24 March 2021
Minimum wages: guaranteeing decent pay for all

Minimum wages: guaranteeing decent pay for all

Plenary session of the European Committee of the Regions

The idea that work is the best remedy for poverty does not apply to a significant and growing number of European workers, for whom a job is not enough to make a living. This situation, defined as "in-work poverty ”, exacerbates social inequality and social exclusion at a time when the COVID-19 pandemic is already placing an enormous burden on the most vulnerable workers.

According to the Eurostat definition, workers are at risk of in-work poverty when their disposable income is below 60% of the national household median income. Eurostat figures show that, in 2018, 9.4% of European workers were at risk of poverty in 2018, thereby posing a serious threat to social cohesion both within and among Member States. Moreover, between 2019 and 2020, the percentage of workers at risk of poverty actually increased in 16 Member States.

It is against this worrying background that the European Commission, after a two-stage consultation of the social partners, came up with its keenly awaited proposal for a directive on adequate minimum wages on 28 October 2020. The progressive family, including the European Trade Union Confederation, has been calling for a proposal on fair minimum wages for a long time. As Commissioner Nicolas Schmit (PES/Luxembourg) put it, “it’s not normal that people who work quite hard very often cannot earn a decent living”.

 

COVID-19 heroes: when applause is not enough

When the COVID-19 pandemic first hit our continent, millions of frontline workers across Europe kept our societies running, putting their own health and life at risk. However, those same workers delivering essential services during the pandemic are at the bottom of the pay scale, just like workers in retail, food-supply chains and care roles. The COVID-19 pandemic has hit them harder than anyone else.

Despite the flowery message of thanks, many of those workers still receive a poverty wage. Refuse collectors, public transport employees, platform workers and farmworkers have rightly been identified as the COVID-19 “heroes”. The least we can do is express our recognition in the form of an adequate minimum wage.

It is therefore no coincidence that, according to a recent Eurobarometer survey, 9 in 10 Europeans consider it “important” that Europe becomes more committed to equal opportunities and access to the labour market, fair working conditions and social protection and inclusion.

Jobs alone are not capable of ensuring a decent standard of living. Therefore, the European Commission proposal for adequate minimum wages focuses on the following four pillars:

  • the adequacy of minimum wages, byproposing guidelines and indicators to assess their adequacy in the light of national economic and social conditions;
  • effective protection of workers in the EU, involving the promotion of collective bargaining coverage, whereby people are covered by collective agreements negotiated by the social partners;
  • involving social partners in the adjustment and setting of collective agreements;
  • setting clear and stable criteria for minimum wage updates.
     

The proposed directive also accounts for the fundamental differences between Member States as regards the way minimum wages are set. While adequacy thresholds are in place for countries with statutory minimum wages, this is not the case for countries where minimum wages are exclusively set through collective bargaining.

 

European Regions and cities' plea for fair working and living conditions

Regions and cities in Europe supported the draft directive on adequate minimum wages at the European Committee of the Regions' March 2021 plenary session. Local and regional authorities are committed to a more social, fair and sustainable social market economy, which cannot be achieved without combating in-work poverty and securing upward convergence of minimum wages.

As PES member Peter Kaiser, Governor of Carinthia and rapporteur for the European Committee of the Regions’ opinion on Adequate minimum wages in the European Union puts it: “Decent minimum wages are an important building block of the European Social Pillar. Low-income earners’ contribution to our societies during the COVID-19 crisis deserves recognition, but above all, concrete action. There is an urgent need to tackle in-work poverty and the downward spiral of unhealthy labour cost competition. For work in the EU to be rewarding for all, we need a binding target of a minimum wage which represents at least 60% of the national gross median wage and 50% of the national gross average wage. This convergence process must respect existing national systems of wage setting and the autonomy of the social partners”.

 

 

While Member States remain fully competent as regards setting minimum wages, EU regions have an important role to play in driving this process of upward social convergence. Local and regional authorities are involved in enforcing the directive, for instance in terms of awarding public procurement contracts and negotiating regional collective agreements.

Echoing these views, Vasco Cordeiro, first vice-president of the European Committee of the Regions and PES Group member, said that “Local and regional authorities are in a key position to enforce, promote and monitor the proposed directive. Together with the Action Plan for the Implementation of the European Pillar of Social Rights and the Porto Social Summit, the directive shows that the EU cares deeply for its people, its social dimension and the post-pandemic recovery”.

 

Minimum wages at the heart of a fair, just and inclusive recovery

The crisis has shown the European Union that no recovery is possible without a focus on a fair, just and inclusive economy that leaves no one behind. At a time when the COVID-19 pandemic is hitting workers’ incomes, minimum wages could really represent a safety net against the risk of in-work-poverty.

It is now up to the European Parliament, specifically the co-rapporteur Agnes Jongerius (S&D/Netherlands), and the Council of the European Union to deliver on adequate minimum wages and to make the fight against in-work poverty a top priority!

 

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Photo by Ahsanization ッ on Unsplash.

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