The Progressive Post

A major step forward for fair wages

Wages should never leave workers and their families living in poverty. However, that has been the reality for one in ten workers in Europe. The EU minimum wage directive is a step in the right direction for fairer wages across Europe. Nonetheless, this directive is not an end in itself. More work needs to be done to maximise its potential benefit and ensure that wages are collectively bargained. Collective bargaining is a collective benefit: it means better outcomes for workers, the economy and society as a whole.

Deputy Secretary-General of European Trade Union Confederation (ETUC)
22/06/2022

Wages should never leave workers and their families living in poverty. However, that has been the reality for one in ten workers in Europe. The EU minimum wage directive is a step in the right direction for fairer wages across Europe. Nonetheless, this directive is not an end in itself. More work needs to be done to maximise its potential benefit and ensure that wages are collectively bargained. Collective bargaining is a collective benefit: it means better outcomes for workers, the economy and society as a whole. 

Europe has an inequality crisis. Seven out of ten minimum wage workers struggle to make ends meet. Rather than seeing a decrease in poverty, Eurostat data shows that the percentage of workers at risk of poverty increased by 12 per cent between 2010 and 2019. Women are worst affected: they make up the majority of minimum wage workers in Europe (58 per cent) and low minimum wages are part of Europe’s gender pay gap problem. Worse still, the current cost of living crisis impacts lowest-wage earners hardest, forcing more and more workers into poverty.

The long shadow of austerity policies adopted over the last decade has contributed to this downward spiral. This directive on minimum wage and collective bargaining has turned a corner from such austerity policies and made way to a more social Europe. A social Europe where statutory minimum wages ensure a decent standard of living for workers. A social Europe where more and more workers are covered by a collective agreement. A social Europe which builds a path to deliver on the promise of upward wage convergence to close the East-West wage gap. 

The European trade union movement worked very hard to get the EU to address low wages and the decline in collective bargaining, and to achieve a strong directive. We are finally seeing the fruit of our work. It is through this directive that there will be fairer statutory minimum wages that put money on the table for hard-pressed working families. The directive includes the ETUC ‘threshold of decency’ for statutory minimum wages. This is set out as both 60 per cent of the gross median wage and 50 per cent of the gross average wage at national level as an indication, but sadly not set as a requirement, as the ETUC would have liked. Member states with statutory minimum wage will have to assess their adequacy, taking into consideration the purchasing power and the cost of living – particularly important in times of high inflation – and long-term national productivity levels and developments. For example, workers in Europe would have collectively received 116 billion Euro more since 2019 if productivity increases had been translated into higher wages rather than shareholders’ profits.

Crucially, this directive will also give a boost to collective bargaining, which has been undermined during the last decade. Collective bargaining is central to the European social model. It is a public good, that benefits workers, employers, the economy and the whole society. This directive places a duty on member states to promote collective bargaining as the best solution to achieving genuinely fair wages for all and to combat union-busting. It is through collective bargaining that we will be able to increase the level of wages overall. It is for this reason that the obligation for countries with collective bargaining coverage below 80 per cent to produce an action plan to increase the number of workers covered by a collective agreement is so important.

We are happy with what we achieved so far. But our efforts do not stop here, we now get to the next stage of our advocacy work. The European trade union movement will now ready itself to make sure the directive gets through the final stages of adoption. Also, we need a labour movement-wide approach to making full use of the opportunities opened up by the directive. We need to ensure that member states implement this directive properly. This is where our work will continue in strong collaboration with our affiliates in their respective countries. 

The ETUC will ensure that this directive is transposed properly in national law, but also that collective bargaining is truly used as the tool to achieving genuinely fair wages for all. A particular focus will be put on the countries where the collective bargaining coverage rate is less than 80 per cent. The directive must have a real impact in those countries where an effective enabling framework for collective bargaining will have to be developed – in cooperation with social partners. In addition, all member states must ensure that workers can join a union without fear and have their right to collective bargaining recognised. Member states must also take steps to prevent union-busting techniques that we associate with the United States but are on the rise in Europe as well. These practices are totally contrary to the European social dialogue model. 

The directive also confirms the obligation for economic operators that receive public procurement or concession contracts to respect the right to organise and to bargain collectively. It highlights the obligation for economic operators to apply to their workers the conditions set by applicable collective agreements, including collective agreements for the relevant sector and geographical area. The transposition of the directive at national level provides an opportunity to change or clarify national public procurement provisions to make sure that trade unions can object to public contracts going to companies that engage in union-busting practices or do not respect the applicable collective agreements. The ETUC will seek to have the Commission’s guidelines on public procurement amended, including the Commission auditors’ practices. 

This directive was the first major test for the European Pillar of Social Rights. It’s essential that the benefits of it become real for working people. Member states should not wait, but they should already start to take action. Poverty wages must become history and the benefits of collective bargaining properly recognised and promoted by member states.

Photo credits: Grand Warszawski /Shutterstock.com

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