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15th Dec 2019

EU commission calls for 'appropriate' minimum wage

The European Commission on Wednesday (18 April) published an ideas paper to get Europe's record number of unemployed into jobs and boost growth, including setting an appropriate minimum wage and shaming member states into improving work rates.

The step represents the first formal policy response dedicated to jobs and growth since EU leaders recently recognised that their focus on debt reduction through harsh budget cuts risks worsening the Union's struggling economy.

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  • 'Minimum wages at appropriate levels can help prevent growing in-work poverty' (Photo: Daniel Ray)

"Current levels of unemployment in the EU are dramatic and unacceptable," said EU employment commissioner Laszlo Andor.

The EU's unemployment rate hit a record high of 10.2 percent in February. Jobless figures among young people are 22.4 percent, rising to almost 50 percent in Greece and Spain or around 30 percent in a further six countries.

A controversial suggestion is that member states should introduce an appropriate minimum wage. Most member states have a floor wage. Germany and Austria are among those that do not. The Nordic countries have collective bargaining systems for many sectors.

"Setting minimum wages at appropriate levels can help prevent growing in-work poverty and is an important factor in ensuring decent job quality," says the text.

There is an oblique reference to Germany, which been criticised in some quarters for suppressing wages and thereby dampening Germans' spending capacity.

"Targeted [wage] increases, which help sustain aggregate demand, might be feasible where wages have lagged significantly behind productivity developments," says the text.

The paper also urges member states to "exploit" jobs potential in the ICT, green and healthcare sectors suggesting that with Europe's ageing population there are about 7 million extra jobs to be had in the sector between 2010 and 2020, or 20 million potential jobs arising from expanding the green economy.

Other suggestions include introducing more hiring subsidies and shifting tax to areas such as property or the environment.

But the commission is stymied by one key factor. It has little real power in employment policy, instead relying on devastating joblessness statistics to create a political momentum for change.

"Implementation on the ground is very much in the hands of member states," noted commission president Jose Manuel Barroso, adding that it was "incomprehensible" that governments are dragging their feet over "growth-friendly" legislation, such as opening up the internal market in services.

As one way of keeping governments on their toes, the commission will publish regular "scoreboards" to keep a tally on progress in job creation.

The EU has set itself a goal of 75 percent employment by 2020. To achieve the target, it would have to create 17.6 million jobs.

But there other problems that affect the European work market as well. There are four million vacant jobs in the EU. But people are slow to move. Language and culture plays a role. But so do the fiendish complexities of cross-border pensions, social security rights and taxation.

EU leaders trying to shift focus from deficits to jobs

Besides a treaty on fiscal discipline, European leaders meeting in Brussels on Monday will also seek to adopt non-binding measures on employment. Their summit will come in the midst of a general strike expected to paralyse the EU capital.

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Twenty three million people in the EU are struggling to find jobs, as the economic crisis and austerity cuts unfold into severe social consequences.

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