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In its new overview of collective bargaining in Europe 2003/2004, the ETUI concludes that employers in Western Europe are abusing the general atmosphere of job insecurity by increasing pressure on trade unions to engage in concessional bargaining. The employers� strategy is clearly to try to hollow out sectoral agreements by �making exceptions the rule�.

Whereas enterprise-level concessional bargaining remains limited, the more general trend of wage moderation continues in Western Europe.

Table 1: Collectively agreed wage increases in the euro area (%)

	2001	2002	2003
Nominal wage increase	2.9	3.0	2.75
Inflation	2.4	2.3	2.1
Real wage increase	0.5	0.7	0.6

Source: Nominal wage increase calculated on the basis of ETUI report; for inflation figures see European Commission.

The net result in most of these countries is that the overall net purchasing power of wages is barely increasing. Together with increasing insecurity resulting from the drive in many countries towards �structural reforms�, stagnant real wages explain the weakness of domestic demand (in Germany, Austria, Switzerland and France, for example).

Unfavourable trends also unfolding in collective bargaining systems

In line with developments in wages and working time, the structures of (sectoral) bargaining themselves are coming under increasing pressure from the encroachment of employers and government interference. This movement towards enterprise level bargaining is shifting the balance of power to the detriment of trade unions.

In Germany, for the first time, a Social Democrat prime minister used the threat of government intervention in the �autonomy of collective negotiations� by claiming publicly that the government would take action if sectoral agreements did not introduce a framework for increased flexibility. The aim was to secure more �employment pacts� at the enterprise level.

Trends in the new member states moving in the opposite direction

In the new member countries, the opposite trends can be observed. There �dynamic wage increases often go beyond collectively agreed targets, working time tends to be slightly reduced and efforts are being made to strengthen the otherwise weak sectoral bargaining level. Pressures on wage dynamics come primarily from the Maastricht convergence criteria�, as planned accession to the euro zone requires strong control over inflation.

Apart from the above positive tendencies in the new member states, sectoral bargaining structures are still weak and the wage gap between East and West is still very wide.

Summary reports of the whole book (compiled by journalist Kate Holman) are available in English and French (10 �).

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