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MNI INTERVIEW: Eurozone Wage Claims Likely Restrained- Union

MNI (Brussels)

Eurozone productivity gains have outpaced wages, but workers are not well positioned demand big pay increases, a senior union official tells MNI.

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Weakened collective bargaining arrangements are likely to restrain pay claims by eurozone workers into next year, despite a surge in inflation which is eroding purchasing power as the share of GDP going to wages continues to fall, a senior official at the European Trade Union Confederation told MNI.

While European Union trade unions normally base wage claims on the European Central Bank’s 2% inflation target plus productivity gains, collective bargaining systems have been eroded in recent years, ETUC deputy secretary general Esther Lynch said in an interview.

“Negative developments have impacted both their structure – notably the degree of coordination between different bargaining levels and across bargaining units – and their outcomes, leading especially to wage restraint and internal devaluations, as well as to more concession bargaining - at company level,” Lynch said.

“The wage share is expected to reach a lower level [by the end of this year] than before the pandemic, meaning that productivity gains are not shared in a fair way,” she said, “The ETUC sees the need for pay increases to ensure that workers get their fair share of the wealth they help to create - in particular, in view of the very high levels of growth expected for this year.”

While, as MNI has reported, accelerating inflation has spurred more hawkish ECB officials to argue for more restrained monetary stimulus into next year ( see MNI SOURCES: Hawks Emboldened As ECB Nears Crunch December), others say that policy should remain easy until wages are pushed up on a sustainable basis.


Changes in wage levels as a percentage of GDP have been “disappointing”, according to Lynch.

“If pay had kept up with productivity in the last two years, total wages by the end of the year should be increased by 1.7%, both in the eurozone and the EU,” she said, adding that key workers in particular should be rewarded financially for the part they played in keeping essential services going through the pandemic.

Energy price inflation will lead to automatic increases in minimum wages in many countries, boosting the benchmark for other wage claims, but many wage indexation regimes are based on core inflation measures excluding energy, she noted.

“Therefore, one should not expect significant, broad-based increases in the price of services—which are normally associated with wage pressures—in most countries yet, and inflationary pressures are expected to ease in 2022, as supply-side constraints abate, and energy prices stabilise,” said Lynch.

ETUC is eager to ensure that new jobs created by the green and digital transition at least match the pay and conditions of those which are lost. The EU’s SURE employment support programme, which protected many jobs during the pandemic, could play a role here, she said, if it became a permanent instrument for protecting employment during the transition.

“Job insecurity must be fought. It is creating a crisis of insecurity in the EU,” Lynch said.