The European Union has managed to agree on a standard that regulates the minimum wage throughout Europe and strengthen collective bargaining. The directive, agreed this Tuesday morning between the Council of the EU and Parliament, represents a step forward in social and labor rights in the labor markets of the Twenty-seven and a further advance in the homogenization of working conditions. Although achieving this step forward has taken a lot of effort. And not only because there is an abyss between the minimum wage in Luxembourg (2,256 euros) and that in Bulgaria (332.34 euros), but also because it has not been easy for the countries that regulate these wages to agree through laws or decrees – the majority of the Twenty-seven, including Spain – with which they have a solid and salary negotiation through agreements, such as the Nordics and Italy. The way to reach agreement among the Member States has been to respect the current mechanisms of each country, but pointing out the criteria that must be taken into account.
It has been a long time since Brussels gave up setting a minimum percentage, either on the average or the median salary of each State, which would serve as legal ground for all. This was one of the things that generated the most rejection among the Nordics, especially in the unions of these countries, which, given their higher starting point, feared that this would become a downward objective and degrade their working conditions. It also collided with the distribution of powers between the European Union and the Member States, which does not allow the former to directly determine how salaries are set. To overcome these obstacles, the directive, which must now be ratified by the plenary session of the Parliament and by the Council of the EU, takes the path of indirect regulation by establishing updating procedures and criteria, especially for countries with a minimum wage established at through laws. To these he tells them that they must take into account the evolution of the cost of living and use indicators to guide the evaluation and adaptation of these salaries. The legal text advises that these references observe a basket of goods and services at real prices (food, clothing, housing or the need to participate in cultural, educational and social activities).
In addition to these criteria, the EU also establishes the need for the lowest salaries to be updated regularly (at least every two years, or at most every four years where automatic indexing tools are used). The participation of social agents in setting these remunerations and the creation of minimum wage evaluation bodies are other aspects of the law.
Expand the coverage of the agreements
Along with this, the agreed directive proposes expanding the coverage of the agreements, that is, increasing the number of jobs covered by the collective bargaining of working conditions. This is what is known in labor market jargon as reinforcing collective bargaining. “Countries with high coverage tend to have a lower proportion of low-wage workers,” says the European Commission in a statement celebrating the agreement. This sentence is written, above all, keeping in mind what happens in the Nordic countries, where high union membership and the negotiating tradition are of great importance in determining all salaries and in the fight against pay inequality. In other countries, such as Spain, where there is a wide coverage rate of the agreements, there is more presence of low wages (this was corrected, in part, since 2017 by the significant increases in the minimum wage and the framework agreement of collective bargaining of 2018).
“The directive asks the Member States in which the coverage of collective bargaining is less than 80% to establish an action plan to promote it,” adds the note from the Community Executive. Setting this goal, even if it is merely a recommendation and promotion, is a challenge for some countries in Central and Eastern Europe, such as Poland. For example, in this country, where collective bargaining takes place in the business sphere, not in the sector, and, therefore, it would be difficult to achieve this figure based only on promoting the use of agreements if there is no legal change. The norm also attaches great importance to the collection of data on collective bargaining coverage and “adequacy of the minimum wage.”
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Little impact in Spain
In Spain, this aspect will hardly have an impact because the coverage of the agreements is very high. Traditionally, it is above that percentage of 80% thanks to the legal regulation of collective bargaining: when a sectoral agreement of the majority unions (in the sector and in the corresponding territory) affects all workers, whether they are affiliated or not; in company agreements, when signed by the majority of the committee.
For the European Commission, establishing shared criteria for minimum wages and reinforcing collective bargaining was one of the priority tasks that the president herself, Ursula von der Leyen, set two years ago in her speech on the State of the European Union in 2020. “The dumping Salary destroys the dignity of work, penalizes employers who pay decent wages and distorts competition in the single market”, declared the German then. “Everyone should have access to minimum wages through collective agreements or legal minimum wages.”
That declaration sets out the two objectives for which the Commission has pursued this directive despite the resistance it encountered, there was also resistance among the eastern countries, which base much of their competitiveness on having lower wages: guaranteeing decent working conditions and avoid unfair competition. “Member States will have to collect data on the coverage and adequacy of the minimum wage, and ensure that workers can access dispute resolution and have the right to redress. Compliance and effective enforcement are essential for workers to truly benefit from access to minimum wage protection and to promote a competitive environment based on innovation, productivity and respect for social norms”, added the Vice President responsible for the economic and commercial portfolio, the conservative Valdis Dombrovskis.
The Spanish Labor Minister, Yolanda Díaz, happily received the agreement reached this morning. “A great step in which our country has played a key role. Work with rights must be at the center of the European project”, Díaz declared in a message on Twitter. Almost more than in the actual conformation of the criteria to update the minimum wage, Labor’s interest focused on the reinforcement of collective bargaining, a purpose that it pursued with the labor reform and that it now sees reinforced.
Today Europe advances!
This morning the agreement was closed for a minimum wage directive that protects the European social majorities.
A great step in which our country has played a key role. Work with rights must be at the center of the European project. https://t.co/sEDh5OFiRh
– Yolanda Diaz (@Yolanda_Diaz_) June 7, 2022
“Workers across Europe deserve fair wages that provide decent living conditions and union representation, and today’s agreement can be a game changer for millions of workers struggling with the cost of living crisis,” said Deputy Secretary General of the European Trade Union Confederation, Esther Lynch. “If the directive is implemented correctly, not only will legal minimum wages be fairer, but it will also protect and promote collective bargaining,” she added.