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December 2010

The wrong target - Public sector pay cuts in EU states

The LRD has carried out a study on behalf of the European Federation of Public Service Unions (EPSU) looking at cuts in public sector pay across the European Union (EU).

The report, which was presented to EPSU's annual Collective Bargaining Conference in December 2010, examines public sector pay cuts in eight EU states, Estonia, Greece, Hungary, Ireland, Latvia, Lithuania, Romania and Spain.

It shows that the impact of the cuts has been very substantial. Official earnings figures, available for five states, show that over two years eanings have fallen from 5.2% in Lithuania (whole public sector), to 6.0% in Estonia (for local government), 7.1% in Hungary (whole public sector), 15.3% in Latvia (whole public sector) and 27.1% in Romania (public administration). In the other countries, government estimates are that in Greece pay has been cut by 15%, in Ireland by 14% and in Spain by 5%.

The report also explains how the cuts have been implemented and finds a number of common factors.

  • Repeated cuts - often the first round of cuts is judged to be insufficient and pay is reduced again and again;
  • Elimination or reduction of bonuses and additional payments - these are generally the first items targeted;
  • Attempts to protect the lower paid - pay is sometimes cut more for the higher paid, although the lower paid also lose pay;
  • The cuts are often linked to attempts to reform the pay system - this seems particularly to be the case where the IMF is involved;
  • The cuts are normally imposed rather than agreed with the unions - although in Ireland and Lithuania there were agreements (in Ireland, after the latest round of cuts);
  • The mechanisms used to cut pay, or at least some of them, have almost always been decided on centrally - Estonia is the one exception.

The full report, including the details of the pay reductions in each country, can be downloaded from the EPSU website http://www.epsu.org/IMG/pdf/Pay_cuts_report.pdf


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