The EU's minimum wage directive - from 'game-changer' to damp squib?

Two years ago, the EU passed the Directive on Adequate Minimum Wages, a piece of legislation that many in the labour movement perceived as a game-changer.

It specifies that EU countries need to take action to promote collective bargaining as the most effective way to create decent minimum wages across the EU – and there is a whole slew of ideas about how exactly to achieve that. 

Today (Friday 15 November), EU member states will have to have the legislation transposed. While a number of countries have done their homework, most are taking a minimalist approach with little or no changes to their legal framework. That is, I believe, not just against the spirit of the directive, but a lost opportunity too.

For one, no legislative change likely means that the witnessed erosion of collective bargaining will continue. Over a period of two decades, collective bargaining coverage in Europa has declined by over 10 percentage points. When in the early 2000s seven-out-of-ten European workers enjoyed protection of a collective agreement,  the number dropped to less than six-in-ten today. 

What’s more, the directive includes a number of obligations which should encourage most EU countries to take action, independent of their current level of collective bargaining coverage.

Let us look at four: capacity building, inspection, the protection of worker representatives and public procurement.

First and foremost, the directive obliges all EU member states to ensure that social partners have sufficient capacity to bargain, with a special attention to the sectoral level. This means that countries should ensure that trade unions and employers organisations exist, have sufficient information, expertise and resources to engage in collective bargaining. 

A quick look at the data on the organisation rate of workers and employers shows that there is much to improve. Only in three EU countries are the majority of workers members of a trade union. In 17 member states, less than one in four is member of a union. 

The same goes for employers’ organisations. While the numbers are higher here, still in eight member states less than one-in-four employees works in companies that are members of employer organisations. 

One example is trade union access to workers. To organise workers and engage in collective bargaining, trade unions need to be allowed to contact employees and inform them about their rights. However, companies and employers often put subtle (and less subtle) barriers to prevent this, as a recent study from Ireland confirms. Under the capacity building obligation, member states should ensure sufficient access (including digital) of workers to unions, and vice versa. 

Second, public authorities should lead by example when it comes to fair labour practices. The directive, in Article 9, emphasises the importance of social public procurement, ensuring that public contracts comply with fair wages and labour rights. 

Price only criteria

Yet again, data shows that many countries still award contracts based solely on price, undermining efforts to strengthen collective bargaining and wage fairness. According to the official EU tender database, this is the case for roughly one-in-two tenders.

While EU rules are an obstacle for member states to take decisive action in promoting collective bargaining through public procurement, which I hope the new commission will remedy, countries can still do much to promote social procurement – and I believe they should.

Standing up together for better wages and working conditions to your boss is not easy. Sometimes rough bosses retaliate against such actions. Therefore, countries need to provide some protection of worker representatives — against dismissal, but also against discriminatory treatment.

This is included in the directive which requires member states to safeguard the rights of those involved in collective bargaining from any discriminatory treatment.

Here again, data from the European Company Survey 2019 suggests that while most representatives report fair treatment, some countries like Belgium, France, and Spain show a worrying trend of adverse corporate behaviour.

Virtually zero inspection

This highlights the need for stronger enforcement of protection laws. While it is fair to say that the data is near anecdotal, reports of UNI Europa affiliates and other unions indicate that retaliation, intimidation and discrimination are a daily reality in European workplaces. 

Bargaining for an agreement is one thing, having it enforced another. For that very reason, the directive’s article 8 stresses the need for effective labour inspections and controls. 

Data from the ESENER surveys, however, shows that the likelihood that a company was visited by a labour inspection has declined significantly in virtually all EU countries since 2009.

In some countries, like the Netherlands, Luxembourg and France, less than one in four companies said they were visited by labour inspection in the last three years. Hardly something one can call effective labour inspection.

The EU minimum wage directive is a significant step toward a more social Europe. But its successful implementation depends on more than just minimum wage thresholds.

Ensuring capacity to negotiate, protection of workers' representatives, revitalising labour inspections, and aligning public procurement with social objectives are equally critical. It is time for national member states to take decisive action.

There is no lack of ideas, as a UNI Europa report based on 20 expert contributions has clearly shown, and there is a clear opportunity, all we need now is sufficient political will to engage.