In her political guidelines , Commission President Ursula von der Leyen referred to the need for action to enforce fair and adequate minimum wages throughout Europe and picked up on an important demand of the S&D group during the EU election campaign. The European Pillar of Social Rights, whose further implementation shall be enforced by an announced Action Plan, serves as the political foundation. The Commissioner for Jobs and Social Rights, Nicolas Schmit, had already emphasised within the scope of the first-stage consultation at the beginning of the year that the Commission was not interested in harmonising or introducing a uniform European minimum wage, but that it wanted to create a coordinated upward convergence and support collective bargaining.

Fair minimum wages as part of the European recovery strategy

Schmit confirmed that one of six workers in the EU has to be classified as a low-income worker, a large part of whom are women. During the Covid-19 pandemic, these workers maintained both society and economy; however, paradoxically they are hardest hit hardest by the crisis and by subsequent economic insecurities. According to Schmit, working on the minimum wage initiative had to be part of the European recovery strategy – after all, everyone deserves an adequate standard of living.

Having reviewed a total of 23 contributions by trade unions and employers’ associations, the Commission has now submitted a second-stage consultation document. This emphasises the necessity of strengthening collective bargaining, playing a “key role” for fair minimum wages and the fight against in-work poverty and income injustice, such as the gender pay gap. Referring to the deficits of minimum wage regulations that become even more apparent during the COVID-19 crisis, it is intended to also support the integration of all workers into minimum wage regimes and to abolish exemption provisions. Concerning the adequate amount of national minimum wages, it is planned to work out criteria for setting minimum wages, which would take account of the socio-economic standards in the Member States and enable a regular and adequate adjustment of the minimum wage. Apart from that, the Commission considers a strengthened role of social partners in negotiations of statutory minimum wages to be necessary. Additional monitoring shall supervise the national minimum wage frameworks and their consequent compliance.

Directive or recommendations on minimum wages?

The Commission names two approaches for the political implementation of the initiative, which shall be assessed during the second-stage consultation. On the one hand, one might consider a Directive on working conditions as a legislative measure, which could implement binding minimum requirements on minimum wages in the Member States. On the other hand, non-binding Council Recommendations could also provide a common political framework, which should support Member States in coordinating their minimum wage policies – however, without binding targets. In respect of the issue’s sensibility, the Commission once again emphasises the autonomy of both Member States and social partners in respect of setting the amount of the minimum wage and the concrete national transposition of a Directive and promises not to interfere in well-functioning collective bargaining systems, for example that of Austria. The European social partners now have until 4th September 2020 to submit their contributions and to propose an implementation, which is the best in their view.

ETUC: Strengthening of collective bargaining essential

In its first contribution to the consultation, ETUC came out in favour of sectoral and cross-sector collective agreements as the best means for adequate wage-setting and for strengthening livelihood-securing wage floors. Furthermore, only healthy collective bargaining systems could ensure workers’ participation and include those workers, who often were excluded from minimum wage regimes for the purpose of an easier entry into the labour market.

ETUC named the second-stage consultation a step in the right direction and once again pointed out that the strengthening of collective bargaining must not remain an empty phrase. For example, employers, who refuse collective bargaining, should not be awarded public procurements. Furthermore, according to ETUC, the Commission still has not made a clear commitment to living wages, amounting to at least 60 % of the Median income. Apart from that, the mainly economic-liberal orientation of the European Semester and insufficient political answers to new forms of work, for example platform work, in recent years were not very helpful to promote fair wages throughout Europe. Between 2011 and 2018, fifty country-specific recommendations were issued within the scope of the European Semester, which suppressed wage growth. It is therefore of utmost importance that this year’s progressive design of the country-specific recommendations will become a lasting trend in the European Semester process.

Further information:

European Commission: Fair minimum wages: Commission launches second-stage consultation of social partners

AK EUROPE: Setting the social policy course in der COVID-19 crisis: Commissioners in exchange with MEPs

AK EUROPE: a strong social Europe: new EU Commission presents Communication