Negotiating wage (in)equality: changing union strategies in high-wage and low-wage sectors in Czechia and Slovakia

Abstract

Reducing wage inequality requires an understanding of the importance of labour market institutions, in particular statutory minimum wages and sectoral collective bargaining. This article argues that the impact of labour market institutions on wage inequality is enhanced by specific strategies of unions and employers. Empirical evidence is provided from the high-wage automotive sector and the low-wage retail sector in Czechia and Slovakia. Against the backdrop of the erosion of collective wage bargaining, trade unions have prioritised increases in the national statutory minimum wage as a mechanism for reducing wage inequalities. Trade unions’ leverage on minimum wages can compensate for their declining influence on wage distribution via collective bargaining.

Arms-length influence: Public sector wage setting and export-led economic growth in Czechia and Slovakia

“…In both Czechia and Slovakia, the export sector is dominated by the automotive industry (Martišková et al 2021). The extended share of the industry on GDP amounts to 13% in Slovakia (Luptáčik et al 2013) and between 10 and 13% in Czechia (Gallistl 2018).…”

“…The extended share of the industry on GDP amounts to 13% in Slovakia (Luptáčik et al 2013) and between 10 and 13% in Czechia (Gallistl 2018). Average wages in the automotive sector exceeded the national average wage in 2018 by 34% in Czechia and 40% in Slovakia (Martišková et al 2021). The average wage in the automotive industry grew faster than in the overall manufacturing sector.…”

“…Still, the Czech public sector is marked by fragmentation, lack of transparency, and absence of collective bargaining across the majority of its sub-sectors, while PSWS mechanisms often derive from unilateral government decisions. Social partners attempt to influence working conditions and employment levels through tripartite consultations, establishment-level negotiations, and employee mobilization strategies (Martišková 2021). Although not strictly focusing on wages, their cooperation does stipulate convergence in interests and approaches to public sector working conditions.…”

Transition of the automotive industry towards electric vehicle production in the east European integrated periphery

“… FDI-friendly state policies, large investment incentives, low corporate taxes, and an active state competition over strategic automotive FDI with other countries contributing to the ‘race to the bottom’ in the integrated periphery (Drahokoupil 2008 , 2009 ; Pavlínek 2016 ). Weak labor unions, more liberal labor codes and more flexible labor practices compared to the automotive industry core countries, especially Germany (Jürgens and Krzywdzinski 2009a , b ; Drahokoupil and Myant 2017 ; Martišková et al 2021 ). A weakly developed domestic automotive industry compared to the foreign-controlled automotive sector (Table 2 ) (Pavlínek 2018 , 2020 ) resulting in the integration of domestic firms into macro-regional GVCs/GPNs at an inferior and subordinate position mainly as low-cost Tier-3 suppliers of niche products and simple parts and components (Pavlínek and Janák 2007 ; Pavlínek and Žížalová 2016 ; Pavlínek 2018 ).…”

“…Weak labor unions, more liberal labor codes and more flexible labor practices compared to the automotive industry core countries, especially Germany (Jürgens and Krzywdzinski 2009a , b ; Drahokoupil and Myant 2017 ; Martišková et al 2021 ).…”