Collectively agreed pay acted as a “kind of insurance,” for workers during the economic crisis according to the Dublin-based European Foundation for the Improvement of Living and Working Conditions (Eurofound). Its new report Pay in Europe in the 21^st century says this insurance effect mattered more than actual compensation.

Comparing wage bargaining outcomes across the EU and Norway before and after the economic crisis, Eurofound concluded that the influence of collective pay agreements has been neglected in discussions on pay developments.

Importantly, in the context of emerging Irish debates about pay increases, it found that Ireland and Lithuania experienced the smallest increase in unit labour costs between 1998 and 2012. Since 2008 the countries hit hardest by the economic crisis saw a decline in labour costs. The biggest fall was in Latvia (-3.7%) followed by Ireland (-3.2%).

The Eurofound report discusses pay developments against the background of different wage-bargaining regimes and analyses links between pay and productivity. It also investigates minimum wage systems and levels across Europe.

Eurofound is a tripartite European Union agency whose role is to provide knowledge in the area of social and work-related policies.

Noreen Moloney