A ‘tight’ labour market is not such a bad thing for trade unions—and therefore for workers.
Across Europe, labour shortages have been making news during the pandemic, accompanied by warnings of reduced business productivity, supply-chain disruption and slower economic recovery. Yet a tight labour market means that the demand for labour is at least as strong as supply, forcing employers to compete for recruits. In the European Trade Union Confederation (ETUC) we believe that unions can use this situation to boost their bargaining power and to obtain better wages and employment conditions for workers.
As societies free themselves of Covid-19 restrictions, many challenges stand in the way of recovery. It has not been an easy start and developments such as the war in Ukraine and even ‘Brexit’ have made progress more difficult. Runaway energy prices and inflation rates not seen for decades mean living standards are plunging, especially for low-paid workers. Trade unions can however use labour-market conditions to defend their interests.
According to the European Foundation for the Improvement of Living and Working Conditions (Eurofound), labour shortages were already increasing in the European Union in the years up to 2019. But the pandemic accentuated longstanding problems in high- and low-skilled sectors, such as healthcare and information technology, education, construction, catering, distribution and transport. In June, for example, the public-employment service in Wallonia published a list of 141 jobs where workers were in short supply, ranging from financial analysts to crane drivers.
Nearly 200,000 European aviation workers have lost their jobs during the pandemic; with bookings returning to 95 per cent of 2019 levels this summer, hundreds of flights have been cancelled as companies struggle to find cabin crew, ground staff and security personnel. In several countries, workers in the industry have voted to strike rather than return to pre-pandemic wages and conditions.
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Labour shortages vary from country to country. Eurofound highlighted problems in manufacturing, construction and services in eastern Europe, where in 2019 39 per cent of companies in manufacturing and 42 per cent in construction already blamed such shortages for production constraints. As recovery from the Covid-19 crisis gets under way, construction, energy, manufacturing and transport are likely to be affected by the transition to a climate-neutral economy, demanding additional labour and new skills.
A number of factors behind shortages have been advanced. Poor wages and bad working conditions are an obstacle to recruitment. The pandemic, digitalisation and decarbonisation are together imposing an unprecedented process of transition on the European workforce. Green and digital transformations are accelerating structural change in many sectors.
According to the European Centre for the Development of Vocational Training (CEDEFOP), 45 per cent of workers think that their skills do not fully match the jobs they do. But while 70 per cent of companies claim to suffer skills shortages, few take practical action—such as raising salaries and improving working conditions, reassessing recruitment procedures or questioning the geographical location of the business.
The European employers’ organisations regard labour-market tightness as a question of ‘skill shortages’ or ‘skills mismatch’, which they relate to general educational levels. They believe public education should be adapted to the demands of the private sector.
The ETUC contends that the education system should prepare young people for life as responsible citizens, and for work in the broader sense through solid basic skills, essential professional skills in terms of vocational education and training (VET) and key competences on which employee training can be based.
Industrial innovation works too quickly for public education systems to keep up with employers’ needs for new skills. CEDEFOP thus sees some skills shortages and mismatches as inevitable: when individuals start or change jobs, they cannot know every aspect of their new role, so training and retraining is crucial.
The European Commission has also identified underlying structural reasons for labour-market tightness, including population ageing, wages and working conditions, mobility and migration policy. But the pandemic has played a role too: workers have become more aware of their working conditions, safety and work-life balance, making them less prepared to return to hazardous and stressful situations, for example in care where intensive physical contact is unavoidable. Former employees have thus hesitated to return to vacancies in sectors with low wages and precarious working conditions or have moved to other, safer jobs.
Trade unions now have a great opportunity to organise among workers looking for an escape from poverty wages and insecurity, in the context of double-digit inflation and a tight labour market—inspired also by the example of Amazon workers in New York. Home-working isolation has encouraged some people to seek a collective identity in union membership, while others are looking to unions to protect their mental health and wellbeing, for example by securing a right to disconnect from telework, or more flexible working arrangements to improve their work-life balance. Unions have also attracted self-employed workers and those employed through digital labour platforms, who have lost their jobs more quickly during the pandemic and received less state support than salaried employees.
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The EU and the social partners have key roles in addressing the challenges of a tight labour market. They are at the heart of emerging trends and labour demands and therefore well placed to design solutions.
Employers influence skills requirements and impose working conditions and levels of pay which can have a direct impact on recruitment. Steps to alleviate labour shortages could help to integrate vulnerable groups into the labour market and dismantle barriers facing women, individuals with disabilities, migrants and members of ethnic minorities. Strong occupational safety and health (OSH) policies at company level, especially for vulnerable workers, amid the continuing risks from Covid-19, can also contribute.
But the priority is to improve wages and working conditions. Achieving a sustainable recovery depends on the quality of employment provided. Collective bargaining should be promoted, particularly in non-standard sectors such as domestic and care work, to secure a better deal for staff. Eurofound suggests increasing working hours for involuntary part-time employees and urges policy-makers to take steps to address the underlying causes of labour shortages.
Education is key. Europe needs investment and joint-financing mechanisms for quality and inclusive adult learning, which must lead to quality jobs and a just transition for the workforce.
Social dialogue and collective agreements should be promoted to ensure all workers have access to training, in line with the European Pillar of Social Rights. The ETUC underlines the responsibility of companies in the upskilling and retraining of workers and ensuring quality apprenticeships for VET learners. Individual workers should not be responsible for their own job-related training: upskilling and reskilling of the workforce should be a collective social responsibility.
For example, Danish unions are calling for support to enable more people to switch professional direction. According to the Danish Trade Union Confederation (FH), fewer Danes now continue their education while in the labour market, even though the retirement age is rising. The FH proposes a ‘right to change lanes’, particularly targeting workers between 45 and 60: while they undergo reskilling to equip them to fill vacant jobs, the state should pay 110 per cent of the highest unemployment benefit rate.
There are dangers and challenges attached to a tight labour market. But for trade unions there are also opportunities. Unions are bargaining organisations. We represent our members but we also act in the interests of the wider society. For workers and trade unions a tight labour market is not necessarily a bad thing since it increases workers’ bargaining power. Unions have grown stronger in such situations.
This is an opportunity for unions to make a difference—negotiating better working conditions and higher wages, which will in turn attract more members. In a tight labour market with rising inflation, higher wages are the best way for employers to recruit suitable candidates and unions have the power to obtain them.
In the Netherlands, for example, trade union strength has won higher wage rises this year in the 32 collective agreements the trade union confederation FNV has negotiated since December, covering industries such as metalworking, freight transport, hospitals, local authorities and cleaning. Trade unions have also helped to achieve bigger increases in statutory minimum wages in 2022 in most European countries.
These are promising times for trade unions and the working class, provided we can seize the opportunity to strengthen our movement.
Claes-Mikael Ståhl has been deputy general secretary at the European Trade Union Confederation since September 2021. He deals with trade, mobility, employment, cohesion funds and occupational health and safety.