Econostrum | Economic News in the Mediterranean

The EU validates a directive on the setting of legal minimum wages

Written by Frédéric Dubessy on Thursday, June 9th 2022 à 14:30 | Read 273 times

EU. The European Parliament and the Member States of the European Union (EU) reached a political agreement on Tuesday 7 June 2022 on minimum wages for workers in the EU.

The nineteen-article directive proposed by the European Commission at the end of October 2020 can therefore be formally approved by the co-legislators. It will enter into force twenty days after its publication in the Official Journal. Member States will then have to transpose it into national law within two years.

The EU will thus create a European framework for setting and updating statutory minimum wages. It also provides for the promotion and facilitation of collective bargaining on wages and for the improved monitoring and enforcement of minimum wage protection. But all this will be done "with full respect for national traditions and competences and the autonomy of the social partners. It does not oblige Member States to introduce statutory minimum wages, nor does it set a common minimum wage level across the EU", a European Commission press release insists.

9.4% of employees still face poverty

70% of minimum wage earners struggle to make ends meet (photo: F.Dubessy)
70% of minimum wage earners struggle to make ends meet (photo: F.Dubessy)
This new legal instrument "establishes a framework for the adequacy of statutory minimum wages, encouraging collective bargaining on wage setting and improving workers' effective access to the protection offered by minimum wages", as the statement says. "Adequate minimum wages are important to strengthen social equity and support a sustainable and inclusive economic recovery. Better living and working conditions also benefit enterprises as well as society and the economy in general by boosting productivity and competitiveness," the text continues.

According to figures published by the European Commission at the end of October 2020, the proportion of people in work but still facing poverty has increased from 8.3% of the total EU workforce in 2007 to 9.4% in 2018. Eurofound (European Foundation for the Improvement of Living and Working Conditions) reported in a 2018 survey on "minimum wage earners struggle to make ends meet" that 39% of EU employees answered this question "quite badly", 20% "badly" and 11% "very badly". On the other hand, the same study revealed that almost 60% of minimum wage earners were women.

"The EU has kept its promise. The new rules on minimum wages will protect the dignity of work and ensure that it is financially worthwhile to work. All this will be done with full respect for national traditions and the autonomy of the social partners", commented Ursula von der Leyen. The President of the European Commission had already committed herself to employee protection in her State of the Union address in September 2020.

21 Member States have a statutory minimum wage

For Vladis Dombrovskis, Executive Vice-President of the European Commission for an economy serving people, "this framework on minimum wages is a fundamental step towards protecting workers throughout the Union, while respecting national competences and the autonomy of the social partners. In the face of the repercussions of Russia's war on Ukraine, it is crucial that we protect people on low incomes. Minimum wages should guarantee a decent standard of living, while promoting innovation and productivity."

Nicolas Schmit, European Commissioner for Employment and Social Rights, added: "At a time when many households across the EU are concerned about not being able to make ends meet, it is essential that all Member States ensure access to adequate minimum wage protection. The framework that has been agreed by the European Parliament and the Council will ensure a dignified life for people on minimum wages. Today is a great day for a strong and protective social Europe".

Legal minimum wages exist in twenty-one EU Member States and in the other six (Denmark, Italy, Cyprus, Austria, Finland, Sweden), minimum wage protection is provided exclusively through collective agreements.

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