Collectively negotiated wages increase 2 percent in 2007

The increase in collectively negotiated wages (CAO) was 2.0 percent in 2007. The wage increase is the same as in 2006, although there is a difference. This becomes evident, when quarterly wage increases are taken into account. In 2006, the average quarterly wage increase was approximately 2 percent, whereas in 2007 the first two quarters showed a lower increase (+ 1.7 percent) than the last two quarters (+ 2.4 percent).

Quarterly growth collectively negotiated wages and contractual wage costs

Employers’ contributions virtually unchanged

With 2.1 percent, the increase in contractual wage costs in 2007 virtually equals the increase in collectively negotiated wages. This implies that in total contributions made by employers did hardly change relative to 2006. In 2006, the increase in wage costs was only half the increase in collectively agreed wages. This was due to lower employers’ contributions for labour disability and (pre-)pension schemes in 2006 relative to 2005.

Growth in collectively negotiated wages

Increase collectively agreed wages marginally higher than inflation rate in 2007
The increase in collectively negotiated wages was 0.4 percent above the inflation rate  over 2007 of 1.6 percent. In 2006, the difference was 0.9 percent, which does not necessarily mean that employees have gained purchasing power. The net wage also depends on changes in the contributions paid by employees into pension and social insurance schemes. Over the past decade, the average increase in collectively negotiated wages has been 0.5 percent above the inflation rate.

Increase collectively agreed wages by sector, 2007

Most substantial wage increase in public sector

With 2.9 percent, the largest increase in collectively agreed wages in 2007 was recorded in the public sector. This increase is more substantial than in other collective labour agreement sectors. One of the reasons is that in various CAO contracts in the public sector agreements are laid down with respect to year-end bonuses. These year-end bonuses are gradually raised over a relatively short period to the level of a full thirteenth month’s salary. With 3.2 percent, the sector education tops the list.

The increase by 2.5 percent in CAO wages excluding special bonuses was also highest in the public sector, mainly because in one collective labour agreement, the compensation for medical expenses was transferred to regular monthly payments. With 1.8 percent, the increase in CAO wages in both the subsidised and the private sector was marginally below the total averages of all sectors.

Monique Hartog - Van der Toorn