Collective bargaining in the EU: It takes two to tango

As European trade unions battle with falling membership, the EU proposes to set a minimum threshold for the percentage of work contracts that have to be concluded by collective bargaining. Welcomed by the unions, the proposal has, however, been met with criticism by employers.

Although the European Union still leads the way when it comes to the number of collective agreements concluded between employers and workers to determine basic working conditions, rights and pay, collective bargaining has generally plummeted, with considerable differences between Member States.

As a hearing held by the European Economic and Social Committee (EESC) on 6 September revealed, it is only a handful of Member States who can boast that 70% or more of their workforce have contracts regulated by collective agreements, which is the threshold set by a recent Commission proposal.

The hearing, organised by the EESC's Labour Market Observatory, specifically looked into collective bargaining practices of EU countries in which trade union membership was low, with a focus on the Czech Republic, Poland, Bulgaria and Spain. It also examined developments in collective bargaining practices across the whole EU.

Opening the hearing, the president of the EESC’s Section for Employment, Social Affairs and Citizenship, Aurel Laurențiu Plosceanu, warned of the challenges facing the post-industrial age, which is centred on increasingly diversified and fragmented services and in which it has become more difficult for workers and employers to find common ground.

GLOBAL DECLINE IN UNION MEMBERSHIP

One of the reasons for dwindling collective bargaining coverage rates is the increasingly lower number of workers joining the unions.

Over the last 40 years, trade union membership has fallen globally and is today low in most industrialised economies, having remained higher only in countries that maintain an unemployment benefit management system, with a fundamental role for the unions, according to Paulo Pedroso from the University Institute of Lisbon.

Professor Marco Ricceri from the Institute for Political, Social and Economic studies (Eurispes) said that, to be future-proof, unions would have to be revitalised and play a political role, becoming true stakeholders in the collective bargaining process, which could become much broader.

David Foden of Eurofound warned about the negative effects of declining union membership, which had recently halved in some countries, for example dropping from 40% to 20% in Croatia since 2000. These figures matter. They are an important factor for sound collective bargaining coverage, Mr Foden stressed, adding that countries with higher collective bargaining rates tend to have much fewer low wage workers.

The low number of unionised workers may be caused by the structure of the labour market in a given country, such as by a large number of SMEs and microenterprises or by a high percentage of precarious workers or those on temporary contracts, tending to have lower labour union representation. Another reason is that interest in joining unions is waning, among young employees in particular.

In some countries the falling union membership has had hardly any effect on collective bargaining. One such example is Spain, where 94% of employees are covered by collective agreements, although only 14% of workers are members of trade unions. The high figure can be ascribed to the Spanish system, which is underpinned by strong labour law, and to the full recognition of the social partners in the country.

Collective bargaining levels are also pushed higher by the extension of collective agreements to apply to all workers and employers in a sector or industry, even if requested by only one party to the agreement.

In recent years, it has been strong employers' organisations that have kept collective bargaining going in the EU, with employer involvement remaining much more stable.

The situation in central and south-western Europe, such as in Austria and France, is similar to Spain, but differs considerably in other countries. The Czech Republic, for example, has low levels of union membership and a small number of collectively concluded agreements. In Belgium and in the Scandinavian countries, both of these figures are high.

HOT POTATO: SETTING A COLLECTIVE BARGAINING THRESHOLD AT THE EU LEVEL

To strengthen collective bargaining and subsequently reduce the number of low-wage workers in the EU, the Commission recently adopted a proposal for a Directive of the European Parliament and the Council on adequate minimum wages in the EU. Under the Directive, if less than 70% of wages in a Member State are regulated by collective agreements, it will have to produce a framework for collective bargaining and draw up an action plan to promote it.

Dennis Radtke MEP, co-rapporteur of the Minimum Wages proposal, told the hearing there were problems with wage bargaining in many Member States. In Germany, for example, under 50% of minimum wages were now set through collective bargaining, compared to 70% only 10 years ago.

Fair wages should not be set by politicians, he stressed, but should be determined in a fair bargaining process and agreed between workers and employers. Our objective is not to change the daily practice of unions and employers in their work, but to add value to collective bargaining and to help ensure that the social partners are strengthened.

Co-rapporteur Agnes Jongerius MEP said that collective bargaining works towards ending in-work poverty: It is unacceptable to work hard and yet still live in poverty in Europe. Europe is so much more than just a marketplace. It should ensure a level playing field for all workers and companies, and workers must be able to rely on what they earn.

The proposal for a directive received a mixed response from the social partners: while applauded by the unions, it met with objections from Europe's employers, who believe this should be left to the discretion of Member States.

Social dialogue and collective bargaining should not be legislated for at the European level. Our position on the minimum wage is clear; we see the setting of the collective bargaining threshold at 70% as interference by the European Commission. It should remain voluntary, said Maxime Cerutti, director of BusinessEurope.

In the employers' view, it is crucial to respect the realities in each Member State. The way forward is to have strong, autonomous and representative social partners who are in charge of setting wages and working conditions, with the right support from the governments and labour market institutions when needed.

On the other hand, Europe's trade unions threw their support behind the Commission's proposal. According to ETUC’s Deputy General Secretary, Esther Lynch, Member States must ensure an enabling environment for bargaining, allowing the social partners to negotiate and come to an agreement.

Anything less than 70% of workers covered by collective agreements means that this is not working, said Ms Lynch. Member States should be required to take action, and it is not acceptable for the EU to pretend that a single market does not need a fair set of rules. 

We cannot sit back and watch collective bargaining decrease in some countries, said Oliver Röpke, president of the EESC's Workers' group. The upcoming directive must first of all include effective measures to promote and strengthen collective bargaining and increase the number of workers covered by it.

Ms Lynch also stressed that Member States must make sure that unions can operate and that workers can join a union, which is currently not the case in all countries.

Mr Röpke warned against falling union membership as one of the major threats to stable collective bargaining coverage, since a sound negotiation process required two sides: It always takes two to tango – in this case both unions and employers.