Europe’s Unions Have Gone Quiet. Wages Are Up and Inflation Is Down.

Autumn has brought eerie calm instead. “The storm has passed for now,” says Nina Skero, CEO of U.K.-based consultant Cebr.

One reason is that the winter-spring labor actions worked. German postal workers scored an average 11.5% pay increase in March. U.K. teachers settled for 6.5% in July. The union successes have rippled across economies. U.K. wage hikes are running at 7% to 8%, reports Hannah Slaughter, senior economist at the Resolution Foundation in London.

Governments have also taken direct action to cushion citizens from inflation. Germany spent 2% of gross domestic product subsidizing energy costs in 2022, and France and Italy, 1% each, the European Commission estimated. The U.K. has raised its minimum wage by 45% since 2016 to 10.42 pounds sterling ($12.81) per hour.

Europe’s macroeconomic weather meanwhile has also changed sharply. Inflation, a major driver for all the strikes, has fallen to 3% in the euro area from 10% a year ago. The U.K. rate has dropped from 11% to less than 7%.

Attention has shifted to the prospect of recession, which should grip most of Europe by early next year, says Eoin Drea, senior researcher at the Wilfried Martens Centre for European Studies. “Both employers and the unions are worried about what the winter will bring,” he says. “That has dampened expectations.”

Especially damp is Germany, home to Europe’s premier private-sector union, 2.2-million-strong IG Metall. GDP there has shrunk in three of the past six quarters. The heavy industry where IG Metall might flex its muscle has been rocked by the cutoff of cheap Russian natural gas and threatened by emerging Chinese supremacy in electric vehicles.

Christiane Benner, who made history by becoming the mega-union’s first female boss last month, has started out playing defense. Rather than stick it to the bosses, she’s lobbying government to halt the “creeping dismantling of industry and jobs.”

Restive French unions focused their energy and political capital this year on street protests against President Emmanuel Macron’s plan to raise the pension age. Macron forced through the reform unilaterally. The demonstrations subsided with little carry-over into industrial action. Strike-prone Italy has also gone quiet. “France and Italy have been quite stable from a labor market point of view,” Drea says.

Creeping dismantling might describe the long-term picture for European organized labor. This year’s strikes were concentrated in the public sector. Private-sector unions struggle against the same headwinds as U.S. counterparts: outsourcing, gig work, and declining membership, says Kurt Vandaele, senior researcher at the European Trade Union Institute. “With the increase of temporary contracts and far less political support, it’s not a very optimistic picture,” he says.

IG Metall’s Benner is nonetheless warning one new German employer that her union isn’t dead yet. That would be Elon Musk and
Tesla
(ticker: TSLA), which is revving up production at its gigafactory outside Berlin. “You need to be careful,” she told the headstrong billionaire in a Bloomberg interview. “The rules of the game are different here.”

Musk didn’t answer, but he did give his German workers a 4% raise.

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