Managing the inflation crisis through social dialogue

Background and Objectives

After two decades of low inflation and wage moderation, Europe is facing an unprecedented rise in the cost of living and the risk of stagflation. The inflationary shock is eroding the purchasing power of workers, especially those at the bottom of the pay scale. Actors at national and EU level have called on governments and social partners to tackle the current inflationary crisis through negotiated income policies and collective bargaining.

The MAINSOC project has two objectives. First, to analyse the impact of the inflation crisis on real wage dynamics and wage differentials across sectors and groups of workers, with particular attention to the asymmetric impact on those at the bottom of the wage scale and the role of industrial relations institutions in explaining differences across countries. Second, to analyse the role of government policies, social partner involvement and industrial relations institutions in managing the inflation crisis, adapting to a new scenario and ensuring inclusive growth in six EU countries (DE, DK, ES, IT, HU, PL).

Approach

The empirical research consists of three work packages

• First, based on quantitative data, the project will examine the impact of inflation on real wage dynamics and distribution, and the role of industrial relations institutions in explaining cross-country differences. More specifically, the work package will analyse real wage developments in the EU before, during and after the inflation shock. It will also examine the distributional impact of the inflationary crisis, focusing on wage inequalities but also on sectoral differences across the EU. Finally, it will analyse these findings in the light of institutional differences in the context of the single currency area.
• Second, the project will examine income policy responses to the inflation crisis. Adopting a broad definition of income policy, this work package will examine the policies implemented by governments to tackle the rise in inflation, paying particular attention to two key instruments: public sector wages and the minimum wage. It will also analyse the involvement of social partners in these policies and the existence of income policy agreements or pacts.
• Thirdly, the project will analyse the role of collective bargaining in responding to a high inflation context, protecting those workers and sectors more affected by the cost of living crisis and adapting to a new scenario of moderate inflation. The analysis will be carried out in two sectors selected on the basis of the evidence gathered in the quantitative analysis. Based on the analysis of documents and literature, as well as expert interviews, the work package analyses the way in which sectoral and company agreements have reacted to inflation, by looking at the processes leading to the negotiation of new wage settlements and the type of wage clauses included in collective agreements. It also examines the way in which collective bargaining is adapting to a new scenario of moderate inflation through the inclusion of new clauses in collective agreements, changes in the duration of these clauses or other forms of adaptation.

The project also aims to provide a set of policy recommendations to policy makers and social partners on which policies are more effective in mitigating the distributional impact of inflation.

Project participants

The project is coordinated by Prof. Oscar Molina Sociological Research Centre on Everyday Life and Work (QUI), an interdisciplinary research unit at the Universitat Autònoma de Barcelona (UAB). The consortium includes research teams from 6 countries (Spain, Italy, Denmark, Poland, Hungary and Germany). A full list of institutes and individual researchers can be found on the project's central website (https://mainsoc.eu ). The IAQ research team is led by Karen Jaehrling.