Business Briefs


Economic & Market Considerations: Wage Bargaining

Collective wage bargaining and negotiations over work related conditions are among the core tasks of trade unions in industrialized countries. The establishment of Economic and Monetary Union (EMU) in January 1999 has had a considerable impact on unions' possibilities to fulfill this function. First, the single currency has made it much easier to compare wage levels across borders, implying potential downward pressure on wages and working conditions in those countries with higher labor costs. Second, the introduction of a single currency virtually eliminates the possibility of devaluations or deficit spending, leaving few adjustment mechanisms available to national governments. The result is again downward pressure on wages and working conditions. Finally, trade unions have traditionally had a big impact on macroeconomic policy-making at the national level. With monetary policy now being carried out by the independent European Central Bank (ECB) and fiscal policy being closely coordinated at the European level within the Stability and Growth Pact, this avenue of influence has been undermined.

  • Convergent Pressures, Divergent National Responses
  • European Coordination of National Wage Bargaining

 


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