The Open Balkan Initiative and the EU’s Minimum Wage Directive

This week we are talking about the EU’s minimum wage directive, what it means for workers and will it have an impact on inflation, as well as the Open Balkan Initiative, why it was touted as a mini Schengen for the Balkans and what the Russian foreign minister Sergey Lavrov has to do with it.

Malte: Hello, and welcome to EURACTIV’s beyond the byline podcast. I’m Malte Ketelsen. And this week we are talking about the EU’s minimum wage directive, what it means for workers and will it have an impact on inflation? But first I talked to Alice Taylor on the open Balkan initiative, why it was touted as a mini Schengen for the Balkans and what the Russian foreign minister Sergey Lavrov has to do with.

Hello, Alice. Welcome to the podcast.

Alice: Hello. Thank you very much for having me.

Malte: There’s been some interesting developments in the Balkans, in the last week. There has been a meeting between the heads of states of some of the countries, for the open Balkan initiative, as well as Lavrov being stopped from flying into Serbia.

So tell me a little bit about this. Why is this important?

Alice: There’s never a dull moment in the Balkans and this recent kerfuffle is a great illustration of this. So to start at the beginning, the open Balkan initiative, was born out of what was previously known as the mini Schengen initiative, which was an idea put forth by Serbia, Albania and North Macedonia, to create a free zone in the Balkans, which would facilitate the ease of trade of cooperation and also the movement of people. So essentially removing borders, letting citizens from each country reside in each country, recognizing university credentials. I mean, on paper, it sounds fantastic.

But then when you look at it in a slightly broader context of the region it becomes a bit more problematic because Kosovo has refused to be a part of it because Serbia doesn’t recognize it as a sovereign state. Bosnia has been very hesitant because they are concerned it could hamper potential EU integration in the future and Montenegro has been hesitant as well, although they are actually attending the current summit as an observer for the first time, so they could be set to join it. But yeah, the idea is to create essentially what the EU has, but on a Balkan scale. It sounds great on paper, but there are a lot of factors which are coming into play, which make it perhaps not so great. One of those was a comment by Sergey Lavrov earlier this week who appeared to support the initiative. So to give you a bit of background, he was due to fly into Belgrade to meet with Aleksandar Vučić. Serbia is the only country in Europe, which is not, apart from Belarus, enforcing sanctions against Russia. They’re actually still continuing to do business with Russia as normal. So Lavrov was due to come to Belgrade for a nice meeting with his dear friend.

But Balkan countries and Bulgaria refused to allow Lavrovs plane to fly. So he was forced to cancel and Lavrov made a comment that the EU wants a closed Balkans, and he spoke about this initiative. And this has caused outrage in the Balkans, as you can imagine, appearing to have support from Russia when its Europe’s only Russian ally Serbia, which is defacto spearheading the initiative. Analysts here, journalists are up in arms. And it’s been compounded by the fact that, enlargement commissioner Várhelyi is visiting the Open Balkan Summit today. So this is potential EU support for something which is potentially backed by Russia.

Malte: And what do you think the fallout will be after this?

Alice: Well, no, one’s really commented on it so far. I mean, the Albanian government has said nothing. Vučić has said nothing. They’ve just had a really nice photo shoot altogether stood in a line, smiling awkwardly. These governments are going to do exactly what they want, regardless of what the people want.

This is how things work in the Balkans. It’s sad to see in the case of Albania because obviously Albania and Kosovo share ethnicity and to see Albania, not backing Kosovo’s stance in this is quite upsetting for people in the region. Fallout. I don’t know. I mean, I think there should be fallout. I think the EU needs to distance itself from this initiative. Like I said on paper, it’s great, but nothing should be replacing the Berlin process. Nothing should be replacing enlargement and they should certainly be very cautious of supporting something, which is defacto led by Serbia and appears to have the support of the Russians, especially at this moment. So I think there needs to be more fallout the than there is. I honestly, I don’t think there is enough outrage about some of the things that go on in the Balkans. I think the west, the EU tends to turn a blind eye more often than not in the name of stability. And I think that does a huge disservice to what’s happening here. The people here and also it ignores the importance of what happens in geopolitics here.

Malte: Do you think the EU use kind of starting to wake up about the geopolitical implications in the Balkans, how Russia is still influencing, especially Serbia, in the region and what can be done really or what should be done?

Alice: I think they’re well aware. I think if, to not be aware, I would be surprised if these people who their job is politics and geopolitics didn’t know what was going on. But I think they’re too slow to react. This issue with Serbia has been simmering for a long, long time. Serbia being something of a black sheep of the Balkans is not new information. And Albania, for example, as well has huge problems with organized crime asylum seekers, the rule of law, media freedom. And instead of dealing with these issues and pushing for change in these issues.

The EU is just sort of said, yeah, you’re doing great. This is great. Come and join us. But then has not given a date has not moved forward with, with talks and the accession process. And these countries have gone well, okay, we’re going to take your money, but we’re going to do our own thing. It’s a lack of real action by the EU has left these countries feeling they have no real future, no real prospect and looking for alternatives elsewhere, but it has also rubber stamped authoritarian behavior, which is being displayed in these countries, which is now potentially aligning with Russia.

Malte: Hmm. I mean, that’s exactly the point, right? The EU accession process and the Balkans has somewhat stalled in the last 20 years, which obviously has left the door open for these alternatives, and has left these kinds of frustrations there. So how with the war in Ukraine with a kind of more emphasis on these geopolitics, with fast-tracked access for Ukraine into Europe, for Georgia to get in for Moldova, what’s happening in the Balkans here, do you think that this will also start getting more attention and that the process will start to speed up.

Alice: I’ve seen how the EU has reacted since the 24th of February this year. And it’s been impressive. They’ve shown that they’ve got teeth, they’ve shown that they can react quickly, that they can be firm. And this is impressive, but why have they not been able to extend this to the Western Balkans and other regions as well?

The EU has been dangling this carrot in front of these countries and there’s been no real impetus to really improve things. So this is why it’s stagnated for me, it’s like a vicious circle. The EU is not really progressing. The countries are not really progressing, but now we have, Ukraine, Moldova, et cetera, who want to come on board. I’m more optimistic about them joining the EU than I am countries like Serbia and Albania. Because I think these countries are really willing and really keen. I don’t want to use the word desperate, but really desperate to join the EU. And I think they will be far more willing to change their ways to enact reforms in order to achieve this.

So I think this is a good situation for these countries, but the Balkans? I don’t know. It concerns me a lot..

Malte: It seems like you feel like everything is a bit stuck right now in the Balkans, that there is no progress that there’s nothing moving forward and clearly there’s frustrations from the governments, in the Balkans as well that there is nothing happening. How can these things change.

Alice: I want to see the EU apply the same tenacity the same pressure, the same stance on the Balkans as they have done with this situation with Russia and Ukraine. I know they’re completely different, but the EU on one hand has shown it’s got the teeth to behave in this way and say, look, you have to stop doing this, or there are going to be consequences.

You didn’t stop. Okay. These are the consequences. This is not what’s happening in the EU. And I don’t think that can be any real movement until they start applying this sort of pressure across the board. So I would like to see the EU really put pressure on these countries to change, not to settle for just books ticking exercises in the name of stability, because at the end of the day, the governments come and go, but it’s the people who live here that deserve better than this.

So there needs to be more, more real pressure for change.

Malte: Alice, thank you very much.

Alice: Thank you.

Malte: You’re listening to EURACTIV’s beyond the byline podcast. Subscribe to our podcast newsletter on euractiv.com/newsletters. And if you want to expand your knowledge on other fields, you can listen to our digital brief podcast and agrifood brief podcast.

And if you have any comments or ideas, you can email us podcasts@euractiv.com.

In our second story, everyone is feeling the pinch of inflation at the moment.

So what can the EU minimum wage directive do to ease inflationary pressures on the lowest earners? Or will it come into force too late? I talk to, I talk to Janos. I talk to Yanus Aman about it.

In our second story, everyone is feeling the pinch of inflation at the moment. So what can the EU’s minimum wage directive do to ease inflationary pressures on the lowest earners? Or will it come into force too late? I talk to Janos Ammann about it.

Hello Janos

Janos: Hi.

Malte: So what is the minimum wage directive?

Janos: So the minimum wage directive was proposed by the EU commission. And it should set a framework by which member states, ensure that statutory minimum wages are at an adequate level because in some member states, minimum wages are quite low.

So they don’t really, ensure that people who work are not in poverty. So what it should do is to have some sort of standard EU wide that, minimum wages actually allow you to have a decent living standard. The directive, as it has been agreed on now by the negotiators from both the parliament and the EU council sets this framework, by which, these member states, have to periodically ensure that, statutory minimum wages are adequate and they say that adequate means about 60% of the median wage in a country. Or 50% of the average wage in a country, and this should be regularly revised every two years or every four years. If it is indexed to inflation, more over it, wants to push for more collective bargaining agreements. So, if a country has collective bargaining coverage of less than 80%, the country or the government has to, define an action plan on how to increase it. And more over the minimum wage directive wants to ensure that Workers actually have access to these rights that they know about the minimum wage rights they have, that they have access to trade unions. What is important to note is that it is not a Europe wide minimum wage. So it will not be the case that we have the same, minimum wage in Germany as we have it in Spain, for example, and also, regarding the minimum wage that this directive wants to, encourage is only applicable to countries that actually have a statutory minimum wage. So countries like Denmark, Sweden, Italy, who currently don’t have a statutory minimum wage, they are not obliged by this directive to actually implement a minimum wage.

Malte: Yeah. So it would be country-specific in essence,

Janos: Exactly. By taking these, uh, levels 60%, 50%, the, EU allows for these differences, between countries.

Malte: Um, and, and how would it affect people?

Janos: So the idea is of course, to have a certain upward convergence of low wage jobs so that, the lowest wage jobs, should get a bit closer to median wages, to average wages. So that exactly these in-work poverty it would not be a thing anymore. Now for example, if we take the 60% of the median wage in the Netherlands, according to Agnes Jongerius one of the raporteurs of the EU parliament in this directive. In the Netherlands this might raise the minimum wage, from between 10 to 11 euros to 14 euros an hour. So this is quite a significant change. now of course, this is a directive that is to be implemented by member states in two years. So this is why it will not affect them right away.

Malte: Um, and, the converse what do the employers have to say about it?

Janos: So in general, employers are quite skeptical of this. They are against government meddling, in the wage setting process. And of course this limits their power vis-a-vis the workers, because on the one hand, this directive, encourages more collective bargaining, meaning a stronger role of trade unions, which is not necessarily in the interest of employers.

But there is, of course also a more general argument that states or governments are too far far away from reality to say, what is an adequate wage. Um, and one could say that if you set the minimum wage too high, that it might actually kill off part of employment because it is not profitable anymore, and you might end up hurting some people. But it has to be said that this is only the case if you set a minimum wages very high and this is not really the case in the EU at the moment.

Schmit: There is not the citizens and the employers, employers are citizens and employers also have an interest to have fair wages in Europe. Do we consider that splitting the society in those who have, and those who have nothing is a fair and stable perspective. I don’t believe that. And it’s not something which employers should be in favor of.

Malte: So in this clip that we just had, commissioner Schmit seems to be on the workers side, was this one of his priorities, to work on? Or was it the French presidency that actually pushed for it?

Janos: So, I mean, commissioner Schmidt is a social Democrat. He is the commissioner for social rights and jobs. So he probably has a certain affinity for this topic. But it was a commission priority. They had one of their six priorities was, a an economy that works for people. They wanted to reduce inequalities and raising the minimum wage, and reducing in work poverty. I mean, this is kind of, what leads to that. So, yes, it was a priority of the commission and not just of commissioner Schmidt. but it was also a goal of the French presidency. The French government, always has this kind of pressure to prove to its people that, the EU is not just this, a social Neo liberal construct, that is, uh, basically an enemy to the French working class. So, this is something that they strive towards.

Malte: So it still has to be voted through in the parliament and then in the council as well.

So what are the chances?

Janos: So it went through the trilogues, meaning the negotiations between the council and parliament. , and the commission was also there of course. So, yeah, the negotiators are in agreement. In parliament I do not expect this to have any big resistance. I think they they are happy with this.

In the council, meaning in member, state governments, there will be some resistance. The Danish and the Swedish are very skeptical of this, because they have systems that are really based completely on, on collective bargaining. And they do not want any state intervention and not any EU state intervention, in their labor systems. Even though they are not that highly affected by this directive. But these two countries, are not enough to block it. Also Hungary was against this, directive earlier. So they might still block it, but, they need more governments to oppose it in order not to pass. We will know by mid to end of June, whether this will pass or not.

Malte: All right. as you said before, it’s only really going to take effect in two years time. Especially with the inflation happening the way it is at the moment, is that not too late?

Janos: So for the current purchasing power crisis that we clearly have, yes, it’s related. It’s not gonna, it’s not gonna help, a worker who struggles to pay his energy bills right now. So yes, for this it’s too late, but in the end, this is a long-term thing, all directives in the EU they have to go through this process of national transpositions. these two years are what they are. I guess in the long-term, this is still beneficial for low wage workers.

Malte: Well, thank you Janos for joining me today.

Janos: Thank you.

Malte: I’m Malte Ketelsen and this was EURACTIV’s Beyond the byline podcast, we will be back on your feed next week, visit euractiv.com for the latest news, and if you haven’t subscribed to the podcast, you can do so from your favorite podcasting app, this episode was produced by myself with the help of Alice Taylor and Janos Ammann. Our music is from audio network.

Goodbye.

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