Nicolas Schmit: ‘The first dignity of work is to pay people a fair wage’

Nicolas Schmit, member of the European Commission in charge of Jobs and Social Rights. [European Union]

Nicolas Schmit will have a busy 2020. The EU Commissioner for Jobs and Social Rights outlined on Tuesday (14 January) a comprehensive agenda to beef up the EU’s social policies. He discussed the details in an interview with EURACTIV.

Born in 1953 in the small town of Differdange, Schmit served for a decade as employment minister of Luxembourg.

His nomination to Brussels did not come as a surprise. A convinced European, he knows the EU institutions well from the time he spent in Brussels as Luxembourg’s ambassador and permanent representative to the EU (1998-2004).

Now back in Brussels, he has a busy year ahead. In the first 12 months of his mandate, he aims to deliver a Gender Equality Strategy, a strategy for persons with disabilities and an updated Skills Agenda. He also intends to table proposals for a reinforced Youth Guarantee, organise a Platform Work Summit, and prepare a new action plan to implement the European Pillar of Social Rights for 2021. 

But his most controversial and eagerly awaited proposals are plans to ensure fair minimum wages across the bloc and set up a European Unemployment Reinsurance Scheme.

“We have to restore the dignity of work. And the first dignity of work is to pay people a fair wage,” Schmit says.  

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Schmit’s view on the economy 

When asked about the job title of his colleague and supervisor at the Commission, Valdis Dombrovskis, – “an Economy that works for people” – Schmit has a straightforward reply.

“We have to make sure that the economy has high productivity andvery strong level of innovation.” But the economy also needs to respect “social protection and labour rights” and ensure “everybody takes a fair share on what is produced.”

Schmit believes in the importance of strengthening the EU’s so-called social pillar, saying the market has failed to deliver a fair deal for workers.

“We forgot about the social and we focused on the market believing that the market would settle that. It has sadly not,” he said.

“The market has brought us into a financial crisis, it is producing growing inequality in our society, which is bad for social cohesion, bad for our societies, bad for politics – we see populism growing up everywhere,” Schmit continued.

“In the end, it is bad for the economy,” the Luxembourgish Commissioner stressed.  

With the advent of the digital economy, the green transition, and globalisation, “we have to reinvent the social market economy to respond to these new challenges,” he argued.  

And in order to do so, Schmit believes in dialogue. “My method is not just to come up with a proposal that’s final, take it or leave it,” he explained. “I want to listen to social partners.”

According to him, collective bargaining can also deliver results. “I do not ask for regulating everything by directives and so on. I would like much more involvement by social partners,” the Commissioner said.

Rather than tabling legislative proposals straight away, he chose a softer approach launching public consultations instead.

Timmermans calls on all EU members to adopt minimum wage

European Commission Vice-President Frans Timmermans on Monday (6 May) called for each EU member to have a minimum wage equivalent to 60% of its median salary to reduce the bloc’s growing wealth gap.

A minimum wage for Europe?

Without doubt, his flagship measure during this mandate will be a proposal for an EU minimum wage initiative.

Schmit has already started sounding the opinion of EU member states and the European Parliament and has launched a consultation with stakeholders, including social partners, aimed at coming up with a proposal by September this year. 

The admission that a minimum wage initiative is required at EU level represents a “paradigm shift” for the Commission, Schmit pointed out. In the past, EU officials have tended to ask member states for cuts in salaries. Now, that logic has been reversed, he says. 

“The economic and social consequences were not good,” Schmit pointed out. People “have to be paid for their work in order to live a decent life,” he added.

Schmit is aware that he will face resistance in a number of member states, starting with Sweden, Denmark and Finland, which fear their social standards will be watered down.

But he is ready to make his point. “I do not want to destroy, alter or whatever the system which exists in a few member countries where wage setting is based exclusively on collective bargaining,” he said. 

In fact, “I would even prefer that this system is extended to other countries,” he claimed. However, “what they also have to understand is that we had in the last years a wage gap in Europe,” Schmit added.

“A lot of people in these countries are working and living with very low wages,” the Commissioner explained, adding that often these do not reflect productivity. “This is bad for these countries,” and “it’s also bad for high-wage countries because then wages become the only definition where companies invest,” he remarked.

While he supports social convergence Schmit insists a harmonised EU-wide minimum wage is not the goal. Rather, he argues in favour of “fair wages” across the bloc that would “bring us in a new dynamic of positive wage setting.” 

Another eagerly awaited measure is the EU unemployment reinsurance scheme. Although member states seem reluctant to adopt risk-sharing measures, Schmit said he is “reasonably optimistic” about reaching a compromise. 

“We have seen, especially in the eurozone, that we do not have the stabilising instruments we would need, especially when in a country there’s a strong surge of unemployment,” the Commissioner explained. 

During the financial crisis, countries in trouble often decided to cut unemployment benefits. But “by cutting unemployment, the same as by cutting wages, you cut internal demand and finally, your economy loses a lot of GNP and your financial growth is decreasing,” Schmit pointed out.

In that context, an EU unemployment reinsurance scheme “would be a useful instrument,” he argued.

The skills gap – an economic burden for the EU

Digitalisation, the transition towards a greener economy, demographic changes… have increased the skills gap. As workers and companies struggle to deal with it, the European economy suffers. The EU is working to reduce it.

A more inclusive labour market 

Updating the Skills Agenda and redesigning the European Youth Guarantee are also key priorities for Schmit.

With digitalisation and the green transition, half of Europe’s labour force needs to be retrained, he said. “More than a hundred million people have to be up-skilled, not within the next 20 years, but in the next five years!” the Commissioner remarks.

It is an enormous challenge, but a challenge Europe needs to address. “A lot of people have lost trust in our economic system because they have the feeling that it is just working for the few, and losers are not sufficiently taken into account,” Schmit noted. 

“This is not only about giving people better opportunities but also about rebuilding trust in our in our economic system,” he stressed. 

Platform workers are among the most vulnerable categories in this changing labour market and Schmit intends to tackle the issue as well.

“First, I’m not against platforms. I think that’s part of our new economy and it’s important for Europe, not to lose the edge with this economy,” he said.

“At the same time, we have to make sure that people who work on these platforms are not just a new underprivileged workforce,” the Commissioner warned. “We cannot have the economy of the 21st century with working conditions that are more comparable to those in the 19th century,” Schmit stressed. 

The Commissioner explained that while many young people voluntarily opt for work in platforms because it awards them more flexibility, they should be entitled to the same labour rights, social protection and access to the healthcare system. 

“Sustainability is not just about the environment, it’s also about people,” Schmit stressed. “We have to offer people sustainable living and working conditions”.

A more inclusive labour market also means tackling gender discrimination. “It’s first a value issue, but in the end it’s also an economic issue,” he said. In the coming months, the Commission will put forward a proposal to increase pay transparency. According to Schhmit, this will contribute to reducing the gender pay gap, which currently stands at 16% on average across the EU.

Supporting people with disabilities and other vulnerable collectives, Schmit explained, “It’s fighting poverty because very often these vulnerable groups are exposed to social exclusion. So this is something which is also high on our agenda.”

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A joint effort

The European Pillar of Social Rights was introduced in 2017 under the previous Commission and yielded proposals such as the work-life balance directive and the directive on transparent working conditions.

Schmit’s programme does not mention the proposed reforms of the regulation on the coordination of social security systems, which is currently stuck in the Council of Ministers. When questioned about his views on the topic, Schmit smiled, as Luxembourg is one of the countries most reluctant to agree to the idea. 

“When you become a Commissioner, you have to forget a bit about your passport,” Schmit said, adding that he was never fully opposed to the plan. However, the Commissioner explained, “we now are stuck and the situation has become much more confusing,” given the divisions within the European Parliament and the Council.  

Still, he believes a compromise can be found. “We have to save this regulation,” Schmit said. “There is still a need for better coordination of social security because mobility is still going on. We have to make sure that people keep their rights,” Schmit insisted while underling the need to find a compromise acceptable to all member states.

For Nicolas Schmit, moving towards a more social Europe is as important as making sure existing legislation is correctly applied. “We have to implement what has been decided,” he said, warning that the recently-established European Labour Authority will play an important role in monitoring implementation of EU laws and regulations. 

Of course, there are still areas “where there is a need for more social Europe,” Schmit admitted.

But the implementation of EU social legislation “is not just business for the Commission,” he added, recalling that social policy “is a shared competence” with EU member states which retain the upper hand when it comes to social measures. The EU executive “will propose directives where needed” but it is also up to countries to drive the agenda forward, he said. 

Schmit sees Europe as a common space for discussion, exchange of good practice and brainstorming to find solutions to shared challenges. That might be why he has put dialogue at the core of his roadmap for a Strong Social Europe.

Social security reform postponed until next European Parliament

Deep divisions among MEPs made it clear on Thursday (19 April) that the social security coordination directive, aimed at enforcing the rights of mobile workers, would be postponed for the next European Parliament, after May’s EU elections.

[Edited by Frédéric Simon]

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