Industrial Relations in Europe 2012 - European Commission - Europa

4.3.3. Pay freezes
A related method of adjustment has been the use of pay freezes. These measures have often
operated alongside pay cuts and have frozen public sector pay or significant components of pay. In
some countries this has been an important component of the government’s response such as in
Cyprus, Denmark, France, Italy, Poland and the UK, indicating a less drastic response to the crisis.
The first pay freezes were introduced in 2008-9 and because of the severity of the crisis in Greece
and Ireland agreed pay increases were annulled. Pay freezes for two years have been common, but
in the Czech Republic and Italy such measures are planned to continue for four years until the end
of 2014.
Pay freezes take different forms and do not invariably result in pay reductions because other aspects
of remuneration apart from base pay may increase. France and the UK have implemented two year
pay-scale freezes. In France, this has been set against improvements in some other elements of pay,
such as performance-related pay. In the UK, pay scale freezes have not stopped progression in
sectors such as the health service, enabling workers to continue to gain nominal wage increases by
moving up the pay scale. The end of the UK pay freeze in 2013 will be marked by a slight easing of
pay policy with the government anticipating that pay awards will average 1% in 2013-2014. Other
methods in which wage freezes have been introduced is by the suspension of collective bargaining
as in Italy or by the failure to negotiate a collective agreement as occurred in the Netherlands in
central government after 2011.
Another important variant on pay freezes relates to their coverage, with specific groups or sectors
excluded. Although the structure and financing of public services varies between countries (see
chapter 3 of this report), governments exercise the tightest control over central government and
especially the civil service workforce. This stems from the tight alignment between the role of
government as a policy maker and its role as an employer. Consequently the scope for the strongest
control over public sector pay exists where the government is the direct employer, has political
authority over policy decisions, and controls expenditure directly. The Netherlands illustrates this
dynamic with a pay freeze from January 2011 implemented in central government, but in local
government and hospitals wage agreements provided for 1.5% and 2% pay increases respectively.
In some countries specific groups have been excluded, notably teachers in Poland and Slovakia.
Overall, the relative advantage of a pay freeze for government is that it is easy to understand,
straightforward to implement and for politicians sends a signal to the electorate that public sector
workers are not exempt from the type of wage adjustments that have occurred in the private sector
during the crisis.
Although austerity is a phrase that has permeated discussion of the public sector across Europe,
some countries have been less affected by the crisis and have not opted for pay freezes and wage
reductions. These countries are exemplified by strong traditions of social dialogue and often a prior
legacy of public sector modernisation. Austria, Germany and the Nordic countries illustrate these
developments. In Austria, public employers were seeking a pay freeze for 2010, but trade unions
secured a wage increase of around 1% and gained higher increases in 2011 (Glassner 2010) with
pay claims of around 4% submitted for 2012. There have also been pay rises in Denmark, Finland
and Sweden with some variation between sub-sectors. Germany has also been shielded from pay
cuts and ver.di, the trade union that bargains on behalf of the public sector workforce, obtained a
6.3% increase over two years (2012-2014), influencing agreements in other parts of the economy.
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