Collective Bargaining

The OECD published data that show the impact of the recent restoration of the statutory retirement age of 65 years for men and 60 for women. Retiring at the reduced statutory pensionable age lowers benefits. The pension is determined by lifetime contributions and remaining life expectancy at the time of retirement. Retiring earlier lengthens the expected remaining life and reduces pensions by around 6% per year. Lower pensions will result in a higher number of people, especially women, relying on minimum pensions, which in turn weakens the financial balance of the public pension scheme. Contrary to the regular earnings-related pensions, minimum pensions are not fully covered by past contributions and require additional financing sources. Increasing labour market participation will be a key issue to keep the pension system sustainable.

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The Biedronka retail chain announced an increase in wages at the beginning of 2018. The relatively low unemployment leads to a situation with shops facing more competition to attract good workers, driving them to offer not just improved wages but also benefits packages that may include provisions like private health insurance, paid holidays, and more. Depending on the location and position, the Biedronka employees’ pay will increase by 200 to 550 PLN per year following 2018. Currently a cashier receives a monthly 2550 PLN (608 euro). At competitor Lidl this pay is around 3300 PLN (787 euro).

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Preliminary figures from the Statistical Office confirmed the ongoing surge in wages for most workers. The numbers for the third quarter of 2017 show average gross wages increased by 6.8% from June to September 2017 compared with the same quarter in 2016. When the impact of inflation - still above the central bank’s target figure of 2.0% - is taken into account this means a real wage increase of 4.2%. The median wage, that midway between the highest and lowest levels, comes in at a lower 25,181 crowns (978 euro), but the average annual rise is a higher 7.1%. This suggests that many lowest wage earners are receiving bigger pay rises.

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Twenty Paris arrondissements were affected by a garbage-worker strike that started on 4 December 2017. Garbage collection workers, who are looking for a pay rise, blocked off the entrances to waste collection centres around the Paris suburbs. Around 400 workers went on strike, meaning rubbish in some parts of town simply hasn't been collected. The City Hall said it was open to wage negotiations with the workers.

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The trade union confederation ICTU published a report, which reveals that precarious work is now pervasive in the country. Secure direct employment is increasingly replaced by insecure, uncertain and unpredictable work. The report assessed the increase of precarious employment and the impact of outsourcing. It signals an intense price competition between supplier firms at all points of the supply chain to respond to demands for low cost and speedy deliver. In response, many firms have sought to take the ‘low road’ approach to production and employment at the expense of job security, job quality and wages. The ICTU calls for legislation to tackle insecurity and bogus self-employment.

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In a report with graphs and figures, produced by the Employment Service of Slovenia, the prognoses for the labour market development in 2018 are revealed. Companies expect to create 16,500 jobs, or expand their workforce by 2.6%, during the first half of 2018. Demand is expected to come from jobs in manufacturing, as well as truck drivers, welders, warehouse employees and salesmen. The data show that the biggest surge in the workforce is expected in construction (7.5%) and other business activities, which includes staffing agencies, security, cleaning and lease of cars and equipment (6.2%).

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Trade union FNV has announced that KLM's cabin crew will be striking for 24 hours on 8 January 2018. FNV announced the strike more than a month in advance to give KLM chance to take security measures and to inform passengers and other airlines. The cabin crew members are striking against the so-called -1CA measure, which was implemented over a year ago. KLM decided to send one fewer cabin crew member on a number of long distance flights. This will be the longest cabin crew strike in the 98-year history of KLM. According to FNV, the strike can be prevented if KLM reverses the -1CA measure.

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In an interesting paper, the labour market development in the period 2000-2016 is analysed. After a sizable negative shock from the double-dip recession a moderate recovery began in 2014. However, unemployment remains higher than pre-crisis levels, especially for young workers. The authors pinpoint the regional heterogeneity that is still high, with the stagnating south unable to catch up with the north. The south has experienced a more pronounced relative decrease in public sector real wages as well as a lower increase in private sector real wages due to different inflation dynamics. Given the strong economic heterogeneity between regions, the same collectively bargained wage might have different purchasing power in the north, the centre, and the south. Real earnings are increasing, but productivity is stable at relatively low levels compared to other European countries. Undeclared employment is still high, especially in the south.

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An analysis from the central employers’ confederation (Danmarks Arbejdsgiverforening, DA) reports the growing need for foreign labour. DA’s figures show that the number of EU citizens coming to work has fallen by 65% in the space of 15 months. That statistic is related to a sharp decrease in Polish citizens taking jobs in Denmark, according to the report. The number of newcomers from other EU countries has also fallen sharply since the second quarter of 2016. An advisor at the Economic Council (Det Økonomiske Råd) thinks that the trend should be cause for concern. Employment minister spoke about risks of companies leaving if there was a lack of available labour. Earlier on, the confederation of employers in the industry DI had expressed similar worries, based on a report (by Hay) that placed the country among the countries currently experiencing the fastest growing gap between vacant positions and available workers. The trade union confederation LO urged the industries to recruit from within the country’s estimated 100,000 jobless.

Read on: in English (1) … in English (2) … The Hay summary: in English …

The OECD published its 2017 pension report Pensions at a Glance. It highlights the pension reforms undertaken by OECD countries over the last two years. Moreover, one special chapter focuses on flexible retirement options in OECD countries and discusses people’s preferences regarding flexible retirement, the actual use of these programs and the impact on benefit levels. The report can be read on the OECD webpage. The webpage also provides separate summary reports with country specific findings and country profiles of pension systems.

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