considered here. However, 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 (eg it stands at 100% of the workforce in Austria and Belgium, but under 40% in the UK). 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 (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 2001 in a number of cases. (In this and subsequent figures, the data are sorted in order of increase [highest to lowest] for 2001. Where there is no 2001 figure, the country is ranked by its 2000 figure in comparison with the 2001 figures for the other 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, Italy, the Netherlands, Portugal, 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 and Norway. In the UK, it is company-level bargaining (or bargaining at lower levels within the company) 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.

• In 2000, nominal pay increases varied between 5.5% in Ireland (the limit laid down by a national agreement) and 1.9% in Italy (though this refers only to sectoral minima, built on at lower level). Increases of 4% and over were recorded in four countries, increases of 3%-4% in five countries, increases of 2%-3% in six countries, and increases of 1%-2% in one country. The average increase stood at 3.2%.
• In 2001, nominal pay increases varied between 7.5% in Ireland (the limit laid down by a national agreement which was revised upward by 2% in 2001 to compensate workers for high inflation) and 2.1% in Germany. Increases of 4% and over were recorded in five countries, increases of 3%-4% in four countries and increases of 2%-3% in seven countries, while no country recorded an increases in the 1%-2% range. The average increase stood at 3.5%.
• The average increase thus rose by 0.3 percentage points from 2000 to 2001. The average increase had fallen from 3.1% in 1998 to 2.9% in 1999, but this proved to be a low point rather than the beginning of a period of sustained stability in nominal pay increases. The average increase rose to 3.2% in 2000 and this upward trend was maintained in 2001.
• There still seems to be relatively little convergence between the rates of nominal pay increase in the various European Economic Area (EEA) countries, with wide variations persisting between them in 2001. Averaging the annual increases over the four-year period 1998-2001, the 16 countries can arguably be divided into: 'low' nominal pay-increase countries - those where pay increases have averaged 2%-3% (Austria, Denmark, Finland, France, Germany, Italy and Spain); 'medium' nominal pay-increase countries - those where pay increases have averaged 3%-4% (Belgium, the Netherlands, Portugal, Sweden and the UK); and 'high' nominal pay-increase countries - those where pay increases have averaged over 4% (Greece, Ireland, Luxembourg and Norway).
• There are also divergent trends in pay increases in the various countries. While the average increase rose from 2000 to 2001 in 11 countries (with pay moderation appearing to come under most pressure in Ireland, Belgium and the Netherlands), following the overall upward trend, the rate of increase fell in five countries (most notably Greece and Spain). Looking at the three-year period starting in 1999 (when the overall downward trend started to be reversed), the countries can be broadly divided into four groups: those which have experienced relative stability in nominal pay increases (Austria, Denmark, Sweden and the UK); those with a clear upward trend (Belgium, Finland, France, Ireland, Italy, Luxembourg and the Netherlands); those with no clear trend (Greece, Norway, Portugal and Spain); and the sole country where increases have fallen consistently - Germany.

Taking only the 12 countries of the euro-zone, the following picture emerges.

• In 2000, nominal pay increases varied between 5.5% in Ireland and 1.9% in Italy. Increases of 4% and over were recorded in three countries, increases of 3%-4% in three countries, increases of 2%-3% in five countries, and increases of 1%-2% in one country. The average increase stood at 3.1%.
• In 2001, nominal pay increases varied between 7.5% in Ireland and 2.1% in Germany. Four countries recorded increases of 4% and over, while increases of 3%-4% were recorded in three countries and increases of 2%-3% in five countries, with no countries recording an increase of 1%-2%. The average increase stood at 3.6%.
• These figures indicate that while nominal pay increases in 2000 were slightly lower (by 0.1 point) in the euro countries than in the EU/EEA more widely, in 2001 they exceeded the overall figure by the same amount. Nominal pay increases thus increased rather more sharply in the euro-zone in 2001. Over 1999-2001, euro-zone countries manifested on average considerably less stability in the level of pay increases than the overall picture for the EU/EEA more widely (three out of the four countries outside the euro-zone had relative pay increase stability over this period, compared with only one of the 12 euro-zone countries), and were more likely to have experienced an upward trend in pay increases.

Source: EIRO.

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

• Austria: 2000 figure from Statistik Austria index of agreed minimum wages; 2001 figure from Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA).
• Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 3.3% in 2000 and 4.0% in 2001); figures represent total of collectively agreed pay increases (1.13% in 2000 and 1.36% in 2001), automatic pay indexation and effects of reduction of working time; figures, from Ministry of Labour and Employment, are for years to September 2000 and December 2001.
• 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 2000 represents the increase from March 2000 and the 2001 figure the increase from March 2001.
• Finland: figures from Statistics Finland.
• France: figures represent the annual change in basic monthly pay for all employees (according to the ACEMO survey); the 2001 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, represent the annual average increase in collectively agreed pay.
• Greece: figures refer to increases in minimum rates as set out in 2000-1 National General Collective Agreement.
• Ireland: the 2000 figure represents the first-phase payment for April 2000-March 2001 under the Programme for Prosperity and Fairness (PPF) national pay 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 employees; the 2001 figure represents the second-phase payment of 5.5% under the PPF for April 2001-March 2002, plus an additional 2% awarded from April 2001 to compensate workers for high inflation.
• Italy: 2000 figure from National Institute of Statistics (Istituto Nazionale di Statistica, Istat); 2001 figure is estimate from REF-IRS (Ricerche per l'economia e la finanza - istituto per la ricerca sociale) research institute.
• 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 from Labour Inspectorate.
• 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 total annual pay increases (including wage drift and 'carryover' effects from previous years); the 2001 figure is an estimate.
• 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) and Directorate-General of Working Conditions (Direcção-Geral das Condições de Trabalho, DGCT); figure for 2001 relates to the year to October.
• Spain: 2000 figure from Ministry of Labour and Social Affairs (MTAS) labour statistics publications (does not include the effect of any inflation-linked pay revision clauses); 2001 figure is estimate, based on mid-range of settlements between 2% and 3%.
• Sweden: no figures available for average collectively agreed pay increases, and figures represent an estimate based on the three-year agreements concluded in spring 1998 bargaining round (2000 figure) and spring 2001 bargaining round (2001 figure); 2001 figure also includes effect of working time reduction.
• Figures from Labour Research Department (LRD) Bargaining Report November 2001; data are for the 12 months up to and including December 2000 (2000 figure) and October 2001 (2001 figure).

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 1999-December 2000 and December 2000-December 2001 respectively, as calculated in line with Eurostat's Harmonised Index of Consumer Prices (HICP). For the EU 15 as a whole, 2000 saw inflation continue to increase, from an average of 2.1% over December 1999-December 2000 to an average of 2.4% over December 2000-December 2001. As figure 2 shows, this continued to eat into the nominal collectively agreed pay increases in many countries.

Source: EIRO.

Figure 2 indicates the following trends.

• The workers concerned received real pay increases in 11 countries in 2000, but in five countries (Belgium, Denmark, Finland, Italy and Spain) they 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 2001, the number of countries where inflation outstripped the nominal pay rise rose to six (Germany, Greece, Italy, Portugal, the Netherlands and Spain). Only in Italy and Spain did workers lose out in both years, but considering the two years together, nominal pay increases were also entirely eliminated by inflation in Denmark, Germany and Portugal.
• In 2000, the range of real pay increases was between 2.2% in the UK and -0.7% in Italy (where sectoral agreements set minimum rates) - a slightly smaller range than found for nominal increases. Increases of 2% and over were recorded in one country, increases of 1%-2% in four countries, increases of under 1% in six countries and decreases of up to -1% in five countries - indicating somewhat greater convergence than that for nominal increases. The average increase stood at 0.5%.
• In 2001, the range of real pay increases was between 3.5% in Ireland and -1.3% in Spain - again a slightly smaller range than found for nominal increases. Five countries recorded an increase of 2% or over, while no countries recorded increases of 1%-2% and five recorded increases of 0%-1% in five countries, with decreases of up to -1% in six countries. There thus appeared to be something of a split between five countries with relatively high (2% plus) real increases, and 10 countries covered by increases in the range of between 1% and -1%. The average increase stood at 0.6%.
• The average increase thus rose by 0.1 percentage point from 2000 to 2001, a considerable smaller rise than recorded in nominal pay. Between 1999 and 2000, there had been a fall of 0.9 points, and between 1998 and 1999 a fall of 0.3 points. The downward trend has thus been reversed. However, the small average rise in real pay increases in 2001 disguises the fact that the rate of real pay increase fell in seven countries. Over the four-year period 1998-2001, the trends in real pay increases have been variable in all countries apart from Spain, where there has been a continuous fall. In Austria, Denmark, France, the Netherlands and the UK, the rate of real increase has risen and fallen over the four years with no clear pattern (though there has been considerable stability in Denmark, France and the UK). The pattern observed in Belgium, Finland, Ireland, Italy and Norway was for real pay increases to fall over 1998-2000, before experiencing an upturn in 2001. By contrast, in Germany, Greece, Portugal and Sweden, real pay increases rose from 1998 to 1999 but have fallen continuously since.
• Averaging the annual real pay increases over the four-year period 1998-2001, the 16 countries can arguably 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, Finland, France, Germany, the Netherlands and Portugal); 'medium' real pay-increase countries - those where pay increases have averaged 1%-2% (Belgium, Greece, Ireland, Luxembourg and Sweden); and 'high' real pay-increase countries - those where pay increases have averaged 2% or over (Norway and the UK).

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

• In 2000, real pay increases varied between 1.3% in Greece and -0.7% in Italy. Increases of over 1% were recorded in two countries, increases of under 1% in six countries and decreases of up to -1% in four countries. The average increase stood at 0.2% - considerably lower than the overall EU/EEA average of 0.5%.
• In 2001, real pay increases varied between 3.5% in Ireland and -1.3% in Spain. Increases of 2% and over were recorded in three countries, while no countries recorded increases of 1%-2% and three countries recorded increases of under 1%. Decreases of up to -1% were recorded in five countries and of -1%-2% in one country. The average increase stood at under 0.5%, compared with the overall EU/EEA average of 0.6%.
• These figures indicate that in 2000-1 (as in 1998-9) real pay increases were lower in the euro countries than in the EU/EEA more widely and that they converged more - the effects of EMU may arguably be detected here. Real pay increases in the euro-zone rose slightly more from 2000 to 2001 than in the EU/EEA more widely, but all of the countries which experienced a decrease in real pay in 2001 were in the euro-zone (indeed this applied to half of the 12 euro-zone countries). If Ireland and its booming economy were removed from the 2001 figures for the euro-zone, the average real pay increase would fall to 0.2%. Furthermore, both of the 'high' real pay-increase countries over 1998-2001 (Norway and the UK) are outside the euro-zone.

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, and other European bargaining coordination efforts by trade unions take a similar approach. For example, the European Trade Union Confederation (ETUC) has adopted a coordination guideline which includes a pay claims formula whereby 'nominal wage increases should at least exceed inflation, while maximising the proportion of productivity allocated to the rise in gross wages in order to secure a better balance between profits and wages' (EU0101291N). A sector-level example is the European Metalworkers' Federation (EMF) 'European coordination rule' whereby 'the key point of reference and criterion for trade union wage policy in all countries must be to offset the rate of inflation and to ensure that workers' incomes retain a balanced participation in productivity gains' (EU0108241F).

Table 1 below assesses pay bargaining outcomes in 2000 and 2001 in the light of the distributive margin 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.

* Average rates, December 1999-December 2000 and December 2000-December 2001.

** Notes on productivity figures: Austria - source Österreichische Nationalbank; Belgium - source National Bank of Belgium/Federal Planning Office; Denmark - source Statistics Denmark; Finland - source Statistics Finland; France - source INSEE, figures refer only to private sector (productivity per hour worked) ; Germany - source Federal Statistical Office (labour productivity per hour worked); Greece - source Ministry of National Economy; Italy - Istat and REF-IRS, 2001 figure estimate; Luxembourg - source STATEC (based on Gross Domestic Product, all workers); Netherlands - source Central Statistical Office; Norway - source National Budget 2002, 2001 figure estimate; Portugal - source Banco de Portugal; Spain - source Ministry of Economics; Sweden - source Statistics Sweden, figures to second quarter; UK - source ONS (output per filled job, whole economy).

*** See notes to figure 1 above.

? Average of 15 countries; ?? average of 12 countries.

Table 1 indicates that trade unions across Europe have continued to face great difficulties in achieving bargaining settlements that use up the full distribution margin. Figures are available for 12 of the countries over the whole 2000-1 period, and these show an average total shortfall of 3.0 percentage points between pay rises and the sum of inflation and productivity increases. The gap narrowed considerably between 2.4 points in 2000 and 0.7 in 2001 (though the latter figure includes fewer countries), the same level as in 1999. Of the four countries where unions operate the 'Doorn formula', figures are available for both years for three (Belgium, Germany and the Netherlands) and the gap was smaller than average, at 2.0 points over 2000-1, while the margin was exceeded slightly in 2001.

Over the full two-year period, only Luxembourg and the UK managed to exceed the distribution margin, by 0.3 points and 0.2 points respectively. The biggest shortfalls were registered in Greece, Spain and Denmark. In 2000, no countries exceeded the margin, while Belgium, France, Luxembourg, Norway and the UK did so in 2001. Between 2000 and 2001, the utilisation of the margin increased in all countries for which figures are available except Greece.

The figures suggest that pay moderation continued in 2001, taking productivity as well as inflation into account, but that this moderation was beginning to lessen. They also suggest that the EU's key broad economic guidelines on pay - that increases in nominal wages should be consistent with price stability and that increases in real wages should not exceed growth in labour productivity - are largely being observed in most Member States.

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 (metalworking), services (banking), and the public sector (local government). 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, or Dutch banking);
• 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 banking;
• 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 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 local government, 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 Portugal).

Comparing the three sectors, in 2000, the average nominal increase stood at 3.4% in metalworking and 3.3% in banking, but at only 3.0% in local government (the whole-economy average was 3.2%). However, in 2001, the average increase in all three sectors was 3.6% (slightly above the whole-economy average of 3.5%), indicating a rising trend in all three sectors, but most sharply in local government. Over the four-year period 1998-2001, the average annual increase stood at 3.2% in metalworking, 3.1% in banking and 2.9% in local government. It might be expected that pay increases in local government would be pushed downwards by the increased pressure on public sector finances owing to the EMU convergence criteria, and the fact that this sector has had the lowest overall pay increases since 1998 may support such a view. However, for whatever reason (labour shortages might be a partial explanation), this was not the case in 2001.

Metalworking

In 2000, the range of nominal pay increases awarded in the metalworking sector across Europe was between 5.5% in Ireland and 1.9% in Italy (where the metalworking sectoral agreement sets minimum rates) - see figure 3 below. In 2001, the range of increases widened, with the highest pay rise again being found in Ireland, at 7.5% (including compensation for high inflation), and the lowest again in Italy, at 1.8%. The average pay increase increased slightly from 3.4% in 2000 to 3.6% in 2001 - in both cases slightly above the whole-economy average figures (see figure 1 above) - with the rate of increase rising in eight countries and falling in seven (no data for 2000 are available for France).

In 2000, the increase in metalworking was equal to the national average increase for all sectors in nine countries, higher in four countries (most notably in Austria) and lower in two countries (Belgium and the Netherlands). In 2001, the increase in metalworking was equal to the national average increase for all sectors in five countries, higher in five countries (most notably in Luxembourg and Sweden) and lower in six countries (most notably in Belgium and Finland).

The average increases of 3.4% in 2000 and 3.6% in 2001 compare with increases of 2.9% in both 1998 and 1999. Over the four-year period 1998-2001, the average annual increase in metalworking was: under 2% in Denmark (where the relevant agreements set minimum rates); 2%-3% in Belgium, Finland, France and Italy; 3%-4% in Austria, Germany, Greece, Luxembourg, Netherlands, Portugal, Spain, Sweden and the UK; 4%-5% in Norway; and over 5% in Ireland.

Source: EIRO; * average of 15 countries for 2000 and average of 16 countries for 2001.

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

• Austria: figures relate to sectoral collective agreements; 2001 figure based on agreement running for one year from 1 November 2001.
• Belgium: figures refer to blue-collar workers and to the sectoral agreement for bridge construction and structural metalworking - they include 1.53% automatic pay indexation in 2000 and 2.82% in 2001; agreements for steel construction and mechanical and electrical engineering do not provide for percentage increases, but a cash rise - an hourly increase of BEF 3 (plus 1.53% indexation) in 2000, and BEF 5 (plus 2.82%) in 2001.
• 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 2000 represents the increase from March 2000 and the 2001 figure the increase from March 2001.
• Finland: the increases applied from 15 January 2000 and 1 February 2001 respectively; figures from Statistics Finland.
• France: there are no nationally agreed increases at sector level, but various agreements at département and regional level; the figure given for 2001 relates to the guaranteed pay rates set out in the Parisian regional agreement (the largest in terms of number of employees covered) - it refers to the increase in the pay scale for employees on a 35-hour week (the increase for those on a 39-hour week was 1.1%).
• Germany: figures from the WSI collective agreement archive; the 2000 figure relates to sectoral agreements applying from May 2000 to April 2001; the 2001 figure to sectoral agreements applying from May 2001 to February 2002.
• Greece: figures refer to increases in minimum rates as set out in 2000-1 National General Collective Agreement.
• Ireland: the 2000 figure represents the first-phase payment for April 2000-March 2001 under the Programme for Prosperity and Fairness (PPF) national pay 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 employees; the 2001 figure represents the second-phase payment of 5.5% under the PPF for April 2001-March 2002, plus an additional 2% awarded from April 2001 to compensate workers for high inflation.
• Italy: 2000 figure from Istat; 2001 figure is estimate from REF-IRS.
• Luxembourg: the figures relate to blue-collar workers only; the 2000 figure includes an automatic indexation-related increase of 2.5% (applicable from July 2000) plus half of a 4.2% wage increase agreed for the two-year period 1999-2000; the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from April 2001), and includes effects of increase in '13th month' bonus.
• Netherlands: figures from relevant collective agreements; 2000 increase applied from 1 July; 2001 increase from 1 May.
• Norway: figures, from TBU, refer to hourly earnings of blue-collar workers in manufacturing companies affiliated to the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO); figures include more than collectively agreed pay increases (eg wage drift and 'carryover' effects).
• Portugal: figures from DGCT; 2001 figure refers to a collective agreement which does not cover production workers.
• Spain: figures from MTAS labour statistics publications.
• Sweden: figures represent an estimate based on the three-year agreements concluded in spring 1998 bargaining round (2000 figure) and spring 2001 bargaining round (2001 figure); 2001 figure also includes effect of working time reduction. .
• UK: figures from LRD Bargaining Report, September 2000 and September 2001; they represent an average of agreements, unweighted for numbers of employees covered.

Banking

The range of nominal pay increases in the banking sector in 2000 was between 6.8% in Greece and 1.4% in Austria - see figure 4 below. In 2001, the range of increases increased slightly, with Ireland heading the list at 7.5% and Italy bringing up the rear with 1.5%. The average rose appreciably from 3.3% to 3.6% between 2000 and 2001, with the rate of increase rising in eight countries, falling in six and remaining stable in one (no data are available for 2001 for France). Banking pay increases were ahead of the whole-economy average in both 2000 and 2001.

In 2000, the increase in banking was equal to the national average increase for all sectors in two countries, higher in eight countries (most notably in Greece, Finland and Norway) and lower in six countries (most notably in Spain, Austria and the Netherlands). In 2001, the increase in banking was equal to the national average increase for all sectors in three countries, higher in five countries (most notably in Greece and Denmark) and lower in seven countries (most notably in Belgium and the Netherlands).

The average increases of 3.3% in 2000 and 3.6% in 2001 compare with increases of 2.8% in 1998 and 2.6% in 1999. Over the four-year period 1998-2001, the average annual increase in banking was: under 1% in France and Italy (where the relevant agreements set minimum rates); 2%-3% in Austria, Belgium, Denmark Finland, Germany, Spain and Sweden; 3%-4% in Luxembourg, the Netherlands, Portugal and the UK; and over 5% in Greece, Ireland and Norway.

Source: EIRO; * average of 16 countries for 2000 and average of 15 countries for 2001.

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

• Belgium: figures relate to sectoral collective agreements for banking and relate to indexation payments; figures exclude a flat-rate bonus of BEF 450 or BEF 800 (depending on size of company) awarded in January 2000, plus further bonuses of BEF 250 in October 2000 and BEF 350 from July 2001.
• Denmark: figures relate to sectoral collective agreements for finance sector.
• Finland: figures from Statistics Finland; 2000 figure includes increases of 2.9% from 1 February and 0.8% from 1 October; 2001 increase applied from 1 February.
• France: figure from Association of French Banks (Association Française des Banques, AFB).
• Germany: figures from WSI collective agreement archive; 2000 figure includes a 1.5% increase applicable from April and a further 1.5% increase from August (applying until April 2001); 2001 figure is an increase applicable from May (for 12 months).
• Greece: figures from the Greek Federation of Bank Employee Unions (OTOE).
• Ireland: the 2000 figure represents the first-phase payment for April 2000-March 2001 under the Programme for Prosperity and Fairness (PPF) national pay 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 employees; the 2001 figure represents the second-phase payment of 5.5% under the PPF for April 2001-March 2002, plus an additional 2% awarded from April 2001 to compensate workers for high inflation.
• Italy: 2000 figure from Istat; 2001 figure is estimate from REF-IRS.
• Luxembourg: the 2000 figure includes an automatic indexation-related increase of 2.5% (applicable from July 2000) plus a 2.5% pay rise applicable from 1 January; the 2001 figure includes an automatic indexation-related increase of 2.5% (applicable from April 2001), and 2.0% applicable from 1 January.
• Netherlands: figures are average of several company collective agreements in major banks (which are no longer covered by the sectoral agreement).
• Norway: figures, from TBU, include more than collectively agreed pay increases (eg wage drift and 'carryover' effects).
• Portugal: figures from Southern and Islands Bank Workers' Union (Sindicato dos Bancários do Sul e Ilhas).
• Spain: figures from MTAS labour statistics publications.
• Sweden: 2000 figure represents an estimate based on the three-year agreement concluded in the spring 1998 bargaining round; 2001 figure based on 21-month sectoral collective agreement for banking and finance signed in late 2000, which provided for an overall 5.8% pay increase (a 1.5% general increase, with the remainder to be negotiated locally).
• UK: figures from LRD Bargaining Report, September 2000 and September 2001; they represent an average of agreements, unweighted for numbers of employees covered.

Local government

There was a very wide range of nominal pay increases in the local government sector in 2000, from 8.5% in Ireland (including a 3% 'catch-up' award) to 1.0% in Italy - see figure 5 below. In 2001, the range of increases narrowed somewhat, with Ireland still heading the list at 7.5% and Spain at the bottom with 2.0%. The average increase rose very appreciably from 3.0% in 2000 to 3.6% in 2001, with the rate of increase rising in nine countries, falling in three and remaining stable in two (no data for either year are available for Austria and France). Local government pay increases were slightly below the whole-economy average in 2000, but exceeded it slightly in 2001.

In 2000, the increase in local government was equal to the national average increase for all sectors in two countries, higher in three countries (most notably in Ireland) and lower in nine countries (most notably in the Netherlands, Greece and Spain). In 2001, the increase in local government was equal to the national average increase for all sectors in one country, higher in five countries (most notably in Italy and Sweden) and lower in eight countries (most notably in Norway and Luxembourg).

The average increases of 3.0% in 2000 and 3.6% in 2001 compare with increases of 2.6% in 1998 and 2.5% in 1999. Over the four-year period 1998-2001, the average annual increase in local government was: 1%-2% in Italy (where the relevant agreements set minimum rates); 2%-3% in Belgium, Denmark Finland, Germany, Greece, the Netherlands and Spain; 3%-4% in Luxembourg, Portugal, Sweden and the UK; 4%-5% in Norway; and over 5% in Ireland.

Source: EIRO.

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

• Austria: no overall agreement for local government, with pay increases differing between local units
• Belgium: increase for 2000 applied from August; 2001 figure includes increases of 2.0% applicable from June and 2.0% applicable from October 2001.
• Denmark: figures from National Association of Local Authorities (Kommunernes Landsforening, KL); 2001 figure includes a special increase of 0.19% awarded to reflect pay developments in the private sector.
• Finland: figures are from Statistics Finland; 2000 figure includes increases of 2.8% from 1 February, 0.2% from 1 June and 0.1% from 1 August; 2001 figure includes increases of 3.0% from 1 February and 0.6% from 1 September.
• Germany: figures, from WSI collective agreement archive, refer to national agreements for the public sector; the 2000 figure refers to an increase applicable from August 2000 to August 2001; and the 2001 figure to an increase applicable from September 2001 to October 2002.
• Greece: figures from Confederation of Public Servants (ADEDY).
• Ireland: the 2000 figure represents the first-phase payment for April 2000-March 2001 under the Programme for Prosperity and Fairness (PPF) national pay agreement for both private and public sectors - plus a separate one-off 'catch-up' pay award of 3% for some groups of public employees (such as civil servants and teachers); the 2001 figure represents the second-phase payment of 5.5% under the PPF for April 2001-March 2002, plus an additional 2% awarded from April 2001 to compensate workers for high inflation.
• Italy: 2000 figure from Istat; 2001 figure is estimate from REF-IRS.
• Luxembourg: figures include an automatic indexation-related increase of 2.5% in each year.
• Netherlands: 2000 increase applied from 1 October; 2001 increase applied from 1 May; figures from relevant collective agreement.
• Norway: figure, from TBU, includes more than collectively agreed pay increases (eg wage drift and 'carryover' effects).
• Portugal: increases are set by governmental orders, following consultation; figures from Directorate-General of Public Administration (Direcção Geral da Administração Pública).
• Spain: figures from MTAS labour statistics publications.
• Sweden: 2000 figure represents an estimate based on the three-year agreements concluded in the spring 1998 bargaining round; 2001 figure applies to blue-collar workers employed in the municipal and city council area only, and is based on a three-year agreement concluded in 2001, providing for a total 11.4% pay increase.
• UK: figures, from LRD Bargaining Report, September 2000 and September 2001, refer to England and Wales only; they represent an average of agreements, unweighted for numbers of employees covered.

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 2000 and 2001 (though figures are not available for 2001 for Spain or for either year in the cases of Austria and Portugal - and some 2001 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 2000 was between 8.1% in Ireland and 1.5% in Germany, while in 2001 the extremes were again Ireland, at 11.0%, and Germany, at 2.0%, along with Italy (though there are more gaps in the national data for this year). The average rate of increase across the countries examined rose from 3.9% in 2000 to 4.5% in 2001 (though the latter average is based on a smaller number of countries). Following increases of 3.1% in 1998 and 3.5% in 1999, this appears to confirm the sustained upward trend already noted for average collectively agreed pay.

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, Greece, Ireland, the Netherlands, Sweden 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 increase in earnings, at 3.8%, was lower than in the whole group of countries in 2000, but this position reversed in 2001, when the euro-zone average stood at 4.6% (though the average for the latter year is based on a smaller number of countries).

Source: EIRO; * average of 14 countries for 2000 and average of 13 countries for 2001.

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

• Austria: figures from Statistik Austria.
• Belgium: figures cover blue-collar workers only (equivalent figures for white-collar workers were 3.3% in 2000 and 4.0% in 2001); figures represent total of collectively agreed pay increases (1.13% in 2000 and 1.36% in 2001), automatic pay indexation and effects of reduction of working time; figures, from Ministry of Labour and Employment, are for years to September 2000 and December 2001.
• Denmark: figures relate to private sector workers and cover the years to August 2000 and August 2001 respectively; the figures for the state sector are 2.8% for 1999-2000 and 5.5% for 2000-1; figures for the local government sector are 3.5% for 1999-2000 and 3.6% for 2000-1; figures are from Statistics Denmark.
• Finland: figures are from Statistics Finland.
• France: figures represents the annual change in basic monthly pay for all employees (according to the ACEMO survey); the 2001 figure is for the year to 30 September.
• Germany: figures from Federal Statistical Office (Statistisches Bundesamt Deutschland).
• Greece: figures from Ministry of National Economy.
• Ireland: figures from the Central Statistical Office; 2001 figure is preliminary estimate for year to September.
• Italy: 2000 figure from Istat; 2001 figure is estimate from REF-IRS.
• Luxembourg: the 2000 figure is calculated as half of the 3.1% increase recorded over the two-year period 1999-2000, plus automatic pay indexation of 2.5%; the 2001 figure is an estimate and also includes automatic pay indexation of 2.5%.
• Netherlands: figures from Central Statistical Office (Centraal Bureau voor de Statistiek, CBS); 2001 figure is for year to end of September.
• Norway: figure based on a weighted average for major sectors, and refers to full-time employees (it covers about 60% of full-time employees).
• Spain: figure, taken from MTAS pay surveys, represents average hourly earnings per worker (including overtime); the 2000 figure refers to the year to the third quarter of 2000.
• Sweden: figures from Statistics Sweden and Swedish Mediation Institute; 2001 figure relates to January 2000 to January 2001; 2001 figure refers to January 2001 to December 2001.
• UK: statistics from average earnings index produced by Office for National Statistics; 2000 figure refers to year to November and 2001 figure to year to September .

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 2000 and 2001 for these countries. These minimum wages are generally increased through some kind of indexation mechanism, plus in some countries through political decisions.

Minimum wage increases ranged from 5.0% (Portugal) to 0.02% (Belgium) in 2000, and from 10.8% (UK) to 0.02% (Belgium) in 2001. The overall average rate of increase rose quite notably from 2.8% in 2000 to 4.5% in 2001. The average increase in minimum wages was thus lower than the average increase in collectively agreed wages in 2000 but considerably higher in 2001. At national level, increases in the minimum wage generally lagged behind the average collectively agreed increases in pay in 2000, with the exceptions of France and Portugal (the two increases were the same in Greece). By contrast, in 2001, the increase in the minimum wages was greater than the average increases in four countries - most notably the UK and France - and lagged behind in four cases - most notably Belgium and Ireland (the two increases were again the same in Greece).

Source: EIRO; * average of eight countries for 2000 and average of nine countries for 2001.

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

• Belgium: increase for 2000 applied from September; increase for 2001 applied from June.
• France: increases applied from July each year; increases given refer only to minimum wage recipients working in companies that had not yet signed an agreement on the changeover to the 35-hour working week (around 70%-75% of recipients in July 2001); increases for workers in companies that had already switched to the 35-hour week were 1.45% from July 2000 and 2.85% from July 2001.
• Greece: figures refer to increases in minimum rates as set out in 2000-1 National General Collective Agreement.
• Ireland: national minimum wage introduced in April 2000, with first increase awarded in July 2001.
• Luxembourg; the 2000 figure includes only an automatic indexation increase awarded in July 2000; the 2001 figure includes a 3.1% increase awarded by law in January 2001, plus an automatic indexation increase of 2.5% awarded in April 2001.
• Netherlands: the 2000 figure includes a 1.26% increase awarded on 1 January and a 1.73% increase awarded on 1 July; the 2001 figure includes a 1.93% increase awarded on 1 January and a 2.25% increase awarded on 1 July.
• Portugal: increases were applied by law in December of each year.
• Spain: increases were applied by law in January 2000 and January 2001.
• UK: increases awarded in October 2000 and October 2001.

Gender pay differentials

The explicit pay terms of the collective agreements and minimum wage laws considered above are 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. The gender wage gap is widest in Austria (at 33%) and narrowest in Luxembourg (at 11%), averaging 20.4% across the 16 countries. While the figure provides a broad picture of the situation, the differences in calculation methods between countries highlighted in the notes below should be noted. Furthermore, the considerable problems in compiling and comparing gender pay statistics have been stressed in a recent EIRO comparative study - TN0201101S (Mark Carley. SPIRE Associates).

Source: EIRO.

Notes: figures are for 2000 except *1998, **1999 and ***2001; figures refer to average hourly pay unless indicated otherwise in the notes below.

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

• Austria: figure from Statistik Austria.
• Belgium: figure, from Ministry of Labour and Employment, refers to blue-collar workers - equivalent figure for white-collar workers was 71.7%.
• Denmark: figure, from Statistics Denmark, refers to private sector - equivalent figure for state sector was 90.1%.
• Finland: figure from Statistics Finland.
• France: figure, from National Institute of Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE), refers to annual average earnings of full-time employees working in the private and semi-public sectors.
• Germany: figure, from Federal Statistical Office, refers to blue-collar workers in manufacturing only.
• Greece: figure from National Statistical Service (ESYE).
• Ireland: figure, from Central Statistical Office (CSO), refers to average hourly earnings
• Italy: figure, from Bank of Italy, refers to annual income.
• 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).
• Netherlands: figure from Ministry of Social Affairs and Employment.
• Norway: figure from TBU, represents average of a few large sectors.
• Portugal: figure from DETEFP.
• Spain: figure from National Institute of Statistics (Instituto Nacional de Estadística, INE) pay survey
• Sweden:figure, from Sweden Statistics, refers to monthly pay.
• UK: figure is projection from Office for National Statistics (ONS) new earnings survey; it refers to average gross weekly earnings in all industries for full-time employees on adult rates.