In Ireland the Duffy-Walsh review of employment regulation and agreements was a comprehensive study (supported by 36 independent economists) on the interactive effects of sectoral based minimum wages, competitiveness and employment. Most of this research concludes that cutting minimum wages and abolishing wage-setting institutions has zero impact on employment creation. It simply serves to increase the profit of employers who rarely, if ever, reinvest this into employment expansion.
The idea that removing institutions of collective bargaining will improve or increase employment is based on the assumption of “perfectly competitive labour markets”. These do not exist. Currently, 80 per cent of employees in the Eurozone have their pay and conditions set by collective bargaining. In Sweden, Austria, Finland or Netherlands, it is more than 90 per cent of employees who have their wages set by collective negotiation between trade unions and employers.
AIDAN REGAN, Guest PhD at the Amsterdam Institute for Labour Studies, University of Amsterdam,