Inflation and economic uncertainty continued to influence collective wage bargaining in 2023. As a result, any gains made in real terms (in the ‘median’ EU country) since 2009 were eroded between 2020 and 2023. This is mainly due to moderate nominal increases in the 14 Member States that had joined the EU prior to 2004. With actual compensation in real terms on the rise again, negotiated wages are also expected to follow suit.

The term ‘minimum wage’ refers to the regulatory restriction on the lowest rate payable1 by employers to workers. Statutory minimum wages are regulated by formal laws or statutes. Collectively agreed minimum wages are stipulated within collective agreements between trade unions and employers. The aim of the EU directive on adequate minimum wages is to strengthen both statutory minimum wages and collective wage bargaining.

This article provides a short synopsis of developments in collective wage bargaining between 2009 and 2023, with information drawn from Eurofound’s working papers collection: Developments in working life 2023. 

Developments in negotiated wages since 2009

National statistics on developments in collectively agreed pay are available for only 12 EU Member States (see Tables 1 and 2). According to these statistics, after some years of decline during the financial and economic crisis, negotiated wages grew substantially in real terms from the 2010s until 2020. However, the high inflation that prevailed from 2021 had eroded all these gains in the median country by 2023.

Developments in actual wages (‘employee compensation’, which includes wages and salaries in kind as well as employers’ social security contributions) in real terms, on the other hand, were more favourable, both in the 12 Member States that had data on negotiated wages and in the euro zone. The decline in real terms due to inflation was shorter lived, and gains were not eroded. Developments in negotiated pay tend to lag behind actual compensation in real terms.

The situation is more diverse, however, when the data for individual countries are examined.

Collective wage bargaining plays a more prominent role in the 14 EU Member States that had joined the EU prior to 2004 (EU14): the coverage of workers by collective agreements is higher on average in those countries than in the Member States that joined the EU in 2004 and later. It was mainly the countries that joined the EU in 2004 and later that saw more substantial increases in negotiated pay in real terms, which – albeit greatly diminished – were not wiped out by the recent increase in prices.

Among most of the EU14 that had available data, growth in negotiated real wages was more modest, and workers earning collectively agreed rates recently saw a considerable decline in their pay in real terms, which has not yet been restored to the real levels of 2009. A closer look at how collectively agreed wages were negotiated throughout 2023, and the role inflation played during these negotiations, is therefore of interest.

To begin, Tables 1 and 2 show the nominal and real negotiated wages, respectively, in the 12 Member States that have the relevant data.