Wages in the East have increased, but not much, says Luca Visentini, Secretary General of the European Trade Union Confederation
Romania has been a member of the EU for more than ten years. During this time-span, Romanians hoped their incomes would come closer to those of West European citizens, or at least rise to a decent level.
According to statistics, wages in the East have increased, but not much, as Luca Visentini, Secretary General of the European Trade Union Confederation has recently underlined in Brussels: “We are still facing in Europe an incredible wage gap. According to the figures, particularly coming from Eurostat and the OECD, it’s clear that while productivity levels in the East of Europe are reaching almost the same level than in the west, 70%, 80%, 90%, in some cases, well, wages are not following at all. 25%, 30%, 40%, in the best option in the eastern countries. So it’s clear that if we continue with this gap, if we continue with this kind of internal unfair competition on cheap labour, there is no future for the single market in the future. So, we really need to address this problem, and we think that the best problem to do it is again to have an alliance, a strong alliance, between public authorities and social partners to make sure that we can catch up with wages, the productivity developments and we can even push towards the better productivity developments in the European Union.“
In an attempt to identify the root causes of this delay in increasing wages in Eastern Europe, to reach the level registered in the West, we’ve talked to Dumitru Fornea, a member of the European Economic and Social Committee, responsible for international relations of the MERIDIAN National Trade Union Confederation in Romania.
Dumitru Fornea: “Salary policies differ from one country to another. The reason for low competitiveness is already obsolete, because it has already been recognised even at European level that East European countries are close to reaching a competitiveness level similar to that in western Europe, and that they are doing it at a fast pace. It seems there are aspects related to social and salary policies and agreements that the governments of the central and east European countries have signed with various multinational companies which conditioned their presence on the territory of the respective states on favourable salary policies. Multinational companies are trying to maintain for as long as possible their competitive advantage as compared to other regions in the world. In the talks with the governments of the respective East European countries in particular, those governments are warned that, if the national minimum or average wage is raised, the companies will migrate further eastward, to Bangladesh, Pakistan, and other regions of the world where they can pay even lower salaries”.
Representatives of the business environment have a somewhat different standpoint. Emma Marcegaglia, President of BusinessEurope, Italy’s employers’ body, has more: “We agree that there can be a problem of wages, mainly in Eastern Europe, but it’s very important that this goes really hand in hand with the raise of productivity, overall productivity, not only productivity in cost, but also in the productivity of the whole country. And this has to be made company by company not in a general way but company by company. There are companies that can afford this increase in wages and there are companies that cannot agree. So […] the role of the social dialogue and the role of bargaining is very important.”
Social dialogue and bargaining are not functioning well everywhere in Europe. In Romania, in the past decade, the government decisions have not been of great help in this regard. Dumitru Fornea: “The Law on Social Dialogue has been amended and the Americanization of industrial relations has been promoted, in the sense that they discouraged the negotiation of a collective labour agreement at national level and of collective agreements by domains of activity. All these transformations have led to a new type of industrial relations and protest movements have been strictly regulated in a rather inflexible legislative framework, which practically puts any trade union organization in difficulty. In another development, companies and employers’ associations refuse this social partnership relation because they have enough guarantees from the host government, namely the Romanian government, that the aspects putting them at a disadvantage such as trade unions’ actions, the conclusion of collective agreements and the negotiation of certain social clauses, will not be promoted.”
In Romania, in December 2016, the Social Democratic Party won the elections with a leftist governing program, their focus being on salary increases against the backdrop of active and real social dialogue. The current government, led by PM Mihai Tudose, which is the second government instated after the Social Democrats took power, announced their openness towards trade unions’ initiatives.
Here is Dumitru Fornea back at the microphone: “The current government has come to power with a program in which they proposed the modification of the Social Dialogue Law, in the sense of making it more favorable to trade union organizations and collective bargaining. They proposed salary increases in the public sector and claim they intend to ensure a framework for social dialogue. Now we are waiting to see if these measures will be implemented or were only vain promises. We hope that in the future, and also through the pressure put by certain European bodies, we’ll be able to make progress towards constructive dialogue and towards increasing the quality of social dialogue, given that our meetings so far have been nothing but talks on legislative changes. Trade unions’ representatives are indeed invited to participate in these meetings, but unfortunately the meetings end up with no results.”
At government level, the first step towards a significant growth of salaries in Romania was made by promoting a new salary law in the public sector. Certain provisions in the document alongside a series of important fiscal measures announced by the executive have nevertheless been a reason of discontent for both trade unions and employers’ associations.