Equitable Wages - a Progress Report
Date: 1997-01-08
Institutions: European Commission
Subjects: European social policy, pay policy, remuneration of work, standard of living, wage determination

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  08.01.1997 
COM(96)  698 final 

Equitable Wages - a Progress Report 

(presented  by the Commission) 

Contents 

Executive  Summary 

1.0  General  Introduction 
1.1  Background 
1.2  The  Opinion 
1.3  The Updating  Process 
1.4  Report  Structure 
1.5  Key  Issues 

2.0  The  Situation  in  Member  States 
2.1  Introduction 
2.2 Definitional  Issues 
2.3  Rights to  an  Equitable  Wage 
2.4  Wages  and  Labour  Market  Transparency 
2.5  Ensuring  Rights  to  an Equitable  Wage 
2.6  Improving  Human  Resource  Development 

3.0  The  European  Union  Perspective 
3.1  Progress  from  the  Commission 
3.2  Overview  of Progress  in  Member  States 
3.3  Statistics 
3.4  Outlook 

Appendices 

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A.  Report  on  the Right  to Payment  of  Wages  on  Public Holidays  and  During  Illness 
B.  Statistics 

Executive  Summary 

The Community Charter of the Fundamental  Social Rights of Workers includes the principle 
that all employment shall be fairly remunerated. In September 1993 the European Commission 
published  its  Opinion  on  an  Equitable  Wage.  It  focused  on  three  key  areas  for  action  by 
Member  States  as  follows:  Action  to  improve  labour  market  transparency  with  regard  to 
wages; action designed to ensure that the right to an equitable wage is respected; and action 
in favour of  human resource development.  The social  partners were invited to address these 
issues. 

The European Commission set itself a number of tasks, summarised as: Improving the quality 
of  information  on  the  structure  of  wages;  vocational  training  needs;  the  exchange  of 
information on good practice in remuneration; and to undertake further studies to promote the 
convergence of equitable wage policies. The Commission undertook to submit a report to the 
Council, the Economic and Social Committee and the European Parliament after consultation 
with the  social  partners. 

The findings of this report are primarily based on a special  questionnaire  sent to all Member 
State  governments  requesting  information  on  progress  since  1993  when  the  Opinion  was 
issued.  All  Member  States replied though  in varying  levels  of detail. 

The conclusions can be divided into a) legislation/regulation b) wage formation c) information 
on wages. 

a)  legislation/regulation 

• 

• 

• 

• 

Most Member  States had the basic planks of legislation towards an equitable wage in 
place before the Opinion was issued. Equal, opportunity provisions were frequently the 
precursor to subsequent legislation aimed at protecting vulnerable groups in the labour 
market. 

Some  Member  States  felt  that  an  equitable  wage  was  a  difficult  concept  to  grasp, 
arising  from  the  separate,  though  interrelated  issues  of  a. fair  wage  and an  adequate 
standard of living.  A fair wage is only one, albeit important, element in achieving an 
adequate  standard  of  living. 

There  were  few  signs  that Member  States  had viewed  the  Opinion  as  a catalyst  for 
action. The closest association was observed in the area of homeworking where some 
Member States had taken action, although probably under the influence  of a complex 
set of  circumstances. 

The majority of Member States felt that intervention in wage setting was not desirable 
and  should  be  avoided  if  possible.  This  was  even  the  case  in  some  Member  States 
where  national  minimum  wage  policy  existed. 

K 

b) wage  formation 

• 

• 

• 

In some Member  States there  had been  a widening  of  wage  inequalities,  a  situation 
exacerbated  by  developments  in  industry  such  as  delayering  and  demerging  which 
have put new pressures on workers and their careers. 

Changes in the ways wages are determined, such as the growth in performance related 
pay  and  the  decline  of  traditional  forms  of  collective  bargaining  in  some  Member 
States, has reduced  control  over monitoring  and maintaining  an equitable wage. 

Labour market developments such as the growth in non-standard forms of employment 
and  precarious  jobs  have  affected  the  ability  of  Member  State  governments  to 
influence  wage  policy. 

c)  information  on wages 

• 

• 

• 

• 

• 

Transparency in wage information remains a problem area for all Member States. The 
wage  statistics  widely  available at Member  State level  are often  too general  and too 
out  of  date  to  aid  transparency  and  wage  information  generated  by  job  vacancy 
information  suffers  from  too narrow a base. 

Labour  market  developments  such  as  the  fragmentation  of  pay  bargaining  may 
undermine  the  basis  for  monitoring  and  setting  minimum  wages  in  some  Member 
States. 

Data on the structure of earnings and changes in income differentials  are not generally 
available on an EU-wide basis. However, new information  sources have been initiated 
by Eurostat and should provide  some useful  indicators  over the next  few  years. 

Some Member States questioned the value of EU-wide data on this subject,  citing the 
sometimes  significant  differences  in  standards  of  living,  wage  rates  and  non-wage 
costs between  Member  States as problematic. 

On the basis of the data available from 7 Member States (Germany, France, Italy, the 
Netherlands, Austria, Portugal  and the United Kingdom) it seems that the distribution 
of  wages  has become wider  over time,  with  the  partial  exception  of  the Netherlands 
over  more  recent  years.  Furthermore,  it  seems  that  the  distribution  of  earnings  in 
services  is wider than the distribution  in industry. 

For  the  Commission  it  is  possible  to  identify  a number  of  key  areas  for  future  activity  to 
develop  these themes.  These  are as follows: 

• 

• 

The dissemination  of good  practice on employment  conditions  in general  and wages 
in particular  at the level  of the enterprise; 

Monitoring  the  development  of  continuous  training  and  its  impact  on  earnings  and 
value  to  the  employer  and  how  opportunities  to  pursue  it  are  handled  (eg,  through 
study  leave,  training  allowances,  etc); 

it» 

information  on  wage 
Encouraging 
determination and levels, etc, in all Member States and selected competitor countries; 

in  reliable  and  up-to-date 

improvements 

Encouraging the development  of  national  vacancy  information  and access to this by 
all  parts of the labour market,  in particular job seekers. 

1c 

1.0  General  Introduction 

1.1  Background 

Following  extensive  background  research  and  consultation  with  the  social  partners,  the 
Commission  issued  its Opinion  on  an equitable wage in  September  19931.  At the time  there 
was considerable concern over long-standing labour market problems that affected  the fairness 
of remuneration.  For example, the Opinion  highlighted  the need for  increases in  productivity 
to match  movements  in wage rates and the problems posed by differentials  in wages that  did 
not  accurately  reflect  pure  labour  market  factors,  often  leading  to visible  discrimination. 

The  basis  of  the  Commission's  response  was the  provisions  of  the Charter  of  Fundamental 
Social  Rights  which,  inter  alia,  stated  the  fundamental  principle  that  all  'employment  shall 
be  fairly  remunerated'.  In  expanding  on  this  statement  the  Charter  suggested  that  each 
Member  State  should  ensure  that  workers  receive  an  'equitable wage',  described  as: 

'A  wage  sufficient to  enable  them (ie,  the workers) to have a decent 

standard  of living '. 

The  Commission  interpreted  this basic  principle  as one that was best  served  by  encouraging 
Member  States  to  respect  it  through  adjustments  in  their  own  economic  and  social  policies 
and  in  particular  through  the  following  methods: 

'..using the normal  instruments of economic and social policy,  in  particular 

those designed  to raise productivity  and stimulate economic growth,  combat 
discrimination,  and  ensure solidarity  across social groups. ' 

Thus  the Commission  saw the achievement  of an  equitable wage  as a task  involving  a  range 
of  policy  areas  and  hence  a  number  of  different  partners  in  each  Member  State.  This joint 
responsibility  also emerged  in the terms of the Commission's  Opinion  on  an  equitable  wage. 

1.2  The  Opinion 

The  Opinion  focused  on  three  key  areas  for  action  by  Member  States  and  these  were  as 
follows: 

• 
• 
• 

Action  to  improve  labour  market  transparency  with  regard  to  wages; 
Action  designed  to  ensure  that  the  right  to  an  equitable  wage  is  respected; 
Action  in  favour  of  human  resource  development. 

All  three  areas  for  action  contained  various  ideas  for  policy  that  should  be  considered  by 
Member  States and in some cases the Commission  offered  ideas on its own role in  promoting 

1 Commission Opinion on an Equitable  Wage (Brussels, European Commission (DGV), 

COM(93)  388,  September  1993). 

IcL 

the opinion. 

Action  to  improve labour market transparency with regard  to  wages: 
Here the Opinion suggested that better, more reliable information on wage structures would 
help ensure that problems become visible and can thus be tackled effectively.  There was also 
an emphasis on the need to disseminate the information  widely. 

Action designed  to  ensure that the right to an equitable wage  is respected: 
This  section  of  the  Opinion  aimed to  convince  Member  State  governments  that  legislative 
arrangements needed to be sufficient to ensure that vulnerable groups did receive an equitable 
wage.  Particular  areas  of  concern  were  the treatment  of  homeworkers,  the  continuation  of 
discriminatory  practices  and  the  need  for  setting  minimum  wages  through  negotiation. 
Information  was  thought  to  be  a  key  ingredient  in  achieving  these  aims,  as  was  the 
development  of  good  practice.  In this section the Opinion also referred to the need to avoid 
negative  consequences  of  measures  to  improve  the  position  of  these  vulnerable  groups, 
including  a negative  impact on job creation. 

Action in favour  of human resource development: 
This  was  a fairly  broad  category  in  the  Opinion  which  aimed  to  bring  to  the  attention  of 
Member  States the  need  for  on-going  attention  to  be  paid  towards  the  development  of  the 
workforce. Here the emphasis was on developing the potential  of people so that they became 
more valuable  to  the  employer  and thus attracted better remuneration  and clearly  the  focus 
was on education  and training  at all  levels. 

The Opinion concluded with an invitation to the social  partners to address the issues raised. 
More specifically  the Commission  set itself a number of tasks that it felt would help improve 
the ability  of Member  States to  respond to the provisions of the Opinion.  These  actions are 
summarised  as follows: 

• 

• 

to  take  appropriate  measures  to  improve  the  quality  of  information  available  at 
Community  level,  in particular with regard to wage structures; 

to  contribute  towards  a  better  matching  of  vocational  training  arrangements  to  the 
developing needs for qualifications  and retraining of both workers and businesses, by 
ensuring the collection  and dissemination of experiences in this area and encouraging 
co-operation  between  those concerned; 

to  encourage  the  development  of  exchanges  across the  Community  on  the  practices  within 
firms with  regard to  remuneration; 

• 

to  undertake  further  studies,  in  collaboration  with the Member  States  and the  social 
partners,  to  seek  to  promote  a  convergence  of  equitable  wage  policies  with  the 
Member States. 

Finally,  the  Commission  also undertook  to do a report on the  progress  made  and  obstacles 
encountered  in the adoption  of  the Opinion approximately  three years after the opinion  was 

first  published  with  a  further  monitoring  at  two  yearly  intervals  thereafter.  This  report 
represents the Commission's  response to this requirement  and  Section  3 contains a review of 
the proposed  actions from  the  Commission  itself. 

1.3  The  Updating  Process 

The principal  source  of  information  used  to  compile  this  report  has been  the Member  State 
responses  to  a  questionnaire  issued  to  the  national  labour  ministries  or  other  appropriate 
bodies in mid-1995  requesting  information  under the main  headings of the original  Opinion. 
The  inquiry  asked  for  information  on the following  aspects  in  each  Member  State: 

• 

• 

• 

• 

Rights  to  an  equitable  wage; 

Wages  and  labour  market  transparency; 

Ensuring  rights  to  an  equitable  wage; 

Improving  human  resource  development. 

The  questions  were  preceded  by  an explanatory  note  that  established  the background  to  the 
equitable  wage  and  the  need  for  this  report  three  years  on.  Member  States  were  asked  to 
respond  to  the  questionnaire  by  the  end  of  September  1995  with  a  special  request  that  any 
documentary  evidence  in  support  of their  responses  should  also be  sent. 

In  the  event,  few  Member  States  had  responded  by  the  deadline  which  was  extended  on  a 
number of occasions. By the end of January  1996 replies had been received from  13 Member 
States,  with  Portugal  and  Sweden  responding  a  little  later,  thus  completing  the  EU  15.  The 
replies received  were highly  variable in their level of detail  and  all provided  little in the way 
of supporting material. One Member State (Italy) not only provided the official  view from  the 
Ministry .of Labour  and  Social  Security,  but included  the views from  consultations  they  had 
held  with  key  social  partner  organisations2  Other  Member  States had  also  sought the  views 
of  the  social  partners  before  forming  their  replies. The  three  new  Member  States  (Austria, 
Finland  and  Sweden)  were  not  members  of the EU  at the time the Equitable  Wage  Opinion 
was  drawn  up.  However,  Austria  and  Finland  provided  detailed  accounts  of  their  current 
situations  under  the  relevant  headings  of  the  questionnaire  and  their  comments  have  been 
included  in  the  general  discussion  of  progress  in  Section  2  of  this  report. 

2  Those  consulted  were:  CONFAGRICOLTURA,  CONFAPI,  INTERSIND,  CGIL, 

CISL,  UIL  and  the  CIDA. 

1.4  Report  Structure 

Given the variable nature of the Member  State responses to the questionnaire, the core of this 
report, Section 2, takes the form  of a collective discussion of the issues raised by the Opinion, 
bringing in examples from  Member  States as appropriate. The section therefore  considers the 
responses under  the  four  main  headings  of: 

• 

• 

• 

• 

Rights to  an  equitable  wage; 

Wages  and  labour  market  transparency; 

Ensuring  rights  to  an  equitable  wage; 

Improving  human  resource  development. 

The  discussion  in  Section  2  provides  the basis for  the following  section  of the  report  which 
summarises the key  issues and  points arising  from  the national  responses,  setting them  in  an 
EU-wide  context. 

Section  3 of  the  report  summarises  the  Commission's  response  to  the  tasks  directed  at  it  in 
the  Opinion.  There  is  also  an  overall  discussion  of  the  progress  made  by  Member  States, 
information  on  the  statistics  available  to  inform  this  subject  area  and  a  forward-looking 
perspective  which  outlines  the  potential  role  of  the  Commission  in  the  area  of  an  equitable 
wage. 

1.5  Key  Issues 

In framing  the debate on  an equitable wage in Member  States, it is instructive to discuss  first 
some of the key  issues that  are likely  to  influence  activity  in this  area.  Some  of these  points 
were raised in the Opinion issued by the Commission. For example, the relationships  between 
wages, productivity,  employment  and  social  factors,  or the reasons  why  there  is variation  in 
wage levels between  the Member  States of the EU. All these are still  relevant three years  on, 
but  it  is  important  to  revisit  some  of  them  in  order  to  catch  up  with  labour  market 
developments  in  what  is  often  an  extremely  dynamic  environment. 

Change in the labour market continues to take place. In particular, the growth in non  standard 
forms  of  employment  and  precarious  jobs  will  have  a  significant  effect  on  the  ability  of 
Member State governments to influence  wages. High levels of self employment, for  example, 
offer  little  opportunity  for  wage  policy  and  the increase in temporary  contracts  and  flexible 
hours complicates the policy  options. Many  of these laboi  force  sub-groups  could  never  be 
brought  into the  scope  of  wage  policy  although  for  others  ihe options  are not  as clear.  With 
potentially vulnerable  groups  such  as part-time workers, for  example,  already  there are  signs 
that  regulation  akin  to  that  offered  to  full-time  workers  is  perfectly  possible. 

More  pressure  emanates  from  the  sometimes  significant  changes  in  the  methods  of  wage 
determination.  Some  Member  States  have  witnessed  a  breakdown  of  traditional  forms  of 
collective  bargaining  in  favour  of  individual  wage  setting,  often  linked  to  such  elements  as 
performance  related  pay.  In  such  circumstances  control  over  what  employees  receive  in  the 

form  of  remuneration  becomes  difficult.  It also  introduces the problem  of  variations  in pay 
performance  from  year-to-year  as  business  fortunes  change,  thereby  posing  particular 
problems for monitoring  and seeking  to maintain  an equitable wage. 

The  use  of  a  national  minimum  wage  is  also  an  issue.  While  only  a  minority  of  Member 
States  have  such  a  policy,  the  other  Member  States  arrange  for  various  minima  to  be 
negotiated through a range of collective agreements or concentrate action to a few vulnerable 
sectors.  The  relationship  between  low  pay  and  low  family  incomes  is  a  complex  one  and 
social policy also has a complementary  role  in tackling inadequate standards of living, albeit 
often  arising  from  wages  that  are  insufficient  to  meet  the  employees'  needs.  Furthermore, 
labour  markets  throughout  the  EU  have  experienced  a  widening  of  wage  inequalities, 
especially  under the  strain of weak  employment growth  and high  unemployment.3 

In  more  general  economic  terms,  Member  States  are  experiencing  considerable  industrial 
change.  Of course the process of fewer  manufacturing jobs and more service sector jobs has 
been going on for some time now and is set to continue in most situations. In some situations, 
activities such as delayering  and demerging have left many employees exposed to  significant 
change  in  their  career  objectives.  This  has  filtered  down  to  how  wage  differentials  are 
perceived and set with yet further implications for how traditional  forms of wage  setting can 
be sustained. 

All  these  factors  must  be  taken  into  account  when  the  way  in  which  the  objective  of  an 
equitable wage has been tackled in Member States is examined.  However,  the diverse nature 
of  the  labour  markets  throughout  the EU  means  that the  effect  of  such  factors  will  tend  to 
vary  in intensity.  Some  of this will  be due to some Member  States being  ahead of  others in 
terms of their experience  of  labour market change; this is good  for the other Member  States 
since they  have  the  opportunity  to draw on the experience  of others. 

3  See,  for  example,  Freeman  R  and  Katz  C F  (1994)  'Rising  Wage  Inequality:  the 
United  States  vs  Other  Advanced  Countries'  (in  R  Freeman,  ed,  Working Under Different 
Rules, New  York,  Russell  Sage Foundation  and NBER,  pp29-62). 

2.0 The Situation  in Member  States 

2.1  Introduction 

All  Member States responding to the questionnaire did so in an organised way following  the 
various sub headings which formed the structure of the inquiry. However, the level  of detail 
provided varied  considerably  between Member States and there were also differences  in the 
interpretation of the questions posed. For example, some Member States explained the history 
of  legislation  surrounding the equitable wage issues  at great length whilst others were more 
apposite,  concentrating  on the developments  since the Commission's  Opinion  was issued. 

In  view  of  these  differences  in  approach,  it  is  not  appropriate  here  to  give  an  account  of 
developments  in  each  Member  State.  The  structure  adopted  in  this  section  of  the  report  is 
therefore  to take the four  key  headings  from  the  questionnaire  as the basis  for a discussion 
of  the issues, bringing  in examples from  Member  States as appropriate. 

2.2  Definitional  Issues 

A number of Member States (for example,  Austria, Belgium, Germany  and France) felt that 
the concept of an 'equitable wage'  was somewhat misleading.  The main problem was that it 
is  often  confused  with  the  much  wider  concept  of  an  'equitable  standard  of  living'.  The 
contribution  from  Austria  expanded  on  this  by  explaining  that  the  basis  for  wage 
determination  should  be  that they  reflect  the value  of  the  work  performed.  Accepting  this 
definition  (as most Member  States explicitly  did) means that if the standard of living  is then 
taken  into  account  in  wage  determination,  it would  mean  that differential  wages  would  be 
paid  for the same job  (assuming  that the individuals  performing  the same job  had  different 
income bases to begin with - again a perfectly feasible scenario). This would make a nonsense 
of  the wage  determination  process  and  leads  to the  obvious  conclusion  that  adjustments  in 
living  standards are not the remit of wage  policy  but of  social  policy. 

Taking  this  definitional  dilemma  further,  all  Member  States  would  agree  that  wage 
determination  is  principally  the  responsibility  of  the  employer  and  employee  (or  their 
representatives  in both cases)  and as  such the need to interfere  in this process is  resisted  as 
much  as  possible.  It  is  therefore  not  surprising  that  the  majority  of  Member  States  were 
unable to demonstrate a direct link between the Commission's Opinion on an Equitable Wage 
and what national governments had done over the past three years. Most Member States were 
comfortable  with  the  way  in  which  the  opinion  was  phrased,  with  the  emphasis  on 
subsidiarity, and felt little compulsion to respond to the measures outlined in it. A number of 
Member  States  clearly  felt  that  even  before  the  opinion  was  issued  they  had  sufficiently 
comprehensive  policies  and  practices  in  place  to  guarantee  compliance  with  the  broad 
intentions  of the  equitable wage  objective. 

2.3  Rights  to  an  Equitable  Wage 

Member States were asked to respond to the point in the Opinion  concerning the Charter of 
the Fundamental  Social  Rights of Workers4 regarding the right to an equitable wage  and the 
need  for  that right to  be  reaffirmed.  Here  Member  States  tended  to  respond  by  providing 
details of  the basic  legal  position  regarding the rights to wages  for work  performed.  There 
was  a clear  distinction  between  those  Member  States  with  constitutional provisions  for  an 
equitable wage,  compared to those with  more fragmented  legislative  provisions. 

Only three Member States, Italy, Portugal and Spain, claimed to have the right to an equitable 
wage enshrined  in their constitutions.  In the case of  Italy, the terminology  used is: 

wage which  is commensurate with the quantity and quality of the work. >5 

The definition  is  also  interpreted  as meaning that the wage  paid  should  not only  be fair  for 
the  work  performed  but  it  should  also  by  sufficient  to  provide  for  family  needs.  This  is 
broadly  similar  to  the  Spanish  case  which  also  uses  the  phrase  'equitable  wage'  and 
additionally calls for the wage to be enough to satisfy the family's needs as well.6  Amplifying 
this, Article 40.1  of the Spanish Constitution sets out that as a guiding principal  of  economic 
and social  policy,  public agencies should promote conditions favourable to progress towards 
a  more  equal  distribution  of  personal 
incomes  and  regional  disparities  in  incomes.  In 
Portugal,  the  explicit  constitutional  provisions  are  reinforced  by  reference  to  a  National 
Minimum  Wage  and its role in the achievement  of  an equitable wage.7 

The majority of Member States do not have such explicit constitutional  provisions and, more 
interestingly,  do  not  necessarily  refer  to  the  concept  of  an  equitable  wage.  In  France,  for 
example, the free determination of wages is regarded as a fundamental  principal  of the  rights 
of workers and is backed up by comprehensive legislation and this is a basic principle evident 
in  other  Member  States.  In  Germany  the  concept  of  an  equitable  wage  is  not  commonly 
accepted  as a basis  for wage  determination  but the right to free  collective  bargaining  is and 
it  is  this  system  that  helps  guarantee  that  fair  wages  are  set.  To  underline  the  point,  the 
response  to  the  questionnaire  from  Germany  suggested  that  the  fact  that  no  one  has  ever 
claimed  that wages  arrived  at in collective  agreements  were  inequitable  proves the  efficacy 
of the system. 

The free determination  of wages under collective bargaining arrangements is therefore by far 
the most common  basis  for  ensuring that equitable wages  are paid in the Member  States. 

4  The relevant section in the opinion is paragraph 3 in the Explanatory Memorandum 

and paragraph  1 in the Opinion. 

5  Contained  in  Article  36  of the Italian  Constitution. 

6  Contained  in  Article  35.1  of  the  Spanish  Constitution. 

7  Constitution  of  the Portuguese  Republic,  Article  59,  paragraph 2. 

However,  the  extent  of  collective  agreements  is  changing  in  many  Member  States  as 
traditional  practices break  down  and  individual  pay determination  takes over.  Within  the EU 
this is at  its most  developed  in the  United  Kingdom  where  the view  is  (as articulated  in  the 
questionnaire  response)  that  government  has  no  role  to  intervene  in  wage  setting.  The 
response  provided  justification  for  the  UK  stance  showing  that  real  wages  increased 
substantially  between  1979 and  1995, by  35  per  cent  for  male  full-time  workers  and  by  56 
per  cent  for  female  full-time  workers,  the  differential  gain  for  women  being  particularly 
important  in  this  context. 

At  perhaps  the  other  extreme,  in  Austria  collective  agreements  are the  basis  for  setting  fair 
wages and are the accepted  way of protecting employee rights. However, the difference  from 
most other Member States is in the comprehensive application of these collective agreements, 
covering  as they  do  all  workers  in  a given  sector  irrespective  of  their  direct  involvement  in 
the bargaining  process.  This  situation  arises from  the requirement  that  all  enterprises  should 
belong to their  local  Chamber of Commerce  and it is these chambers that are at the  forefront 
employee  representative  organisations.  All  member 
in  collective  bargaining  with  the 
organisations  are  therefore  bound  to  honour  the  collective  agreements  reached  by  their 
chamber. However,  even  in this comprehensive  system there are some exceptions  to the rule. 
In  cases  where,  on  the  employers'  side,  no  incorporated  bodies  exist  which  enter  into 
collective agreements, an administrative  authority (the Bundeseinigungsamt)  may issue scales 
of  minimum  wages.  These  are  provisions  laying  down  minimum  rates  of  pay  and  providing 
for the reimbursement  of costs. Another exceptional  case may arise if a voluntary  employers' 
association  rather  than  the  statutory  representative  body  concludes  the  collective  agreement 
and there may therefore  be employers who are not bound by collective bargaining  agreements 
(i.e.  non-members  of the voluntary  employers' association).  In these instances,  provision  has 
been made for the Bundeseinigungsamt  to extend the scope of collective agreements to  cover 
those employers who  are not party  to the collective agreement  concerned. However,  this only 
involves  extending  the  scope  of  the  collective  agreement  and  not  any  changes  to  its 
provisions.  In  Sweden  it  is  also  common  practice  for  collective  agreements  to  be  extended 
to cover all workers in a particular  sector which would  also include those not involved  in  the 
negotiation  process. 

Comprehensive  collective agreements are also the normal  practice in Finland where they tend 
to set all manner of working conditions in addition to wages. For example, agreements usually 
cover  holidays  and  other  benefits  and  may  make  provision  for  training  and  this  is  a  trend 
common  to  many  other  Member  States  as  well.  Germany,  for  example,  has  a  particularly 
well-structured  system  of  collective bargaining which  is guaranteed  and  honoured  in the  law 
and  covering  many  aspects  of  employment  in  addition  to wages. 

Increasingly  Member  States  have  enacted  special  legislation  to  encompass  the  growing 
numbers  of  people  in  precarious jobs.  Home  workers  are  an  important  category  here  and  in 
Austria  they  are  covered  by  a  special  Act  (the Heimarbeitsgesetz)  that  sets  wages  and  other 
conditions  of  work  through  special  home  work  commissions.  A similar  system  to  this  exists 
in  Germany  where  home  worker  wages  are  fixed  to  binding  scales  set  by  home  worker 
committees involving  employer  and  home worker representatives with  an  independent  chair. 
In  Spain,  legislation  provides  for  home  workers  in  that  they  are  required  to  be  paid  a  wage 

at  least  equal  to  the  comparable  wage  paid  in  a  more  normal  work  situation8,  and  this  is 
broadly similar to the approach in Portugal9.  In the Netherlands a special law to protect home 
workers  is in preparation. 

It  is  interesting  to  note  that  many  Member  States  did  not  give  great  prominence  to  their 
provisions  on minimum  wages in their responses to the^questionnaire which tends to  reflect 
the  real  role  of  such  measures,  as  a  safety  net  which  may  not  be  extensively  used.  All 
Member  States have  some form  of  minimum  wage provision,  although they  range from the 
comprehensive  covering  all  sectors  and types  of  employment  (eg  France)  to  the  extremely 
limited,  exemplified  by  the United  Kingdom  with just  one  sector,  agriculture,  now  covered 
by minimum  wage setting.  The types of minimum wage provision within the Member States 
can be  categorised  into three types as follows: 

• 

• 

• 

National  minimum  wage  set  by  law  (France,  Luxembourg,  Netherlands,  Portugal, 
Spain); 
Minimum  wages  set  through  collective  agreements  (Austria,  Belgium,  Denmark, 
Germany,  Greece,  Italy, Finland,  Sweden); 
Minimum  wages  set  in some vulnerable  sectors (Ireland,  United Kingdom). 

In the  case of  France,  the national  minimum  wage  (known  as the SMIC) was  established  in 
1970  and  is  maintained  through  a  two-staged  process  of  adjustment  involving  monthly 
uprating according to the retail price index and an annual review which takes into account the 
wider economic  and social  circumstances of the country.  In Portugal  the National  Minimum 
Wage  was  introduced  in  1974  and since  1978  has been  subject to  an annual  adjustment  by 
the Government on the basis of consultations with the social  partners. In 1991, 1992 and 1996 
this adjustment  has been  agreed by the social  partners themselves. 

The most common way of establishing minimum wage rates is through collective agreements 
which effectively  means that there will be different minima set when examined across sectors. 
Even in the case  of the Netherlands where a legal  minimum  wage is  set (albeit  linked to an 
index  of  wage  rates derived  from  collective  agreements)  employees  are covered  by  minima 
(agreed at sectoral  or company level) which, on average, are  15 per cent higher than the legal 
minimum  wage.  However,  the  social  partners  are  currently  introducing  wage  rates  which 
begin  from,  or slightly  above,  the legal  minimum  wage. 

In the case of Ireland, the system of Joint Labour Councils which set not just minimum rates 
of  pay  but  all  rates  for  their  sectors  and  occupations,  operates  in  a much  wider  system  of 
collaboration  between  the government  and the  social  partners.  Since  1987  there  has been a 
series of three-year national  programmes which provide a basic framework  for the economic 
and  social  policies  and  include  ceilings  on  wage  increases  applicable  to  all  sectors.  These 
agreements  are  weighted  in  favour  of  the  lower  paid  to  help  ensure  that  equitable  wages 
prevail,  although  the  system  is  not entirely  dependent  on  influencing  pay  but  also  involves 

81995  Workers'  Statute (Article  13). 

91990  and  1991  Economic and Social  Agreements  (in force  respectively  in  1991 and 

1992)  and  1996  Short Term  Social  Agreement. 

ensuring that  social  benefits  play  their  part. 

2.4  Wages  and  Labour  Market  Transparency 

The Opinion, under the heading:  'Action  to improve labour market transparency  with  regard 
to  wages',  envisaged  that  improvements  in  the  collection  and  dissemination  of  comparable 
statistical  information  would  help ensure greater fairness  in wage provision.  In responding  to 
the  questionnaire,  most Member  States recognised  the  important  role  of  good  statistics  as  a 
basis  for  transparency  but  few  had  done  anything  since  1993 to enhance their  own  data. 

The exceptions to this general  rule included Denmark where the social partner organisations, 
in  association  with  the  central  statistical  agency,  Danmarks  Statistik,  in  1993  started 
developing  new  wage  statistics  to  provide  greater  detail  across  the  country.  By  the  end  of 
1995 this data covered  the whole labour market and all elements in the remuneration  package 
(eg,  in  addition  to  wages,  sick  pay,  pensions,  etc).  However,  there  is  no  doubt  that  the 
comparatively  high levels of trade union membership have enabled Denmark to develop  such 
data in an atmosphere where transparency  on wages is already  highly  developed  by virtue  of 
the  high  levels  of  social  partner  support.  The  same  conditions  prevail  in  Sweden  where  a 
comprehensive  set  of  wage  statistics  are  available. 

By contrast, in Luxembourg a meeting of the tripartite committee in  1995 met and considered 
the need for  further  information  on wages, but decided  that no new measures were needed  at 
the  time.  However,  at  least  it  is  known  that  the  issue  was  considered  in  Luxembourg  since 
there is little evidence to show that the available wage information  has come under such high 
level  review  in  the  other  Member  States  in  the  past  few  years.  Only  the  Austrian  response 
mentioned  its  involvement  in  the  new  EU-wide  structure  of  earnings  survey  which  it  is 
planning to  implement  in  1996 following  the development  of a new household  panel  survey 
which  derives  income  components  information.  Some  of  the  impetus  for  these  important 
developments  in Austria came from  the country's recent accession  to the EU. However,  even 
prior  to  1995,  the  Austrian  Central  Statistical  Office  (ÔSTAT)  published  statistics  on  the 
levels of income in various  sectors of the economy  at regular intervals. In the last few  years, 
the main  focus  has been  on  income  distribution.  The  response from  Finland  did  not  specify 
any  new  statistical  developments  but  confirmed  that  it already  carries out  relevant  statistical 
surveys  on  earnings  and  conditions  of  work. 

In  fact,  most Member  States concentrated  on  confirming  that they  already  carry  out  a  range 
of  wage  studies  producing  useful  comparative  statistics  which  were thought  to  be  adequate 
to  ensure  a  high  degree  of  transparency  in  the  labour  market.  For  example,  there  is  a  long 
tradition  of  wage  surveys  in  the  United  Kingdom  with  the  annual  New  Earnings  Survey, 
Labour  Force  Survey  and  household  expenditure  survey  and  the  response  stated  that  there 
were  no  plans to  extend  these.  Similarly  in  the Netherlands  the  Central  Bureau  of  Statistics 
(CBS)  is  active  in  the  preparation  of  earnings  information  and  works  with  the  Central 
Planning Bureau in this field. Germany  has a similarly well-developed statistical base, as does 
France  where  the  Ministry  of  Labour  (MTDP)  publishes  monthly  wage  indices  and  in 
association  with  INSEE,  the  national  statistical  agency,  conducts  various  wage  surveys.  In 
France  the  information  provides  an  important  input  to  the  social  dialogue  at  the  quarterly 
meetings  of  the  tripartite  council. 

10 

Aside  from  statistics,  for  those  Member  States  with  well-developed  collective  bargaining 
arrangements (ie the majority) another means of ensuring transparency is in the dissemination 
of information on the terms of these agreements. In Belgium, for example, all agreements are 
kept on file by the  Employment Ministry  and are available for  scrutiny.  A  similar  situation 
exists in Italy where the national collective agreements are published with details of the wage 
levels set clearly displayed. In Germany collective agreements allow access to full  information 
to both  sides  and even  in  the more  restricted  environment  of  public  sector  agreements,  the 
terms of these are widely published.  A public register on collective agreements is kept in the 
Ministry of Labour and Social  Affairs.  The situation is similar in most of the  "Lander" with 
regard to regional  collective  agreements. 

The process in Austria is for all agreements to be registered with the Ministry  of Labour and 
Social  Affairs,  after  which  they  are  open  to  public  scrutiny.  In  Finland  the  collective 
agreements  are  also  open  to  view  and  here  they  often  contain  information  on  the  work 
evaluation  criteria  that  have  been  used  to  determine  the  true  worth  of  a job  (in  financial 
terms).  The  only  restriction  on  access  to  such  information  in  all  of  the  above  cases  is  that 
individual  wages  do not form  part of this openness and hence must be kept  confidential. 

In Portugal, collective agreements which are the main instrument for fixing wages at sectoral 
level  must  be  deposited  with  the  Ministry  of  Labour.  The  Ministry  keeps  a  register  on 
collective  agreements  and publishes them  in the Official  Bulletin  of the Ministry. 

In  Spain,  collective  agreements  are  registered  with  the  competent  labour  authority  in  the 
territory covered by the agreement. In addition, collective agreements must be published (free 
of  charge)  in  the  Spanish  Government  Gazette  (Boletin  Oficial  del  Estado),  or  in  the 
equivalent  Gazette  of  the  Autonomous  Community  or  Province  according  to  its  territorial 
scope.  Publication  ensures  transparency  in  the  labour  market  with  regard  to  wages  and 
salaries. 

Clearly  where  collective  agreements  do  not exist  then  information  on the  prevailing  wages 
is  more limited.  This  is  again the  majority  situation  in the United  Kingdom  and to  a lesser 
extent in Ireland where the trend has been for less collective bargaining and more individual 
wage  negotiations  between  employer  and  employee.  Of  course  collective  agreements 
themselves  often  just  establish  broad  wage  floors  and  it  is  then  up  to  local  or  individual 
negotiations  to  improve  on  them.  However,  in  those  labour  markets  where  collective 
bargaining  is  of  secondary  importance,  the transparency  in wages becomes  that much  more 
opaque. Nor is the  situation  helped much by reliable information  from  earnings  surveys and 
the like  since these  have the universal  defect  of being well  out-of-date  by the time  they  are 
published.  Typically  a  year  out-of-date  is  the  minimum  and  often  two  or  three  years  is 
common  which  may  not assist  efforts  at improving transparency  in the  short term. 

The Opinion mentioned the potential role of employment services in improving labour market 
transparency  and this  point  was  picked  up in  a minority  of  responses  from  Member  States. 
The advantage of the information  generated by employment services  is that it is likely  to be 
up-to-date,  based  as  it  generally  is  on  current job  vacancy  information,  and  it  is  generally 
more accessible to the parties likely  to be affected  by wage  inequalities  (ie the job  seeker or 
current  worker).  Of  course  accuracy  of  the  information  may  be  a  problem,  although  the 
recruitment  process  tends to generate  fairly  reliable  indications  of what the jobs  pay. 

11 

The  provision  of  employment  services  varies considerably  between  Member  States but  few 
details emerged from the questionnaire response to highlight these differences.10  Austria took 
an  important  step  in  1994  when  it  set  up  the  Employment  Service  {Arbeitsmarktservice), 
which  is  a  public-law  enterprise  for  the  provision  of  services  with  responsibility  for 
implementing employment policy.  This function  was carried out by the public authorities up 
until  1994,  when  privatisation  took  place.  However,  it  is  not just  the  public  employment 
services that have a role to play here but also private sector employment agencies.  Again the 
incidence of such private sector agencies varies across the EU but their role in certain sectors 
and occupational  areas (eg  clerical,  secretarial)  is quite crucial. 

However,  one  of  the  main  problems  in  relying  on  the  employment  services to  bring  about 
wage transparency  is that their coverage  of the labour market is at best  partial  and  at worst 
biased.  The fact that private sector agencies tend to specialise  has already  been referred to. 

Public  sector  employment  services  are  also  limited  by  the  vacancies  that  are  notified  to 
themnand  inevitably  they  constitute  a minority  of  the total  vacancies  existing  in the labour 
market at any one time since Labour Force Survey and other data show that other sources of 
information  invariably  dominate  in  job  search.12  Notified  vacancies  can  also  be  heavily 
skewed  towards  those  in  lower  skilled  categories  and  in  hard-to-fill  vacancy  areas,  where 
terms and conditions (including the offered  wage) fail  to attract the job seeker. Nevertheless, 
for  the job  seeker  the  employment  services  represent  a source  of  current wage  information 
and it is important that Member States try to ensure that it is as reliable  and wide-ranging as 
possible. 

One area where at least two Member  States have taken steps to improve their information  is 
in  international  comparative  wage  information.  The  central  statistical  agency  in  the 
Netherlands  has  been  working  with  the  Central  Planning  Bureau  to  establish  reliable 
indicators  on  wage  indices  and  replacement  rate  information  in  countries  both  inside  and 
outside the EU.  Italy  also has a tradition  of publishing  international  wage  comparisons  on a 
regular basis. However, whilst some Member States expressed an interest in such international 
comparisons  (especially  with  other  EU  Niember  States)  others  questioned  their  usefulness 
bearing  in  mind  the  sometimes  huge  differences  in  wage  and  non  wage  costs  between  EU 
Member States. 

10  The provision  and development  of employment services is of considerable interest 
to  the  European  Commission  and  work  is  currently  un  srway  through  the  Employment 
Observatory (DGV)  to assess provision throughout the EU.  The forthcoming  Trends bulletin 
No  26  will  report on  this work  (due for  publication  in late  1996). 

11  In the EU only  Luxembourg  has a legal  requirement that vacancies  are notified  to 
the public employment  service.  However,  this does not guarantee wider coverage of  unfilled 
vacancies  since  most  are filled in  a relatively  short period  of time. 

12  In  most  cases  LFS  data  shows  that  most jobs  are  filled  through  word-of-mouth 

information  followed  by  advertisements  in newspapers  and journals. 

12 

Aside from  statistics,  one of the key  ways to transparency  in wages across the labour  market 
is  for  worker  representatives  involved  with  the  bargaining  process  to  have  access  to 
information  on earnings at enterprise level. This is a problem  for  many Member  States  since 
firms  are often  protected  from  imparting  such information  by  the rules of  confidentiality.  In 
Greece, for  example, there are some obligations  on employers  to keep good  information  and 
to open  this information  for inspection  and  indeed  most Member  States will be governed  by 
similar  regulations  on  maintaining  proper  records  for  taxation  purposes,  for  example. 
Employers in France have a particularly  rigorous  set of rules on what they need to collect and 
report  as  regards  wages  and  other  payments  to  employees.  However,  access  to  such 
information  is  only  going  to  assist  in  the  wage  setting  process  for  those  covered  by  the 
relevant collective bargaining agreement.  It will not promote transparency  across the separate 
bargaining rounds. In Portugal workers and their representatives have the right to be  informed 
on the data relating to annual  personnel  plans. These plans also contain information  on wages. 

2.5  Ensuring  Rights  to  an  Equitable  Wage 

Despite  the  difficulty  some  Member  States  had  in  interpreting  the  concept  of  an  equitable 
wage,  plenty  of  evidence  was  provided  in  the  questionnaire  responses  on  the  activities  that 
underpinned 
their  concern  over  fair  wages.  The  Opinion  went  into  some  detail  under  this 
section:  'Actions  designed  to  ensure  that  the  right  to  an  equitable  wage  is  respected'.  It 
suggested  that  Member  States  should  consider  the  need  for  further  arrangements  in  the 
following  areas: 

• 

• 

• 

legislation  on  discrimination; 

ensuring  fair  treatment  for  workers  in  all  age  groups  and  for  home  workers; 

mechanisms  for  establishing  negotiated  minima  and  the  strengthening  of  collective 
bargaining  arrangements. 

The questionnaire attempted to elicit a response on these issues and most Member  States gave 
comprehensive information  on the existing provisions and indicated where recent changes had 
taken  place  and  it  is these  changes  that  are  of  most  interest  to  this  report. 

Provisions  for  the  equal  treatment  of  men  and  women  were  in  place  in  all  Member  States, 
although  with  varying  degrees  of  history.  France  has  had  a  law  in  place  on  the  equal 
treatment of  all its citizens since  1958 and this has been embellished  over the years to ensure 
that  men  and  women  receive  (and  are  seen  to  receive)  equal  treatment  in  matters  of  pay  for 
similar  work.  In  Portugal  the  Constitution  establishes  the  principle  of  non-discrimination. 
Equal  treatment between  men and women  at work has been ensured by law since  1979 which 
established  a tripartite committee with the task  of promoting the application  of this principle. 
In  Germany  there  has  been  an  explicit  prohibition  since  1980  against  any  discrimination 
between  men  and  women  with  regard  to  equal  pay  for  the  same  or  equivalent  work.  More 
latterly,  in  Sweden  in  1994 and  in Denmark  in  1995 (covering  racial  discrimination),  specific 
legislation  outlawing discrimination  in the labour market has been enacted,  although the issue 
was  already  prominent  in  separate  collective  agreements  in  both  countries. 

13 

In  Italy  the  basic  legislation  on  equal  treatment  has been  in  place  since  1977  with  further 
legislation enacted in  1991. However, the law protecting disabled people from  discrimination 
in the workplace has a much longer history dating back to  1968. In the United Kingdom  the 
1995 Disability Discrimination Act has been recently introduced to provide specific protection 
on issues  such as recruitment,  pay  and career advancement. 

Other recent changes to equal opportunity legislation include amendments to the law on equal 
treatment for men and women in Finland where, in  1995, the coverage has been increased to 
include such factors as access to education and training and similar measures which underpin 
the  equality  of  career  opportunities  in  direct  response  to  EC  Directives  in  this  field.  In 
Belgium  the emphasis has been on minor amendments to how the existing legislation  in this 
area operates. For  example,  there have been  some  new  attempts to improve  the  monitoring 
of  equal  opportunities  in  the  workplace  backed  up by  legislation.  In France,  1995  saw  the 
setting  up  of  a  high-level  special  project  establishing  an  observatory  to  monitor  equal 
opportunities,  presided  over by  the Prime Minister.  The main focus  of this new  monitoring 
will  be equality  between  the sexes,  but also within  scope are foreign  workers in France. 

In  helping  ensure  that  fair  wages  exist  as  far  as  possible,  minimum  wage  policy  plays  an 
important  part.  The  range  of  different  approaches  to  minimum  wage  setting  have  been 
discussed in the previous section and here it is important to focus on their effectiveness  in the 
process.  For  national  minimum  wages  the  key  to  their  continuing  effectiveness  is  the 
regularity  with  which  they  are  reviewed  and,  ultimately,  their value  as  a proportion  of  the 
going  rate in the occupations  to which  they  apply.  Here the French  SMIC operates  under a 
structured  and  regular  uprating  procedure  which  helps  ensure  its  relevance.  However,  this 
appears to be  less  of  the  case  with  some  other national  minima.  In Portugal  and  Spain,  for 
example,  the national  minimum  wages  are only  reviewed  annually  which  may  mean that in 
between  reviews  they  may  be  less  effective.13  Of  course  annual  reviews  and  possibly  even 
longer  periods  are the  norm  in  collective  agreements  and where  minimum  wage  levels  are 
established  through this process, the same degree of downward drift  might occur.  However, 
given that all  other wages covered  by  such agreements are likely to be in the same position, 
then the potential  for  a gap  to  open between  the minimum  wage  and other wages  is  less  of 
an issue. 

One interesting  development  on  the use  of minimum  wages is  in the Netherlands.  Here the 
legal  minimum  wage  has  clearly  been  seen  as  a potential  constraint  on  the  recruitment  of 
certain disadvantaged groups in the labour market. Thus a special  dispensation  is now  being 
introduced  for  the  minimum  wage  which  allows  employers  to  recruit  the  long-term 
unemployed  for a wage of at least  70 per cent of the agreed minimum wage for a maximum 
duration of two years. These offers of jobs are also linked to a requirement that the employer 
offers  relevant opportunities for education  and training.  Other special  measures exist that are 
aimed  at persuading  employers  to  recruit the long-term  unemployed,  all  linked  to  levels  of 
the minimum wage.  Similarly,  in Portugal  there is some flexibility  in the National  Minimum 
Wage. For instance,  it can be 25  per cent less for workers under  18 years of  age and 20 per 

I3Although in Portugal  the minimum wage is normally  adjusted only once a year,  it may 
happen  that  it  is  adjusted  more  often.  This  was  the  case  in  1989  during  which  two 
adjustments took  place  (January  and July)  due to a high inflation  rate. 

14 

cent  less  for  workers  under apprentices'  or training  contracts.  Since  1991  there  has been  a 
separate  minimum  wage  only  for  domestic  servants  (before  1991  also  for  the  agricultural 
sector)  with  a  minimum  inferior  to  the  general  minimum  wage.  However,  this  sectoral 
minimum  wage has been  adjusted at a higher rate than the general  minimum  wage with the 
result that the difference between the sectoral and the general minimum wage has diminished. 

In Spain there is a two-tier statutory minimum-wage,  i.e.  for those under and those over  18. 
In  apprenticeship  contracts  -  covering  young  people  over  16  and  under  25  without  the 
qualifications  required  for  a  formal  training  contract  -  the  apprentice's  wage  is  fixed  by 
collective  agreement.  In the absence of an agreement,  the wage may not be less than 70,  80 
or 90 % of the statutory  minimum  wage during the first, second and third year respectively 
of  the  contract,  wages  for  apprentices  aged  under  18  may  not  be  less  than  85  % of  the 
statutory minimum wage corresponding to their age group. Similarly, in training contracts the 
worker's wage  must  be  that  laid  down  in the  collective  agreement  for  workers  undergoing 
training.  If no  such contract  exists, the wage during the first or second year  of  the contract 
may  not  be  less  than  65  or 75  % respectively  of  the  wage  laid  down  by  agreement  for  a 
worker carrying  out  similar or equivalent work. 

Some  Member  States  operate  their  labour  market  policies  under  a broad  consensus  on  the 
major economic and social issues. In Ireland, for example, the triennial framework agreements 
between  the government  and the  social  partners tend to  establish  an  atmosphere  where  fair 
treatment  of  all  workers  can  be  monitored  closely.  In  Italy,  a  1993  Protocol  signed  by  the 
government and the  social  partners agreed on an incomes policy  designed to improve equity 
in the  distribution  of  incomes  through policies to control  inflation  and encourage  economic 
growth.  It is hoped  that by  working  closely  with the  social  partners,  government  can better 
influence  such  activities  as  wage  determination  and this  includes  protecting  the  vulnerable 
groups in the labour market. 

All  Member  States  provided  some  indication  of  their  provisions  to  protect  the  wages  of 
workers  who  were  put  at a disadvantage  through  no  fault  of  their  own.  Typically  this  can 
arise  in  cases  of  illness  or  industrial  injury,  but  relevant  policies  are  also  directed  towards 
firms going bankrupt, for example. In Spain, the new Workers'  Statute of  1995 made various 
provisions  in  this  area.  For  example,  the  concept  of  a  wage  was  clarified  removing,  for 
example,  the  possibility  that  an employer  might try  to  substitute  payment  in  kind  for  cash 
wages. Under the new  statute payments in kind are not allowed to exceed  30  per cent of the 
total  (gross) pay of the employee.  Responding to an EC Directive14, there was also cover for 
wages in the event of  an employer's insolvency  and entitlement to wages if the employee  is 
unable to work because  of the employer.  Basically  the  Spanish provisions make it clear that 
the wage obligations  of the employer take precedence over other financial  commitments.15 In 
Germany  labour legislation  seeks to  protect  employees  by  ensuring that fair wages  are  also 
paid for  public  holidays,  absence for  personal  reasons and annual  holidays,  etc. 

14  Council  Directive  of  20  October  1980  on  the  approximation  of  the  laws  of  the 
Member States relating to the protection  of employees in the event of the insolvency  of their 
employer  (80/987/EEC)  O.J. NL  283/23  of 28.10.80. 

15  As  contained  in  Article 45  of the amended  Workers'  Statute (24th  March  1995). 

15 

In the White paper on European  Social  Policy,  the issue of the right to payment  of wages on 
public  holidays  and  during  illness  was  listed  among  the  range  of  "other  areas"  put  forward 
for  legislative action  at  Union  level  (Chapter  III, paragraph  13). The  Commission's  Medium 
Term  Social  Action  Programme  again  refers,  in  paragraph  4.3.6.  to the  right  to  payment  of 
wages  on  public  holidays  and  during  illness.  It  goes  on  to  say  that  this  question  will  be 
covered  by  the  first  report  on the  Commission's  Opinion  on  an  Equitable  Wage.  In  order  to 
fulfill  this task, the Commission  sent out a questionnaire to Member States regarding the right 
of  payment  of  wages  on  public  holidays  and  during  illness.  Member  States'  replies  are 
summarised  in  Appendix  A. 

Many  Member  States  have  sought  to  adjust  their  legislative  provisions  in  line  with 
developments  in  the  labour  market  over  the  past  few  years.  The  Equitable  Wage  Opinion 
drew  attention  to  one  of  these  areas,  that  of  home  workers  and  this  has  been  directly 
responded  to  by  a  number  of  Member  States.  For  example,  the  1995  Workers'  Statute  in 
Spain  specifically  protects  home  workers,  particularly  that  the  wage  paid  should  be  at  least 
equal to that of workers carrying  out  similar tasks in  a more normal  workplace  environment. 
Portugal  has  a  similar  requirement  with  the  minimum  wage  acting  as  a  fall  back  position. 
Austria  and  Germany  have  their Home  Worker Committees  that  set binding  rates  of  pay  for 
home  workers  through  agreement  between  the  employers'  and  employees'  organisations, 
guided  by an independent  chair.  The Netherlands  is also in the process of preparing  a law to 
cover  homeworkers. 

However,  responses to labour  market  change extend  beyond  home workers.  In  Luxembourg, 
for example, a new law in  1993 established  equal  treatment in the payment of wages for  part-
time  workers  and  in  1994  this  approach  was  extended  to  those  on  temporary  contracts  of 
employment.  Part-time  workers  have  received  similar  attention  in  other  Member  States, 
although  Italy  has  probably  gone  further  than  most  in  introducing  legislation  that  seeks  to 
protect workers on all  types of different  employment  contracts at the same place or work.  In 
a  similar  vein,  the  Netherlands  has  recently  extended  the  coverage  of  its  national  minimum 
wage to  all  those  employed  working  fewer  than  13 hours  a  week. 

All  these  measures  indicate  that  Member  States  have  tended  to  respond  to  the  key  changes 
in  the labour  market  over  the  recent  period  and  whilst  some  Member  States  have  chosen  to 
respond  by introducing  specific  legislation,  others  have allowed  the existing provisions to be 
extended to cover the new forms  of working,  albeit sometimes determined  through  case law. 

This  introduces  a  discussion  on  the  ways  in  which  Member  States  enforce  their  legislative 
provisions  on  fair  wages.  Breaching  the  laws  carries  the  normal  financial  and/or  custodial 
penalties that have been  a feature  of  such provision  for  a long time. However,  these  penalties 
apply  once  infringements  have  been  discovered  and  proven  and  there  is  some  variation 
between Member States  in the ways in which such infringements  are detected. Countries such 
as Italy  and  Portugal  tend  to  rely  on  the  labour  inspectorate  to  check  on the  implementation 
of  the  legislative  provisions,  although  individuals  can  also  bring  a case  before  an  industrial 
tribunal,  which  is  a  facility  found  in  other  Member  States.  France  and  Belgium  also  rely 
heavily  on  the  labour  inspectorate  to  detect  infringements  of  the  legislation  and  in  the  case 
of the France the  provisions  of the  SMIC are  assiduously  applied.  Once cases  reach  the  law, 
most  Member  States  have  special  labour  courts  to  handle  the  process  at  least  in  the  first 
instance. 

16 

Enforcement  of the legislation  on fair  wages does not appear to be a large problem  identified 
by  the Member  States. However,  there  is  some  evidence  to  show that  it  is a problem  likely 
to  be  of  more  significance  in  the  future  as  non  standard  working  arrangements  proliferate 
and, in  some Member  States in  particular  (eg,  Greece,  Spain  and  Italy) the special  problems 
posed  by  illegal  workers  and  the  informal  economy  grow  in  complexity. 

2.6  Improving  Human  Resource  Development 

The section  in the Opinion  on  * action in favour  of human resource development was a rather 
broader  area  than  the  previous  action  points  and  it  is  not  surprising,  therefore,  that  the 
responses to the questionnaire on this point were somewhat vague. In fact the question in the 
inquiry  to  Member  States  was  much  more  focused,  asking  for  a  view  on  human  resource 
development  initiatives  aimed  at  improving  the earnings potential  of the  workforce. 

The  majority  of Member  States  responded  in the form  of  rather  wide-ranging  statements  of 
commitment  to  the  development  of  the  workforce  through  education  and  training  and 
increased  productivity,  all  going  towards  economic  growth.  Portugal  was  the  only  Member 
State  to  draw  attention  to  the  relationship  between  earnings  and  educational  attainments, 
quoting the OECD which  suggested that in Portugal  education  and earnings are more closely 
related  than  in  any  other  OECD  country.16 

Interest in encouraging  a climate of  continuous  training seems to have permeated  the  human 
resource  development  objectives  in  most  Member  States.  In  Greece,  for  example,  there  has 
been  a joint  initiative  between  the  Ministry  of  Labour  and  Social  Security  and  the  Labour 
Force Employment  Organisation  (OAED) to develop measures to promote life-long  learning. 
In  Denmark  education  and  training  is  explicitly  seen  as  the  way  to  maximise  the  labour 
market  potential  of  the  workforce  and  this  includes  earnings  and  in  1995  a  new  agreement 
was  formed  for  state  sector  employees  that  strengthens  the  role  of  training  in  general  and 
continuous training in particular.  This is linked with a wider effort  by the Danish  government 
and  the  social  partners  to  give  'interesting  and  exciting'  jobs  through  continuous  human 
resource development,  currently  undergoing  pilot  studies. Portugal  is in the throes of  a  large 
scale  reformation  of  its  education  and  vocational  training  systems. 

Germany  also  states  its  commitment  to  life-long  learning  but  here the  employers  operate  in 
an employment culture where training has always played a prominent role which has, to some 
extent,  reduced  the need  for  further  government  pressure  in this area. Luxembourg  may  also 
be considered  in a similar  light, yet in  1994 the government issued  a Declaration  reaffirming 
the need for continuous training, backed up by proper access and certification.  France has also 
taken  steps to encourage  a greater take-up  of continuous training through  the introduction  of 
new  qualifications,  for  example,  all  with  the  involvement  of  the  social  partners.  In  fact  in 
many  Member  States  the  role  of  the  social  partners  is  quite  crucial  to  the  success  of  the 
measures  introduced  since  many  are  built  into  collective  agreements  at  national  and  local 
levels. In Portugal  the  extensive  reforms  to initial  and continuing vocational  training  depend 
on  the  involvement  of  the  social  partners  with  government. 

16  OECD (1995)  OECD Economic Studies Portugal  (Paris, OECD). 

17 

One important issue in the development of continuous training is ease of access and there is 
useful  information  from Member States to indicate significant  changes here. For example, in 
the Netherlands a recent White Paper, 'Labour and Care', proposed developing such measures 
as parental  leave and career breaks in order to allow employees to follow  training.  Similarly 
in Finland a new 'Study Leave Act' has given those with a minimum of just one years length 
of  service the right to take study  leave  (unpaid).  Significantly,  however,  the study  followed 
by those taking up the offer does not have to be related to the business of their employer, the 
emphasis being  more  on  personal  development.  In Austria the  eligibility  for  study  leave  is 
much  more  restricted  with  only  members  of  works  councils  being  legally  entitled  to 
educational  leave.  However,  some  collective  agreements  also  make  provision  for  training 
leave. In Portugal  most continuous training is funded through the state under the guidance of 
the Institute for Employment and Vocational  Training.  In Sweden,  over the period  1990-95 
the  state-managed  Working  Life  Fund  aimed  to  support  improvements  to  the  working 
environment  and the  organisation  of work. 

Vocational  training generally  has come under scrutiny in most Member States over the recent 
period.  In Spain,  vocational  training is seen as the key  to getting  the unemployed  back  into 
the labour market and to tackle this the Spanish vocational  training  system  was  reorganised 
in  1993. This effectively  merged the two previous vocational  training systems into one with 
the  primary  goals  of  matching  training  to  labour  market  need  and  improving  access  and 
quality.  In  Luxembourg  the  changes,  although  less  dramatic,  still  aim  to  adapt  vocational 
training  provision  to  developments  in  the  labour  market  (particularly  those  resulting  from 
technological  applications)  and to the world  of work generally. 

A  key  feature  of  the vocational  training  developments  is to  assist the  disadvantaged  groups 
in the  labour  market  and  so  many  of  the changes  can be  linked  to  general  interventions  to 
combat  unemployment.  This  is  particularly  so  in  Italy  where  1993  legislation  gave  the 
Ministry  of  Labour  the  task  of  implementing  training  advice  and  guidance  to  workers  on 
special earnings supplements,  support is also available to firms providing in-company training 
and guidance  as is the  case  in Portugal  as well. 

Two  Member  States  have  also  taken  the  opportunity  to  raise  the  development  of  the 
workforce  to  national  crusade  status.  The United Kingdom  was first to  do  this  through  the 
setting up of the National  Targets for Education and Training (NTETs), based on the initiative 
of  the  main  employers'  confederation  with  later  support  from  trade  unions  and  the 
government.  The NTETs  set  objectives  for  proportions  of  the working  population  to  reach 
certain levels of qualification  by the end of the decade and the  1995  Competitiveness  White 
Paper17 set revised targets (generally upwards) and with more emphasis on higher level  skills. 
A similar approach is also evident in Spain's  1993 National  Vocational  Training Programme 
which  set out quantitative and qualitative targets  on vocational  training achievements  to the 
end  of  1996.  All  this  was  tied  in  with  the  1993  National  Employment,  Training  and 
Integration Plan which aimed to ease the integration of the unemployed into the labour market 
through training. 

17  Competitiveness  - Forging Ahead (London,  HMSO,  May  1995). 

From  the  information  supplied  by  the  Member  States  it  is  not  possible  to  determine  how 
much influence the Equitable Wage Opinion had on the types of human resource development 
measures outlined above.  In reality the role of increased earnings potential  in the changes to 
vocational  training and other key policy  areas is likely  to be of  secondary  importance to the 
other objectives  of this policy,  a principal  one of which  is the reduction of  unemployment 

3.0 The European  Union  Perspective 

3.1  Progress  from  the  Commission 

In  its  Opinion  on  an  Equitable  Wage the  Commission  considered  that  it was  pertinent 

• 

• 

• 

• 

To  take  appropriate  measures  to  improve  the  quality  of  information  available  at 
Community  level; 

To  contribute  towards  a  better  matching  of  vocational  training  arrangements  to  the 
developing  needs  for  qualifications  and  retraining,  etc; 

To  encourage  the  development  of  exchanges  across  the  Community  on  the  practices 
within  firms  with  regard  to  remuneration; 

To undertake  further  studies,  in  collaboration  with  the Member  States  and  the  social 
partners  to  seek  to  promote  a  convergence  of  equitable  wage  policies  within  the 
Member  States. 

The quality of information available  at  Community level 

Regarding  the  improvement  of  the  quality  of  information  available  at  Community  level, 
Council  Regulation  2744/95  was  adopted  in  1995  in  order  to  produce  statistics  on  the 
structure of earnings for  the year  1995 (1994 for France and  1996 for  Austria). The statistical 
work  is  currently  being  undertaken  in  all Member  States, and the  results  regarding the level 
and  the  distribution  of  individual  earnings  will  become  available  during  1997.  Most  EEA 
Member  States are expected  to have  submitted  their results by  the middle  of  1997 and  these 
will be published progressively in a separate volume for each Member State, including in each 
case an overview of the most important points. A series of brief reports will give  comparative 
information  as the  general  picture  emerges.  There will  later be  considerable  possibilities  for 
in-depth  multivariate  analysis, aided by the fact  that the data for  most Member  States will  be 
in  the  form  of  individual  records;  a  programme  for  such  work  will  be  defined  during  the 
course  of  1997.  In  1996  the  Commission  will  publish  a  study  which  focuses  on  the 
development of minimum wages during the period of  1980-1995,  on the relationship between 
the  minimum  wage  and  the  average  wage,  and  on  the  number  of  people  receiving  the 
minimum  wages  in  the  Member  States.  In  1994  the  Commission  launched  the  European 
Household  Panel  survey  for  a minimum  of three years  of  duration.  The  survey  consists  of  a 
sample  of  about  60  000  households  throughout  the  European  Union.  After  it  was  launched 
in  12 Member  States  in  1994,  Austria joined  the project  in  1995  and  Finland  in  1996.  The 
preliminary  results  relating  to  1994  are already  available  and  the  results  for  1995  should  be 

19 

available  at  the  end  of  1996.  In  addition,  Eurostat,  with  the  collaboration  of  the  national 
statistical  institutes,  is  currently  carrying out studies on the following  issues: 

1.  the  feasibility  for  a  European  Employment  Cost  Index  (EECI)  which  would  allow  a 
quarterly  follow-up  of  the  evolution  of  the  cost  of  employment  in  relation  to  industry, 
occupation,  gender,  age and size  of enterprise; 

2.  whether it is  appropriate to include wage variables in the EU Labour Force  Survey. 

It is also important to mention at this point the memorandum  on equal  pay for work of equal 
value [COM(94)6], which has been adopted by the Commission on 23 June 1994, with a view 
to define  the scope  and concept of  equal  pay for work  of  equal  value  and provide guidance 
on the criteria to be taken into  account in job  evaluation  and job  classification.  In addition, 
the  Commission  intends  to  adopt  a  code  of  conduct  on  equal  pay,  which  will  provide  all 
interested parties with  practical  guidance on measures to secure the implementation  of equal 
pay  in  all  aspects  of  the  pay  package,  as  well  as  guidance  for  the  elimination  of  sex 
discrimination  in  the job  classification  and evaluation  schemes  on which  pay  structures  are 
based.  This  idea  of  a  code  of  conduct  with  regard  to  the  treatment  of  weaker  groups  of 
workers has already  been floated  in the Opinion. 

The  matching of vocational  training arrangements 

With regard to the contribution towards a better matching of vocational training arrangements 
to the developing  needs  for  qualifications  and retraining,  the Commission  has  established  a 
policy  framework  to  support  the  actions  of  the  Member  States  to  develop  more  flexible 
systems.  The  Commission's  White  Paper,  "Teaching  and  Learning:  Towards  the  Learning 
Society",  whilst  recognising  that the responsibility  for  education  and training  rests with the 
Member States, puts forward some objectives for its development in Europe. The White Paper 
advocates  developing  new  ways  of  accrediting  skills  irrespective  of  how  they  have  been 
acquired,  to  give  unqualified  people,  who  for  example  have  work  experience,  access  to 
qualifications  outside  the  formal  training  system.  To  meet business  needs,  the White  Paper 
advocates closer relationships between education  and training establishments  and enterprises 
and the development of on-and-off-the-job-training at all levels, including in higher education. 
The  White  Paper  also  argues  for  a change  in  the ways  in which  expenditure  on  training  is 
viewed  in  taxation  and  accounting  terms  to  promote  investment  in  people  and  it  suggests 
exploring  new  ways  of  financing  training  through,  for  example,  training  accounts  and  new 
combinations  of  training  and  working  time.  During  1996  -  the European  Year  of  Lifelong 
Learning - a wide ranging debate has been launched aroun^ the issues in the White Paper. It 
is  also  proposed  that the LEONARDO  DA  VINCI  vocat  nal  training  programme,  be  used 
to support a number of experimental  pilot projects to test out some of the ideas in the White 
Paper.  In  the  context  of  the  European  Employment  Strategy,  the  Commission  has  urged 
Member  States  to  set  targets  for  the  educational/attainment  levels  of  their  workforce.  This 
would  provide  a commitment  to raising  skill  levels  in the medium  term,  including  those  of 
the more lowly  qualified. 

In addition, within the framework  of Objective 4 of the European  Social  Fund, which has as 
one  of  its  aims the  improvement  of  vocational  training  so  that it meets the  requirements  of 

20 

the  labour  market,  several  actions  have  been  taken.  First  of  all,  the  firms,  which  receive 
financing  under  Objective  4  for  the  readaptation  of  their  workers,  are  required  to  introduce 
a forward  looking element  into their training  plans in order to be able to make a  comparison 
between  the  profile  of  future job  requirements  and the  profile  of the  skills of  their  workers. 
Secondly,  the  first  axe  of  the  Community  Support  Framework  or  Single  Document  is  to 
review the labour market to highlight industrial  developments that will lead to changes in skill 
requirements  of the  labour  force.  One  way  of  achieving  this is by  special  studies  to  identify 
industrial  changes  that  will  lead  to  new  training  needs  of  the  labour  force.  In  some  cases 
Labour Market Observatories have been  instituted  to provide fast  feedback  of the changes  so 
that  the  necessary  alterations  can  be  made  to  meet  the  new  needs.  The  second  axe  of  the 
Community  Support  Framework  provides  the  necessary  training  for  the trainers  so that  they 
can  respond  to  these  new  needs.  The  third  axe  establishes  training  plans  which  will  ensure 
that  the  new  skills  are  passed  on  to  those  who  need  them. 

Furthermore,  the  mid-term  review  has  as  one  of  its  principle  aims  to  re-focus  the  training 
provided  to  better  meet  the  current  needs  and  future  needs  of  the  labour  market.  The 
Community  Support Frameworks are being constantly changed so that they can better  address 
the changing  needs. Finally,  the  Commission  has actively  encouraged  the Member  States  to 
involve the  social  partners  in the  training  process with  the aim  of continually  improving  the 
training  provided  by  ensuring  it  is  kept  abreast  of  the  changing  skills  needs. 

The  development  of  exchanges  across  the  Community  on  the practices  within  firms  with 
regard  to  remuneration 

With  regard  to  the  encouragement  of  the  development  of  exchanges  across  the  Community 
on  the  practices  within  firms  with  regard  to  remuneration,  reference  can  be  made,  in 
particular,  to the report  of the Expert  Working  Group  on Flexibility  and Work  Organisation. 
This  was  published  in  Social  Europe  Supplement  1/95.  The  Working  Group  recommended 
that  experiences  with  new  wage  systems  should  be  evaluated  at  the  European  level  and  the 
results  made  available  to  the  social  partners.  Good  examples  can  be  an  important  tool  in 
promoting  negotiations at industry  and  company  level.  Since wage  systems are very  strongly 
influenced  by  the  nature  of  production  and  size  of  firm,  the  evaluation  should  focus  on 
specific  new  experiences  which  can  be used  by  others. The Commission  will  be  considering 
with  the  social  partners  how  best  to  take  forward  this  recommendation. 

Further  studies  to  seek  to  promote  a  convergence  of  equitable  wage  policies  within  the 
Member  States 

With  regard  to  the  commitment  to  undertake  studies  to  seek  to  promote  a  convergence  of 
equitable wage policies within  the Member  States, the Commission  is carrying  out two  study 
projects.  The  first  project  is  an  Analysis  of  Wage Structures and Employment.  The  purpose 
of this project  is to improve and  enrich  the capacity  of analysis and expertise,  and  streamline 
the  cooperation  with  experts  in  accordance  with  the  commitments  agreed  at  the  European 
Council  at Essen.  A group  of  independent  experts  on  employment  has been  set  up  as  a  part 
of  this  process.  An  analysis  of  wage  structures  and  employment  will  be  carried  out  in  the 
project.  This  analysis  will  recall  the  main  elements  of the  problem,  give the  state  of  debate, 

21 

address  important  policy  responses  and  formulate  proposals  for  policies  and/or  further 
research. The final report of the study will be presented in 1996. The second project concerns 
the Mapping  of Low  Wages. The  project aims to  examine the extent  of  low  pay  in  selected 
European countries and to map the personal, job-related and household characteristics  of the 
low paid in different countries from new harmonised data sources; to examine the role played 
by  social  security  systems  in  supporting  the low  paid in different  countries; to  examine the 
implications  of minimum  wage legislation  for low pay, the wage bill  and social  security bill 
in  several  countries.  The project was started in March  1996 and will  be finalised in  August 
1997. 

3.2  Overview  of  Progress  in  Member  States 

It  was  clear  from  the  responses  to  the  questionnaire  that  some  Member  States  were  not 
comfortable with the definition  of an equitable wage. Basically it was thought to confuse the 
separate, though interrelated issues of a fair  wage and an adequate standard  of living. Clearly 
a fair  wage  is  an  important ingredient  in  achieving  an adequate  standard  of  living,  but it is 
unlikely  to be the  only  factor. 

In general  there were few  signs that the Commission's Opinion on an Equitable Wage acted 
as  a  catalyst  for  action  in  the  Member  States.  The  closest  relationship  observed  in  the 
responses was the introduction in some Member States of  legislation to protect the terms and 
conditions  of homeworkers, which was specifically  mentioned in the Opinion. However, there 
are significant  problems  in establishing  such  relationships because  of  the  complexity  of the 
economic  and social  environment.  It is highly  probable that changes  made by Member State 
governments  were  influenced  by  a  variety  of  factors,  one  of  which  might  have  been  the 
Opinion. 

The fact that most Member States felt that they already had the basic planks of the necessary 
legislation  in  place  should  be  seen  as  an  encouraging  factor.  Much  of  the  legislation 
surrounding equal  opportunities,  for example, dated from the  1970s and was directly  related 
to EC Directives,  although  there had been  some updating  of  provisions  since.  In fact  much 
of  the  concern  over  the  provision  of  an  equitable  wage  has  come  through  the  equal 
opportunities  route.  The  fact  that  more  women  than  men  tend  to  take  precarious jobs  (eg, 
part-time,  temporary  work,  etc)  indicates  that attention  to equal  opportunities  is  particularly 
important and there were encouraging signs in the Member States that other vulnerable groups 
were being brought  into the  protection  of the law. 

However,  even  in  the  more  regulated  labour markets there was  still  an  overwhelming  view 
that intervention  in wage  setting was not desirable and should be avoided where possible.  So 
even  where  national  minimum  wages  existed  they  tended  to  directly  affect  few  people, 
although their existence tended to influence the overall wage setting processes. This was also 
the case in the majority situation where collective agreements set minimum wages for  specific 
groups  of workers,  but here the direct  relevance  of  the minimum  wage  was  even  less. 

Transparency  in wage information remains a problem in all Member States. Whilst nationally 
generated  wage  statistics  existed  in  all  Member  States,  it was  usually  a case  of  them  being 
too  general  and  too  late.  Wage  information  related  to job  vacancies  has the virtue  of  being 
more immediate,  but its value is severely  limited by the low rate of notification  of vacancies 

22 

to the public employment service and the general  process of filling vacancies which often  by 
passes employment agencies completely.  The value of EU-wide data is also open  to question 
due to the wide  differences  in  the  standards  of  living,  in  wage  rates  and  in  non-wage  costs. 

The above discussion  tends to show that creating the right conditions  for  an  equitable  wage 
to be maintained will vary between Member States and the main objective  should be that each 
achieves  it in  its own  way  with the minimum  disruption  to economic  and  social  progress. 

3.3  Statistics 

Information  on  trends  in  the  structure  of  earnings,  and  changes  in  income  differentials  are 
needed  in  order  to  gauge  the  magnitude  of  the  effects  of  labour  market  and  legislative 
changes  since the Opinion  was issued.  Unfortunately  such  data is not readily  available on an 
EU-wide basis, and any  attempt to compile data across Member  States inevitably  involve the 
use of data from  a variety  of  sources, which  are not  necessarily  comparable.  However,  there 
are important  developments  that will  assist research  in the near future.  In  particular there are 
three  statistical  exercises  being  developed  by  Eurostat,  namely: 

Structure  of  earnings  statistics:  Eurostat  is  currently  co-ordinating  the  collection  of 
relevant data in each Member  State which will  identify  different  characteristics  of the 
sample  according  to  gender,  age,  length  of  service  (in  job),  occupation,  sector  and 
educational  attainments,  etc. Results  from  the  inquiry  are  expected  during  1997; 

The Household  Panel:  This  study  of  household  income  was  launched  in  1994  for  a 
minimum  of three years of duration. The survey  consists of a sample of  about 60 000 
households  throughout  the European  Union.  The  preliminary  results  relating  to  1994 
are already  available  and the  results for  1995  should  be  available  at the  end  of  1996. 

Study  of minimum  wages  in Europe:  This  special  study  is  due to  report  in  mid  1996 
and covers in the main those Member States with national  minimum wages, examining 
the  scope  of  the  minima  and  relationships  with  average  wages.  For  those  Member 
States  without  a  national  minimum  wage,  the  study  is  restricted  to  certain  sectors ad 
areas  of  collective  agreement. 

Appendix  B  contains  information  on  wage  developments  in  Member  States  on  the  basis  of 
both the Household Panel  and a direct request from  Member States which were able to supply 
information  on  wage  developments. 

3.4  Outlook 

The need to monitor  equitable wages will continue to be an important  issue for  the future  but 
it  cannot  be  isolated  from  the  other  factors  currently  shaping  labour  markets  in  the  EU. 
However, the relative importance of the issue is heightened by the fragmentation  of the labour 
market, drawing away from  traditional  forms of collective bargaining. In some Member States 
where established  collective bargaining arrangements are key to the setting of minimum  wage 
levels, for  example,  then  the question  arises as to what  will  happen  to these  provisions  if the 
bargaining  structure  breaks  down?  Without  these  collective  agreements  a  further  negative 

23 

effect  would  be  the  loss  of  a  valuable  source  of  information  on  wages  that  currently 
contributes  a good  deal  towards  transparency  in  this  area. 

However,  as  labour  markets  fragment  and  new  forms  of  working  begin  to  predominate,  the 
most  realistic  way  of  encouraging  an  equitable  wage  will  be  through  the  demonstration  of 
good  practice,  principally  at  the  level  of  the  employer.  This  suggests  a  positive  role  for  the 
Commission  in  fostering  this  use  of  experience  throughout  the  EU. 

For  the  Commission  it  is  possible  to  identify  a  number  of  key  areas  for  future  activity  to 
develop  these  themes.  These  are  as  follows: 

• 

• 

• 

• 

The  dissemination  of  good  practice  on  employment  conditions  in  general  and  wages 
in  particular  at  the  level  of  the  enterprise; 

Monitoring  the  development  of  continuous  training  and  its  impact  on  earnings  and 
value  to  the  employer  and  how  opportunities  to  pursue  it  are  handled  (eg,  through 
study  leave,  training  allowances,  etc); 

Dissemination,  every  four  or  five  years,  of  comparable  statistics  on  structure  of 
earnings in all Member  States, implementation  of a European  Employment Cost Index 
allowing  the  measurement  of low  wages trends,  and  yearly  publications  of  minimum 
wages  applicable  in  the  Member  States. 

Encouraging  the  development  of  national  vacancy  information  and  access  to  this  by 
all  parts  of  the  labour  market,  in  particular job  seekers. 

24 

Appendix A: 

Report  on  the  Right  to  Payment  of  Wages  on  Public 
Holidays  and  During  Illness 

2S 

Report on the Right to Payment of Wages on Public Holidays  and during Illness  on  the 
basis of a questionnaire sent to the Member States by the Commission  in January  1996. 

1. The  questions  and  the  overall  situation  in  the  Member  States: 

A The  Right  to Payment  of  Wages  on  Public  Holidays 

1.)  Do  employees normally  have  a right  to  be paid  in respect  of public  holidays? 

In Belgium,  Germany,  Greece, Spain,  Ireland,  Italy,  Luxembourg,  Austria,  Portugal,  Finland 
and Sweden employees have a legal right to be paid in respect of public holidays. In Denmark 
there  are  some  employees  that  are  excluded  from  this  right  and  in  the  United  Kingdom  the 
right  depends  on  the  terms  of  the  employee's  contract  of  employment.  In  France  and  the 
Netherlands  the  right  is  regulated  in  many  cases by  collective  agreements. 

2.)  If  " yes  ",  is  the  legal  basis for  this  right  enshrined  in  the  Constitution,  in  laws, 
regidations,  administrative provisions  or  legally  binding  collective  agreements? 

The normal  legal basis is a law and in addition to this there are other regulations or  collective 
agreements.  In  the  Netherlands  and  Sweden  this  right  is  only  enshrined  in  collective 
agreements  (in  the  Netherlands  in  collective  agreements  declared  generally  binding).  In 
Finland,  only  the  independence  day  as  a  public  holiday  has  a  statutory  basis.  Other  public 
holidays are regulated  by  collective  agreements. Holiday  entitlement  in the United  Kingdom 
is not generally  a statutory right but a matter covered by the contract of employment  between 
the  individual  employer  and  employee. 

3.)  Are  there categories  of  employees  who are  excluded  from  the right,  or  are  normally  not 
paid,  in respect  of public  holidays? 

In Belgium,  Germany,  Greece,  Spain,  Italy, Luxembourg,  Austria, Portugal, Finland  (subject 
to  one  small  exception:  see  4 below)  there  are  no  exceptions.  In  Denmark,  France,  Ireland, 
the Netherlands and  Sweden  certain groups of employees  are exclucui from  this  right  and in 
the United  Kingdom  it  depends  on  the  contract  of  employment. 

4.) Is  the right  to be paid  in respect  of public  holidays  subject  to completion  of a period  of 
service with  the  employer? 

In Belgium, Denmark,  Germany, Greece,  Spain, Italy, Luxembourg, the Netherlands,  Austria 
and  Portugal  there  is no qualifying  period.  In France  some workers  with  an  hourly  wage  are 
excluded  and  in  Ireland  there  is  only  a  period  for  part  -  time  employees;  in  Sweden  and 
Finland this can be regulated  in collective agreements and in the United Kingdom  the  answer 
to  this  question  depends  on  the  contract  of  employment. 

5.) Is the payment  always  made by the employer or by some other body? If the latter, which? 

In most Member  States the employer  has to pay; in Denmark there is  a special  scheme  for 
some  employees. 

6.) How  is the notion  of  "public  holidays  " defined and how many such days  are  there? 

In no Member State is there a clear legal definition  of the term "public holiday", but the days 
are listed.  In Belgium  there are  10; in Denmark  9  1/2; in Germany  10 -  13; in Greece  10 -
12; in Spain  14; in France  11; Ireland 9; in Italy  10; in Luxembourg  10; in the Netherlands 
7; in Austria 13; in Portugal  12 -  14; in Finland  12; in Sweden  11 and in the United Kingdom 
8 - 10  public holidays. 

7.) Are such holidays paid  in addition  to paid  annual leave, within the meaning of Article  7 
of the working time directive  (  93/104/EC )? 

In  the  United  Kingdom  the  answer  depends  on  the  contract  of  employment.  In  all  other 
Member  States the  public  holidays  are paid in addition to annual  leave. 

8.) Is  the question of  the right  to payment  of wages  on public  holidays  an  issue of current 
public  debate  in the Member  States? 

Only  in Ireland,  where  holiday  legislation  generally  is under review  at present. 

B  The Right to Payment  of  Wages  during Illness 

1.) Do  employees normally  have  a  right  to be paid  in respect  of periods  when they are  ill? 

Normally  employees  have the  right to be paid during illness. 

2.) If  "yes  ",  is  this right  enshrined  in social  security  law,  in employment law,  or  in some 
other laws, regulations, administrative provisions  or legally binding collective  agreements or 
elsewhere? 

This right is  enshrined  in  employment  laws,  social  security  laws  and collective  agreements. 

3.) Are employees paid  their full  wages  or some percentage  or at  aflat  rate? 

In Belgium,  Denmark,  Italy,  Luxembourg,  Austria and Finland  employees  receive  their  full 
wage.  In all  other countries payments are often  at a lower rate either as a percentage of their 
wage  (in  Germany,  in  Greece,  in  Spain,  in  France,  in  the  Netherlands,  in  Portugal  and  in 
Sweden)  or at a flat  rate (in  Ireland  and in.the United Kingdom). 

2* 

4.) Does  the basis  of  calculation  change  over time and  is there a  limit  to  the period  of  time 
for  which payments  can  be  made? 

In all Member States except Ireland there is a limit to the period of time for which payments 
can be made. In Ireland there is no limit provided that the employee has paid social insurance 
contributions  for at least  5 years. 

5.)  Are  there  categories  of  employees  who  are  excluded  from  the  right  or  are  normally  not 
paid  in  respect  of  illness? 

In the United Kingdom  employees over 65, employees with a fixed term contract of less than 
3  months,  employees  who  earn less than £ 61  per week  and employees who are involved in 
a  trade  dispute  are  excluded  from  this right. Employees  who  cannot  get  statutory  sick  pay 
from  their employer  may qualify  for Incapacity  Benefit  from the  State. In Finland  (usually) 
and Sweden the first day, in France and the United Kingdom the first three days of illness are 
not paid.  In Greece  only  half the wage  is  paid in respect of  an illness  lasting  1 -3  days. In 
the other Member  States there are no exclusions. 

6.)  Is  the  right  to  be paid  in  respect  of  illness subject  to  completion  of  a period  of  service 
with  the  employer? 

In  Germany  (on  the  basis  of  statutory  law),  Luxembourg,  the  Netherlands  and the  United 
Kingdom  there is no qualifying  period,  in Austria there is such a period for manual workers 
and in Belgium,  Greece, France, Ireland (for the health insurance organisation),  and Sweden 
(for  only  a few  cases)  for  manual  workers  and  employees.  In Finland,  the  employer  is  not 
obliged  to pay  wages  in respect  of  illness  if the employment  relationship  has lasted  for  less 
than one month. However, collective agreements often contain more favourable provisions for 
the employees. 

7.) Is  the payment  always  made by the employer or by some other  body? If  the latter,  which? 

In all Member States except France, Ireland and in some circumstances in Italy the employer 
has to pay the wages  during the initial  period; afterwards it is the responsibility  of the health 
insurance  organisation. 

8.)  Where the  employer  pays,  is he  reimbursed  from  a social  security  or similar  fund? 

In  Germany  and Austria the  employer  is  reimbursed  for  the  payment to  manual  workers in 
many  cases;  in  Luxembourg,  Finland,  Sweden  and  the  United  Kingdom  in  some  cases.  In 
Belgium,  the Kingdom  of Denmark and the Hellenic Republic there is no reimbursement. In 
France,  Ireland  and  Italy  (for  manual  workers)  in  most  cases  it  is  the  social  insurance 
organisation  which  pays. 

9.)  Is  the  question  of  the  right  to payment  of wages  in respect  of  illness  an  issue  of  current 
public  debate  in  the Member  States? 

In Denmark  employees  make  regular demands  for  improvements  in existing  schemes under 
collective agreements. In Germany the Act on Payment of Wages during Illness was amended 
on  1 October  1996. All  employees and manual workers receive in principle only 80 % of the 
wage instead of  100%. This amendment is subject to a controversial  public debate. In Sweden 
there have been substantial  changes in the system of sick benefits - including the introduction 
of the Act on Sick  Pay, the introduction  of the so called waiting  day - a day without pay or 
compensation  -  and  the  reduction  of  compensation  levels.  In  the  United  Kingdom,  the 
Department of Social  Security  has issued a consultation document which invited views from 
all sides of industry  on a proposal to exempt employers from paying and operating  Statutory 
Sick  Pay  where  they  pay  contractual  remuneration  (including  occupational  sick  pay)  at or 
above the Statutory  Sick Pay  rate to employees who have a day of incapacity  for work.  The 
United  Kingdom  says  that  employee's  right  would  be  fully  protected  by  retaining  the 
underlying  liability  for  Statutory  Sick Pay. 

2.  The  Right  to  Payment  of  Wages  on  Public  Holidays  and  during  Illness  in  Different 
Member  States: 

A The Right to Payment  of  Wages  on  Public  Holidays 

Belgium 
There  are  10  public  holidays  (1.1.,  Easter  Monday,  1.5.,  Ascension,  Whit  Monday,  21.7., 
15.8.,  1.11.,  11.11.,  25.12.).  If a public holiday  is a Sunday another day has to be free. Each 
employee  receives the  same wage  on these  days,  provided that he has not been  absent from 
work  without justified  ground  the  day  before  and  after  the  public  holiday.  Working  on  a 
public holiday  is  allowed  if  it is  allowed  on  Sunday. 

Denmark 
There are 9  1/2  public holidays  (1.1.,  Maundy Thursday,  Good Friday, Easter Monday,  1.5., 
12.5.,  Ascension,  5.6.-  half  public  holiday,  25.12.,  26.12.).  Employees  who  are  paid  on  a 
monthly  basis  receive  the  full  wage.  Other  employees  covered  by  collective  agreements 
normally get 3.5  %  of the wage for each public holiday.  Employees who are not covered by 
collective  agreements  have  no  legal  right to be  paid  in respect  of  public holidays.  Work on 
public holidays  is  allowed. 

Germany 
Only  the  Day  of  Unity  (3.10.)  is  fixed  by  a Federal  Law.  The  other  public  holidays  are 
regulated differently  by the single Federal  States. There are between 9 and  13 public holidays 
per  year.  The  1.1.,  Good  Friday,  Easter  Monday,  1.5.,  Ascension,  Whit  Monday,  25.12., 
26.12.  are public  holidays in  each federal  state. Each employee  gets the wage  on these  days 
if  he  hasn't  been  absent  from  work  the  day  before  and  after  the  public  holiday  without  a 
justified  ground  (  § 2  Entgeltfortzahlungsgesetz  ). 

Greece 
There are 6 public holidays (25.3., Easter Monday,  1.5.,  15.8., 28.10., 25.12.) for everybody. 
In addition to these days the Minister of  Social  Affairs  can determine 5 days a year as public 
holidays. Each employee gets the wage on these days if he hasn't been absent from  work the 

2°\ 

day before the public  holiday  without justified  ground. 

Spain 
There are 12 fixed public holidays (1.1., 6.1., 19.3. or 25.7., Maundy Thursday, Good Friday, 
1.5.,  15.8., 12.10.,  1.11., 6.12., 8.12., 25.12.)and two optional public holidays.  Whenapublic 
holiday falls on a Sunday the following Monday  is free.  Each employee gets the same wage 
on these days as if  he  had worked. 

France 
The right for payment  on the  1 st of May is enshrined  in article L. 222  -  7 Code du travail. 
Employees with a monthly wage get also the wage on the  1 st of May.  Other employees  get 
the wage  if they  have been  employed  for at least 3  months and have been  working  for  200 
hours during the last 2  months and haven't been  absent from  work the day before  and  after 
the  1 st of May  without  a justified  ground.  There are  11 other public  holidays  enshrined  in 
Article L.  222  -  1 of  the  Code  du travail,  but it  depends  on  collective  agreements  whether 
employees  get their wage  or not. 

Ireland 
There are 9 public holidays (1.1.,  17.3.,  Easter Monday,  the first Monday  in May,  June and 
August, the last Monday  in October,  25.12., 26.12.). When a public holiday  falls  on Sunday 
another day is free. Full time workers get the full  wage on a public holiday; regular part-time 
workers  have  to  complete  13  weeks  and  non  regular  part-time  workers  have  to  work  120 
hours to get this right. Outworkers,  seafarers,  lighthouse  or lightship  employees, fishermen 
and relatives  of the  employer who  live  in his house  are excluded  from  this  right. 

Italy 
There are two  national  public  holidays  (25.4.,  1.5.)  and  8  other public  holidays  (1.1.,  6.1., 
Easter Monday,  15.8.,  1.11.,  Immaculate  Conception,  25.12.,  26.12.).  There  are also  public 
holidays fixed by collective agreements. Each employee receives the same wage on these days 
as if he  had worked. 

Luxembourg 
The  Law  of  10.4.1976  establishes  New  Year's  Day,  Easter Monday,  1.5.,  Ascension,  Whit 
Monday, 23.6.,  15.8.,  1.11., 25.12., 26.12. as public holidays. When a public holiday falls on 
Sunday  another  day  is  free.  Each  employee  gets  the  wage  on  these  days  if  he  hasn't  been 
absent from work the day before  and after the public holiday without justified  ground  or for 
3  days  within  25  working  days  before  the  public  holiday.  Work  on  public  holidays  is 
permitted. 

Netherlands 
There  are 7  public  holidays  (1.1.,  Easter Monday,  30.4.,  Ascension,  Whit  Monday,  25.12., 
26.12.)  per year  and  the  5  th  of  May  every  five  years.  There  is  no  law,  but  almost  in  all 
collective agreements there is a provision for payment of wages on public holidays. This  right 
can also be a part of  the contract  of  employment. 

Austria 
There  are  13  public  holidays  (1.1.,  6.1.,  Easter  Monday,  1.5.,  Ascension,  Whit  Monday, 
Corpus Christi,  15.8., 26.10.,  1.11.,  8.12., 25.12., 26.12.) for everybody  and some for special 

groups.  Working  on  a  public  holiday  is  not  allowed,  subject  to  many  exceptions.  Each 
employee  receives the  same  wage  on  these days as if  he had  worked  (=  principle  of  loss  of 
wages,  § 9 par.  1 Arbeitsruhegesetz  ). 

Portugal 
There are 12 fixed public holidays (1.1.,  Good Friday, 25.4.,  1.5., Corpus Christi,  10.6.,  15.8., 
5.10.,  1.11.,  1.12.,  8.12.,  25.12.)  and two optional  public holidays  (Shrove Tuesday  and  one 
day  for  each town). Each  employee gets the same wage on  these  days as if  he  had  worked. 

Finland 
Independence  Day  (6.12.)  and  the  1st of May  are legal  public holidays. Employees  who  are 
paid  weekly  or monthly  are also paid  for  public holidays. Employees  with  a daily  or  hourly 
wage get the wage for  Independence  Day  if they have been  employed  for  at least  6  working 
days. There are 9 further  public holidays (1.1., 6.1., Good Friday, Easter Monday,  Ascension, 
Midsummer  Day,  1.11.,  25.12.,  26.12.)  laid  down  by  Church  Law.  Payments  in  respect  of 
these  public  holidays  is  determined  by  collective  agreements. 

Sweden 
There are  11 public holidays  (1.1.,  6.1., Good Friday, Easter Monday,  1.5.,  Ascension, 23.6., 
24.6.,  1.11.,  25.12.,  26.12.).  6  of  these  days  can  never  be  on  Sunday.  There  is  no  law,  but 
collective agreements for  about 85 % of all employees govern  the right to payment of wages 
on  public  holidays. 

United  Kingdom 
In  England  and  Wales  there  are  8  bank  and  public  holidays  (1.1.,  Good  Friday,  Easter 
Monday,  the  first  and  the  last  Monday  in May,  the  last Monday  in  August,  25.12.,  26.12.), 
in Northern Ireland  10 as for England and wales plus  17 March and  12 July. In Scotland  there 
are 8 (1 January,  2 January,  Good  Friday, first and  last Monday  in May, the first Monday  in 
August, 25 and 26 December). It is traditional  for many employees to have holidays on these 
days.  But  there  are  regional  variations  and  in  Scotland  in  particular  the  public  and  business 
community  tend to  observe various local  and traditional  days instead.  Entitlement  to  holiday 
pay  generally  depends  on  the  contract  of  employment  between  the  individual  employer  and 
employee. 

B  The  Right  to  Payment  of  Wages  during  Illness 

Belgium 
Manual  workers get this right after  one month of employment;  employees get it after  the trial 
period.  During  the  first  7 days  of  an  illness all  employees  receive the full  wage.  Afterwards 
manual  workers  get  85.88  %  and  non  manual  workers  86.93  %  for  further  three  weeks. 
During  the  last  two  weeks  the  health  insurance  organisation  has  to  pay  60  %  and  the 
employer  has to  pay  the  rest.  In  some  cases the  employer  is  reimbursed. 

Denmark 
The  employer  has to  pay  the  full  wage  during  illness  for  14 days.  Afterwards  the  state  pays 
sickness  benefits  which  consist  of  about  90 %  of  the  wage. 

3\ 

Germany 
All  employees  have  the  right  to  80  %  of  their  wage  for  at  least  6  weeks  (§  3 
Entgeltfortzahlungsgesetz). By renouncing one day of their annual leave the employees obtain 
the  right  to  full  wage  during  5 days  of  illness.  During  the  firts  4 weeks  of the  employment 
relationship the employees have no right to payment of wages during illness. For the  majority 
of  employees,  collective  agreements  contain  more favourable  provisions.  Small  firms  (max. 
20  workers)  can  be  reimbursed  with  regard  to  wages  paid  to  manual  workers  during  their 
illness. 

Greece 
After  having been employed for  10 days employees receive about 70 % of the wage from  the 
employer  during  illness. The  payment  lasts for  13 days  and becomes  26  days  after  one year 
of  employment.  In  case of illness  lasting between  one and  three  days the employer  only  has 
to  pay  half  the  wage. 

Spain 
In  Spain  all  employees  get  60 %  of the  wage  from  the  health  insurance  organisation  for  20 
days  and afterwards  75 %. The first 3 days of each  illness are waiting  days.  Sometimes there 
are  collective  agreements  with  sickness  benefits  paid  by  the  employer. 

France 
Employees  covered  by  the  law  78/49  of  19.1.1978  get  90  %  of  the  wage  for  30  days  from 
the employer  when they  become  ill  after  having been  employed  for  at least  3 years. After  30 
days they get 66.6 % for  a further  30 days. But many  employees who  are not covered by this 
law  get  about  50  %  of  the  wage  from  the  health  insurance  organisation.  There  are  also  3 
waiting days. The right to payment from  the health insurance organisation  depends on having 
worked  for  at  least  200  hours  during  the  last  three  months.  Within  three  years  the  health 
insurance  organisation  pays  sickness  benefits  only  for  360  days. 

Ireland 
In  Ireland  the  social  insurance  organisation  has to  pay  a flat  rate  during  illness. There  is  no 
limit  for  employees  that  have  paid  social  insurance  contributions  for  at  least  5  years;  for 
others the right to payment of wages during illness is limited to one year.  The first three days 
of  each  illness  are  not  paid. 

Italy 
The  right  to  payment  of  wages  during  illness  is  enshrined  in  article  2110  of  the  civil  code. 
Further  regulations  for  employees  are  enshrined  in  collective  agreements.  The  employer  has 
usually  to  pay  the  full  wage  during  illness  for  employees  and  the  health  insurance 
organisation  has  to  pay  about  60  %  of  the  wage  for  manual  workers.  Manual  workers  have 
3  waiting  days.  But  many  collective  agreements  reduce  the  differences  between  employees 
and  manual  workers. 

Luxembourg 
The employer  has to  pay the full  wage during the month  during which  the illness has  started 
and  the  following  three  months.  If  the  employer  does  not  pay,  the  health  insurance 
organisation  has  to  pay  in  advance. 

3Z 

Netherlands 
All  employees  have the right to payment of 70 % of the wage during illness. The  employer 
has to  pay  during  52  weeks.  In  a few  cases  there is  a reimbursement  to  the  employer.  In 
most collective  agreements there is a provision  for a supplement to the statutory  level. 

Austria 
This  right  is  enshrined  in  §  8  Angestelltengesetz  for  non  manual  workers  and  in  §  2 
Entgeltfortzahlungsgesetz  for  manual  workers.  Non  manual  workers  have  this  right  for  6 
weeks,  manual  workers  for  4  weeks.  They  get  the  full  wage.  During  the  first  14  days  of 
employment manual workers do not have this right. The duration of the payment depends on 
the period of service with the employer.  In the case of non-manual workers, this increases to 
8/10/12  weeks  after  5/15/25  years  respectively,  and  to  6/8/10  weeks  after  5/15/25  years 
respectively  in the  case  of  manual  workers.  In the case  of  manual  workers the  employer  is 
reimbursed  80 % of  the payment made. 

Portugal 
In Portugal the health insurance organisation has to pay 65 % of the wage during  155 weeks. 
If an employee  has to  stay  in a hospital  or has a family,  he gets  100 % of the wage. 

Finland 
After having been  employed for at least one month all  employees  have the right to payment 
of wages during illness. They get the full  wage for seven working days starting from the first 
day  after  the  day  of  reporting  to  be  sick.  This  right  may  be  extended  by  collective 
agreements.  After  this  period  and  after  one  waiting  day  all  employees  receive  70  % of  the 
wage from  the health  insurance  organisation. 

Sweden 
All  employees get  75  % of the wage  during the first 14 days from  the employer.  Each first 
day  of  illness  is  a  waiting  day.  Afterwards  they  get  75  %  from  the  health  insurance 
organisation and  10 % from the employer. There is only a reimbursement for small firms that 
have a special  insurance  for this purpose. 

United  Kingdom 
The right to  payment  from  the  health  insurance  organisation  is  enshrined  in  Part XI  of  the 
Social  Security  Contributions  and  Benefits  Act  1992  and  in  the  Statutory  Sick  Pay 
Regulations  1982.  Statutory  sick  pay  is  payable  at a flat rate of  £  52.5  per week.  The first 
three days  of  each  illness  are not  paid.  In addition,  employees  may  be  entitled  under their 
contract of  service with  their employer to  occupational  sick pay. 

3.  Conclusion: 

The  principle  of  the  payment  of  wages  on  public  holidays  and during  illness  is  established 
in  all  Member  States,  though  there  are some  differences  in  how the  legislation  operates.  In 
some Member States some (relatively  small) categories of employees are excluded from these 
rights.  In no Member State is there a current public debate on the issue of payment on public 
holidays,  but  in  Ireland  the  holiday  legislation  is  currently  under  review.  In  a  number  of 
Member  States,  i.e.  in  Denmark,  Germany,  Sweden  and the  United  Kingdom,  the  issue  of 
payments  during  illness  is  discussed  as  part  of  the  wider  debate  on  financing  the  social 
security  system. 

Appendix B: 

Statistics 

2>Mr 

Statistics 

1.  Introduction 

The purpose of this Statistical  annex is to review the data which are available on the distribu 
tion  of  wages  in  Member  States  of  the European  Union  and  how  this  has  tended  to  change 
over recent years. Its further  aim is to indicate the lack of information  which at present exists 
on these issues in the Union. It has been  prepared with the assistance of the Statistical  Office 
of the European  Communities  (Eurostat). 

Despite  the increasing  interest from  both  an economic and  social  perspective  in the  distribu 
tion  of wages in the Union  and the extent to which  it is becoming more or less unequal  over 
time, the data available are extremely  limited  and, to a large extent,  not comparable  between 
countries.  Although  information  is  collected  on  a  regular  basis  by  Eurostat  on  wages  and 
labour costs in private  sector  activities across the Union  (the Labour Cost  Survey,  conducted 
every four  years)  and  on changes in hourly  and monthly  earnings of manual  and  non-manual 
workers in manufacturing  and certain service activities (compiled on a six-monthly basis), this 
is  concerned  with  averages  rather  than  with  how  wages vary  between  individuals. 

The only data at present available which are approximately  comparable between Union  coun 
tries  are from  the new  European  Community  Household  Panel  (ECHP) which  was  set up by 
Eurostat  in  1994,  in  part  to  provide  details of  household  income  and  of  the  relative  import 
ance of different  sources of income, including wages and salaries, in Member States (although 
so  far  the three  new  Member  States  are  not  included).  Data,  however,  are  only  available  at 
the moment from  the first wave (the survey of the sample of households included in the Panel 
conducted  in  Spring  1994)  and,  therefore,  effectively  relate  to  the  position  at  one  point  in 
time. 

While  these  data  are  analysed  below,  they  indicate  nothing  about  how  the  distribution  of 
wages is changing  over time, which  is a key point of interest. For this, there is no  alternative 
to using  national  sources  of  data,  despite the inevitable  problems  of  comparability  to  which 
this gives rise. These  data have been  compiled  by  means of  a direct approach  to the  national 
Statistical Offices  in each of the countries, requesting the following  details for  1985, 1990 and 
1995: 

-  the  distribution  of  monthly  earnings  from  employment  by  decile  of: 

-  full-time  male  employees  in  the total  economy,  industry  and  services 
-  full-time  female  employees  in  the total  economy,  industry  and  services 
-  the  hourly  rate  for  each  decile  where  available; 

-  the  distribution  of  hourly  earnings  from  employment  by  decile  of: 

-  part-time  male  employees  in  the total  economy,  industry  and  services 
-  part-time  female  employees  in  the total  economy,  industry  and  services. 

In practice, only 7 Member States - Germany, France, Italy, the Netherlands, Austria, Portugal 
and the UK  - were  able to supply  any  of these data at all. Two  of these countries  -  Germany 
and  Austria  -  could  only  provide  data  for  a  single  year  (1990  for  Germany  and  1995  for 

3^ 

Austria)  and  then  only  for  a  restricted  set  of  variables  (for  full-time  male  and  female 
employees  but  not  for  part-time  employees  in  both  cases  and  for  Industry,  Wholesale  and 
Retail  trade, Banking  and Insurances in the case of  Germany).  One country,  Italy,  was able 
to  supply  data  only  for  1985  and  1990  and  then  only  for  full-time  employees  (part-time 
workers  account  for  a relatively  small  share  of  employment  in  Italy),  and  another,  France, 
could provide data only for  1986 and  1992. Portugal  was able to supply figures for all three 
years (though for  1994 rather than  1995), but only  for full-time employees (as in Italy, part-
time  workers  account  for  only  a  small  proportion  of  employment).  None  of  the countries, 
except Portugal,  supplied  data for the distribution  of hourly earnings of full-time  employees 
as well  as monthly  earnings. (These data are also collected routinely in the UK as part of the 
New Earnings Survey, though given the lack of data for other countries, it was not considered 
worthwhile  to collect  these for  present  purposes.) 

This means that a complete set of data for three years (though not necessarily  for the precise 
ones  specified)  is  available  for just  two  countries  -  the Netherlands  and the  UK.  For  most 
countries,  the data cover only  employees  in the private sector and not the public sector and, 
in some  cases,  only  a limited  number of  service  activities  (in  Germany,  only  wholesale and 
retail  distribution,  banking  and  insurance,  in  France,  these  sectors  plus  business  services). 
Moreover,  since  the  data come  from  different  sources  in different  countries  (administrative 
sources, such as social security records, in some cases, business surveys in others), this further 
limits their direct  comparability  between  Member States. 

An  additional  featuie  affecting  comparability,  as  well  as  any  interpretation  placed  on  the 
results  of  the  analysis,  is that the  data in  most  cases  relate to  employees  of  all  ages,  young 
people  who  may  have been  working  only  for  a relatively  short time  as well  as people with 
experience.  In practice,  the former  are likely  to be on lower rates of  pay than the latter, the 
extent  of  the  difference  varying between  different  sectors  of  activity  according  to the value 
attached to experience (which  is likely  to be greater the higher the skills required by the job 
performed). This is clearly liable to distort comparisons between countries, as well as changes 
over time insofar as the age composition  of the work force is changing. Indeed, the declining 
numbers  of  young  people  entering  employment,  bQth  because  of  demographic  trends  and 
because  of  the tendency  of  these  to remain  longer in  education,  might be  expected  of  itself 
to be associated with a reduction in the inequality of the distribution of wages insofar as there 
are fewer  workers  on youth  rates  of  pay.  In  practice,  however,  this  could  well  be  offset  by 
other developments,  such as the tendency  for the skill  content of jobs and the  qualifications 
demanded  to increase. 

Although the data available are likely to be most informative for indicating changes over time, 
the fact that a time series exists only for a few countries clearly limits the analysis which can 
be  undertaken  on  this.  This  annex,  therefore,  is  largely  concerned  with  presenting  the data 
rather than interpreting  them  in  any  great detail. 

2.  Measures  of  wage  dispersion 

To assess  how the distribution of wages  has changed  over time or how it compares between 
different  groups in the labour market (between men and women employed  full-time),  as well 
as between  different  countries  (though  as emphasised  above  the  nature of  the  data  severely 
restricts how far this is meaningful  in practice), the approach adopted here is to construct, in 
the first  instance,  what are known  as  'Lorenz  curves'.  These indicate the percentage  of total 

3fo 

earnings  in  the  economy  or  in  a  particular  sector  going  to  a  given  percentage  of  the 
population (they show, for example, what proportion of male full-time  employees receive 50% 
of  the  total  earnings  received  by  this  particular  section  of  the  work  force).  More  formally, 
they  show  the  relationship  between  the  cumulative  percentage  of  employees  in  each  of  the 
groups distinguished, ranked in terms of the earnings they receive, and the cumulative percen 
tage of  total  earnings  of  that  group  which  they  account  for.  If the  cumulative  percentage  of 
employees is plotted against the vertical (or Y) axis and the cumulative percentage of earnings 
against  the  horizontal  (or  X)  axis,  then  the  more  concave  the  curve,  the  more  unequal  the 
distribution  of  wages.  (This  can  be  readily  envisaged  by  imagining  two  distributions,  one 
where  50% of  employees  receive  only  20% of total wages and the other  where  50% receive 
40%  of  the  total.)  If  earnings,  on  the  other  hand,  were  to  be  equally  distributed  between 
employees, then  the relationship  would  be a straight-line at 45 degrees to both  axes  (20% of 
employees  would  receive  20%  of  wages,  50% would  receive  50% and  so on). 

Instead of directly  examining curves, the degree of inequality in the distribution  of wages can 
be measured  by  a summary  statistic known  as the Gini  coefficient.  This,  in  effect,  measures 
the  curvature  of  the  Lorenz  curve.  More  precisely,  it  is  defined  as  the  ratio  of  the  area 
between  the curve and  the 45 degree line to the total  area above the 45 degree  line. It,  there 
fore,  varies  between  0,  when  there  is  perfect  equality  in the  distribution  of  earnings  (ie  the 
Lorenz  curve  corresponds  to  the  45  degree  line),  and  1, when  there  is  perfect  inequality  (ie 
a  single  individual  receives  all  of  the wages).  An  increase in  the  Gini  coefficient,  therefore, 
indicates that the wage distribution  is becoming more unequal  and a decrease that it is becom 
ing  more  equal. 

This,  however,  is true  only  in  some  average  sense. In other  words,  a given  Gini  coefficient, 
since it is summarising  the  degree  of inequality  of the distribution  as a whole,  is  compatible 
with  curves  of  different  shapes  - with  ones which,  for  example,  are more  unequal  at the  top 
or bottom  end of  the  distribution.  The fact  that the coefficient  does not  change between  two 
years  does not  necessarily  signify,  therefore,  that the distribution  has not  changed,  except  in 
some overall  sense. It could  have become either more unequal  at the top or the bottom  of  the 
wage  scale.  This implies  that,  though  the Gini  coefficient  is a useful  summary  measure,  it is 
not really  a substitute for  examining the  shape of the Lorenz curve and  how  this is  changing 
over  time.  In  consequence,  this  annex,  as well  as  presenting  values  for  the  Gini  coefficient 
for different  groups of employees  in the different  Member States, contains a large number  of 
graphs  illustrating  the  wage  distributions. 

In  addition  to  the  Gini  coefficient,  the  other  measure  of  wage  dispersion  which  is  used 
focuses  specifically  on  the bottom  end  of  the wage distribution  which  is of  major  interest  in 
the  context  of  the  present  report.  This  is  the  wage  of  the  bottom  decile  of  employees  as  a 
percentage  of  average wages  of the group  in question.  If this were 60% of  avearge  earnings, 
for  example,  it  would  indicate  that  10%  of  wage  earners  received  60%  or  less  of  average 
earnings. 

3.  Wage  distribution  in  selected  Member  States 

For the  7 Member  States  for  which  data  have been  provided,  Lorenz  curves  are plotted  here 
showing  the  distribution,  first,  of  the  monthly  earnings  of  full-time  male  and  female 
employees,  where  possible  in  the  total  economy,  industry  and  services  and  for  each  of  the 
years  for  which  statistics  are  available.  (In  practice,  the Lorenz  curve  is  not  shown  here  for 

2* 

Germany  because of  doubts about the representative  nature of  the data,  as noted  below.) In 
each case, the two summary  measures of dispersion,  or inequality,  described  in the previous 
section  are calculated  for all  of  the wage  distributions illustrated  in the graphs. 

What  emerges  from  this  analysis  is  that for  all  Member  States for which  data are  available 
for more than one year,  the distribution  of wages  appears to have become wider over time, 
with the partial exception of the Netherlands over more recent years. This is the case for both 
men  and  women  employees  and,  for  the  most  part,  for  earnings  in  industry  and  services 
considered separately (the only exceptions being the Netherlands for the economy  as a whole 
since  1990  and France  for  services).  At the  same time,  however,  the  extent  of  the  increase 
differs  significantly  between  countries  as well  as between  sectors. 

A  general  point  to  emphasise  in  this  regard,  when  interpreting  movements  in  the  measures 
of dispersion, is that, under normal circumstances, the distribution of earnings tends to change 
relatively  slowly  over time, partly because of pressure (in the form  of  collective  bargaining, 
for example, or established pay scales in most organisations above a certain size) for uniform 
ity in rates of pay increase and inertia against significant  changes in relative wages.  Signifi 
cant changes  in  distribution  would,  therefore,  be expected  only  over  a number of years. 

The  other general  features  of  the  data are, first, that the distribution  of  earnings  in  services 
seems  to  be  wider  than  the  distribution  in  industry  for  both  men  and  women,  perhaps 
reflecting  the  wider  range  of  skills  covered  by  service  activities  than  industrial  ones.  Over 
time, as the share of employment in services increases, this could lead to a widening of wage 
dispersion  in the economy.  Secondly,  the distribution  of earnings for men working  full-time 
appears to be wider than for women. 

Full-time  male  employees 

Starting with the three countries - the Netherlands, Portugal  and the UK - for which  data are 
available  for  each  of  the three years  1985,  1990  and  1995  (or for  years which  are adjacent 
to these),  all  show  a widening  of the distribution  of  monthly  earnings of  men working  full-
time in the economy  as  a whole  as well  as in  industry  and services  taken  separately.  In the 
Netherlands, where the distribution of wages seems to have been less unequal at the beginning 
of the period (although  as noted above comparisons need to be interpreted with caution), the 
widening  in  the  distribution  was  very  much  smaller  than  in  the  other  two  Member  States 
(Graph  1), the Gini  coefficient  for the economy  as a whole increasing from  0.187  in  1985 to 
0.193  in  1990 and 0.196  in  1994 (Table  1), while the bottom  10% of wage  earners received 
less than 62% of the average wage in  1994 as opposed to less than 65% 9 years earlier (Table 
2).  For men working full-time  in industry, the increase in wage inequality  was more marked 
than in the rest of the economy between  1985 and  1990, but the distribution remained largely 
unchanged between  1990 and 1994, while for services it widened at much the same (low) rate 
between  both  pairs of  years  (Graphs 2  and 3). 

In Portugal,  the  wage  distribution  for  full-time  male  employees  widened  significantly  both 
between  1985 and  1989 and between  1989 and  1994 (Graph 4). In  1985, the Gini  coefficient 
for such workers was 0.287  over the economy  as a whole; by  1989, it has risen to 0.305  and 
by  1994, to 0.343.  At the same time,  the bottom  10% of employees earned  less than 43% of 
the average wage in  1994, whereas in  1989, they had earned 46!/2% and in  1985  51%. In this 
case,  the widening  of  the  wage  distribution  was  greater  in  industry  over  the  period  than  in 

3& 

services, though as in the Netherlands, the dispersion of earnings remained wider in the latter 
sector than the former  (Graphs 5 and 6). 

In the UK,  the widening  of  the wage  distribution  was almost  as large over a similar period 
(Graph  7),  though  in  this case the figures relate to full-time  men on adult rates of  pay and, 
therefore,  unlike for the other two countries, exclude young people on lower pay rates. Here, 
the Gini coefficient  for men working full-time over the economy  as a whole (excluding those 
employed  in the public sector as in the other cases) went up from  0.239  in  1986 to 0.260 in 
1990 and, at a somewhat slower rate, to 0.275  in  1995. The bottom  10% of wage earners in 
this case received less than 48'/2% of the average wage in the latter year as opposed to 53'/2% 
in  1986.  As  in  Portugal,  the  wage  distribution  is  wider  in  services  than  in  industry  and 
widened  by  more over the period (Graphs  8 and 9). 

In the other two countries for which  data are available for  more than a single year, the dis 
tribution of earnings of full-time  male employees also widened  (Graphs  10 and  11).  In Italy, 
the Gini  coefficient  for the  economy  as a whole  rose from  0.203  in  1985  to  0.236  in  1990, 
while in France, it increased from 0.248 in  1986 to 0.262 in  1992. In the former, the widening 
of  wage  distribution  was  more  marked in  industry  than in  services  (Graphs  12 and  13), the 
overall  widening  in the dispersion  of  earnings  partly  reflecting  the  relative  shift  in  employ 
ment from the former to the latter. This effect  was even  more pronounced  in France,  where 
the distribution  of  wages  became  less  rather than more unequal  in services  even though the 
degree  of  inequality  increased  over the  economy  as a whole,  as well  as in industry  (Graphs 
14 and  15). 

For the remaining  two  countries  for  which  data exist,  these  relate  only  to  1995.  In the case 
of  Germany,  for which  details  of hourly  earnings of  full-time  male (and female)  employees 
in the total  economy  alone are available,  the distribution  seems to be much more equal than 
in  any  other Member  State, though this might well  be a consequence  of the coverage  of the 
data rather than  of  a genuine  difference. 

For Austria, the other country  concerned,  for which the data appear to be more reliable,  the 
extent of wage dispersion for full-time  male employees over the economy  as a whole in  1995 
was relatively  narrow (Graph  16), slightly  wider than in the Netherlands, but less than in the 
other countries for which data exist (ignoring Germany). As for other countries, the dispersion 
was  wider  in  services  than  in industry  (the  Gini  coefficient  being  0.207  in  the latter,  0.257 
in the former). 

Full-time female  employees 

The dispersion of earnings for women working full-time  appears to be narrower than for men 
in  all  countries  apart from  Austria.  As  for  men, however,  the  degree  of  dispersion  has  also 
tended  to widen  over time,  with the exception  of  the Netherlands. 

In the last country, though the distribution of wages for full-time women employees widened 
between  1985  and  1990 in the total  economy  as well  as in services  (though not in industry), 
it narrowed slightly  between  1990 and  1994 (Graphs  17,  18 and  19), the Gini  coefficient  for 
the economy  as a whole  declining  from  0.187  to  0.184. 

2,°i 

In Portugal, wage dispersion for women employed full-time widened between  1985 and 1994 
even  more than for  men,  in  industry  and services  considered  separately  as well  as over the 
total  economy  (Graphs 20,  21  and 22).  The overall  Gini  coefficient  rose from  0.240  in the 
earlier year to 0.305  in the later one, while the bottom  10% of wage earners received under 
53% of the average wage  in  1994 as opposed to less than 66% in  1985. 

In the UK, though the widening of the wage distribution was less for full-time  women than 
for full-time men, it was, nevertheless,  significant (Graph 23), the Gini coefficient  increasing 
from  0.215  in  1986  to  0.246  in  1995  and the earnings of  the bottom  10% of  wage  earners 
declining  from  58V4%  of  the  average  wage  to  under  52'/2%  over  the  same  period.  The 
widening of the dispersion of wages was equally marked in industry and services  considered 
separately  (Graphs 24  and 25). 

In  Italy,  the  widening  of  the  distribution  of  wages between  1985  and  1990  was  much  less 
pronounced for women working full-time than their male counterparts* especially  in services 
(Graphs 26, 27 and 28), where the Gini  coefficient  remained virtually unchanged. In France, 
on the other hand, the reverse was the case, the dispersion of women's wages widening more 
than for men between  1986  and  1992,  in industry and services  as well  as over the  economy 
as a whole  (Graphs 29,  30  and 31). 

Finally, in Austria, the earnings of full-time  women employees were more unequally distrib 
uted than those of men in 1995, especially in industry (Graph 32). Overall the Gini  coefficient 
for women's  wages  was  0.264  as against  a value  of  0.228  for men. 

4.  European  Community  Household  Panel 

The new Household  Panel  provides a source of  additional  information  on the distribution  of 
wages  in the  Union,  which  in  view  of  the  paucity  of  data available  at the  national  level  is 
potentially  of  great  value.  Precisely  how  valuable  it  will  prove  to  be,  however,  will  only 
become  clear over time. 

While the primary purpose of the Panel is to indicate how income, living conditions and other 
characteristics of  households in the Union  are changing over time,  so far only  the results  of 
the first wave  (ie  the first of  the  annual  surveys  of  the  households  included)  carried  out in 
Spring  1994  are  available  and  then  only  on  a  provisional  basis.  These,  therefore,  provide 
details  of  the  distribution  of  earnings  solely  for  one  point  in  time.  (Though  questions  are 
asked in the survey  about income  during the previous year as well  as about current income, 
it is hazardous in  practice to infer  anything  about changes from  this.) 

Moreover, the sample of households included in the Panel,  even though it has been  carefully 
selected  to be  as  representative  as possible  of  the population  as a whole,  is  relatively  small 
(in  total  just  over  60,000  households  are  included  in  12  Member  States,  the  three  new 
Member States so far not being covered),  and it remains as yet unclear how reliable the data 
will  turn  out  to  be  in  practice.  This  applies  especially  to  a  few  of  the  larger  countries, 
Germany particularly,  where the sample is very  small  in relation to population  (in Germany, 
only  5,000  households  are  covered  out  of  a  total  number  of  around  35  million)  and  to 
comparisons between  Member States as opposed to estimates of the position  over the Union 
as a whole (for which the sample size may be less of a problem). It also applies, in particular, 

to income which it is notoriously difficult to collect information about, in part because of the 
disparate sources of this, in part because individuals themselves  are often  unclear about how 
much  they  earn  either  before  or  after  tax,  especially  if  their  pay  varies  over  the  year  and 
includes  various  bonuses  or  special  payments,  in  part  because  there  is  no  easy  way  of 
checking the details which  are given. 

Nevertheless,  even  accepting  the  possibly  wide  margins  of  error  to  which  the  results  are 
subject, the ECHP provides a potentially  valuable insight into differences  in the distribution 
of earnings from employment across the Union. This is particularly the case since, unlike the 
data  presented  and  discussed  above,  the  figures  are  compiled  (at  least  in  principle)  on  a 
common  set of  definitions  both  of earnings and of the employees  covered. 

The  data  from  the  first  wave  of  the  ECHP  on  monthly  gross  earnings  of  employees  are 
analysed  below.  (Specifically,  the  data  relate  to  the  gross  monthly  wage  of  employees  in 
1994, adjusted for bonuses and annual supplements, which may not be paid in equal amounts 
through the year, in order to produce an estimate of average monthly  earnings). Despite their 
apparent comparability  between countries,  given the small  sample included in the Panel  and 
the  difficulty  of  collecting  reliable  details  of  income,  the results  should  be  interpreted  with 
due caution and treated as indicative only of the true differences which exist between Member 
States. 

The distribution  of gross  earnings  across  the  Union 

Analysis  of the ECHP  data shows  some  differences  in the distribution  of  earnings from  the 
national  figures  examined  above.  This  is  only  to  be  expected  in  view  of  the  (possibly) 
different  definition  of  earnings  involved  and differences  in  coverage,  as noted  above,  with, 
in principle,  all  employees being included in the Panel  data rather than only  some as in most 
of  the  national  data  (which  mostly  cover  only  private  sector  employees  and  then  in  some 
cases  not  all  of  services).  Nevertheless,  the  relative  picture  shown  by  the  ECHP  data  is 
broadly  similar to that indicated by the national  figures; generally,  women's wages appear to 
be  less  widely  dispersed  than  those  of  men,  while  earnings  of  both  men  and  women  seem 
more  widely  dispersed  in  the  UK,  France  and  Portugal  than  in  the  Netherlands  or  Italy 
(Graphs 33 to 44 summarise the ECHP results). It also seems to the case from the ECHP data 
that wage disparities in the less prosperous Member States tend to be wider than in the more 
prosperous  ones,  though there are notable exceptions. 

In more detail,  the country  with the widest distribution  of wages of both full-time  male and 
full-time  female  employees  in  1994  was the UK,  where the  Gini  coefficient  for  the  former 
was  0.333  and  for  the  latter  0.290  (Table  3)  and  where  10% earned  less  than  43% of  the 
average wage and  10% of women, less than 48%. (These figures indicate a wider dispersion 
of  earnings than the  national  data examined  above, though  part of the reason for this is that 
the latter covered only  employees on adult rates of pay and, therefore,  excluded many young 
people  included  in  the  data  for  other  countries).  This  is  followed  by  France,  Ireland, 
Luxembourg,  Spain and Portugal, where the distribution was only slightly  less wide for both 
men and women.  There is a distinct difference  between  these six  countries  and the other six 
Member  States for which  data are available, where gross earnings appear to be more evenly 
distributed. This is particularly  so in the Netherlands (where the data relate to  1993  and may 
be  less  reliable  than  for  1994  because  of  rnemory  difficulties  on  the  part  of  respondents), 
Greece  and  Italy,  where  in  each  case  the  value  of  the  Gini  coefficient  was  less  than  0.2 

4-1 

(perhaps  too  much  below  to  be  plausible  in  the  case  of  the  Netherlands). 

The data show, in addition, that the pattern of disparities in earnings (the shape of the Lorenz 
curve) differs  between Member States with similar degrees of overall dispersion. In particular, 
disparities  are relatively  wide  at the bottom  end  of the  wage  scale  in  some  countries  and  at 
the  top  end  in  others.  The  UK  and  France,  for  example,  have  a  similarly  dispersed  overall 
distribution  of  gross  earnings  for  men  (the  Gini  coefficient  having  much  the  same value  in 
both  cases) but  there were  more people  on low wages  in  1994  in the UK  than  in France  (as 
indicated by the lower wages of the bottom  10% of wage earners relative to the average wage 
in  the former  than  in  the latter  in  Table 3) and,  by  implication,  less people  on higher  wages 
(a  difference  which  may  reflect  the  existence  of  minimum  wage  legislation  in  one  case  and 
not  the  other). 

Similarly,  the  relative  wages  of  the bottom  10% of  earners  were  higher  in  Portugal  than  in 
any  other  Member  State  apart  from  the  Netherlands,  Italy  and  Greece  despite  the  relatively 
dispersed nature of the overall  distribution  of earnings, and significantly  higher than in Spain, 
where the overall dispersion was similar. As in the previous case, this implies a comparatively 
wide dispersion  of earnings in Portugal  further  up the wage scale. In other words, in both the 
UK and Spain, as well  as in Ireland and Luxembourg, the wide dispersion  of wages was more 
the  result  of  a  large  proportion  of  employees  earning  low  wages  than  a  large  proportion  of 
earnings  going  to  a  small  proportion  of  high  wage  earners,  in  relation  to  the  position  in 
France  or  Portugal. 

Earnings  and  hours  worked 

The ECHP  data also provide an insight into the hours worked by those on low wages  relative 
to  those  further  up  the  pay  scale.  For  both  men  and  women  working  full-time,  there  is  a 
common  tendency  across the Union for  those earning the lowest wages to work longer  hours 
than  those  earning  higher  levels. For  7 of the  11 Member  States for  which  data are  available 
(there are no data for  the Netherlands),  men  in the bottom  decile  of the earnings  distribution 
in  1994  worked  an  average-of  at  least  3 hours  a week  more  than  the  average  hours  worked 
by  all  full-time  male  employees  (Graph  45).  (These  figures  relate  to  those  employed  in 
industry  and  services  taken  together  and  exclude  agriculture  where  hours  worked  are  more 
difficult  to  estimate  and  generally  longer,  especially  for  those  on  low  wages,  than  those 
employed in other activities. Including agriculture would, therefore,  increase the relative hours 
worked  by the lowest  paid  employees). In Greese,  Spain  and France, the difference  was over 
4  hours  a  week  and  in  Ireland,  over  5  hours  a  week.  Only  in  Luxembourg  did  men  in  the 
bottom  decile  work  less  than  2  hours  a week  longer  than  the  average. 

For women, those on the lowest earnings also work longer than average in all Member  States, 
though  the difference  tends to be slightly  less than  for  men. In five of the  11 Member  States, 
women  in  the bottom  decile  of the earnings  distribution  worked  over  3 hours  a week  longer 
than  the average weekly  hours for  those employed  full-time  (Graph  46). Only  in Ireland,  was 
the  difference  more  than  this, while  in  both  Germany  and  Luxembourg,  it was under  1 hour 
a  week. 

The implication  of the figures  for  hours worked  is that,  for  both  men  and women,  disparities 
in  hourly  rates  of  pay  in  all  Member  States  are  even  wider  than  the  differences  in  monthly 
earnings  indicated  above. 

Table 1 
GINI coefficients: Full-time  employees 

Netherlands 

Men 

Women 

Portugal 

Men 

Women 

United  Kingdom 

Men 

Women 

Italy 

Men 

Women 

France 

Total economy 
0,187 
Total economy 
0,177 

1985 
Industry 

0,168 

Services 

0,197 

Industry 

Services 

0,170 

0,179 

Total economy 
0,193 
Total economy 
0,187 

1990 
Industry 

Services 

0,180 

0,201 

Industry 

Services 

0,163 

0,191 

Total economy 
0,196 
Total economy 
0,184 

1994 
Industry 

Services 

0,180 

0,205 

Industry 

Services 

0,164 

0,188 

Total economy 
0,287 
Total economy 
0,240 

1985 
Industry 

Services 

0,257 

0,303 

Industry 

Services 

0,188 

0,264 

Total economy 
0,305 
Total economy 
0,250 

1989 
Industry 

Services 

0,276 

0,326 

Industry 

Services 

0,190 

0,283 

Total economy 
0,343 
Total economy 
0,305 

1994 
Industry 

Services 

0,323 

0,351 

Industry 

Services 

0,258 

0,320 

Total economy 
0,239 
Total economy 
0,215 

1986 
Industry 

Services 

0,218 

0,267 

Industry 

Services 

0,188 

0,223 

Total economy 
0,260 
Total economy 
0,236 

1990 
Industry 

Services 

0,233 

0,302 

Industry 

Services 

0,210 

0,252 

Total economy 
0,275 
Total economy 
0,246 

1995 
Industry 

Services 

0,242 

0,311 

Industry 

Services 

0,231 

0,261 

Total economy 
0,203 
Total economy 
0,182 

1985 
Industry 

Services 

0,183 

0,250 

Industry 

Services 

0,161 

0,212 

Total economy 
0,236 
Total economy 
0,192 

1990 
Industry 

Services 

0,219 

0,266 

Industry 

Services 

0,173 

0,214 

Total economy 
0,248 
Total economy 
0,184 

Men';:y;:-S:-:::V:::^::-,-:,: 

Women-;  m/ïïM 

Austria 

Men 

Women 

1986 
Industry 

Services 

0,231 

0,286 

Industry 

Services 

0,174 

0,194 

Total economy 
0,262 
Total economy 
0,216 

1992 
Industry 

Services 

0,247 

0,275 

Industry 

Services 

0,208 

0,219 

Total economy 
0,228 
Total economy 
0.264 

1995 
Industry 

Services 

0,207 

0,257 

Industry 

Services 

0.246 

0.273 

Table 2 
Bottom decile relative to average earnings: Full-time employees 

Netherlands 

Men 

Women 

Portugal 

Men 

Women 

United  Kingdom 

Men 

Women 

Italy 

Men 

Women 

France 

Men 

Women 

I 

Austria 

Men 

Women 

Total economy 
65,165 
Total economy 
61,381 

1985 
Industry 

69,145 

Services 

62,404 

Industry 

Services 

60,893 

59,984 

Total economy 
63,304 
Total economy 
60,341 

1990 
Industry 

Services 

65,785 

61,637 

Industry 

Services 

67,306 

59,157 

Total economy 
62,064 
Total economy 
63,738 

1994 
Industry 

Services 

65,363 

60,078 

Industry 

Services 

68,442 

63,179 

Total economy 
51,117 
Total economy 
66,061 

Total economy 
53,697 
Total economy 
58,564 

1985 
Industry 

Services 

56,048 

45.2Q3 

Industry 

Services 

65,199 
-

53,922 

1986 
Industry 

Services 

58,229 

49,407 

Industry: 

Services 

63,035 

58,879 

Total economy 
46,726 
Total economy 
57,705 

1989 
Industry 

50,860 

Services 

40,762 

Industry 

Services 

71,117 

53,922 

Total economy 
42,853 
Total economy 
52,765 

1994 
Industry 

Services 

46,730 

38,884 

Industry 

Services 

60,811 

46,310 

Total economy 
50.712 
Total economy 
54,759 

1990 
Industry 

Services 

55,323 

45,613 

Industry 

Services 

60,410 

53,568 

Total economy 
48,580 
Total economy 
52,299 

1995 
Industry 

Services 

53,281 

44,274 

Industry 

Services 

57,079 

51,745 

-

Total economy 
63,370 
Total economy 
58,174 

1985 
Industry 

Services 

65,945 

53,068 

:  Industry • 

Services 

60,413 

56,381 

Total economy 
59,757 
Total economy 
65,539 

1990 
Industry 

Services 

61,805 

53,890 

Industry 

Services 

69,988 

61,332 

Total economy 
57,149 
Total economy 
67,016 

1986 
Industry 

Services 

59,770 

50,681 

Industry 

Services 

69,271 

64,073 

Total economy 
54,545 
Totai economy 
61,134 

1992 
Industry 

Services 

56,220 

53,058 

Industry 

Services 

62,974 

60,328 

Total economy 
54,108 
Total economy 
43.895 

1995 
Industry 

Services 

60,587 

46,813 

Industry 

Services 

49.112 

41.733 

Table 3 
Summary statistics of gross  monthly wage distribution of full time men and women 
employees  in Member States, 1994 

Gini coefficients 

Bottom decile as % average 

Men 

Women 

Men 

Women 

B 

OK 

D 

EL 

E 

F 

JRL 

I 

L 

NL*) 

P 

UK 

0.213 

0.246 

0.238 

0.192 

0.285 

0.318 

0.308 

0.195 

0.300 

0.126 

0.284 

0.333 

0.194 

0.208 

0.214 

0.134 

0.283 

0.270 

0.256 

0.158 

0.290 

0.165 

0.269 

0.290 

55.7 

52.6 

52.7 

57.8 

47.5 

47.0 

42.4 

61.8 

42.2 

73.6 

56.5 

42.8 

57.7 

55.2 

47.3 

69.6 

41.5 

50.2 

49.7 

65.3 

38.5 

68.7 

60.0 

48.3 

*) Figures relate to annual gross wages in 1993 as 1994 data are not available. 

Note: The data are for employees working 30 hours or more a week. 

Source: European Community Household Panel, first wave, provisional data. 

<-V^ 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1985-95 

1 

The Netherlands, total economy,  1985,1990,1994 

2 

The Netherlands, industry,  1985,1990,1994 

% mate employees 

100 

100 

% male employees 
r 

100 

60 

80 

Cumulative % earnings 

„ 60 
„ 
Cumulative % earnings 

80. 

,  . 

3 

T he  Netherlands, services,  1985,1990,1994 

4 

Portugal, total  economy,  1985,1989,1994 

%  male employees 

100 

% male employees 

100 

^ 6° 
Cumulative % earnings 

, 8° 

.  • 

„ 60 
„ 
Cumulative % earnings. 

80. 

,  . 

5 

Portugal,  industry,  1985,1989,1994 

6 

Portugal,  services,  1985,1989,1994 

%  male employees 

„  % male employees 
100 

100 

„ 60 
Cumulative % earnings 

. , 8 0. 

,  . 

60 

80 

Cumulative % earnings 

H-b 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1985-95 

7 

UK, total economy,  1986,1990,1995 

8 

UK, industry, 1986,1990,1995 

. „  % male employees 
100  r 

100 

% male employees 

100 

100 

,  . 

„ 60 
Cumulative % earnings 

,  80. 

100 

^6°  .  . 
Cumulative % earnings 

, 8 0. 

9 

UK, services, 1986,1990,1995 

10 

Italy, total economy,  1985,1990 

%  male employees 

loo  %  m a ,e  e mP,° ye es 

,  . 

„ 60 
Cumulative % earnings 

.,  80. 

100 

^ 60 
Cumulative % earnings 

. , 8 0. 

,  . 

11 

Italy, industry,  1985,1990 

12 

Italy, services, 1985,1990 

% male  employees 

%  male employees 

r 

100 

60 

80 

Cumulative % earnings 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1985-95 

13  France, total economy,  1986,1992 

14  France, industry,  1986,1992 

% male employees 

100  r 

100 

% male employees 

100 

M 

„ 
Cumulative % earnings 

80. 

,  . 

,  A. 

- 60 
Cumulative % earnings 

.,  80. 

100 

15 

France, services,  1986,1992 

16  Austria, total economy, industry  and  services, 

% male  employees 

100  r 

1995 
% male employees 

100 

60 

80 

100 

Cumulative % earnings 

60 

. 

80 

Cumulative % earnings 

100 

17  The  Netherlands, total  economy,  1985,1990,1994 

18  The Netherlands, industry,  1985,1990,1994 

%  female  employees 

100 

% female  employees 

60 

80. 

100 

Cumulative %  earnings 

60  . 

. 

, 8 0. 

Cumulative  % earnings 

,  <y 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1985-95 

19  The Netherlands, services,  1985,1990,1994 

20  Portugal, total economy,  1985,1989,1994 

% female employees 
r 

100 

100 

,_^  % female employees 
100  r 

_60 
Cumulative % earnings 

80 

100 

^60  ,  .
Cumulative % earnings 

..  80. 

100 

21 

Portugal,  industry,  1985, 1989,1994 

22 

Portugal, services,  1985,1989,1994 

% female employees 

% female employees 

60 

80 

100 

Cumulative % earnings 

,  . 

„ 60 
Cumulative % earnings 

80. 

100 

23  UK, total  economy,  1986,1990,1995 

24  UK, industry, 1986,1990,1995 

*/• female employees 

100  r 

% temale employees 

60 

80 

Cumulative  % earnings 

60 

80 

Cumulative % earnings 

f  LN 

Distribution of gross monthly earnings of men and women full-time 

employees in Member States, 1985-95 

25  UK, services, 1986,1990,1995 

26 

Italy, total economy, 1985,1990 

% female employees 

100  7 

100 

100 

% female employees 

100 

60 

80 

Cumulative % earnings 

„60  ,  .  „  80. 
Cumulative % earnings 

100 

27 

Italy, industry,  1985,1990 

28 

Italy, services, 1985,1990 

% female employees 

% female employees 

60  ,  . 

.,  80. 

Cumulative % earnings 

60 

80 

100 

Cumulative % earnings 

29 

France,  total  economy,  1986, 1992 

30  France, industry, 1986,1992 

% female employees 

100  r 

% female employees 

100  r 

60 

,  80. 

Cumulative % earnings 

60 

80 

Cumulative % earnings 

SO 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1985-95 

31 

France, services,  1986,1992 

32  Austria, total economy, industry and services, 

%  female employees 

100 

100 

1995 

% female employees 

100 

,  . 

„ 60 
Cumulative % earnings 

80 

100 

_60 
Cumulative % earnings 

80. 

100 

S\ 

Distribution of gross monthly earnings of men and women  full-time 

employees in Member States, 1994 (ECHP data) 

33 

Belgium,  1994 

%  employees 

100 

34  Denmark, 1994 

100 

100 

% employees 
"•—J— 

„60 
Cumulative % earnings 

80 

100 

35  Germany,  1994 

% employees 

36  Greece,  1994 

100 

% employees 

.  4. 

.60 
Cumulative % earnings 

.,  80. 

100 

100 

_60  ,  . 
Cumulative % earnings 

.,  80. 

^60  ,  . 
Cumulative % earnings 

.,  80. 

100 

37 

Spain,  1994 

%  employees 

38 

France,  1994 

% employees 

~60  ,  .  „  80. 
Cumulative % earnings 

100 

Cumulative % earnings 

52. 

Distribution of gross monthly earnings of men and women full-time 
employees in Member States, 1994 (ECHP data) 

39 

Ireland,  1994 

%  employees 

100  r 

40 

Italy, 1994 

100 

„ 
_60  . .. 
Cumulative % earnings 

80. 

100 

20 

40 

_60  .  . 
Cumulative % earnings 

'  80. 

100 

41 

Luxembourg,  1994 

42 

The Netherlands,  1993 

%  employees 

100  r 

100 

%  employees 

100 

.  .. 

^ 60 
„ 
Cumulative % earnings 

80. 

100 

60 

80 

100 

Cumulative %  earnings 

43 

Portugal,  1994 

%  employees 

44  UK, 1994 

100 

%  employees 

. .. 

„ 
^ 60 
Cumulative %  earnings 

80, 

100 

60 

80 

Cumulative %  earnings 

$2> 

45  Average  hours  usually  worked  per week,  full-time 

46  Average hours usually worked  per week,  full-time 

male employees,  1994 

female  employees,  1994 

£0  ^ v e r a ge  hours  per  week 

.,  60 

60  Average  hours  per  week 

•  Average hours of aR full-time men  employees 

•  Average hours of bottom decile 

•  Average hours of al tut-Une women  employees 

• A v e r a ge  hours of bottom decile 

50  " 

40 

30 

20 

B 

DK 

*\ 

ISSN 0254-1475 

COM(96) 698  final 

DOCUMENTS 

EN 

04  06 

Catalogue  number  :  CB-CO-96-707-EN-C 

ISBN  92-78-13782-0 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

. bS