development report 2012 - UMAR

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18 Development Report 2012 Development by the priorities of SDS – A competitive economy and faster economic growth Box1: Survey of wage policies or policy measures relating to wages and employment in selected EU Member States during the crisis As a result of the global financial and economic crisis, which has also exerted huge pressures on the public finances, the number of employees and the level of wages in the private and public sectors are shrinking in EU Member States; this is also partly due to wage-trend imbalances in the Member States prior to the crisis. The data and analyses (Glassner, O’Farrell, 2010) summarised below reveal that in the decade preceding the crisis, wages in Western Europe mostly stagnated in real terms, i.e. they grew very modestly, while the growth of wages in Eastern European countries was higher also on account of catching up in terms of development. Public sector wages in both groups of countries increased somewhat faster than wages in the private sector 1 . When it comes to restrictiveness with respect to wage policy and cuts in labour costs, prior to the crisis, Germany stood out among Western European countries. At that time, many economies in the process of catching up from a development perspective, particularly those in the south of Europe, experienced higher economic growth based on relatively strong credit expansion and, accordingly, attained higher wage growth than they would otherwise have achieved. Given the onset of the crisis, the private and the public sectors in these countries had to react promptly by taking anti-crisis measures, including cuts in the costs of labour. The private sector responded mainly through relevant adjustments on the employment side, while the public sector applied a combination of both measures. The private sector mainly responded to the crisis by reducing working hours and the number of employees and by partially adjusting wages, which had showed only a modest rise in real terms at the EU level just prior to the crisis. Owing to the shrinking of economies in real terms in the majority of EU Member States, employment fell in each. Most jobs were lost in those countries experiencing a major decline in economic activities, such as the Baltic states, Ireland and Spain; the employment of workers on fixed-term contracts took the brunt of the cuts. The reduction in employment had a statistical effect on average wage trends. The losses in low-wage jobs increased average wage values in purely statistical terms; nonetheless, owing to a decline in labour productivity in several countries and private sector activities, wages in fact even decreased. In the past three-year period, the fiscal consolidation carried out in nearly all EU Member States required a restrictive policy with regard to wages and employment in the public sector; however, given the different critical situations regarding the public finances and the differences in the approaches taken, the severity and choice of the relevant measures implemented reveal a considerable differences between the countries. The impact of the crisis on the public finances of the EU Member States manifested itself at varying paces, whereby these countries attempted to resolve their fiscal problems by containing/reducing labour costs in the public sector. In some countries, these were contained or even reduced as early as in 2009; however, most of the countries adopted these measures during the period 2010–2011, for which statistical data on wage trends and employment figures have not yet been published. As a result, their effects on the growth of wages and on employment in several countries with very different wage systems are not yet known. The analyses available reveal (see table) that, in 2009, the first labour cost cutting measures were applied in those countries which were the first hit and most affected by the crisis or received financial assistance from international financial organisations, which put further pressure on them to cut their public spending. In 2010, twelve Member States intervened with the public sector expenditure on wages and mostly continued their restrictive wage and employment policies in 2011. Since the beginning of the crisis, the mildest austerity measures have been introduced by France, Italy, Denmark and the United Kingdom, where, in conjunction with reductions in the number of public employees, wages were merely frozen 2 . The most severe measures were taken in Greece, Latvia and Romania, where, in addition to a considerable reduction in the wages of public servants, the number of employees was significantly reduced. There are some exceptions in those EU Member States where the fiscal situation has not yet required intervention in terms of the costs of labour in the public sector, or where the fiscal problems were addressed by some other combination of economic policy measures. As a result, in 2010 and 2011, the wages of public servants rose slightly in Austria, Germany, Finland, Slovakia, the Netherlands and Sweden, while the number of employees was mainly regulated through softer measures. In view of the forecasts announcing a standstill in Europe’s economic recovery and only slow improvements in fiscal indicators, the austerity measures in the public sectors of a number of Member States are expected to continue in 2012. Under the influence of reducing fiscal deficits to which the countries have committed themselves within the framework of excessive deficit procedure, in 2012 and 2013, the majority of EU Member States will be obliged to remain committed to restrictive public sector wage and employment policies – in addition to other measures aimed at fiscal consolidation. In the conditions of weak economic activity and given the persistence of worsening labour market conditions, this seems to be far from creating pressures on wage growth in the private sector. 1 In Western Europe the pace of increase was only slightly faster, while in Eastern Europe this pace was considerably faster, particularly during the period 2001–2003. 2 Sources do not reveal whether the freeze in wages concerns only their non-adjustment to inflation or whether other possibilities for an increase in wages (e.g. performance at work, promotions, increased workload) were also frozen.
Development Report 2012 Development by the priorities of SDS – A competitive economy and faster economic growth 19 Box 1: Survey of wage policies or policy measures relating to wages and employment in selected EU Member States during the crisis – continue Table: Survey of measures taken regarding wages and employment in the public sector, EU Member States, 2009–2012 Country Wages Employment 2009 Latvia wage reduction by 15–30% reduction in the number of public sector employees Estonia wage reduction by 8–10% reduction in the number of public sector employees by 5% Lithuania wage reduction by 8–10% reduction in the number of public sector employees Ireland reduction of net wages by 5–7% reduction in the number of public sector employees by 12% (2008–2015) Hungary wage freeze, abolition of the 13th monthly payment N/A France – reduction in the number of public sector employees by 150,000 (2008–2012) Belgium, Bulgaria, Greece, Romania wage freeze reduction in the number of public sector employees Romania 2010 wage reduction by 25% and further reduction of bonuses Greece wage reduction by 12–20% Ireland wage reduction by 5–8% reduction in the number of public sector employees, replacing only 15% of outgoing personnel reduction in the number of public sector employees by 150,000 (2011–2015), replacing only 20% of outgoing personnel reduction in the number of public sector employees by 12% (2008–2015) Spain wage reduction by 5% only 10% replacement of outgoing personnel Czech Republic wage reduction for officials by 4% reduction in the number of public sector employees Italy wage freeze, reduction of only highest wages (5–10%) reduction in the number of public sector employees, replacing only 20% of outgoing personnel Portugal wage freeze, reduction of wages for officials (by 5%) N/A Hungary France wage freeze wage freeze reduction in the number of public sector employees by 25% (2010–2012) reduction in the number of public sector employees by 150,000 (2008–2012) Bulgaria, Estonia wage freeze reduction in the number of public sector employees Germany – reduction in the number of public sector employees Czech Republic 2011 wage reduction by 10% (except teachers), reduction in bonuses for officials by 10% Greece reduction in bonuses by 20–25% Portugal Germany wage freeze, 3.5%–10% reduction in wages higher than EUR 1,500 abolition of 13th monthly payment reduction in the number of public sector employees reduction in the number of public sector employees by 150,000 (2011–2015) N/A reduction in the number of public sector employees by 10,000 (by 2014) Denmark wage freeze, 5% reduction of wages for ministers reduction in the number of public sector employees Slovakia – reduction in the number of public sector employees United Kingdom wage freeze above GBP 21,000 Hungary, Italy, Estonia, France, Spain, Bulgaria, Ireland, Poland wage freeze 2012 reduction in the number of public sector employees by 330,000 (by 2014) reduction in the number of public sector employees Belgium 5% wage reduction for ministers – Portugal wage freeze, abolition of 13th and 14th monthly payments N/A Germany – United Kingdom wage freeze above GBP 21,000 Luxembourg only partial wage adjustment reduction in the number of public sector employees by 10,000 (by 2014) reduction in the number of public sector employees by 330,000 (by 2014) restrictions on employment in the public administration Finland – reduction in the number of public sector employees Hungary, Denmark, Italy, France, Ireland, Greece, Cyprus wage freeze reduction in the number of public sector employees Source: A cuts watch brief (2011), Bashing public sector wages and public sector jobs (2010), Budget goes further than agreement (2011), EU Austerity: Country by country (2011), Giordano (2011), Glassner (2010), Industrial Relations in Europe (2011), O’Farrell (2010), Parry (2011), Survey of measures and reforms to tackle the financial and economic crisis – by country (2012).
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Part II Indicators of Slovenia’s
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THE SECOND PRIORITY Efficient use o
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Development Report 2012 Indicators
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THE FOURTH PRIORITY: A modern welfa
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Development Report 2012 Appendix 24
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