Europe's wage-setting mechanisms under the spotlight

Since its onset in 2008, the economic crisis has had a substantial impact on levels of economic activity, on employment and on industrial relations in the EU.  

In some Member States, the changes have been negotiated by the social partners or imposed by governments as an internal response to changing conditions, while in others they have been prompted by European-level policies – such as annual country-specific recommendations under the EU’s new economic governance regime – or required as part of the reform programmes instigated by the troika of European and international institutions (the European Commission, European Central Bank and International Monetary Fund) as a condition of financial assistance packages to a few countries.  

The report found extensive changes in Cyprus, Greece, Ireland, Portugal, Spain and Romania, in which wage-setting mechanisms have undergone multiple changes. These changes were part of bail-out requirements in all countries, apart from Spain. 

Croatia, Hungary, Italy and Slovenia have undergone some change, drive by social partners at national level. In the majority of countries (19), there have been few or no changes to wage-setting mechanisms since 2008. One reason for this is the fairly limited impact of the economic crisis in some countries, in other countries it is the marginal role of collective bargaining in wage-setting mechanisms that is the reason. 

One outcome of decentralization is the decline in the volume of collective wage-bargaining in a number of countries. 

Ten of the 25 countries for which data were available reported that the numbers of wage agreements concluded had fallen since 2008. 

The report found that the impact of country-specific recommendations under the European semester macro-economic planning regime is variable. 

Where changes have been negotiated between employers and trade unions, rather than being imposed by governments, they have tended to further extend the existing directions of change.