A European minimum wage, the debate reloaded (2010)

On Tuesday, Belgian MPs, members of the Social Affairs Committee, voted – unanimously – a resolution to include the proposal for a European minimum wage on the agenda of the EU Presidency chaired by Belgium starting in July 2010. (1) The resolution was introduced by 4 Belgian Socialist MPs last October, in line with the Party of European Socialist (PES). The resolution does not specify a nominal value for a European minimum wage. Instead, it sets the minimum wage above the poverty line in each country, currently at 60 per cent of the country’s median income.

The resolution requests the Belgian Government to specifically:

    1. Include in the agenda of the Belgian Presidency of the EU to seal a European agreement on wages, providing for the establishment of a decent minimum wage in all Members States, either by law or by collective bargaining;
    2. Requesting, from the European Commission, an impact assessment of a European minimum wage, to highlight the process to successfully reach an agreement between the Member States;
    3. Submit any proposals on this issue to a broad consultation of European social partners;
    4. Submit the question of a European minimum wage to the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) where the EU labour and social affairs ministers will share their position on the issue.

Socialist MPs stress the urgency to address an unbalanced European Union: too focused on the economic growth and businesses’ interests (after the Conservatives won the battle on the infamous Bolkenstein Services Directive) and not enough – or not at all – focused on tackling poverty and social dumping within the EU.

The Belgian resolution is by no means a breakthrough as the debate is already underway within the European Parliament at the initiative of MEP Ilda Figueiredo (GUE), whose report will be discussed on April 28 by EP Committee on Employment and Social Affairs.(2) However it focusses on wages rather than income, and that is actually key if the EU MEPs really want work to actually pay and reduce the social dumping Member States practice heavily thanks to the huge gap between monthly wages within the EU.

The European Anti-Poverty Network (EAPN) is fighting for a lifeline rather than a European minimum wage with its campaign « Ensure an adequate minimum income for all ». It aims to make the EU governments accountable on the respect of human dignity (whatever that means …). « The 2008 EU Commission Recommendation on Active Inclusion recognises “the individual’s basic right to resources and social assistance sufficient to lead a life that is compatible with human dignity”, says EAPN.

Thanks to “the crisis”, wages may decrease further …

ETUI researcher Thorsten Schulten explains: “Against the background of the severe crisis of the world economy, the pressure will grow on minimum wages – and wages generally – across Europe. There is a serious danger that, with real or even nominally falling minimum wages, the ‘wage anchor’ underpinning the price system will come adrift, raising the threat of deflation as happened in the 1930s. Instead, appropriate increases in minimum wages are recommended to underpin demand and contribute to price-level and more general economic stabilization”. The European minimum wage policy has had advocates since 2007 in the persons of Luxembourg Prime Minister Jean-Claude Juncker and former EU Commission president Jacques Delors (3). Unfortunately, it is requiring a bold and extremely progressive move from EU Members States, considering the European Commission is rather obsessed only with growth at any cost, not really fighting poverty, even if it launched a year labelled on that theme. It’s just for show.

According to Eurostat in January 2009:

  • The value of the gross monthly minimum wage ranged from EUR 123 in Bulgaria to EUR 1642 in Luxembourg.
  • 20 out of 27 Members State have a statutory minimum wage applicable through all sectors of their economy.
  • Denmark, Finland, Italy and Sweden do not operate national minimum rates, but nevertheless, have minimum rates set through sectoral collective agreements that jointly cover a high proportion of the working population. Germany operates statutory minimum rates in the construction, janitorial and postal sectors only.(4)

[UPDATE] In January 2019:

  • 22 out of the 28 EU Member States (Denmark, Italy, Cyprus, Austria, Finland and Sweden were the exceptions) have a national minimum wage, as do all of the EU candidate countries (Montenegro, the former Yugoslav Republic of Macedonia, Albania, Serbia and Turkey).
  • Monthly minimum wages are ranging from EUR 286 in Bulgaria to EUR 2 071 in Luxembourg

Where to find low wages in the EU?

According to the Federation of European Employers (FedEE): “Employers in western Europe looking to save on wage costs are increasingly relocating operations to Eastern Europe, Asia and Latin America. In western Europe itself, there are significant differences in gross median weekly pay between the principal states. The countries with the highest gross pay levels are Denmark, Switzerland, Norway, Liechtenstein, Germany and Luxembourg. At the bottom of the pay league in the established EU states are Spain, Greece and Portugal. In fact, Portugal’s median weekly earnings are just 28% of those in Germany. Pay in the EU’s eastern European member states is generally much lower than in western Europe, with the highest rates being approximately one-third of those paid in Germany. Social security charges are generally higher than in western Europe, but corporate taxation is usually low enough to offset such costs”.(5)

Wage does not always suffice to lift workers out of poverty

Data show over 15 million Europeans are “working poor” in the EU27 in 2010. In Greece, Italy, Latvia, Poland, Portugal and Spain, for example, more than one in every 10 workers are in the ‘working poor’ category. Although data about trends regarding this phenomenon is scarce, the recent increase of atypical forms of employment, which tend to provide fewer working hours and consequently lower incomes (very short part-time work, for example), can lead to more people falling into in-work poverty.(6)

Not only does the EU need an ambitious European minimum wage to tackle poverty, but it must address the pay gap between rich western Member States and poor southern and eastern Member States to eradicate social dumping within the EU. The EU can no longer afford to fail its citizens for fear of increasing their wrath against the Union.

Corine Barella

(1) La Chambre des Représentants de Belgique
• 14 octobre 2009, PROPOSITION DE RÉSOLUTION visant à inscrire la question du salaire minimum européen à l’agenda de la présidence belge de l’Union européenne en 2010 (déposée par Mme Camille Dieu et consorts).
• 26 mars 2010 Texte adopté sous le nouvel intitulé de « Proposition de résolution visant à inscrire la question d’un salaire minimum situé au-dessus du seuil de pauvreté dans chaque pays européen à l’agenda de la présidence belge de l’Union européenne » en 2010 et le rapport accompagnant le texte de la Commission des Affaires Sociales.
(2) DRAFT REPORT 2010/2039(INI) on the role of minimum income in combating poverty and promoting an inclusive society in Europe (2010/2039(INI)), Committee on Employment and Social Affairs, rapporteur: Ilda Figueiredo, PR\810174EN.doc – PE439.981v01-00
(3) Thorsten Schulten, “Minimum wages in Europe: new debates against the background of economic crisis”, ETUI Policy Brief 2/2009
(4) Eurostat
(5) http://www.fedee.com/minwage.html
(6) data from the EU-SILC (Statistics on Income and Living Conditions) survey for 2007
More reading
MEP minimum wage debate 2007
EUROFOUND Minimum wage study 2007
ILO on vulnerability of employment due to the crisis
ILO minimum wage revisited in an enlarged Europe