Monday

19th Apr 2021

EU regions sound alarm over minimum wages details

  • Monthly minimum wages vary widely across the EU - ranging from €312 in Bulgaria to €2,142 in Luxembourg (Photo: European Community)

The directive for "adequate minimum wages" recently unveiled by the European Commission was widely welcomed by regional authorities - who stressed the need to reflect on the local dimension of the proposed legal framework.

While only very few EU regions have legislative powers to set base rates of pay, they can influence minimum wages in their capacity as employers, negotiating sub-national collective agreements, and award public contracts.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

There are also examples of cities that have voluntary agreements on minimum wages and employment conditions for specific sector, as in Italian region of Bologna, where there is a voluntary agreement for the so-called digital platform workers.

That is why local and regional authorities are "in a key position to enforce, promote and monitor the proposed directive," the vice-president of the Committee of the Regions, Vasco Cordeiro, said on Thursday (18 March) during a European Parliament plenary session.

"With adequate minimum wages in the EU, we are taking another step in the direction of eradicating in-work poverty and reducing poverty in general," he added.

Monthly minimum wages vary widely across the EU, ranging from €312 in Bulgaria to €2,142 in Luxembourg.

In Denmark, Italy, Cyprus, Austria, Finland and Sweden, minimum wage protection is provided exclusively by collective agreements, while the remaining 21 countries have statutory minimum wages set by governments.

The commission proposal does not oblige member states to harmonise their systems, nor does it set a common minimum wage level.

However, some local authorities fear that the EU proposal would undermine the Scandinavian model.

"Most member states have laws on minimum wages, but we keep seeing more and more in-work poverty in the EU," said Karsten Uno Petersen, member of South Denmark regional council

"We need to make sure that countries with strong collective bargaining agreements are not adversely affected by any directive," she added, arguing that it is "worrying" that the commission interferes with the Danish system.

However, according to the vice-president of the parliament for Germany's Saarland region, Isolde Ries, "the directive is the only way to crack down on discrimination and reduce poverty".

Capitals vs countryside?

A study on the regional dimension of minimum wages, published this week, warns that the extensive impact assessment guiding the commission's proposed directive pays little attention to the territorial and local aspects.

The report reveals that wage levels vary significantly at a regional level - with notable differences among sectors.

For example, there are regions with high wage-levels, typically the capital city and metropolitan regions, where the minimum wage may not secure adequate living standards in low-pay sectors due to high living costs.

In Spain, the analysis of the Basque Region and Catalonia suggest that a minimum wage of €1,200 per month is needed - against the current minimum wage set at €950.

That is also the case in Prague and Warsaw, where the statutory minimum wage represents only a quarter of the region's average wage.

Meanwhile, local authorities warned that the regional imbalances in minimum wages have also an impact on migration flows, creating demographical problems in some regions, such as rural areas.

Hungarian Patrick Schwarcz-Kiefer, from the Baranya county assembly, said that in his region the minimum wage is so low that "it is not surprising that a lot of people leaves for other regions in the EU, for example, in neighbouring Austria".

The committee of the regions report calls on the commission to undertake an in-depth assessment of the territorial aspects of minimum wage and to clarity the wording of the proposed directive to include justified regional variations and add-ons to minimum wages laws.

In the EU, in-work poverty increased from 8.3 percent in 2007 to 9.4 percent in 2018 as a result of the previous economic crisis. The pandemic is expected to exacerbate these figures.

Opinion

EU minimum wage directive undercuts Scandinavian model

Imposing minimum wages and interfering in collective bargaining through binding legislation, not only means breaching EU treaties - there is also a serious risk that this will undermine successful labour market models that have delivered real wage increases for decades.

EU Commission unveils 'adequate minimum wage' plan

The European Commission proposed minimum standards to ensure adequate minimum wages all across the EU. But the proposal does not oblige member states to harmonise their systems, nor does it set a common minimum wage level.

Spain takes 'giant step' on guaranteed minimum income

The minimum income guarantee was a condition included in the coalition agreement between the Socialists and the leftist group Unidas Podemos, after the indecisive results of the November national elections.

Opinion

EU minimum wage - a view from Poland

An EU minimum wage would vary between member states, at 60 percent of their respective average or median national wages. Six countries would be obliged to introduce a minimum wage. Is this a whim or a necessity?

Opinion

EU minimum wage directive risks legal quagmire

The one key question that needs to be asked is – will this proposed new legislation aid the required economic recovery or could it have an actual negative effect?

News in Brief

  1. EU postpones decision on labelling gas 'sustainable'
  2. MEPs call for mass surveillance ban in EU public spaces
  3. Greek and Turkish ministers trade jibes in Ankara
  4. Biden repeats opposition to Russia-Germany pipeline
  5. Navalny in danger, letter warns EU foreign ministers
  6. Lithuania keen to use Denmark's AstraZeneca vaccines
  7. Gas plants largest source of power-sector emissions
  8. Study: Higher risk of blood clots from Covid than vaccines

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. US rejects Slovenia-linked plan to break up Bosnia
  2. Ukraine urges Borrell to visit Russia front line
  3. Could US sanctions hit Russia vaccine sales to EU?
  4. Polish court pushes out critical ombudsman
  5. Political crises in Romania and Bulgaria amid third wave
  6. Von der Leyen's summer plans undisclosed, after Ukraine snub
  7. Over a million EU citizens back farm-animal cage ban
  8. Three options for West on Putin's Ukraine build-up

Join EUobserver

Support quality EU news

Join us