Building strong social Europe

Minimum EU wage idea met with stark opposition

Photo: EPA Executive VP Valdis Dombrovskis presents the plan.

The Commission presented last Wednesday a communication on building a strong social Europe for just transitions, the EU press service reported. It sets out how social policy will help deliver on the challenges and opportunities of today, proposing action at EU level for the months to come, and seeking feedback on further action at all levels in the field of employment and social rights. The Commission also launched the first phase consultation on the issue of fair minimum wages in the EU, which has already caused an uproar.

“Europe is going through a momentous shift. As we go through the green and digital transformation, as well as an ageing population, the Commission wants to ensure that people remain centre stage and that the economy works for them. We already have an instrument, and now we want to ensure that the EU and its Member States, as well as stakeholders, are committed to its implementation,” Executive VP Valdis Dombrovskis said.

The communication builds on the European Pillar of Social Rights, proclaimed in November 2017. The Commission set out planned initiatives that will contribute to the implementation of the Pillar. Key actions in 2020 include fair minimum wages for workers in the EU; a European Gender Equality Strategy and binding pay transparency measures; an updated Skills Agenda for Europe; an updated Youth Guarantee; Platform Work Summit; Demography Report; etc.

“The working lives of millions of Europeans will change in the coming years. We need to take action to allow the future workforce to flourish. Europe's innovative and inclusive social market economy must be about people: providing them with quality jobs that pay an adequate wage. No Member State, no region, no person can be left behind. We must continue to strive for the highest of standards in labour markets,” Jobs Commissioner Nicolas Schmit pointed out.

According to the Commission, while the number of people in employment in the EU is at a record high, many working people still struggle to make ends meet. When taking the post, EC President Ursula von der Leyen expressed her wish that every worker in the EU has a fair minimum wage that should allow for a decent living wherever they work. The initiative aims at stemming the east-to-west “brain drain”.

With an eye on this, the Commission launched a first phase consultation of social partners - businesses and trade unions - on the issue of a fair minimum wage. The Commission wants to hear from social partners whether EU action is needed, and if so, to help negotiating the issue. The EC clearly states that there will not be a one-size-fits-all minimum wage. Any potential proposal will reflect national traditions, whether collective agreements or legal provisions. The Commission wishes to ensure all systems are adequate, have sufficient coverage, include thorough consultation of social partners, and have an appropriate update mechanism in place.

Even before being put on the table, the EU wage plan was met with strong opposition. Northern countries such as Denmark and Finland prepare to battle plans to introduce an EU-wide minimum wage over fears the measure will undermine their century-old models of collective bargaining. Danish Employment Minister Peter Hummelgaard said that his country backs higher wages for those least well paid in Europe but that “the means to achieve this goal must respect national traditions and well-functioning models”.

With the backing of major unions, politicians in countries where employer-worker negotiations set the rates of pay are to challenge the proposals. They argue that Brussels' intervention could ultimately lead to lower wages among their workforces. “In Denmark, wages are negotiated by the trade unions and the employers' organisations alone - it has been that way for more than 100 years,” Hummelgaard pointed out.

Across the EU only Denmark, Italy, Cyprus, Austria, Finland and Sweden do not have a statutory minimum wage. But workers in Nordic countries enjoy comparatively high average salaries with employers in Denmark paying labour costs of €43.50 an hour per worker in 2018 - the highest in the EU. Danes on even the lowest salaries can expect to be paid around €18 an hour. Swedish and Finnish workers are similarly well paid under their collective bargaining models.

Minimum wages on a monthly rate vary widely across the EU - from €312 in Bulgaria and €430 in Latvia to €1,635 in the Netherlands and €2,090 in Luxembourg.

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