Industrial Relations in Europe 2012 - European Commission - Europa

the legal system of wage tariffs set out in the public sector pay arrangement is replaced by the
thin protection associated with the Labour Code, limited to application of the two statutory
national minimum wages (a standard and skilled minimum wage). In one municipality, the
perception among interviewees was that everyone was paid the minimum wage regardless of
whether they worked for the municipality, a municipal-owned company or a private sector or
third sector (eg. church) subcontractor.
Sweden’s relatively inclusive system of industrial relations means that pay differences are not a
strong driver of outsourcing and insourcing decisions in local government. With high collective
bargaining coverage, strong union membership and a convergence of trends in wage-setting in
both public and private sectors (‘negotiated decentralisation’), outsourcing and insourcing
decisions are not motivated by differences in pay and industrial relations. Public and private
sector collective agreements exist for all five areas of investigated services (public transport,
school catering, cleaning, waste services and elderly care); moreover, the sector agreements for
school catering and cleaning are in fact integrated across public and private sector
organisations. Also,, the minimum annual wage rises in 2012 were very similar across the
public and private sector agreements.
In the UK the divided industrial relations model between strong collective bargaining coverage
for public sector workers and weak coverage for private sector workers means that workers in
private sector contractors delivering elderly care, cleaning and school catering services are paid
at, or only slightly above, the statutory national minimum wage. At first sight the national
collective agreement for local government would appear to set a wage that is increasingly
competitive with private sector companies; a pay freeze and increases in the national minimum
wage have combined to shrink the gap with the collectively agreed base rate from 9% to 2%
during 2009-2012.
However, case studies of six UK municipalities reveal evidence of local interventions to
improve pay for the lowest paid. These respond to varying combinations of political,
managerial and union interests to address problems of poverty (particularly by introducing a
‘living wage’), improve staff retention and compensate for higher work effort in a reduced
workforce following downsizing. These interventions conflict with the strongly ideological
central government demand for a revision of public sector pay to become ‘more market facing’,
which would reduce pay among low paid public sector workers. Our evidence suggests pay is
pushing in two directions – towards reducing local government workers’ pay as a result of a
failure of the national agreement to win pay rises and yet a widening gap with the private sector
for the very lowest paid following local level collective agreements. The overall effect on the
role of pay differences in influencing procurement of low-wage services in UK local
government would thus appear to be neutral.
References
Grimshaw, D., Rubery, J. and Marino, S. (2012) Public Sector Pay and Procurement in Europe
during the Crisis: The Challenges facing Local Government and the Prospects for
Segmentation, Inequalities and Social Dialogue,
www.mbs.ac.uk/research/europeanemployment/.
Five national reports on ‘Public sector pay and procurement’, available for download at
www.mbs.ac.uk/research/europeanemployment/:
Anxo, D. and Ericson, T. (2012) Sweden; Audier, F., Bacache, M., Courtious, P. and Gautié, J. (2012) France;
Berki, E., Neumann, L., Edelényi, M. and Varadovics, K. (2012) Hungary; Bosch, G., Mesaros, L., Schilling,
G. and Weinkopf, C. (2012) Germany; Grimshaw, D., Marino, S. and Rubery, J. (2012) UK.
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