EU: Commission continues work on Instrument for Fair Minimum Wages

The EU Commission concluded the first stage of consultation with the social partners and has now launched a second stage, regarding the introduction of an instrument for decent minimum wages. Options for a directive and a (soft law) Council recommendation are both on the table.

Commissioner von der Leyen has made the creation of an EU instrument for setting fair minimum wages one of the primary future targets of the European Union’s social policy. On 3 June 2020, the Commissioner for Jobs, Nicolas Schmit, presented the conclusions of the first stage of consultation with the social partners (which received input from 23 social partners across the EU) and launched the second stage, which will run until 4 September 2020.

The current COVID-19 crisis has reinforced the Commission’s belief that an EU instrument on decent minimum wages is necessary as, according to Schmit, workers with low wages “kept our societies and economies alive when all else had to stop” during the outbreak “but paradoxically, they will be hit the hardest by the crisis”.

The Commission does not aim to set a uniform European minimum wage, nor does it aim to harmonise minimum wage setting systems. Any possible measure would be applied differently depending on the minimum wage setting systems and traditions of the Member State, in full respect of national competencies and social partners’ contractual freedom. Some of the minimum wage systems among the EU Member States are based on collective bargaining agreements, while others are purely statutory minimum wages. Therefore, the Commission still has a hard law option (EU Directive) and a soft law option (Council Recommendation), both of which would require implementation by the Commission.

With this instrument, the Commission wants to ensure that minimum wages are set at adequate levels and protect all workers. The first-stage consultation made clear that collective bargaining has a critical role to play. Therefore, the EU initiative would aim to ensure that:

• well-functioning collective bargaining in wage-setting is in place;
• national frameworks would allow for statutory minimum wages to be set and regularly updated according to clear and stable criteria;
• social partners are effectively involved in statutory minimum wage setting to support minimum wage adequacy;
• minimum wage variations and exemptions are eliminated or limited;
• effective compliance with national minimum wage frameworks is adhered to and that monitoring mechanisms are in place.

After the second-stage consultation, social partners may take the matter into their own hands by negotiating a European framework agreement. Alternatively, the Commission could come with its own proposal. In any case, the Commission will have to act carefully when proceeding with such a controversial matter.

For more information on these articles or any other issues involving labour and employment matters in European Union, please contact Chris Van Olmen (Partner) of Van Olmen & Wynant at chris.van.olmen@vow.be or visit www.vow.be.