The relation between collectively bargained and earned wages in sector level bargaining in 7 EU member states

Abstract

This study examines the relationship between collectively bargained wages and actual, earned wages across six sectors in seven EU Member States. We address the theoretical ambiguity surrounding this relationship, considering collective bargaining as both a wage-regulating institution and potentially subject to pressures for employer discretion. Using coded data on bargained pay systems from the WageIndicator CBA database and microdata on earned wages from the 2018 European Structure of Earnings Survey, we employ two analytical strategies: a broad comparison of earned wages against bargained benchmarks, and a granular examination of pay scale tables by country and sector.

Our results reveal significant variations across countries and sectors, identifying four distinct configurations in the relationship between bargained and earned wages. These range from earned wages exceeding bargained levels to falling below both floors and medians. The findings highlight the complex interplay between collective bargaining outcomes and actual earnings, demonstrating that the effectiveness of collective bargaining in setting wage standards varies considerably across contexts. This study contributes to understanding wage-setting mechanisms in Europe and provides insights for future labour market policies and research.