Minimum wages increasingly appear as proper tools to fight cross-border social dumping, argues Klaus Heeger, despite objections that the EU has little or no competence on pay.
Klaus Heeger is secretary-general of the European Confederation of Independent Trade Unions (CESI), a European umbrella organisation with members from EU and associated countries. He contributed this commentary in exclusivity for EurActiv.
"Alongside new calls for a move away from austerity measures towards job and growth stimulating policies, one particular issue raises enthusiasm and rejection at the same time: the question of 'setting minimum wages at appropriate levels' throughout the EU as part of the new package on 'job-rich recovery'.
Minimum wages increasingly appear as proper tools to fight cross-border social dumping, i.e. to create more social justice -in view of strong social disparities between the member states and one-sided labour migration within Europe - and to tackle increasing working poverty. In this understanding, 'setting minimum wages' would have to mean setting them at least 'throughout' the EU.
Objections of juridical nature have already been raised, underlining that the EU has little, if not to say no competence in respect of pay. However, European intervention in national wage policy is already reality as member states have to comply for instance with the guidelines and recommendations under the European Semester, the Stability and Growth Pact and the macroeconomic imbalance procedures, and above all when having to comply with the adjustment programmes of the EU and the IMF in cases of support from the ESFS/ESM.
Furthermore, the question of EU competence is not decisive when overrun by political will – such political will however, was difficult to achieve in the past: the setting of minimum wages throughout the EU was allegedly running against the member states' own national economic interests, i.e. competitiveness.
Yet in the present situation - as the EU and its member states are confronted with a new situation: a severe crisis and, as a consequence, the likelihood of ongoing fiscal integration- calls will become more and more virulent to envisage the setting of minimum wages throughout Europe, also as as part of the general new 'zeitgeist': In times when one-sided austerity measures are increasingly challenged, minimum wages throughout Europe fit into concepts of more demand-oriented economic stimulation policies, that is to say into wage-led growth models.
Whereas for instance the 2011 Euro-Plus Pact still aimed at lowering minimum wages to foster competitiveness, the latest June Summit Eurogroup results have shown another direction: financial support from the EFSM/ESM without full austerity measures to be taken, direct bank recapitalisation by the ESFS/ESM and a new Compact for Growth and Jobs mobilising €120 billion for growth and employment measures.
In its demands to the last European summit, the European Confederation of Independent Trade Unions (CESI) also welcomed the idea of setting up of a minimum salary in all member states of the European Union (respecting national competences, traditions, and especially the rights of the social partners to establish these through collective agreements).
Trade unions do increasingly recognise that local, regional or national wage policies may indeed lead to painful delocalisation, harmful in the end to all and employees. Hence, they must more and more be able to strike the right balance between their local, their national and their European interests, i.e. to be more and more aware of the impact of their own national wage policies on employment, recovery and prosperity in all of Europe.
And, although they must endorse the general objective of raising competitiveness throughout Europe, they have first and above all to ensure that this is not achieved on the back of employees."