Brussels, 17/04/2012 (Agence Europe) - The European Commission will, for the first time, on Wednesday 18 April deliver its opinion on the issue of the minimum wage, a topic which affects both competitiveness among member states and inequalities within national labour markets. In proposals which it is preparing to present in Strasbourg, the Commission argues for systems which establish “decent and sustainable” wages, while making the point that differentiated minimum wages, varying from one sector to another, could “be an effective means of upholding labour demand”, it says in its working paper, a copy of which has been obtained by EUROPE.
The paper, “Towards a job-rich recovery”, sets out a medium-term strategy for promoting the instruments that will get job creation back on track and bring a return to economic growth. It comprises three strands: supporting job creation; restoring the dynamics of the labour markets; and improving the governance of the EU. Of all the proposals contained in the document, the one on minimum wages is both the most politically sensitive and the one which has raised most controversy in a number of media. Given the level of attention paid to this issue, the spokesperson for Employment, Social Affairs and Inclusion Commissioner Laszlo Andor, Cristina Arigho, speaking 24 hours before the official publication of the employment package, sought to “correct any misunderstandings”. “We are not talking about a reduction in minimum wages”, or about a European rate, she stated. The Commission's aim is to underline, “and this is a first”, that the system of remuneration plays an important role, especially in tackling poverty and inequality, but that, working with the social partners, it “also has to be able to be regularly tweaked”, she said.
While Germany is often held up as an example of industrial flexibility, able to adjust easily to the fluctuations of the global economy, it also comes in for criticism for not having a national minimum wage system. The Commission seems to favour a hybrid approach, though this is not without its contradictions. Though such a system “can help prevent growing in-work poverty”, it is also a competitiveness instrument. And while the Commission highlights “targeted increases, which help sustain aggregate demand … where wages have lagged significantly behind productivity developments”, it acknowledges at the same time that “wage moderation might be necessary for some sectors or member states”. The chosen path is, then, one in which minimum wages are negotiated on a case-by-case basis favouring sectoral agreements over national systems. Here too, there is an exception, however: the states receiving financial assistance, for example Ireland and Greece, will have to considerably lower their wage rates, putting in place atypical employment contracts, inter alia for young people in Greece (see EUROPE 10583), which depart from the current norm on wages, redundancy rules and unemployment benefit rights. (JK/transl.rt)