Brussels, 30/04/2014 (Agence Europe) - European Ministers for Employment and Social Affairs met in Athens on Tuesday 29 and Wednesday 30 April for an informal session of the Council on the question of the minimum income schemes and systems for setting salaries. One of the key issues was to tackle a problem often described by the term “handout”, or how to avoid subsidising people not going back to work.
On Tuesday 29 April, the ministers started their day with a meeting with the Social Platform on the “role of minimum income schemes”, which was followed by a meeting with the social partners, with whom the topics of discussions were similar: “Combating long-term unemployment and increasing the participation in the labour market” and “The role of wage setting systems and reforms on Employment Protection Legislation”. The second day was given over to two workshops on the subjects discussed the day before. The meeting closed with two plenary sessions, one on the conclusions of the workshops and the other on a subject which is close to the heart of the Greek Presidency: undeclared work.
The question of the minimum wage schemes is a vital issue during the economic recovery phase, Greek Employment Minister Giannis Vroutsis remarked during the press conference. However, although these schemes are necessary “social shields”, they must not be seen as anything but “temporary measures”, he said, stressing that all the ministers agreed on this point. However, Greece is one of the very few member states which do not have a minimum wage system. Vroutsis stated that his government was setting one in place for all Greeks, starting in 2016.
Vroutsis said that, in general, these regimes should be coordinated with measures to get people back on to the employment market, particularly with training and apprenticeship programmes. Here, the member states are trying to put forward new solutions, as shown by the recent announcement by French President François Hollande that apprenticeships would be extended to the long-term unemployed by removing the upper age limit. The question of their level has been looked into by the Commission, which is considering how to set “reference budgets” in order to help the member states to devise regimes which correspond to the principle of efficiency, Commissioner Laszlo Andor (Employment and Social Affairs) reminded the ministers.
This informal meeting of the Council partly devoted to the question of minimum income could not have been better timed. Scarcely three weeks earlier, the German Council of Ministers adopted a bill bringing in a legal minimum wage, laid down at €8.50 per hour gross. Although this decision is already seen as one of the most emblematic of the third term in office of Chancellor Angela Merkel, it is “not only an issue which is important for Germany but the whole euro zone”, said Andor.
The Treaty on the Functioning of the EU explicitly excludes pay issues from the scope of competences of the European institutions, but in reality these are dealt with, at least partly, in the framework of the “European Semester” process, or through the financial assistance programmes. The same applies for the national minimum income schemes, dealt with by the Commission in the global strategy of structural reforms in the social field (the so-called “Social investments” package) and in the country-specific recommendations. Andor also reiterated the Commission's position, which is to encourage states to adjust the level of the minimum wage to combat the risk of in-work poverty.
The principle of the minimum wage exists in all member states, albeit in different forms and without necessarily covering all workers. In the majority of EU countries, its level is laid down by the government. Austria, Denmark, Finland, Italy, Sweden and, until recently, Germany are exceptions, as the minimum wage in these countries is laid down by collective agreements, which excludes the notion of a set of rules common to all employees. The disparity is considerable, as seen by the two extremes of Luxembourg, where the minimum income is €1,788, and Romania, where it is just €122.70.
These differences are a considerable obstacle to laying down a uniform level across the whole of the EU. But what would happen if the Council decided tomorrow that all employees should earn at least 60% of the national median salary? Researchers from the European Foundation for the Improvement of Living and Working Conditions (Eurofound) examine the consequences of just such a scenario, in a study published in early March and entitled “Pay in Europe in the 21st century”. The conclusion is that the German workers would be the most affected, as nearly 25% of them would see their salary increase. The Baltic States, Ireland, Poland, Romania and the United Kingdom would also see considerable consequences, whilst Belgium, France, the Scandinavian countries, Portugal and Slovakia would see little change. Ultimately, this kind of scenario would have the greatest impact on women (21.5 would be affected) and young workers (35%). (JK)