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ISSUE 65 page 5

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Unions against pension reform but seek influence
THE PACE OF PENSION REFORM IN THE European Union has picked up with the onset of the economic crash. Originally concerned with the ‘demographic time-bomb’ in an ageing population, the focus switched to austerity measures simply designed to save money.  From restricting early retirement governments have moved on to raising the age when state pensions are payable, equalising retirement ages for men and women, always in an upwards direction, linking the pension age to life expectancy and changing the way that contributions are calculated so that higher payments attract lower benefits. Though these reforms have often been imposed, according to a recent Eurofound report, in countries with strong traditions of social dialogue (e.g. Austria, Finland) trade unions have

often been consulted and protests in others have resulted in some amendments (Belgium, U.K.). Generally unions have opposed the raising of the retirement age arguing that it discriminates against workers with strenuous jobs and needs to be accompanied by new flexibility by employers to allocate lighter duties or allow more part-time work.
They also feel that the authorities are going for a ‘quick fix’ to plug holes in the national balance sheet without considering the impact on generations to come. Employers have usually been in favour of reform on the grounds that pension schemes will not be financially sustainable without them but have baulked at paying greater contributions themselves, as in the Czech Republic where plans to institute a mandatory private sector fund were opposed by both social partners. The most meaningful negotiations have usually taken place in the reform of occupational pensions where trade unions have a substantial presence in  a private firm or public sector organisation. For example occupational schemes in Denmark, France, Germany, the Netherlands and Norway are fully bipartite and self-administrated by social partners, However across Europe they disagree on the so-called ‘third-pillar’ where individuals make their own voluntary provisions:

employers generally welcoming its expansion and unions fearing that  the other types of scheme will be weakened as a result.
In conclusion the report advises the social partners to get involved in the negotiation of future pension reform as they have often been left out in the rush to cut costs by governments under pressure from the financial effects of the economic slump. They should aim to take a long-term view avoiding drastic or retro-active change so that employers and employees have time to adjust. Measures to lengthen working life should go hand-in-hand with ‘active ageing’ policies to adapt work to the needs of older workers. Finally it says that trade unions and employers are best placed to tailor reform to the situations of specific groups of workers and professions


 Social partners’ involvement in pension reform in the EU is available at:
Raise wages in the EU: it’s good for the economy as well as the workers

WHISPER IT IF YOU DARE BUT THERE IS JUST AN INKLING ABROAD, even in the highest EU circles, that increasing wages might actually be a better course to follow for the wider economy then forcing them downward via the continued austerity policy that we have endured since 2010. The recent decision by the European Central Bank (ECB) to cut interest rates has been interpreted as a symbol of their worry over the prospect of falling inflation tipping over into a disastrous deflationary spiral. Meanwhile the European Commission has announced an in depth study of Germany’s huge current account surplus. Why might these two developments presage a wage rise for the average employee? Well, it is clear from analyses of what has happened to the economies of the ‘bail-out’ countries, who have been forced to take the strongest ‘Troika’ (EU-ECB-IMF) medicine, that reducing salary levels causes reduced inflation followed by deflation if pushed far enough. In Greece average wages have fallen by 16.3% since 2009 and the country has now recorded falling prices over the previous 12 months for the last four months. Ireland, Portugal and Cyprus each recorded figures of +0.6% in November to continue a steady decline in inflation. The economy itself also contracts as workers have less to spend; Gross Domestic Product (GDP) in Greece fell by 20.1% between 2008 and 2012. Similarly, if the policy was put into reverse the economy would expand. The Greek trade union confederation calculate that merely restoring the minimum wage to €751 a month would raise GDP by 0.5% in the first year.
The German surplus, the country sells much more than it buys, has been flagged up as a ‘macro-economic imbalance’ by the European Commission. They are worried that the strength of the German economy drives up the value of the euro to the detriment of the ‘bail-out’ states whose exports therefore become more expensive. By insisting on the introduction of a minimum wage in Germany and general policies to raise salaries the EU could boost the bloc’s economy, warding off deflation and lowering the euro at the same time. The Commission is forecasting an increasing growth in wages to 3% a year.  However those optimists who see a ‘Road to Damascus’ conversion on the part of the authorities should bear in mind that the Commission also wants to apply some of the the disastrous ‘labour market reforms’ served up to Greece and the rest to weaken regulation in German industries such as construction leading to lower rather than higher wages. 

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