The results of the Italian referendum earlier this month confirms that the European Union is facing a perpetual stress test and that the future of Europe as a social project is at stake. If Europe wants to keep right-wing populism at bay, it needs to deal with its problems head-on rather than postponing them until it's too late. The year 2008 may now be, in part, behind us, but it has led to serious political polarization both in Europe and across the globe. The explosion of social inequalities is at the foundation of this ongoing polarization -- one that is challenging traditional political forces and elites almost everywhere.
The slogan "We are the 99%" sheds some light on what is still at stake. It challenges the prevailing political discourse that suggests that the economic crisis evolved because the working population "lived beyond its means," thereby implying that workers should now learn to live with less. This conclusion goes beyond the issue of wages and extends to other areas of life: fewer rights, fewer dreams, less dignity. Greece may no longer dominate the headlines, but right now, in this country, a crucial battle is taking place for the future of the European social model. This battle concerns collective bargaining.
If Europe wants to keep right-wing populism at bay, it needs to deal with its problems head-on.
Since 2010, several reforms in the area of collective bargaining have been introduced. The goal of these reforms was to limit the role of industry level bargaining and to create a system of decentralized bargaining by promoting collective agreements at the firm level. The adopted policy measures succeeded in the former objective but failed in the latter. The number of sectoral collective agreements dropped substantially, while the bargaining-coordination index decreased from 4.0 to 1.8. However, the number of firm level agreements signed annually did not increase and the coverage of employees by collective agreements has dropped from 80 percent to less than 40 percent. Overall, individual contracts set the employment conditions for the largest part of the working population. Collective bargaining in Greece is practically non-existent. Through a tough negotiation, the Greek government managed to include the issue of collective bargaining in the agenda of the second evaluation of its program of financial assistance. On this issue, the agreement signed by the Greek government and the European institutions clearly provide that the former is expected to bring collective bargaining in line with best practice in the EU. In an attempt to identify "best practices" with regards to employment relations, the Greek government, in cooperation with the European institutions, launched a consultation process led by a group of independent experts. In the report they submitted, one can clearly see that the two pillars of a stable bargaining system are the extension of collective agreements and the principle of favorability -- both of which are widely enforced by EU countries.
Indeed in most EU countries, industry level bargaining plays a very important role in the determination of employment relations.
There are various good reasons for this arrangement. One should start from the premise that the employer-employee relationship is not one of equals, and, therefore, the lower the level of bargaining the weaker the bargaining position of the employee. Moreover, establishing a strong system of collective bargaining is not merely a matter of equality but also one of efficiency. Labour market institutions offer solutions to problems arising from imperfect labour markets. Empirical evidence shows that a strong system of centralized collective bargaining has several advantages, including the reduction of transaction costs, and the creation of a level playing field for companies in terms of wages, in effect allowing them to focus on issues of productivity, tackling undeclared work, and fostering social dialogue and social peace. Having said that, collective bargaining is far more than an issue of technocratic consensus or even of a long standing legal tradition. It relates to the core of democracy. It concerns the right of employees to co-define the terms and conditions of employment. Therefore, it offers an opportunity to redefine growth to include the redistribution of wealth and the strengthening of democracy. The question now is whether Europe will allow Greece to remain in a state of exemption from the European social model. In my view, a Europe that is willing to impose a state of exemption from the framework of social achievements is a Europe that runs counter to its own existence. Who would such a Europe serve? Who would it inspire or represent? The current situation is critical but not irreversible. We can send a strong message today, that democracy and social achievements constitute an important pillar of the future we want to build in Europe; and this message will be sent if collective autonomy starts functioning in a country like Greece as soon as possible.