In a letter to the US President F.D. Roosevelt, the famous economist John Maynard Keynes stated in 1938: “I regard the growth of collective bargaining as essential. I approve minimum wage and hours regulation.”
Not less than 80 years after this declaration, many more agree that collective bargaining is essential. In recent years, EU Commission president Von Der Leyen declared to be a “strong advocate” of collective bargaining and recent OECD, ILO and ETUI research shows that collective bargaining is vital for attaining equal and democratic societies, just as contributing to crisis resilient economies and adequate wages.
Now that there is an established consensus to strenghten and rebuild collective bargaining systems in Europe, there is also a political breakthrough with the EU Directive on adequate minimum wages including a clear target: all Member States should aim for 80% of their workers to be covered by a collective agreement. An ambition that currently only a handful of countries have manged to reach. Those who fail to reach such threshold are to develop national action plans to show how they will strenghten collective bargaining, and as such, 19 of the 27 European Union member states will need to do so.
To be effective, these action plans need to firstly concentrate on developing systems of multi-employer bargaining and secondly on addressing the concrete challenges with collective bargaining in services sectors. Without such focus, these national action plan will be in vain.
Multi-employer bargaining, a necessary condition for reaching the objectives
Collective bargaining can take place between one (or more) trade unions and a single company, but it can also be done with multiple companies at the same time. This often happens with employers active in the same sector (for example, all retail companies) or in a specific location (for example, an airport). This second type of collective bargaining (multi-employer bargaining or sector bargaining) has clear benefits. It reduces the number of negotiations necessary, ensures that more employees are covered by a collective agreement and, above all, makes sure that competition between those companies does not happen at the detriment of working conditions. Sector bargaining effectively takes wages out of competition.
That’s why a number of EU countries support this kind of system through legislation or active support of sector level trade union and employer organisations.
This figure shows clearly that multi-employer bargaining is a necessary condition for reaching the 80% threshold of collective bargaining coverage. The consequence is self-evident. National action plans will have to include some measures to strenghten or (re)build multi-employer bargaining, through legislation, administrative facilitation or voluntarist capacity building of social partners.
The key to success lies in the services sectors
If the national action plans are to be successful they will, additionally, have to focus on collective bargaining in the services sectors. Over the last decades, the number of employees in services sectors have increased whilst the numbers of workersin industry and agriculture are decreasing. In 2020, almost one in two workers in Europe was working in one of the services sectors.
Moreover, the collective bargaining coverage in services sectors is comparatively lower than in, for example, industry or public administration. According to estimations done by ETUI researcher Wouter Zwysen, all services sectors have below average coverage rates. In the ICT sector, for example, the coverage is 20% less than the average coverage in Europe.
National action plans on collective bargaining will necessarily have to focus on the services sectors and address the particular challenges that these sectors face. These challenges include:
Clear conditions for effective national action plans
In the directive on adequate minimum wages, it is clearly stated that the action plans should progressively increase the collective bargaining coverage rate towards the 80% objective. If Member States are serious about these ambitions, these plans need to include clear steps towards sector bargaining and address the particular challenges to collective bargaining in the services sectors. Without these elements, Member States should be sent back to the drawing table to revise their plans in line with the Directive.