At the start of her term in office, Commission President Ursula von der Leyen had instructed the European Commissioner for Jobs and Social Rights, Nicolas Schmit to prepare a legal instrument, which should guarantee that all workers within the EU are paid an adequate minimum wage. Now, about a year and two consultation phases later, the Commission has presented its Proposal. This shall prevent workers from living close to or even under the poverty line, in spite of being in work.

However, the present Commission Proposal doesn’t provide for a common minimum wage level and Member States shall not be obliged to implement statutory minimum wages. Instead, it consciously focusses on promoting collective bargaining, as this normally result in less wage inequality and higher minimum wages. Existing statutory minimum wages shall become more adequate and both the implementation and monitoring of existing regulations shall be improved in all Member States. In addition, when awarding public contracts in future, close attention shall be paid to ensure that the companies in question do not pay their workers less than the set minimum wage.

European Trade Union Confederation demands binding threshold

In a first response, the Deputy General Secretary of the European Trade Union Confederation (ETUC), Esther Lynch, welcomed the proposal as a “positive step”. Nevertheless, she sees plenty of room for improvement. According to ETUC, the 60 % of the median wage and 50 % of the average wage mentioned in the Proposal, should not be laid down as “potential indicators” for the adequacy of a minimum wage, but as a binding threshold. Because voluntariness alone would not guarantee higher wages.

Collective agreements being the first choice

ETUC regards it as positive that the Directive shall include an Action Plan to promote collective bargaining, if less than 70 % of workers in a country are covered by a collective agreement. However, this Action Plan should also address very practical problems, for example reprisals, if workers join a trade union. Apart from that, certain workers, such as domestic staff or juveniles, must no longer be excluded from legally regulated minimum wages – demands, which ETUC had already voiced within the framework of the second-stage consultation. However, unfortunately they were not considered in the proposal presented.

ÖGB President Wolfgang Katzian also regards the current proposal as a positive sign with room for improvement. He supports the plan to determine minimum wages mainly through collective agreements: “Statutory minimum wages are always only the second-best means, the primary target of the initiative remains the promotion of collective bargaining”. However, there are still big differences within the EU regarding coverage: whilst in 2016, Austria with a collective agreement coverage of 98 % had been the European frontrunner, in Lithuania only 7 % of workers were covered.

Low wage earners have been particularly hard hit

In-work poverty in the EU increased from 8.3 % to 9.4 % between 2007 and 2018. Mind you, this was even before the Coronavirus crisis, which particularly effects low wage earners, including a disproportionally high number of women. For months, many of the “frontline” workers, sustaining the system – for example in the healthcare and care sector, but also in retail – have not only worked under more difficult working conditions, but also by putting their own health at risk. However, applause alone neither pays the rent, nor food or kindergarten. That is why AK President Renate Anderl  demands the permanent credit, which they are truly due – in Austria in form of a minimum wage of 1,700 euros, laid down by collective agreement.

Further information:

AK EUROPA: German Council Presidency sets priorities for a social Europe

AK EUROPA: Fair minimum wages – go ahead for second-stage consultation of social partners

A&W Blog: Justice for the true service providers

A&W Blog: The European Minimum wage is on its way – but how?