The European Commission chaired by Ursula von der Leyen announced, on Tuesday 14 January, the launch of the first stage consultation of the social partners on the possibility of “action” to address the challenges of achieving fair minimum wages in the EU.
Thus, the Commission asks social partners in particular whether EU action is needed to address the adequacy and coverage of minimum wages among Member States, the need to promote collective bargaining in setting minimum wages, or the need to ensure that there are clear national mechanisms for the adjustment of statutory minimum wages. It will also examine whether the social partners want to take up the subject in full or only certain aspects in order to negotiate a collective agreement.
The Commission knows that it is walking on thin ice. As soon as he took office, Nicolas Schmit went to meet Denmark and Sweden to guarantee them full respect for their respective social models (see EUROPE 12387/17). In the consultation, the Commission thus repeats that it is certainly not seeking to introduce a uniform mechanism for setting minimum wages or to determine the level of pay or even to affect collective bargaining where it operates.
Minimum wage and productivity gains
In other words, the objective of the European Commission is to ensure that the principle of a minimum wage is as “inclusive as possible” on the one hand, and to ensure that the mechanism for setting the minimum wage is operational on the other.
The difficulty is, in particular, enabling the Central and Eastern European Member States to continue to enjoy wage competitiveness, the only economic advantage they have over the Western Member States, while at the same time avoiding active social dumping. According to one source, the European Commission will pay particular attention to ensuring that the minimum wage is not lower than productivity gains at the national level.
The willingness to act on minimum wages in the EU was announced very early on by President Ursula von der Leyen, in connection with the implementation of the European pillar of social rights (and its principle 6). And for good reason: the institution itself notes that the situation of low-wage workers has deteriorated and that wage inequality has increased in recent years, noting that the share of working poor has slowly increased to almost 10% of workers.
The challenge is to act without upsetting the patterns of national Member States. Currently, 22 Member States have a statutory national minimum wage and 6 others have wages determined by collective bargaining.
A timetable that can be undermined by the social partners
The timetable for consultations is based on Articles 153 and 154 of the Treaty on the Functioning of the EU. This first consultation, which lasts 6 weeks, is intended to determine the possible direction of action by the Union. Subsequently, if the Commission considers Union action desirable after such consultation, it shall consult the social partners on the content of the envisaged proposal, after which social partners shall deliver an opinion or recommendation to the Commission. They may also, at any time, inform the Commission of their willingness to initiate the process of finding a conventional agreement (Article 155 of the TFEU). The duration of this process may not exceed 9 months, unless the social partners concerned and the Commission jointly decide to extend it.
Unions disappointed, employers on the alert
The European Trade Union Confederation reacted immediately and regretted the lack of ambition in the European Commission’s proposals, since nowhere does it mention the need to raise the legal minimum wage to 60% of the median wage, which corresponds to the poverty line. At present, only France and Portugal have adopted this approach, according to the Confederation. For trade unions, the Commission could set an example and conclude contracts only with companies that recognise trade unions.
On the employers’ side, BusinessEurope welcomed the proposal and insisted that the discussions must be taken in hand by the social partners. However, in its press release, the organisation points out that wages are not the “right tool” for redistributing wealth and that there are other means such as taxes and social protection. (Original version in French by Pascal Hansens)