European pay campaign launched

Written By: Kate Holman
Published: February 24, 2017 Last modified: February 26, 2017

An ambitious 18-month campaign to raise wages for workers across Europe took off last week in Brussels, led by the European Trade Union Confederation.

At the launch conference, trade unionists from around Europe, employers’ representatives and government ministers from Portugal, Slovakia and Luxembourg heard evidence that pay rises would boost economic recovery.

Ronald Janssen, senior economist at the OECD’s Trade Union Advisory Committee, said Europe has been emerging from recession since 2013, but wages have not kept pace with economic growth. While productivity has improved, pay has fallen as a proportion of GDP, meaning that more money is going into profits for companies or dividends for investors, expanding the gap between rich and poor.

“Low wage-growth is bad economics. My wage is my spending and my spending is your job,” said Janssen. Increasing pay would encourage companies to innovate as well as boosting demand for goods and services, creating more employment. A low-wage strategy is unsustainable in the face of global competition, he concluded.

ETUC General Secretary Luca Visentini described attacks onunion rights since the economic crisis as a “disaster” encouraging social dumping (undercutting locally agreed pay levels) and increased inequality. “Collective bargaining is the fundamental tool to make sure wage increases benefit labour and the economy,” he insisted.

The campaign launch coincided with the publication of labour market data from the UK’s Office for National Statistics showing real pay growth down to 1.4% – the lowest for nearly two years. And a new report from the Joseph Rowntree Foundation finds that the number of people living on the brink of poverty in the UK has risen by 4 million since the crisis. Around 19 million people – some 30 per cent of the British population – are at serious risk of real poverty as Brexit brings more price rises and higher inflation. The increase is due not to unemployment, says the research, but to the growing number of workers on poverty pay.

The British TUC, which has been coordinating its own ‘Britain needs a pay rise’ campaign and will remain a member of the ETUC regardless of Brexit, welcomed the Europe-wide initiative. Said TUC General Secretary Frances O’Grady: “Working people in Britain still haven’t seen their wages recover after the financial crisis. And with inflation rising, there’s fears that another pay squeeze is around the corner. We’re supporting the Europe Needs a Pay Rise campaign to make sure all working people get a fair day’s pay for an honest day’s work, both in the UK and right across Europe.”

One of the campaign’s priorities is to stop social dumping by boosting wage convergence and increasing pay in the low-wage economies of central and Eastern Europe. “It’s no longer acceptable that in the EU we have countries where the hourly wage is one tenth of that in other countries,” argued Visentini.

Józef Stredula, President of the Czech trade union confederation CMKOS, highlighted the extent of the problem. At the current pace of convergence, wages in the Czech Republic will take 207 years to catch up with Denmark and 84 years to reach German standards, he said.

Speaking on behalf of the EU-level employers’ organisation, BusinessEurope, Deputy Director General Thérèse de Liedekerke accepted that “companies and workers have a common objective: to create higher prosperity and wealth”. But she insisted that labour costs must be “sustainable”, and claimed that rapid pay rises before the crisis had made recovery more difficult in some countries.

The pay rise campaign also has the backing of the body representing unions at global level, the International Trade Union Confederation. “We are united,” declared General Secretary Sharan Burrow. She highlighted the 40% of the global workforce in informal work, with no rights and poverty pay: the “desperation sector” as she called it. “I leave you with a simple challenge. If you don’t want your sons and daughters to live in a low-wage, insecure working environment, then change the rules of the global economy.”

The rolling campaign will target different pay issues over the coming months, starting with the gender pay gap around International Women’s Day in March. The ETUC hopes that its economic arguments will build a broad consensus in favour of higher wages. “We would like to open a dialogue with institutions and employers, on the need for a pay rise and how to achieve it,” concluded Visentini.

About Kate Holman

Kate Holman writes for Tribune on European affairs