EU minimum wage legislation can help drive much-needed momentum for social policy reform, writes Oliver Röpke.
Oliver Röpke is the president of the Workers’ Group of the European Economic and Social Committee (EESC)
The proposal for a minimum wage directive currently under discussion is of key political importance. It is the Commission’s social policy flagship initiative, announced by President von der Leyen at the beginning of her term of office. The proposal is not free from controversy, as expected in such an important measure.
At its recent plenary session, the EESC backed with a broad majority a favourable opinion supporting it, but was nonetheless also witness to diverging views. However, with earlier doubts on the legal grounds for action cleared by the Council’s legal service, solutions can be found to avoid any negative interference with national collective bargaining systems.
What Europe do we want?
European trade unions agree that cases such as Laval or Viking cannot happen again. But the fact that they took place shows that the EU’s ‘interference’ in social matters has been with us for a long time. It would be a mistake to think otherwise when monetary policies are decided at the EU level and many economic and social ones are conditioned by common European decisions.
The question, therefore, is not if Europe should play any role in social policy. Rather, it is what kind of role it should be. Do we want an EU where the four freedoms are used to trample over social rights? Or do we want policies that ensure justice and convergence, in a completed single market that ensures the social, economic, and environmental sustainability of the EU?
The need for action at EU-level
Europe needs to make sure that workers benefit from adequate minimum wages, that poverty wages end and that wage setting systems through collective bargaining are strengthened again after years of stagnation and decline. The results of this are painfully evident: one in five Europeans are at risk of poverty, and inequality levels have either stagnated or worsened since 2008.
The divide between east and west is huge, and getting bigger, since the 2008 crisis. In 16 member states, in-work poverty rose from 2010 to 2019, leading to one in ten workers in the EU being considered working poor. The gender pay gap will not be closed until 2104 without further action.
Truth be told, the European Union has made little progress towards its aim of raising the quality of employment over the last decade and, in the case of Greece, even gone backwards, a new ETUC decent work index has found. The index also highlights how GDP has little bearing on decent work or its reliability as an indicator, particularly in cases such as Ireland.
Social Policy: a turning point
However, we are observing a fundamental shift in paradigm in the EU, started under the former College of Jean Claude Juncker, that identified a massive social imbalance in EU policies and took decisive steps to correct it.
A milestone on this was the European Pillar of Social Rights, with decisive support from the Swedish Prime Minister Stefan Löfven. The Pillar is not just a compass but must be turned into concrete policies. European citizens would not understand such a display of principles if they do not come accompanied by tangible effects.
The minimum wage directive would not, as sometimes claimed, come into force in the middle of the corona crisis, but, as usual, after an implementation process of several years, leaving governments and social partners time to adapt.
This should not be achieved through a one size fits all approach but through a rather cautious approach in the minimum wage directive, which is primarily intended to strengthen collective bargaining in the member states.
This is one of the many reasons why the EESC recently voted with a clear majority in favour of the Commission proposal and rejected doubts about the legality of the directive.
The EESC opinion says clearly that the proposal “is carefully designed to respect national traditions, laws and practices, and that it leaves discretion for adaptation to the domestic context in its obligations.”
Making the European Pillar of Social Rights a tangible reality
Europe now faces the next logical step, the implementation of the Social Pillar Action Plan, which was presented at the beginning of March by Vice President Dombrovskis and Commissioner Schmit.
For the first time in many years, Trade Unions feel that the Commission is bringing forward initiatives for a more social Europe, including binding legislative measures to respond to the changes in the labour market and in society.
This contrasts with the experience of the crisis and the damage created by austerity policies that stalled economic growth, fostered divergence and inequality, and severely damaged the acceptance of the EU among working people.
The current Portuguese presidency has the political momentum to push for a more social Europe. The vast majority of the EESC supports this initiative; our Committee, as the organised civil society, must use and support this momentum.
The latest Eurobarometer survey confirms citizens’ expectation that Europe must tackle economic and social recovery equally.
The message of organised civil society is clear: all those involved in the negotiations should now work on a constructive solution for a minimum wage directive that ensures all workers benefit from functioning collective bargaining systems and reasonable minimum wages.
This is also a question of European solidarity and responsibility with workers and their families, especially in Central and Eastern European countries and in the south of the EU.
The European trade union movement and the EESC workers’ group supports the proposals of the Portuguese EU-Presidency and will help make the Porto Social Summit a political success.