Meeting of the Network of trade union economic experts from the Western Balkan countries “Follow up of the ITUC/PERC Eastern Europe Wage Forum”

A meeting of trade union economic experts from the Western Balkan countries was held on 29-30 October 2019 in Sarajevo. The topics of the meeting were minimum wages in the region, which is the regular activity of the PERC Programme and projects, financially supported by the Swedish “Union to Union”. The meeting was a technical follow up meeting of the Eastern Europe wage forum that took place in Belgrade on 16-17 July 2019.

Experts from Bosnia and Herzegovina, Serbia, Croatia, North Macedonia, Albania, Montenegro and Bulgaria participated in the meeting.
A significant contribution to the meeting was given by prof. Bruno Sergi – ETUI, a permanent mentor of the Network of economic experts, Evelyn Astor – ITUC Economic Expert, Lyuben Tomev – CITUB Bulgaria, and Anton Leppik – PERC Executive Secretary.
The activity was organised by ITUC/ PERC Office in Sarajevo. Working languages were BSCM and English.
The meeting had following sessions: (1.) Overview of the minimum wages in South-Eastern Europe; (2.) Country reports – The levels of minimum wages in each of the countries – gross and net (after taxes and social security contributions), The estimated cost of living in each of the countries – official data for the countries, and alternative estimates: Albania, Bosnia and Herzegovina, Croatia, North Macedonia, Montenegro, and Serbia; (3.) Methodology for a cost of living basket; (4.) Arguments to support minimum wage increases; (5) SEE wage dynamics – change in wage policy; (6) Next steps – planning.
The meeting reviewed the main outcomes of the July meeting and reviewed updates on minimum wages that have taken place since the meeting. Notably, North Macedonia has agreed to increase the minimum wage from 214 USD to 259 USD (very close to the union’s demand). Directly after the July wage forum, unions from Republika Srpska (Bosnia and Herzegovina) organised a regional meeting on wages, framed around the need to “fair pay to convince youth to stay”. The meeting gathered lots of publicity and a commitment from the regional government to further increase the minimum wage (however exact amount TBD).
The meeting also reviewed the arguments and evidence that unions are using to underpin their wage claims. The cost of living is the main focus for most trade unions, but unions also heavily cited the issue of emigration/brain drain as one of the main ways that they have been framing the need for a pay rise. Other arguments/evidence that unions are putting forward in their campaigns include:
• Steady GDP growth outpacing wage increases (with the labour income share declining)
• Productivity increases outpacing wage increases
• High inflation in some countries
• Deficits in aggregate demand and the usefulness of wage raises in stimulating local consumption
• The usefulness of promoting regional convergence through tackling enormous wage disparities between Eastern and Western Europe
• Addressing informality through improving the attractiveness of formal work

Unions also cited the need for governments to respect the provisions on minimum wage fixing in Convention 131 – particularly those from Albania, who say that the social dialogue process for minimum wage fixing is not respected. Almost all countries in the region have ratified the convention with the exception of Croatia and Kosovo.
A strong focus was put on the methodologies used to determine the cost of living in different countries. In some cases, trade unions collect their own data on the cost of living – such as CITUB in Bulgaria and KSBiH/SSRS in Republika Srpska, an entity in Bosnia and Herzegovina. Union cost of living baskets tend to be more comprehensive than the official baskets provided by the national statistical institute – in Montenegro, the statistical institute recently revised the cost of living basket (under the recommendation of the World Bank) to exclude housing costs from the basket (reducing the amount of the basket from around 800 EUR a month to 600 EUR a month). In some countries, the basket is calculated on the basis of an individual (e.g., Albania) and this amount is the benchmark for wage negotiations. In Croatia, it is estimated for 2.7 people (average household size), in Serbia it is estimated for 3 people, and in most other countries it is based on a family of 4 people.
As an immediate follow up of the meeting, unions were asked to send to the ITUC Sarajevo Office a short update of their minimum wage systems, the arguments/evidence they are using to underpin their wage claims, and the methodology used for the cost of living. Bruno Sergi (ETUI economic expert) and Evelyn Astor (ITUC economic and social policy advisor) will consolidate the responses into a descriptive chapter on minimum wage fixing that can be included in the forthcoming South-East Europe Review publication. The information provided will also be helpful to inform the eventual ITUC Scandal Report under preparation and lobby materials that will be produced for the regional campaign.
Some unions also requested whether the ITUC/PERC/ETUI could prepare a comparative report on progressive taxation/social security contributions in the region, since workers’ take home pay is often substantially less than their gross wages because of inequitable tax burdens between workers and employers. It was agreed that the ITUC/PERC/ETUI would look into what exists already in terms of data, and the feasibility of collecting new information for such a report if needed.

Levels and coverage of minimum wages in South-East Europe + cost of living baskets