Project: Decentralised Wage Finding Systems in the EU: The Operationalisation of the Performance Principle on the National and Workplace Level and its Impact on Collective Bargaining (LoFi-EU)

Project Description

What is it about? (Problem Statement and Research Matter)

At an international level, the cooperative social partnership of trade unions and employers’ associations (based on collective bargaining autonomy) in Germany is considered a successful model for the bargaining of collective agreements and for the stabilisation of wages and labour markets. However, a crisis of regional collective agreements, an erosion of employers’ associations and decreasing union density are now evident. Combined with the collective bargaining reform (ERA in the steal and car industry) and corresponding collective agreement reforms of the public sector (TVöD 2005, TV-L 2006), these trends have contributed to a decentralisation in wage formation. Opening clauses, as well as new remuneration grid and performance related wage bonuses within tariffs have displaced bargaining to a company level. Such decentralised wage formation promotes individualised conflicts about pay scale classification in line with collective agreements.  

Since the economic crisis of 2007, the development of the (collective) wage policy in the EU Member States, regardless of structural heterogeneity, has been defined by decentralisation - often based on the German system. Whether this is a general trend in European development as a whole cannot yet be determined. Even though German research into collective bargaining reforms, accompanying individualisation and decentralisation of wage negotiations, classification regulations, and performance reviews has been quite extensive, no comparisons to different salary grids and their impact within the EU have been effected so far. Given increasing European integration, of which a race to the bottom (in order to secure the attractivity of the production site) is a frequent feature, it would appear appropriate to determine the consequences of the decentralisation in wage formation, whilst taking the transformative patterns of the stability of labour markets, questions of the fairness of pay and performance, social acceptance, and union perspectives into account.  

The individual collective bargaining systems of the EU Member States differ especially with respect to union density and the structure of employers’ associations, the practice of wage formation, and the social security provided by the State. Despite all national particularities, wage and performance policies of the respective national collective bargaining partners must adhere to the legal framework established by the EU. Strictly speaking, these legal norms do not regulate national social policies or national collective bargaining legislation but still have an impact on national collective bargaining via EU institutions. Considering far-reaching interventions in times of crisis, one could speak of cross-border wage coordination within the EU - not at the hands of the social partners but by the so-called Troika. To increase competitiveness, EU country members such as Belgium, Spain, Italy or Greece have had to decentralise their wage formation systems accordingly, in a race to the bottom of wages. 

 

What do we want to find out? (Research Goal and Scientific Interest) 

The general aim of the project is to analyse collective bargaining decentralisation processes in the EU and to examine their effects. The operationalisation of decentralised evaluation and pay systems on the meso level of companies and workplaces, which, so far, has been neglected in the research landscape, is to be illuminated by means of contrasting case study examples from EU member states in order to capture the range of designs within the framework of EU standards and in particular to analyse the effects on (performance-related) pay and on the enforcement power of the collective bargaining parties. Comparisons of the findings of collective bargaining reforms in Germany with those of other European countries are extremely rare, especially at the level of collectively agreed wage-setting systems. A central aim of the project is to analyse these different modes of shaping the performance principle, and the (supra-)company disputes relating to it, in a context of crisis phenomena and European competition. In addition, the project aims to establish where European coordination among trade unions in wage-setting systems must start (in view of decentralisation) and what role tripartite actors as well as legislative and administrative bodies should/could/might play in this.  

 

What is our approach? (Research Design)

The selection of countries for the case studies is based on the principle of maximum contrast with regard to the degree of effectiveness and decentralisation of national collective bargaining policies as well as trade union strength.  In addition to the pioneer, Germany (which has no nationally binding collective bargaining system and whose collective bargaining landscape is characterised by multi-sectoral negotiations with simultaneous enforcement of company evaluation systems) cases in Greece, Spain, Great Britain and, probably, Slovenia will be examined. In Greece, the decentralisation of wage-setting systems (i.e. the abolition of the favourability principle) has been suggested by the EU whereas previously there had been a nationwide binding collective bargaining effect and, since the Euro crisis in 2009, there have been numerous general strikes and collective bargaining disputes as a result. In post-socialist Slovenia, central collective bargaining law provides for a broad collective bargaining effect in a context of  trade union weakness and, in Spain, European influence is  viewed as limited still, although the country has been facing serious problems since losing its status as a low-wage country due to the EU's eastward expansion. Latterly, with hard- Brexit, Great Britain has moved into the focus of labour market research as a current transition case.  

This is an exploratory study, in essence. Firstly, current research related to respective EU countries will be systematically analysed; document analyses and expert interviews will shed more light on collective bargaining and company practices. Secondly, in addition, a qualitative examination of the application of collective bargaining regulations in companies in all four countries is planned, together with a focus on the practice of grouping employees within the framework of collective bargaining and company disputes between/among the participants. in the final third step of the study, a comparative country perspective will be complemented by expert interviews at the European level.