Collectively negotiated wage increase substantially higher at the start of 2006

In the first quarter of 2006 thee collectively negotiated wages increased by 1.7 percent on the year before. This is substantially higher than in 2005.
The collectively negotiated wage increase has been growing ever since the third quarter of 2005 after the lowest point since 1984 was hit in the second quarter.

Bonuses increased

In the first quarter of 2006 the collectively negotiated wages including bonuses rose faster than the collectively negotiated wages excluding bonuses. When bonuses are not taken into account, the collectively negotiated wage increase comes to 1.4 percent.

Collectively negotiated wages and contractual wage costs

Public sector has largest collectively negotiated wage increase

In the government sector the collectively negotiated wages increased by 2.1 percent. In 2004 and 2005 the public sector wage increase was a mere 0.4 percent. The private sector saw a 1.7 percent wage increase, which equals the average of the three sectors. The smallest collectively negotiated wage increase was for people working in the subsidised sector, comprised mainly of health care and social work. These wages increased by 1.1 percent in the first quarter of 2006. Bonuses cause part of the difference in the collectively negotiated wage trend in the subsided and the public sector. These increased by 0.7 percent for the public sector and by 0.2 percent for the subsidised sector.

Collectively negotiated wages and bonuses

Diminishing wage cost increase

In the first quarter of 2006 the contractual wage cost increase fell to 0.7 percent. For the first time since 2002, the contractual wage costs increased by less than the collectively negotiated wages. In 2005, the wage cost increase was still 0.6 percent above that of the collectively negotiated wage. The wage cost increase fell specifically because of lower disability and pension premiums payable by the employer. The pension premiums fell partly because early retirement and pre-pension premiums were abandoned.

Strong drop in wage cost increases in the public sector

In the first quarter of 2006 the differences in the wage cost developments did not differ a great deal between the private sector (+ 0.8 percent), the subsidised sector (+ 0.6 percent) and the public sector (+ 0.5 percent).
In the fourth quarter of 2005 there were substantial differences: the wage cost increase in the public sector was 2.1 percent, compared to 1.1 and 1.7 percent among the private and subsidised sector. This means that the wage costs for the public sector fell much more sharply than among the private and subsidised sector. The difference is caused by lower pension premiums payable by the employer.

Contractual wage costs by sector

Nathalie Peltzer