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ORIGINAL FRENCH ARTICLE: Conflits en vue sur les salaires en Europe

by Gaël de Santis

Europe : Disputes Over Wages Ahead

Translated Saturday 26 January 2008, by Isabelle Métral

Following the recent publication of a record-breaking inflation rate and the German rail-workers’ victory, European employers and the ECB call for wage moderation.

Italian metal-workers have gone into action for a wage rise as the time has come for their industry agreement to be negotiated. More and more demonstrations are staged and motorway traffic keeps being held up in many places. Like the victory of German rail-workers, this conflict shows how disputes over wages are spreading all over Europe. European employers are alarmed at the prospect: “Average pay rises above 3% in the euro zone might be a cause of alarm,” Marc Stocker said, speaking for Business Europe, an employers’ organization.

In Rome negotiations that will settle the fate of 1.5 million employees have come to a dead end and the labour minister has called representatives of employees and employers to a meeting today. While wages in the metallurgical industry range between 1000€ and 1200€, the referendum organized by the industry’s trade unions sanctions their demand of a uniform 117€ rise. Employers will concede no more than 100€ and only for employees at the top of the pay scale.

Pressure has been building up as a result of inflation. Employers’ papers show concern over the national negotiations on wages due next spring in Ireland and Portugal. Last December the Irish Trade Union Congress complained that the income of many workers did not increase in 2007 as a result of high inflation. With a price rise forecast at nearly 4% for 2008 in Ireland the present social unrest might intensify.

Similarly, the negotiations for six million public employees in Britain reveal the wide gulf between the unions’ claim of a 6% rise and the government’s meagre 2% offer. Employers want pay rises to “reflect the evolution of productivity”. And yet worker productivity increased by a yearly rate of 1.7% between 1998 and 2006 while workers’ purchasing power went up by 1.25% only.

Government response to the unions’ claims has been ambiguous. Apart from José-Luis Zapatero who has already publicly settled for pushing the minimum wage up to 800€ by 2012 (against today’s 600€), governments as a rule seem to favour tax cuts rather than pay rises. That is the option envisaged by Italy’s centre-right Prodi government. In Spain the right-wing opposition is planning to cut household taxes if it wins the next general election on March 9.

Jean-Claude Trichet, the governor of the ECB (European Central Bank), also called for wage moderation in his monthly press conference last Tuesday. The board of governors is concerned over “the possible backlash, namely the inflationary spiral”. The ETUC (European Trade Union Confederation) has contested this point of view, its deputy general secretary Reiner Hoffmann declaring that “the ECB attacks collective agreements to hide the fact that its governing board is incapable of meeting its political responsibility in the face of the rise in the euro exchange rate and the subprime financial crisis by cutting interest rates.” Last month the ECB injected 350 billion euros in liquidity into the financial markets to help big banks meet their obligations, and to no effect. This shows the ECB to be more concerned over pay rises than over financial inflation.

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