EESC gives its input to the debate on decent minimum wages in Europe

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The European Economic and Social Committee (EESC) has adopted the opinion Decent minimum wages across Europe following the European Parliament's request for an exploratory opinion. The request was made after the Commission announced that it was considering proposing a legal instrument to ensure that every EU worker is entitled to a minimum wage allowing a decent standard of living.

Figures show that about one in ten workers in the EU earn around or below the national statutory minimum wage. In some countries, the existing minimum wage floors are currently not sufficient for workers to be lifted out of poverty by employment alone. The EESC said in the opinion that it remained concerned that poverty in general and in-work poverty were still significant problems in many Member States. At the same time, it emphasised that high-quality employment continues to be the best route out of poverty.

In its view, fair minimum wages could help reduce poverty among working poor people, combined with person-centred, integrated and active inclusion policies. They could also help meet a number of EU objectives, such as achieving upward wage convergence, improving social and economic cohesion and eliminating the gender pay gap. Women currently account for the majority of low-wage earners, together with other vulnerable groups, such as older workers, young people, migrants and workers with disabilities. Wages represent payment for work done, and are one of the factors that ensure mutual benefits for companies and workers. They are linked to the economic situation in a country, region or sector. Changes may have an impact on employment, competitiveness and macro-economic demand.

The EESC said that it recognises concerns regarding possible EU action in this area and does not underestimate the complexities of the issues involved. It acknowledges that the Commission will have to adopt a balanced and cautious approach.

It therefore stresses that any such EU initiative must be shaped on the basis of an accurate analysis of the situation in the Member States, and must fully respect the social partners' role and autonomy, as well as the different industrial relations models. It is also essential that any EU initiative safeguards the models in those Member States where the social partners do not consider statutory minimum wages to be necessary, notably those where wage floors are set through collective bargaining.

When setting statutory minimum wages, timely and appropriate consultation with social partners is important to ensure that the needs of both sides of industry are taken into account. The EESC regrets that, in some Member States, the social partners are not adequately involved or consulted in statutory minimum wage setting systems or adjustment mechanisms.

However, the three groups within the EESC, representing the EU's employers, trade unions and civil society organisations, have divergent views on the way ahead.

Rapporteur of the opinion, Stefano Mallia (Employers' Group), said: The COVID-19 crisis has caused and continues to cause huge economic losses, which will inevitably take a huge toll on businesses. Minimum wages is a sensitive subject that must be approached in a manner that fully takes into account economic consequences and the division of competences between the EU and the Member States, and that respects the specific features of national minimum wage setting and collective bargaining systems. The Employers' Group believes that the EU has no competence over pay, and pay levels in particular, and that setting minimum wages is a national matter, done in accordance with the specific features of respective national systems. Any misguided action on the part of the EU must be avoided, especially at this particular point in time. Where social partners need support, we should look into addressing specific needs by promoting exchanges of best practices and capacity-building and not fall into the trap of coming up with a one-size-fits all approach that could have serious negative consequences.

Rapporteur of the opinion, Oliver Röpke (Workers' Group), said:  This opinion comes at an opportune moment for the European Union and I'm very pleased that the EESC can contribute to the discussion on minimum wages in Europe. The COVID-19 crisis has again thrown a spotlight on the dramatic inequalities in our labour markets and in society, not least the severe income and job insecurity felt by far too many working people. Ensuring that workers across the EU benefit from decent minimum wages must be an essential part of the EU's recovery strategy. For the Workers' Group, it is undisputable that all workers should be protected by fair minimum wages allowing a decent standard of living wherever they work. Collective bargaining remains the most effective way of guaranteeing fair wages and must also be strengthened and promoted in all the Member States. We therefore welcome the Commission's recognition that there is scope for EU action to promote the role of collective bargaining in supporting minimum wage adequacy and coverage.

President of the study group which drafted the opinion, Séamus Boland (Diversity Europe Group), said: I believe this opinion will provide a high level of value to the many discussions across all EU Member States on the subject of minimum wages. It asserts the value of social partnerships as well as ensuring that all relevant stakeholders are included. The opinion emphasises the need to guarantee proper dignity and respect for all workers, especially those employed in lower paid jobs in our economy. I believe that the EESC can be proud of the work done in completing this opinion and I encourage all stakeholders to read it.

BACKGROUND

The Commission launched the first phase of the social partner consultations in January 2020, setting out a number of ways in which EU action could prove beneficial in enabling all EU workers to earn a living wage.

In June 2020, the second-phase consultations were launched, with the Commission spelling out the policy objectives of a possible initiative: ensuring that all workers in the EU are protected by a fair minimum wage which provides them with a decent standard of living wherever they work. At the same time, the Commission said that access to employment would be safeguarded and the effects on job creation and competitiveness taken into account. 

While preparing the opinion, the EESC held virtual consultations with stakeholders from five countries, chosen on the basis of their minimum wage setting mechanisms, which are included as annexes to the opinion. The stakeholders were sent a survey, the results of which were also included in the opinion. The EESC also held a virtual public hearing which included contributions from Commissioner for Jobs and Social Rights Nicolas Schmit, several MEPs and members of some of Europe's top network organisations representing employers, workers and other civil society organisations, such as BusinessEurope, the European Trade Union Confederation (ETUC) and Social Platform.