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In its 2002 overview on collective bargaining in Europe, the ETUI concludes that negotiated wage increases over recent years have been vital in keeping inflation under control. It calls on central bankers in Europe to take better account in its monetary decisions of this ‘stability role’ played by collective bargaining.

In its recently published overview of collective bargaining in Europe, the ETUI concludes that collectively agreed wage increases have been an indispensable factor of stability in recent years. According to the figures provided by national trade unions across Europe, negotiated wage increases did not translate the one-off hike in oil prices in 2000 into a chronic wage/inflation spiral. Despite rising inflation, collectively agreed wages show remarkable stability, remaining on a growth path of 2.5 to 2.9% over 2000 to 2002 (see table). In promoting this stability, trade unions have delivered potential disinflation and have made life easier for the central bankers, the European Central Bank in particular.

Collectively agreed wage increases over the euro area

	2000	2001	2002
Nominal wage increase	2.5	2.9	2.8
Inflation	2.1	2.3	2.3
Real wage increase	0.4	0.6	0.5

Source: Nominal wage increase calculated on the basis of ETUI report, see table page 25, 26; Inflation figures see European Commission

The ETUI report also describes how trade unions in Europe have attained this result against a background of increased coordination of collective bargaining on a European level. Trade unions refuse to be played off against each other and use the formula of ‘inflation plus productivity increases’ to guide their collective bargaining. Recent developments show that this exercise in international coordination can make an important contribution to the objective of price stability in the euro area.

Finally, these figures also illustrate that the concerns regularly expressed by the ECB on ‘wage increases that do not react to the economic slowdown’ are beside the point. Real wage increases did react, slowing substantially from 1.1% in 1999 to 0.5% in the following years.

These concerns – albeit unjustified – on the evolution of wages have kept the ECB from responding swiftly to the economic slowdown, thereby deepening and/or prolonging the slowdown itself. Improved dialogue and better mutual understanding between social partners and central banks in Europe is therefore necessary if such policy misunderstandings are to be avoided in the future.

Combining a wealth of information from national sources with descriptions of European developments on the collective bargaining front, the Collective bargaining in Europe series constitutes a practical reference guide for trade unionists, employers, researchers and anyone with an interest in collective bargaining issues and developments.

A summary version of about 30 pages is available in English, French, German and Spanish (10 €).

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