Wages 9% lower in sectors with labour shortages

Employers need to offer better-paid jobs to end Europe’s damaging labour shortage, according to new research published by the European Confederation of Trade Unions (ETUC) today (Tuesday).

An analysis of job vacancy rates and wages in 22 EU countries reveals that industries with the worst labour shortages pay 9% less on average than sectors where it’s easier to recruit.
 
It comes after the EU job vacancy rate reached a record high last year, causing production problems for a quarter of EU companies.
 
The trend has been attributed to a lack of skills, but the new analysis of EU data suggests that low pay is one of the main drivers of labour shortages.
 
The comparison carried out by the ETUC’s research institute, the European Trade Union Institute (ETUI), shows a clear link between low wages and high vacancy rates. It found that:

• Across the EU, the industries finding it hardest to recruit workers paid 9% less on average than those least affected by the labour shortage.
   
• In 13 of the 22 EU member states for which data is available (see table 1), the sectors where labour shortages grew most between 2019 and 2022 also offered the lowest wages.* 
   
• The biggest pay gaps between sectors with the highest and lowest increases in labour shortages were found in Italy (€4.17 an hour), Luxembourg (€4.16), Germany (€3.26), the Netherlands (€2.49) and Greece (€1.51). 

 See the tables below for full country and sector data.

The ETUC’s four-yearly Congress, which opens in Berlin on Tuesday, will call on national Governments to help raise pay by supporting unions to increase the proportion of workers covered by collective bargaining.
 
Collective bargaining agreements between trade unions and employers are essential to eliminate the poverty pay rates fuelling Europe’s labour shortage.

This week’s Congress will also hear calls for social conditionalities to be attached to financial support to companies to ensure the creation of quality jobs covered by collective agreements and on the European Commission to change its public procurement rules to ensure that only companies that respect collective bargaining are eligible to receive public funds from the EU, or get national or local government contracts.

Speaking at the Congress on Tuesday, ETUC General Secretary Esther Lynch will say:
 
“Decent pay is good for workers, good for employers, and good for Europe. Low pay is fuelling the cost-of-living crisis, while labour shortages are harming Europe’s economic performance and public services. It’s clear from this data that low pay is one of the main factors driving Europe’s recruitment challenges.
 
“Europe needs to be a great place to work. Already in the 80s, Delors promised workers in Europe the right to lifelong training. It is high time to deliver on that key promise for social Europe. This means investing in high-quality jobs, paid time off for training for workers, just transition, social conditionalities to ensure that companies invest in training. This means right to training for every workers.
 
“No blank checks. Financial support and public contracts should come with conditions that guarantee quality jobs and collective bargaining.”
 
Over 1,000 delegates and participants, representing 45 million workers across Europe, are meeting at the ETUC Congress to set the direction of the trade union movement for the next four years. The Congress will be addressed by German Chancellor Olaf Scholz this morning (Tuesday 23^rd May) and by European Commission President Ursula von der Leyen on Thursday (25^th May).

Notes

*Wage levels are taken from the European Structure of Earnings Survey 2018, which is the latest available data on sectoral wage levels. Job vacancy data is from Eurostat dataset JVS-Q-NACE2

Full briefing from the European Trade Union Institute includes list of highest shortage industry for each member state for which data is available here

Table 1: Wage difference between sectors with highest and lowest increase in job vacancy rates
  

Table 2: Number of times an industry is in the top third of increases in job vacancy rates