Industrial Relations in Europe 2012 - European Commission - Europa

able to progress to higher salary points. In France, various bonuses have partly compensated for the
freezing of pay scales. The upshot is that, whilst acknowledging some variations between countries
within each cluster, very important differences remain in the experience of wage moderation
between the two country groupings.
4.3.4. Pensions
Pensions comprise a very large and rising share of public expenditure (European Commission
2012b). Pension provision has been under pressure not only because of fiscal pressures but also
from demographic trends (Ghellab et al. 2011). Most countries have reviewed pension arrangements
and have increased the statutory pension age for men and women in the public and private sectors.
A key measure is to increase the threshold age for the payment of a statutory pension delaying
payment for up to five years, typically raising the threshold from 60 to 65 with plans to raise the
threshold further in a range from 66-68 over subsequent decades, often linked to increased life
expectancy. In addition contribution rates have frequently been raised.
Alterations in public sector pension arrangements, however, may require agreement from the social
partners, who often have a key role in managing pension funds. Complex negotiations have resulted
in changes (i.e. increases) in the retirement age of public sector workers with differences remaining
between countries and between occupational groups within each country. Pension reforms that have
been especially prevalent in the public sector include: an increase in the retirement age with a
narrowing or closing of the gap between men and women and between the public and the private
sectors; abolition or at minimum an uplift in the age of mandatory retirement for specific
occupational groups such as police officers; increased contributions via special levies or permanent
increases in employee contribution rates; new – usually less favourable – pension provision for new
starters in public sector jobs; reductions in benefits, with short-term reductions often reinforced by
structural reforms that alter accrual mechanisms. Pension reforms and the social partners’ response
are discussed more fully in chapter 6 of this report.
4.4 Employment, working time and flexible labour utilisation
Reducing the public sector pay bill by a combination of pay freezes, pay cuts and adjustments to
pensions have been the most prevalent methods for achieving savings. In addition, a variety of other
measures have been used to reduce public expenditure. In general terms the scope for governments
to reduce public sector employment is related to nationally specific employment statutes. As noted
in chapter 3, many public sector workers have permanent employment status and high levels of job
security, incorporated into specific public sector labour codes that are difficult to reform. The crisis,
however, is being used as an opportunity to alter labour codes often portrayed as protecting
privileged public sector workers, for example in relation to dismissal. More broadly, despite the
uncertain results of public sector reforms (Bach and Bordogna 2011), responses to the crisis seem to
have reinforced efforts to introduce some of the principles, if not the core practices, of NPM with
considerable interest in the use of outsourcing, performance management and attempts to increase
flexible labour utilisation to control the paybill. An important difference, however, in the latest
phase of reform is that instead of an emphasis on the decentralised management of change, both the
measures and their consequences have been substantially predetermined at the centre, reflecting the
overriding priority to achieve financial objectives. .
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