Collective Bargaining in Europe: Trends and Challenges

1. Christos TriantafillouLabour Institute of the Greek General Confederation (INE- GSEE) Collective Bargaining in Europe: Trends and Challenges ETUC Course TU strategies to increase wages and collective bargaining coverage in Europe Brussels , 5 march 2019

2. Presentation Plan • The role of collective bargaining and recent trends in EU countries. • The main influencing factors on the coverage rate of collective labour agreements. • The impact of the crisis and recent reforms on collective bargaining and wage formation. • Challenges and Action Items to Strengthen Collective Bargaining and the Coverage Rate

3. 1. The Role of Collective Bargaining Trends in Coverage Rates Collective bargaining between unions and employers: an essential institution of the labour market It sets employment terms and conditions (wages, working times, relationships between the parties) Collective Labour Agreements (CLA) guarantee worker protection and employer stability, providing public authorities with a type of regulation produced by social partners (an important regulatory tool) The coverage rate (the ratio of workers covered by CLAs) and its impact differs between countries and time periods Since the 2008 financial crisis, collective bargaining has come under pressure in many countries

4. CLA Social and Economic Regulation Functions Structural imbalance in power relations between work and capital. CLA Functions from the point of view of: • Workers: immediate protection, redistribution and participation • Employers: competition (limiting competition in wages and labour costs), social peace, predictable and uninterrupted business environment • Public authorities (State): The 'autonomous self-regulation' of CLAs enables regulation of areas of conflict to be avoided (working conditions, wages and elements of social policy)

5. Coverage Rate Trends for Collective Bargaining in the EU The collective bargaining coverage rate varies enormously between EU member states. • These differences can be explained by sociopolitical system features and the tradition of labour relations • However, they also show the economic evolution and political choices regarding the crisis • ...notably, recent labour reforms including collective bargaining systems and wage formation

6. Coverage Rate Trends for Collective Bargaining

7. 2. The Main Influencing Factors on the CLA Coverage Rate The impact of collective bargaining systems depends on: • Unionisation rates (the organisational strength of union and employers' organisations) • The dominance level of collective bargaining (sector/national inter-professional, Business) • CLA expansion mechanisms, erga omnes or equivalent (widening cover to non-organised workers and businesses)

8. Unionisation Rate and CLA Coverage Rate

9. The coverage rate depends on the level where the bargaining is held (national, sector or business) • High coverage rate: with multi-employer negotiations at sector or national level (the most inclusive method) • Low coverage rate: negotiations with a single employer (company-level, factory, company) (limited number of workers covered) • Where bargaining takes place solely at company level, the coverage rate does not exceed 30% • In countries where multi-employer negotiations predominate at sector and/or national level, the coverage rate runs between 58-98%

10. Predominant Collective Bargaining Level and Coverage RateSector, Sector/National, Company/Sector and CompanySource: data compiled from Viser (AIAS), OECD and Eurofound

11. The Extent of CLA Use in Europe (2015) *only in non-member sectors and professions of the Austrian Economic Chamber **no legal provisions but indirect extension methods (jurisprudence) Source: Schulten T., Elding L., Naumann (2015)

12. Extension mechanisms or equivalent: important factors for coverage rate • Only six EU countries have no legal obligation to administratively extend CLAs: DK, SE, UK, CY, MT, IT* (*Italy has an indirect extension method in practice through jurisprudence, art. 36 in the Constitution) • As part of the neoliberal strategy to dismantle collective bargaining (by sector), limiting, i.e. withdrawing the extension of CLAs is of utmost importance and justified as a 'reform to boost employment and competitiveness' • Troika: Portugal (imposition of representativeness criteria) Greece and Romania (de facto CLA extension abolished). • Progress to the contrary: Germany (loosening legal conditions for extension), Norway (extension gains importance) • Denmark and Sweden: intense debate following expansion of the EU, increasing immigration and rulings from the European Court of Justice that tend to only accept generally applicable CLAs as legitimate limitations to fundamental freedoms

13. Evolution in the Coverage Rate for Collective Bargaining in Germany 1998-2016-West -East

14. Coverage Rate for Collective Bargaining and Wage Inequalities Rate of Low Wages and Coverage Rate

15. 3. The Impact of the Crisis and Recent Reforms on Collective Bargaining and Wage Formation • The economic crisis has been managed in terms of cutting labour and social rights • Austerity policies and reforms in different EU countries increased precarious employment. Measures in the vein of: • Boosting the flexibility of atypical employment types and work time management by employers • Making redundancies easier and cutting unemployment benefits • Deregulating national collective bargaining systems, decentralising negotiation and cutting the collective protection of workers • 'Internal devaluation' policies under guidance from the TROIKA

16. Labour Reforms based on Neo-liberal Axioms Arguments that underscore the reforms: • 'The labour code kills employment!' • 'We need to make redundancies easier to create jobs' • 'Flexibility reduces unemployment' • 'Labour is too expensive!' • 'Social security contributions crush businesses' • 'Wages need to fall so that firms start hiring' • 'Company-level agreements respond better to conditions on the ground!' • 'Self-employment is the future' Common denominator of the reforms: lowering the cost of labour Favoured adjustment variable: wages

17. Major Pressure on Collective Bargaining and Wagesthrough Specific recommendations by country (European Semester): decentralising collective bargaining (BE, IT, ES) cutting the minimum wage(BG, FR, PT, SI)and general wage changes (nominal wages in line with productivity) (BE, BG, HR, FI, IT, LU, SI, ES) Memorandum Measures (MoU)-Adjustment programmes (TROIKA/IMF): • Decentralising collective bargaining (GR, PT, RO) • Restricting/suspending CLA extension (GR, PT, RO) • Cutting/freezing minimum wages (GR, IE, LV, PT, RO) • Cutting/freezing public sector wages (GR, HU, IE, LV, PT, RO) • Primacy of company CLAs/abolishing the favourability principle (GR, ES) • Special dispensation for company CLAs compared to sector-level CLAs (GR, PT, HU, IT, ES) • Limiting the duration, validity and after-effect of CLAs (GR, ES) • Signing company-level agreements without unions (GR, HU, PT, RO, ES)

18. WHO BENEFITS FROM THESE REFORMS? • The post-2010 labour reforms in the EU openly benefit employers and change the balance of power between social partners • The 'concessions' agreed with unions are in the best case scenario 'what could be averted' • 'Internal devaluation' policies in countries in crisis (mainly through cutting wages) under the pretext of improving competitiveness and employment. • But the facts are stubborn and the reforms regarding job market flexibility and decentralising (weakening) collective bargaining weigh more on wage dynamics than reduce unemployment

19. Impacts of the Reforms: Major Decline in Collective Bargaining and Wages The new landscape, especially in countries severely affected by the crisis, can be characterised as: • deregulating national collective bargaining systems • lack of coordination between different CLA levels (change in hierarchy) • major decline in collective bargaining and the number of CLAs • weaker coverage rates

20. Changes in the Coverage Rate for Collective Bargaining (% change between 2008 and 2013)

21. SpainEvolution in the Number of CLAs 2005-2016-Higher-level –Company-level

22. PortugalEvolution in the Number of CLAs 2005-2016 : Company-level and Higher-levelCoverage rate of corrent and renewed agreements 2005-2015

23. Greece Evolution in the Number of Collective Agreements 1990-2016Sector and professional CLA - Company-level CLA

24. GREECE. New hires (private sector): over 50% of new contracts are part-time or with a reduced workingweekSource: INE GSEE (based on the Ergani database)

25. Real compensation per employee 2009-2017, total economy(deflator private consumption) Source: calculated from data in the Ameco database

26. Some see unions as useless • Nonetheless, we will need unions and collective bargaining more and more in order to avoid inequalities • More collective agreements and less individualisation (fragmentation): • bargaining for working conditions • participating in the process of organisational changes • More education and lifelonglearning • New work-life balance (unions are essential) • EU: move beyond rhetoric: deregulation, the weakening of labour market institutions and the lack of substantial interventions that place greater value on work strengthen the populism of the far right

27. 4. Challenges and Action Items to Strengthen Collective Bargaining and the Coverage Rate • Weakness, reduction or decline (depending on the countries) of coverage rate for collective bargaining • Atypical jobs and precarious employment • Digital economy: think ahead in terms of new challenges • Reduce growing inequalities and meet the demand for social justice

28. The Link between the Level of Collective Bargaining and the Coverage Rate can be verified over the long-term • After WW2, the level of wage solidarity through sector/national bargaining (Western Europe): a major factor in unprecedented economic growth with high wages and decent working conditions • Where a national multi-employer bargaining system is discredited (at sector and/or national level), the coverage rate declines radically. Examples: UK (1980-1990), GR, PT and RO (post-2010) • The weakness of bilateral negotiation in CEE countries and the recent decline in the coverage rate in the southern EU: a major risk for the quality of work, wages, democracy (and also a factor in social dumping) • The weak collective bargaining in these countries is incapable of generating wages that can support demand to stimulate the economy, which they so desperately need

29. If we want collective bargaining to remain a distinctive feature of the European labour market regulation • Many EU countries need to rebuild their collective bargaining systems so that most workers are covered by CLAs • This cannot be done solely by social partners without the support of public policies (State and EU) • Instead of supporting abolition, the EU should actively promote extending CLAs so as to strengthen collective bargaining in all EU member states and effectively counteract social dumping

30. THE DIFFERENT FORMS OF ATYPICAL EMPLOYMENT ILO Typology (closely tied to insecurity)

31. .... We can add other atypical forms such as long-term, 'new' forms of employment in the digital economy • Mobile work based on ITC, working in any location and at all times with modern technologies: risks of intensification, higher stress and working time, blurring the lines between private and professional life... • Or even 'collaborative' work, where an online platform places employers in touch with workers (large-scale tasks divided and shared among different workers organised in the 'virtual cloud').A marginal occurrence in the EU right now but rapidly expanding • Analyses on digitisation show technological determinism often prevails over the need to anticipate and regulate

32. Automation and Digital Platforms Who Decides about New Technologies? • The future of work is not decided in advance • We have 'civilised' industrial capitalism. We can succeed with digital capitalism • Destruction/creation of jobs: no analysis can forecast precisely what the impact on jobs will be • Cutting working time: a variable to be negotiated (within the organised structures) • Platforms: no Collective Labour Agreements and no Social Security It is not easy to respond alone at national level European-level intervention: those who create the platforms should be recognised as employers • Regulating digitisation - Moving beyond statements • Enhancing labour rights (via regulations) and providing access to social security for all

33. In light of the creation of atypical and precarious employment, the response to challenges (old and new) includes • Strengthening regulatory tools (equal treatment, minimum schedule and irregular working hours, restrictions on some uses of atypical employment, obligations and responsibilities of parties...) • Strengthening collective bargainingand the ability of unions to represent those in precarious employment (atypical) • Extending collective agreements so as to cover all workers in a sector or professional category. • All workers should have rights linked to freedom of association and collective bargaining.

34. Changing the rhetoric or policies? • There is currently a gap between the rhetoric on social rights and reality (reflecting the impact of austerity policies and reforms weakening the collective protection of workers) • Despite the recent rhetoric from the Commission on the importance of social cohesion and more dynamic wage progress • Specific recommendations (European Semester) covering wages and collective bargaining continue along the same lines as before • The main aim continues to be improving the cost of competitiveness through restricting wage progress and more flexibility (decentralisation) in wage formation mechanisms • Changing economic policies - Reforming the Euro zone (which has become an economic and social mechanism for divergence destroying the social model) • Recognising past errors, investing in the future, replacing the neoliberal model for a more Democratic EU with more Solidarity

35. Action items to strengthen collective bargaining in the EU In order to reconstruct and strengthen collective bargaining systems and wage formation in Europe, we need to: • Put a stop to restrictions on autonomous collective bargaining (TROIKA, Institutions, European Semester, national governments) • Re-establish bilateral collective bargaining at all levels(especially in countries that were severely affected by the crisis and those with weak sector-level bargaining) • Promote a high coverage rate • Promote multi-employer collective bargaining (sector/national) • Re-establish and strengthen CLA extension mechanisms (sector) so as to protect workers in SMEs and vulnerable workers • Make bargaining more inclusive (precarious employment + digital economy) • Strengthen union power at national and European level In light of the increasing inequalities and demand for social justice, public policies should support collective bargaining through the appropriate measures to extend the coverage rate and improve its inclusive nature.

36. Thank you very much for your attention!!!! Triantafillou Christos Senior Researcher Labour Institute of the Greek General Confederation (INE- GSEE) GSEE 24, Ioulianou Str. Email: christ@inegsee.gr