UK Markets closed

OECD calls for revival of collective bargaining to fight wage erosion

·1-min read
Eurosatory international defence and security exhibition in Villepinte

PARIS (Reuters) - Raising minimum wages and building support for collective bargaining could help to rein in the erosion of pay in the face of the current inflation spiral, the OECD recommended on Friday.

Since the inflation crises of the 1970s, most countries have largely stopped indexing wages to inflation and collective bargaining is less common in some countries, giving employers more power to unilaterally set wages and working conditions.

Meanwhile, as firms have merged into ever bigger corporations, labour markets have become more concentrated, limiting workers' opportunities to seek higher wages elsewhere.

"Protecting living standards ... requires rebalancing bargaining power between employers and workers, so that workers can effectively bargain for their wage on a level playing field," the Organisation for Economic Cooperation and Development said in its annual Employment Outlook.

The 38-member country policy forum added that meant giving "a new impetus" to collective bargaining and encouraging unions and employer organisations to boost membership so more workers would be covered by collective agreements.

It said recent collective agreements for workers at online platform-based companies in Denmark, Germany, Italy, Spain and Sweden were "interesting" and could be replicated elsewhere.

While temporary energy bonuses could help ease short term pain, the current inflation crisis justified regularly raising statutory minimum wages, the OECD said.

The OECD said antitrust authorities also needed to pay closer attention to the risk of labour market concentration and said governments should reconsider no-compete clauses in labour contracts.

Such clauses, which are legal in most OECD countries and common in some industries in countries like the United States, prevent employees from taking up a similar job at a rival for a certain amount of time.

(Reporting by Leigh Thomas. Editing by Jane Merriman)