The trend fall in the share of wages in gross domestic product is substantial (see graph). With policies of wage moderation being the root cause for this trend, it is not consistent for European policy actors to regret on the one hand the falling share of wages while on the other hand calling for wage moderation to continue.

Moreover, it is even disingenuous to present ‘profit sharing’ as a solution while at the same time insisting on wage moderation. The risk of such a strategy is that the real wage of the average worker will continue to stagnate whereas ‘strong insiders’ (Chief executive officers, managers, supervisors) will strongly improve their income position. To stop the trend of a falling share of wages, competitive wage dumping policies need to be ended and collective bargaining strategies and collective bargaining coverage need to be strengthened. For the ETUC, profit sharing is additional to and not a substitute for robust collective bargaining strategies. The ETUC is ready to discuss these issues with finance and labour ministers and, in particular with other social partners.

Says Walter Cerfeda, Confederal Secretary of the ETUC: “Europe has to get rid of the ‘idée fixe’ that wage moderation automatically results in new jobs. For an integrated economy such as the euro area, systemic wage moderation only results in undermining overall domestic demand on the European internal market.”

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