Given the economic circumstances in the European Union during 2009, maintaining jobs and avoiding redundancies were to the fore in social partner discussions and actions across Europe in 2009, according to the new annual review of industrial relations developments in the EU from Eurofound's European Industrial Relations Observatory (EIRO). For the EU as a whole, despite the general decline in nominal pay increases in 2009, continuing a trend of wage moderation since 2008, the steep fall in inflation resulted in real pay increases in all countries bar Malta. While the inflation rate fell sharply, from 3,7% in 2008 to 1% in 2009, average real pay rose by 2,9%, compared to 0,5% in 2008.

The economic crisis that took hold across much of Europe from mid-2008 has multiple direct and more subtle effects in 2009 on employment, labour markets and industrial features.

One key feature in 2009 has been that many governments faced with deteriorating public finances, cut or froze public expenses. These cuts had dramatic effects on employment in public services, central administrations and public agencies; moreover while the number of industrial actions seriously declined, the main actions dealt with pay cuts in the public sector.

The main collective agreements on pay having been negotiated before the downturn began, little effect were expected on collectively agreed nominal pay increases during that year. However, the recession started to have a marked effect on wage increases in most countries in 2009. The (unweighted) average of collectively agreed nominal pay increases fell from 5,0% in 2008 to 4,2% in 2009. Since the inflation rate fell sharply, from 3,7% in 2008 to 1% in 2009, average real pay rose by 2,9%, compared to 0,5% in 2008.

The impact of the crisis on industrial relations processes and collective bargaining is substantial. Some countries, as diverse in terms of their industrial relations systems as France, the Netherlands and Poland, negotiated some responses to the crisis, as per pay increase, working time...

On the other hand, traditional collective bargaining at intersectoral level failed in 2009 in Ireland and in Spain. Finally, in a number of countries, opportunities have been open for companies to derogate to sectoral or national collectively agreed working conditions as pay increase for example, increasing the ‘decentralisation trend' in collective bargaining.

One main feature during 2009, has been the development of ‘Short working time' schemes (SWT) as a response to the economic downturn. These schemes include some or all of the following elements: negotiation on reduction of working time, pay reduction correlated, training during the time freed and governments' support, both for compensation of earning losses and for financing training schemes.

The European Industrial Relations Observatory (EIRO) remains a reliable and up-to-date source of news and comparative information on industrial relations developments and trends for the key actors in the field of European social dialogue.