On 25 November 2021, the European Parliament adopted the EU Directive on Minimum Wages and Collective Bargaining with a large majority, thereby giving the green light for negotiations between Parliament, Council and Commission. Minimum wages are important for reducing in-work poverty and wage differences and creating good working conditions.
Based on the Commission Proposal for a Directive on adequate minimum wages in the EU, the European Parliament’s Committee on Employment and Social Affairs (EMPL) has strengthened the planned measures in its report. On 25 November 2021, the report was adopted by the plenary of the EU Parliament with a clear majority (443 in favour, 192 against and 58 abstentions). As soon as the Council has found a position, the trilogue negotiations between Council, Commission and Parliament can begin. The collective bargaining negotiations, which have been strengthened by the implementation of the Minimum Wage Directive, are regarded as an effective means to counteract wage and social dumping and to ensure a living wage for all EU employees.
Promoting collective bargaining
It is important to state that the Minimum Wage Directive does not intervene in national collective bargaining but aims at promoting collective bargaining between employers and trade unions in the Member States. Hence, the Directive shall only apply if the coverage of collective bargaining is below a certain threshold. While the Commission Proposal provides for a threshold of 70 %, the Parliament is going further, calling for action as soon as fewer than 80 % of employees are covered by collective agreements.
Ambitious report by the EMPL Committee
Many aspects of the Parliament report are even more ambitious than the Commission Proposal. For example, the EU Parliament explicitly states that collective bargaining is the responsibility of trade unions. Furthermore, a new section shall ensure that the fundamental right to be a member of trade unions and to collective bargaining is being upheld and that any related discrimination is banned. Minimum wages shall be strengthened on the basis of public contracts by making public funds only available to those companies, that pay adequate minimum wages, are governed by a collective agreement and recognise employees’ right of assembly. The report further calls for the level of national minimum wages to be linked to the true cost of living. Here, the Parliament refers to a “threshold of decency” — wages should not be below 60 % of the gross median wage and 50 % of the gross average wage. Apart from that, everybody should be entitled to receive an adequate minimum wage; hence current national exemptions for certain groups of employees shall be prohibited in the Commission Proposal.
Position of the member states
Following the initial strong resistance by some member states, it is now likely that a compromise will be reached by the Council. Unfortunately, Austria is still vehemently opposed to a Minimum Wage Directive. Members of Parliament of the ÖVP also voted against the report, while parts of the EPP supported the initiative. Austria’s opposition is difficult to understand as – due to the particularly high level (98 %) of collective bargaining coverage - Austria would not be directly “affected” by the Directive. Furthermore, from an Austrian perspective, it should be viewed positively that minimum wages would mean a gradual convergence of the massive wage differentials in the EU, which could reduce the pressure from wage and social dumping on the Austrian labour market.
EU Parliament: New rules for fair minimum wages in the EU
AK EUROPA: Gemeinsamer AK und ÖGB Brief zum EU Sozialgipfel in Porto (German only)
A&W Blog: Ist die EU für die Mindestlohnrichtlinie eigentlich zuständig? (German only)