While the pact includes some positive measures – such as a commitment to reduce taxes on labour to help low earners, and to life-long learning – it establishes that unit labour costs will be monitored to assess whether wages are in line with productivity, using as a benchmark countries such as Germany and France.
This could lead to collective bargaining agreements being reviewed in “under-performing” countries. The pact also seeks to link wage settlements in the public sector to the private sector.
The proposals on pensions are of more concern workers in many countries. Similar to the approach taken in the recent report by Lord Hutton on pension reform in Britain, the majority of EU leaders want to align the pension system to demographic changes, such as linking the retirement age to life expectancy while limiting early retirement schemes where possible.
The document released by the European Council states that financial sustainability indicators will be used in relation to “health care and benefit schemes”.
These proposals are of greatest concern to members of the euro area, with each member state using the euro required to start looking at the process of reform within 12 months. Nonetheless, they also tie in with the domestic attempts by David Cameron’s Government to reform the wage, pension and benefit schemes, while also increasing privatisation of the NHS.
