Collectively Agreed Wages in Europe. COLBAR-EUROPE. University of Amsterdam

Abstract

Collective bargaining is an important arena for wage setting in many European countries. Through collective agreements, workers’ and employers’ representatives can regulate the wages paid in specific sectors or firms, mostly by fixing pay scales or wage floors, as well as wage growth, when structural or incidental pay increases are negotiated. The extent to which collective agreements effectively determine employee wages differs across European countries. In Austria, 98% of workers are covered by collective bargaining on wages. In Lithuania, only 7% of workers are covered. The share of workers covered by collective bargaining in a country has been associated with the level of income inequality as well as the real value of wages (Eurofound, 2015; Garnero, 2020). Furthermore, collective agreements sometimes set sector specific wage floors that can be as efficient as statutory minimum wages (Garnero et al., 2015a, 2015b). Collectively bargained pay is therefore pivotal for wage developments in Europe.

However, evidence of the effectiveness of collective bargaining for pay on the country level is not matched on the micro level. Very little is known about the wage levels that are negotiated in collective agreements. There is no country-comparative database of pay scales or even collectively bargained wage floors in Europe (Besamusca, Kahankova, et al., 2018; Besamusca, Tijdens, et al., 2018). The studies of pay scales that do exist are mostly country-specific (e.g. de Beer et al., 2017). This report aims to fill part of that gap in both data and knowledge by asking whether collective agreements in Europe contain wage clauses and
pay scales, as well as how pay scales compare within and across countries and sectors. Using the WageIndicator CBA Database (Ceccon & Medas, 2021), 602 collective agreements from 26 European countries were examined to determine whether and how they set wages and other forms of pay. Following a brief overview of the literature on wage setting and collective bargaining, three sections of this report study wage fixing in collective agreements in Europe, the extent to which agreed wage levels constitute decent wages, and the level of wage inequality contained in pay scales.

The research was conducted in the context of the COLBAR-EUROPE project, which aimed to contribute to the objective of the EU’s Social Dialogue Program: “the functioning and effects of coordination of collective bargaining across different levels and territories”.