Collective Bargaining

In a Global Labour Column, the impact of the Troika intervention is assessed. The author refers to the fact that all countries in the European Monetary Union (EMU) have been severely hit by the Great Recession in 2008 and 2009. However, the Troika did not push for a symmetric adjustment mechanism. It would have been functional to push current account surplus countries such as Germany towards substantially higher wage increases and fiscal expansion, and deficit countries like Greece, Spain or Portugal towards lower wage increases. Instead, deficit countries alone were pushed into enforcing nominal wage cuts to increase their price competitiveness. Wage cuts were combined with Washington Consensus-style policies, including flexibilization of labour markets, privatisation and deregulation of public utilities.

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The Institute for Employment Research IAB compared the labour market participation in several EU-countries over a longer period. The comparison gives an impression of how the financial crisis and the subsequent European debt crisis affected the labour markets in several European countries. It shows the employment rates in 2007, before the onset of the financial crisis, and for 2014, when the crisis in Southern Europe reached or just passed its peak. In the EU-28, the 2014 rate was 64.8%, barely lower than in 2007 (65.2%). However, the picture becomes more diverse, if the situation in individual countries is analysed. In Germany the rate increased to almost 74%, whilst employment in Greece fell more than 10% to below 50%.

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In a rather optimistic paper, labour market data from the period 2000-2016 are analysed. The authors conclude that, although the crisis had a strong impact on the economy, unemployment remained below 5%, and real earnings have been growing at a rate of about 0.7% per year since 2000. However, there is a wide wage gap, both between men and women and between nationals and foreign workers. For instance, foreign men’s earnings equal 83% of Swiss men’s earnings in 2015. Women earned around 83% of a man’s wage in 2015. Thus, convergence has been slow. At a speed of three percentage points per 15 years, or one percentage point per five years, it would take another 25−30 years to wipe out the gender pay gap.

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An analysis with labour market data from the period 2000-2016 shows that youth and long-term unemployment escalated during the crisis and, despite the ongoing recovery, were still at unsustainably high levels in 2016. The aggregate rate of temporary employment declined during the recession, but grew among youth. Real wages declined during the recession and have not returned yet to their pre-recession levels. Interestingly, median real wages kept on rising until 2010 despite dramatic job losses, which, according to the authors might reflect ‘rigidities in the system of collective bargaining’.

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An analysis of the labour market now available online reveals that employment rates are high, but average working hours are low due to many working part-time. The economy was severely affected by the crisis and the associated employment loss was large. Although many have been affected by unemployment, overall unemployment spells have been short due to high job turnover rates. This has prevented a sharp increase in long-term unemployment and eased labour market entry for young people. Wage inequality is on the rise. Wage developments reflect a boom-bust pattern. As employment increased and unemployment decreased, wage increases (both nominal and real) picked up and wage competitiveness (relative unit labour costs) deteriorated by about 15% over the period 2004-2009. The crisis reversed these wage developments, inducing negative real wage growth.

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A financial-worker trade union expects that the job cuts announced by Nordea Bank AB are just the beginning of a transformation that’s about to hit the whole industry as more financial firms come to rely on digital solutions. Nordea said it intended to get rid of 4,000 full-time employees and 2,000 consultants. The move toward digital services increases demand for IT specialists, and when there’s a shortage of those skills, hiring moves elsewhere. The Civilekonomerna union warned employees at other banks for similar developments.

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The Chamber of Labour (AK) reveals on a special webpage the profits collective bargaining can bring. AK notes that collective bargaining contributes to the economic performance, a better distribution of wealth and social peace. The country is on top of the ranking of countries with high bargaining coverage (98% of the workforce). But, collective agreements settle much more, for instance provisions related to work-life balance or holidays payments. The AK-webpage provides detailed overviews of provisions for selected occupations and jobs.

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ABN Amro bank is planning to overhaul its current bonus structure for the 17,000 members of staff who are covered by the bank’s collective agreement. The move is being discussed between unions and the bank in the ongoing collective bargaining for 2018. Part of the talks is to initiate a complete new structure with neither performance assessments nor performance-related bonuses. The plans would cover all workers who are paid according to the collective agreement. Around 100 specialists, including traders and corporate bankers, will still be eligible for a bonus. Trade unions and the management are about to agree on a 9% pay increase to compensate the end of the bonus system.

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The statistical office produced an interesting overview of the evolution of outsourcing practices, and especially of outsourcing across the border. The data provide information on the occurrence of outsourcing in different sectors and occupations, as well as an indication of its impact. The figures show that 8,500 jobs were outsourced abroad in 2014-2016. This is a substantial reduction, compared to the 16,900 jobs that were outsourced in 2009-2011. The industrial sector accounted for the highest share of outsourced jobs, followed by information & communication and trade.

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Teachers at the Malta College of Arts Science and Technology (MCAST) organised a series of strikes, but so far, their industrial dispute is not solved. The Malta Union of Teachers announced another one-day strike because of lack of adherence to agreed deadlines in which the MCAST had to provide counter financial proposals for the collective agreement being negotiated. In correspondence with the MCAST management, the MUT had noted that it is clear that whilst the union is taking agreements seriously, with all the necessary commitment towards its members, MCAST is instead dragging its feet and finding excuses to refrain from adhering to commitments to the detriment of educators and ultimately students.

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