Overtime and Wage Adequacy in the European Union: Evidence from Survey Data and Collective Agreements

Abstract

The negotiation of premium rates for workers who exceed their standard work hours is a core issue in collective bargaining on wages and working time. Bargained overtime premiums serve to discourage the (excessive) use of overtime by employers and to compensate workers for the inconvenience of long hours. While overtime premiums are a common feature of both working time legislation and collective agreements across the EU Member States, there is surprisingly little insight into the relation between the negotiation of overtime premiums and the incidence of actual overtime pay in the economy. This knowledge gap sparks questions about the extent to which bargained overtime premiums effectively raise workers’ incomes and, if so, which group benefits from them most.

The BARTIME project on the monetary rewards of working time dimensions in collective bargaining and in the working population, funded by the European Commission’s Directorate General for Employment, Social Affairs and Inclusion (Project No. 101126498), studies this relation. This report, which constitutes deliverable 3.1 of the BARTIME project, focuses on the question to what extent paid overtime premiums contribute to workers’ ability to earn an adequate wage. Together with two further studies into the wider incidence of premiums for non-standard hours and the pervasiveness of unpaid overtime, BARTIME investigates the relation between collectively bargained arrangements on paper, and the way in which they work out in the labour market.

The aim of this report was, first, to understand how much income workers across EU member states derive from overtime premiums, and to what extent these premiums help low-wage workers attain adequate wages. Secondly, the report aims to show how paid overtime premiums are related to bargaining overtime premiums. Combining microdata on wages and paid overtime premiums from the EU Structure of Earnings Survey (ref) with data on collectively bargained premium rates from the WageIndicator CBA Database (Medas et al., 2024), this report critically interrogates the role of (collectively bargained) overtime premiums as an instrument for in-work poverty reduction.