Regional leaders call for upward convergence of minimum wages across Europe and an end to in work poverty
The CoR endorses the draft directive on adequate minimum wages in the EU.
Regions and cities believe that a social, fair and sustainable market economy cannot be achieved in the European Union without combatting in-work poverty and securing upward convergence of minimum wages. The European Committee of the Regions (CoR) has therefore welcomed the European Commission’s proposal for a directive, which provides a framework for setting adequate minimum wages while respecting existing national legislation and the role of social partners. The CoR opinion drafted by Peter Kaiser (AT/PES), Governor of Carinthia, was adopted at this week’s plenary session after a debate which included a representative from the Portuguese Council presidency.
Recent years have seen an increase in wage inequality in many Member States: the proportion of workers at risk of poverty increased from 8.3% in 2010 to 9.3% in 2018. Moreover, the COVID-19 outbreak has had a negative impact on workers’ wages, particularly when it comes to those on the lowest incomes. The CoR is therefore calling for a convergence process to be launched with a view to achieving a lower threshold of at least 60% of the gross national median full-time wage and 50% of the national gross average full-time wage in all Member States with a statutory minimum wage. It also urges the Commission to support both future capacity-building and the autonomy of the social partners at European and national levels.
Vasco Cordeiro, First Vice-President of the European Committee of the Regions, said: “With adequate minimum wages in the EU, we are taking another step towards eradicating in-work poverty and reducing poverty in general. Local and regional authorities are in a key position to enforce, promote and monitor the proposed directive. Together with the Action Plan for the Implementation of the European Pillar of Social Rights and the Porto Social Summit, the directive shows that the EU cares deeply for its people, its social dimension and the post-pandemic recovery”.
Miguel Cabrita, Portuguese Deputy Minister for Labour and Vocational Training, said: “We all consider that ensuring that workers in the European Union earn adequate wages is essential in order to guarantee decent working and living conditions, as well as to build fair and resilient economies and societies. Adequate wages are an essential component of the European Social Model. We all uphold the idea that work must pay, and share the objectives of ensuring adequate minimum wages across the EU either by law or by collective bargaining respecting national systems and the autonomy of social partners.”
While very few EU regions have legislative powers to set minimum wages, they play a key role in negotiating regional collective agreements in their capacity as employers and in awarding public procurement contracts, which should ensure that economic operators comply with applicable remuneration conditions and respect the right to collective bargaining. At the same time, the CoR opinion calls for in-work poverty to be tackled with a multi-faceted approach that takes into account other factors such as the tax system, training initiatives, the level of social benefits and employment policies.
Rapporteur Peter Kaiser (AT/PES), Governor of Carinthia, said: “Decent minimum wages are an important building block of the European Social Pillar. Low-income earners’ contribution to our societies during the COVID-19 crisis deserves recognition, but above all, concrete action. There is an urgent need to tackle in-work poverty and the downward spiral of unhealthy labour cost competition. For work in the EU to be rewarding for all, we need a binding target of a minimum wage which represents at least 60% of the national gross median wage and 50% of the national gross average wage. This convergence process must respect existing national systems of wage setting and the autonomy of the social partners.”
Csaba Borboly, President of the Harghita County Council, also spoke and made a proposal on the topic: “Minimum wages are a compensation for the work performed and according to hours worked. We need to take this into account in order to safeguard the rights of both employees and employers, and in the interest of a swift economic recovery.”
Ensuring adequate minimum wages for all workers is one of the 20 principles of the European Pillar of Social Rights. On 4 March, the European Commission presented an Action Plan to speed up its implementation and to pave the way for the EU Social Summit in Porto on 7-8 May.
This week the CoR published a new study analysing the local and regional dimension of minimum wages in Europe. It concludes that imbalances between regions can negate the good intentions behind minimum wage policies. For instance, in many capital regions with a high cost of living, the national minimum wage does not guarantee a decent income. Furthermore, within the EU there are border regions where minimum wages differ significantly, which may have consequences for the labour market on both sides. The study suggests developing regional “living wage” assessments as the basis for reference values and highlights local and regional authorities’ key role in monitoring and promoting the objectives of the new directive.