10.6092/issn.1561-8048/14899
This paper examines the involvement of social partners in the mechanisms of fixing minimum wages in the light of the pertinent ILO Convention No. 131 and the proposal for a Directive on adequate minimum wages in the European Union. The author draws attention to the differences between the said Convention and the draft Directive with regard to the types of wage-fixing mechanisms as well as the form, scope and significance of involvement of social partners and other entities in their operation. The paper further analyses the influence of ILO Convention No. 131 on the draft EU directive and the significance of the latter for the dissemination of standards applicable to minimum wage fixing mechanisms in the EU Member States. These issues are examined against the backdrop of their growing importance—as observed in recent years— in the international legal and EU discourse concerned with adequate working conditions to ensure more sustainable and inclusive social-economic development.
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Collective voice in fixing minimum wages:  social partners’ participation from the ILO and EU perspectives
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Katarzyna Bomba
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Collective voice in fixing minimum wages:  social partners’ participation from the ILO and EU perspectives
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Collective voice in fixing minimum wages: social partners’                            Italian Labour Law e-Journal
participation from the ILO and EU perspectives                                                Issue 1 Vol. 15 (2022)
Katarzyna Bomba                                                                                    ISSN 1561-8048
katarzyna.bomba@uwm.edu.pl                                         https://doi.org/10.6092/issn.1561-8048/ 14899




           Collective voice in fixing minimum wages:
      social partners’ participation from the ILO and EU
                           perspectives
                                             Katarzyna Bomba *

 1. Introduction. 2. Background of the analysis. 3. Types of mechanisms for fixing minimum
 wages. 4. Participation of the social partners in the minimum wage fixing mechanism. 5.
 Participation of other actors in the minimum wage fixing mechanism. 6. Conclusions.


                                                        Abstract

     This paper examines the involvement of social partners in the mechanisms of fixing
     minimum wages in the light of the pertinent ILO Convention No. 131 and the proposal
     for a Directive on adequate minimum wages in the European Union. The author draws
     attention to the differences between the said Convention and the draft Directive with
     regard to the types of wage-fixing mechanisms as well as the form, scope and significance
     of involvement of social partners and other entities in their operation. The paper further
     analyses the influence of ILO Convention No. 131 on the draft EU Directive and the
     significance of the latter for the dissemination of standards applicable to minimum wage
     fixing mechanisms in the EU Member States. These issues are examined against the
     backdrop of their growing importance—as observed in recent years— in the
     international legal and EU discourse concerned with adequate working conditions to
     ensure more sustainable and inclusive social-economic development.

     Keyword: ILO Convention No. 131; Proposal for a Directive on adequate minimum
     wages; Minimum wage; Mechanism of fixing minimum wages; Collective bargaining.


 1. Preliminary remarks.

    The matter of minimum wage is referred to in international and European legislation in
 varying degrees of detail. The instrument in question is explicitly regulated only in several
 Conventions and Recommendations of the International Labour Organisation, most notably
 in Convention No. 131 of 1970 concerning Minimum Wage Fixing, with Special Reference


 *Assistant Professor at the Faculty of Law and Administration, University of Warmia and Mazury in Olsztyn,
 Poland. The elaboration is the effect of the research project No. 2017/26/D/HS5/01050, financed by the
 National Science Centre, Poland. This essay has been submitted to a double blind peer review.
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to Developing Countries and its supplementary Recommendation No. 135. The
aforementioned Convention lays down legally binding criteria for establishing the minimum
wage. For this purpose, it invokes both social factors and economic indicators. It also sets
out detailed requirements applicable to the establishment and operation of the mechanism
for fixing the minimum wage. Currently, Convention No. 131 is considered to be the legal
act which formulates the most comprehensive standard of the minimum guaranteed wage.
The solutions adopted there are deemed valid today, given new challenges in the world of
labour.1 The vital contribution of Convention No. 131 to national rules which govern
minimum wage fixing is evinced by the fact that the UN Committee on Economic, Social
and Cultural Rights draws on it to monitor the compliance of national legislation with Article
7(a)(ii) of the International Covenant on Economic, Social and Cultural Rights.2 The
Committee admonishes those states which have not ratified Convention No. 131 and calls
for its adoption. Moreover, domestic laws which fail to specify the procedure for determining
the minimum wage receive a negative assessment.3
   The minimum wage is also the subject of the 2020 proposal for a Directive on adequate
minimum wages in the European Union.4 The draft Directive is concerned primarily with
the mechanisms employed to fix minimum wages, seeking to ensure that workers are
guaranteed minimum wages—in an adequate amount—by way of statutory instruments or
collective agreements.5 The actual wage rates are not specified, but their adequacy is linked
to assuring decent working and living conditions, as well as the pursuit of social cohesion
and positive convergence. Moreover, it formulates a catalogue of national criteria for the
adoption and adjustment of statutory minimum wages. The draft Directive on adequate
minimum wages is the EU's first legally binding instrument which provides for the
coordination of national policies to raise minimum wages and strengthen collective
bargaining in the European Union.6 The latest development should be emphasized. On the
7th of June 2022, the Council and the European Parliament have reached a provisional
political agreement on the abovementioned draft EU directive7. On the part of the Council,
the agreement will still have to be approved by COREPER, meaning the Committee of
Permanent Representatives of the Governments of the Member States to the EU. This

1 Cunningham W., Minimum Wages and Social Policy. Lessons from Developing Countries, World Bank, 2007, XVI.
2 Saul B., Kinley D., Mowbray J., The International Covenant on Economic, Social and Cultural Rights. Commentary, Cases
and Materials, Oxford University Press, Oxford, 2016, 413.
3 Committee on Economic, Social and Cultural Rights, Concluding observations of the Committee on Economic,

Social and Cultural Rights: Portugal (Macau), E/C.12/1/Add.9, 6.12.1996, United Nations, Economic and Social
Council, Section 15.
4 Proposal for a Directive of the European Parliament and of the Council on adequate minimum wages in the

European Union, COM(2020) 682 final, Brussels 28.10.2020.
5 The proposal for the directive in question is in line with the Council Recommendation of 13 July 2021 on

economic policy in the euro zone, Official Journal of the European Union of 15 July 2021, C 283/1. Recital 13
states, among other things, that supporting the creation of quality jobs and improving working conditions, in
particular by ensuring adequate minimum wages, reducing labour market segmentation and eliminating barriers
to labour mobility, are crucial for supporting sustainable and inclusive economic recovery.
6 Schulten T., Müller T., A paradigm shift towards Social Europe? The proposed Directive on adequate minimum wages in

the European Union, in Italian Labour Law e-Journal, 14, 1, 2021, 6. https://doi.org/10.6092/issn.1561-8048/13368
7 European Commission - Press release, Commission welcomes political agreement on adequate minimum

wages for workers in the EU, Brussels, 7.6.2022:
https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3441

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approval will be followed by a formal vote in the Council and the European Parliament. The
political agreement increases the chances of the directive being adopted.
   This study examines the differences between the ILO Convention No. 131 and the draft
Directive to regulate the mechanisms of fixing minimum wages for labour, focusing on such
elements as the type of mechanisms for determining the minimum wage, as well as the scope,
modalities in the role of participation for social partners and other actors. Furthermore, it
also analyses the impact of ILO Convention No. 131 on the solutions adopted in the
proposal for a directive concerning the mechanisms of fixing minimum wages and the
significance of the draft Directive for the propagation of ILO standards across the EU
member states.


2. Background of the analysis.

    The minimum wage standard stipulated in Convention No. 131 is one of the ILO's
indicators for measuring the progress made by States in ensuring decent work8, within the
framework of the sustainable development paradigm.9 On the one hand, the paradigm
presupposes that the rules to be set forth will enable enterprises to develop and natural
resources to be respected; on the other, it involves undertaking measures to ensure full and
productive employment and decent work for all. Within this paradigm, the requirements of
the social aspect of sustainable development are determined by labour protection standards
which, at the same time, have an impact on the accomplishment of economic and
environmental objectives, whereby they contribute to ensuring decent work in the broad
sense.10 This perspective rests on the assumption that the interplay between economic, social
and political measures may be decisive in ensuring decent work.11 According to the ILO, a
well-designed minimum wage policy requires that the benefits of progress be equitably and
equally distributed among all people12 and that a minimum living wage be guaranteed for all
employed persons.13 The above position draws on the objectives of the United Nations 2030
Agenda for Sustainable Development and its Sustainable Development Goals14. Although
the 2030 Agenda does not address minimum wages directly, the direction for development
it adopts remains closely linked to policies in this respect. In particular, attention should be
drawn to Goal 8 of the Agenda, which calls for the promotion of sustainable, inclusive and
balanced economic development, full and productive employment as well as decent work.

8 International Labour Organization, Declaration on Social Justice for a Fair Globalization, Geneva 2008, 13.
9  Bomba K., Minimalne wynagrodzenie za pracę w działalności Międzynarodowej Organizacji Pracy, in Praca i
Zabezpieczenie Społeczne, 10, 2021, 17. DOI: 10.33226/0032-6186.2021.10.2
10 Novitz T., Engagement with sustainability at the International Labour Organization and wider implications for collective

worker voice, in International Labour Review, 159, 4, 2020, 464-465. https://doi.org/10.1111/ilr.12181
11 International Labour Organization, Report of the Director-General, Decent Work, International Labour

Conference, 87th Session 1999, Geneva 1999, 3–4.
12 International Labour Organization, Global Wage Report 2020-21. Wages and minimum wages in the time of Covid-19,

International Labour Office, Geneva, 2020, 166.
13 International Labour Organization, Declaration on Social Justice for a Fair Globalization, Geneva, 2008, 6 ff.
14 United Nations, Resolution adopted by the General Assembly on 25 September 2015, Transforming our

world: the 2030 Agenda for Sustainable Development.

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    Despite the ILO’s universal mandate in the field of labour protection15, the minimum
standards it stipulates may or may not be adopted by the member states. Minimum wage
conventions are binding on states subject to ratification. A. Supiot observes that non-
fundamental conventions are optional for the ILO member states which, in effect,
undermines the pursuit of social justice stated in the Philadelphia Declaration.16 Since ILO
Convention No. 131 is not directly applied by the ILO, other means of exerting influence
need to be sought. For instance, in 2019, the Council of the EU promulgated its conclusions
on promoting the ILO Centenary Declaration on the Future of Work.17 The Declaration in
question sees an adequate minimum wage established by law or negotiation as an instrument
to ensure decent work for all workers.18 The ILO Conventions and Recommendations have
been one of the inspirations for the European Pillar of Social Rights within the European
Union. The preamble of the Pillar also draws on a 2016 ILO study entitled Building the Social
Pillar for European Convergence, in which the ILO indicates that a balanced approach to
minimum wage policy based on the principles detailed in the ILO legal instruments could
reduce in-work poverty in the EU and help decrease low-wage competition while promoting
sustainable enterprises and economic development.19 Meanwhile, it is noted in pertinent
literature that there is nothing to prevent the Court of Justice of the EU from interpreting
or filling gaps in EU legislation through reference to international law. However, the fact
that some countries have not agreed to meet internationally agreed minimum standards may
explain the limited importance that the CJEU attaches to the ILO conventions in its rulings.20
    The proposal for a Directive on adequate minimum wages in the European Union
implements the demand expressed in Section 6 of the 2017 European Pillar of Social Rights21
that an adequate minimum wage shall be ensured in a way that provides for the satisfaction
of the needs of the worker and his/her family in the light of the national economic and social
conditions, whilst safeguarding access to employment and incentives to seek work. In-work
poverty shall be prevented. It follows from the rationale of the draft that ensuring adequate
wages to workers in the Union is essential if one is to guarantee adequate working and living
conditions, as well as build fair and resilient economies and societies in line with the United
Nations 2030 Agenda for Sustainable Development and its Sustainable Development Goals.
Meanwhile, adequate wages are an essential component of the EU model of a social market
economy. The preamble of the proposed directive on adequate minimum wages in the
European Union explicitly invokes ILO Convention No. 131 and states that a minimum


15 Supiot A., Labour is not a commodity: The content and meaning of work in the twenty-first century, in International Labour
Review, 160, 1, 2021, 126; Sengenberger W., International labour standards in the global economy: past, present and future,
in Polityka Społeczna, 15, 1, 2019, 6 ff.
16 Supiot A., The tasks ahead of the ILO at its centenary, in International Labour Review, 159, 1, 2020, 125 ff.
17 The Future of Work: the European Union promoting the ILO Centenary Declaration Council Conclusions of 24.10.2019,

13436/1/19 REV 1.
18 See Part III(B)(ii) of the ILO Declaration of 2019.
19 See Part of the 2016 ILO study entitled Building a Social Pillar for European Convergence.
20 Robin-Olivier S., The relationship between international law and European labour legislation and its impact on the

development of international and European social law, in International Labour Review, 159, 4, 2020, 487-488.
DOI: 10.1111/ilr.12195
21 Inter-institutional Proclamation on the European Pillar of Social Rights, Official Journal of the European

Union C 2017/428/10.

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wage, fixed at an appropriate level, safeguards the income of disadvantaged workers, helps
to ensure a decent living standard and limits the loss of income in adverse economic
circumstances (Recital 7 of the preamble). It should be stressed that it was previously not
common for EU directives to invoke the global standards set out in the ILO conventions in
their preambles. In view of the discussed proposal, adequate minimum wages and strong
collective bargaining are not an impediment to the free market, nor do they constitute factors
which are detrimental to economic growth and employment levels but foster more
sustainable and inclusive economic development.22 In this approach, achieving economic
development relies on increasing productivity and innovation rather than on wage
dumping.23


3. Types of mechanisms for fixing minimum wages.

    Under international law, the mechanism for fixing the minimum wage is indirectly
governed by the laws pertaining to equal treatment and non-discrimination in employment,
as well as freedom of association and collective bargaining24. However, the respective
obligations of the states derive primarily from the ILO conventions and recommendations,
which explicitly refer to minimum wages (Convention No. 131 of 1970, in particular).
Pursuant to Article 1(1) of the Convention No. 131, each member of the ILO which ratifies
this Convention undertakes to establish a system of minimum wages which covers all groups
of wage earners whose terms of employment are such that coverage would be appropriate.
Article 4(1) of the Convention also stipulates that each member which ratifies this
Convention shall create and/or maintain machinery adapted to national conditions and
requirements whereby minimum wages for groups of wage earners covered in pursuance of
Article 1 thereof can be fixed and adjusted from time to time. The mechanism in question is
part of a more broadly construed minimum wage system which applies to all groups of
workers whose employment conditions are such that the system will be adequate to provide
for their protection. The system also includes the criteria for fixing the minimum wage
(Article 3), a legal obligation to have it periodically adjusted (Article 4(1)), as well as legal
guarantees associated with the said wage (Article 5).25
    Convention No. 131 does not specify the exact form that the national mechanism for
fixing the minimum wage should assume. Simultaneously, it is underscored that the adopted
mechanism should be aligned to the domestic circumstances. Chapter IV(6) of the ILO
Recommendation 135 lists several examples of such mechanisms without introducing a
hierarchy between them. According to its tenor, the minimum wage fixing machinery
provided for in Article 4 of the Convention may take a variety of forms, such as the fixing

22 Schulten T., Müller T., nt. (7), 1-2.
23 Menegatti E., Much ado about little: The Commission proposal for a Directive an adequate wages, in Italian Labour Law
e-Journal, 14, 1, 2021, 22. https://doi.org/10.6092/issn.1561-8048/13369
24 See more broadly in Bomba K., Minimalne wynagrodzenie za pracę jako instrument realizacji społecznych praw człowieka,

C.H. Beck, Warsaw, 2022, 81 ff.
25 Seweryński M., Minimalne wynagrodzenie za pracę – wybrane zagadnienia, in Sanetra W. (ed.), Wynagrodzenie za pracę

w warunkach społecznej gospodarki rynkowej, Wolters Kluwer Poland, Warsaw, 2009, 54.

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of minimum wages by- (a) statute; (b) decisions of the competent authority, with or without
formal provision for taking account of recommendations from other bodies; (c) decisions of
wages boards or councils; (d) industrial or labour courts or tribunals; or (e) giving the force
of law to provisions of collective agreements. On that basis, J.-M. Servais concludes that a
minimum wage fixing mechanism may take the form of “legislation, decisions of wages
boards or councils, court rulings or acts giving force of law to provisions of collective
agreements”. The author also notes that domestic legal mechanisms need not be
homogeneous in terms of type or internal design. However, he cautions against formulating
them in an excessively complex manner which could undermine the freedom of collective
bargaining.26
    Regardless of the type of national mechanism, the minimum wage rate it establishes
should be legally binding. Consequently, minimum wage compliance is compulsory for
workers and employers within the scope of such wage, with no possibility of reducing it,
whether by agreement or contract. With this stipulation, Article 2 of Convention No. 131
guarantees the freedom to conclude collective agreements. Ensuring freedom of
agreement—subject to the legally binding nature of the minimum wage thus determined—
means that within the framework of the agreement mechanism, there is no obligation to
apply the social and economic criteria stated in Article 3 of the Convention No. 131 to
determine that wage. As a result, the application of the agreement-based mechanism entails
greater freedom for the social partners to negotiate than if a statutory mechanism were
chosen.
    Now, with respect to the draft Directive, one should draw attention to Article 1(2) and
(3), according to which the Directive shall be without prejudice to the choice of the Member
States to set statutory minimum wages or promote access to minimum wage protection
provided by collective agreements. Nothing in this Directive shall be construed as imposing
an obligation on the Member States where wage setting is ensured exclusively via collective
agreements to introduce a statutory minimum wage or make the collective agreements
universally applicable. Compared to the ILO regulations, the draft Directive refers to the
form of national mechanisms for setting minimum wages in very general terms, stating only
two essential types: statutory and agreement-based. The draft EU Directive merely lays down
a framework to improve the adequacy of minimum wages and increase workers’ access to
minimum wage protection, yet it does not aim to either harmonize minimum wage rates
across the Union or establish a uniform mechanism for fixing minimum wages. Nor does it
affect the freedom of the Member States as they fix statutory minimum wages or support
access to minimum wage protection provided for in collective agreements. Moreover, those
Member States in which minimum wage protection is only provided for by collective
agreements are not obligated to institute a statutory minimum wage or to apply collective
agreements across the board. Furthermore, the draft does not define a hierarchy between
statutory solutions and collective bargaining as methods to fix minimum wages, allowing the
States to choose their preferred mechanism freely in line with the particular features of their


26   Servais J.M., International Labour Law, Wolters Kluwer International, Alphen aan den Rijn, 2014, 197-198.

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national systems, national competencies, the autonomy of the social partners and freedom
of contract.27
    The method adopted in the draft implements the "positive" model of European
integration, in which the common market would be governed by norms accommodating
diverse national solutions in economic and social affairs.28 However, the obligations of the
Member States arising from the Directive differ depending on the type of mechanism for
fixing the minimum wage that they adopted. Article 3 of the draft applies to the 21 EU
Member States with a statutory mechanism, as it formulates general criteria for fixing the
national minimum wage. As for the six countries where an agreement-based mechanism is
in force (Austria, Cyprus, Denmark, Finland, Italy and Sweden), this provision does not
apply, leaving the social partners free to determine the minimum wage. In none of these
cases does the draft formulate detailed solutions to be adopted by the countries.29 Such an
arrangement is due to the EU's limited competence with regard to pay (Articles 153.1(f),
153.5 TFEU);30 consequently, the Union has to respect the autonomy of the Member States
in shaping their minimum wage systems, especially those based on collective bargaining.31
    Thus, none of the discussed pieces of legislation requires that a statutory mechanism be
adopted in countries where such a mechanism does not exist, or that collective agreements
be universally applied. All the while, these legislative acts leave considerable discretion to
States in how they choose the appropriate mechanism and formulate the rules which govern
it, subject to a guarantee that the minimum wage fixed by the mechanism is legally binding.
Such a solution arises from the necessity to leave states at liberty to opt for and shape
particular mechanisms, given that the process of choosing the minimum wage fixing modality
in a given country should respect other domestic solutions and the autonomy of social
partners. However, the obligations of States under these legal instruments vary. Both
Convention No. 131 and the draft Directive provide that, in the case of a statutory
mechanism, States should take into account the criteria formulated therein for fixing the
minimum wage. This obligation does not apply to countries where the minimum wage is
established exclusively through collective bargaining. Such a regulation respects the
autonomy of the social partners in shaping the minimum wage.




27 COM(2020) 682 final, 3, substantiation.
28 Schulten T., Müller T., nt. (7), 2-3.
29 Delfino M., The Proposal for an EU Directive on adequate Minimum Wages and its impact on Italy, in Italian Labour

Law e-Journal, 14, 1, 2021, 51. https://doi.org/10.6092/issn.1561-8048/13370
30 For further analysis see Aranguiz A., Garben S., Combating income equality in the EU: a legal assessment of a potential

EU minimum wage directive, in European Law Review, 2, 2021, 162; Sjödin E., European Minimum Wage: A Swedish
perspective on EU’s competence in social policy in the wake of the proposed Directive on adequate minimum wages in the EU, in
European Labour Law Journal, 1, 2022, 6 ff. DOI:10.1177/20319525221090547
31 Grenfors J., Gentile E., The minimum wage Directive proposal and the promotion of collective bargaining: the voice of SGI-

Europe, in Italian Labour Law e-Journal, 14, 1, 2021, 43 ff. https://doi.org/10.6092/issn.1561-8048/

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4. Participation of the social partners in the minimum wage fixing mechanism.

    The ILO legislation imposes an obligation on states to cooperate with social partners
while developing a minimum wage fixing mechanism and afterwards, once it has been put
into effect. Under Convention No. 131 and Recommendation No. 135, the interaction
between public authorities and social partners may proceed either as consultations or involve
direct participation in decision-making.
    Comprehensive consultation with the representatives of workers and employers is
required when the minimum wage fixing mechanism is being established, operates or
undergoes amendments. Pursuant to Article 4(2), Convention No. 131, the provision shall
be made, in connection with the establishment, operation and modification of such
machinery, for full consultation with representative organisations of employers and workers
concerned or, where no such organisations exist, representatives of employers and workers
concerned. Chapter IV(7), Recommendation No. 135, stipulates that the requirement to
consult social partners is associated, e.g. with the selection and application of criteria for
fixing the minimum wage, its adjustments, as well as with arising issues and gathering useful
data and information.32 The ILO Committee of Experts notes that the obligation to consult
goes beyond providing information. It is a form of collaboration with the social partners,
which is intermediate between sharing information and co-decision. Consultations should
have a real impact on the decisions taken and must therefore be carried out beforehand, in
such a way that the arguments put forward by the social partners may be duly considered. It
should be genuine and ensure representatives of both employers and workers access to the
information required to express their views. Thus, a consultation procedure which prevents
comments made by the social partners from being considered and does not guarantee the
opportunity to take a position on the basis of exhaustive information will not meet these
standards.33
    Where appropriate, in view of the nature of minimum wage fixing mechanisms, states
should enable representatives of the employers and representatives of the workers to
participate directly in their application. The obligation arises under Article 4(3a), Convention
No. 131, which specifies that wherever it is appropriate to the nature of the minimum wage
fixing machinery, provision shall also be made for the direct participation in its operation of
representatives of organisations of employers and workers concerned or, where no such
organisations exist, representatives of employers and workers concerned, on the basis of
equality. The ILO Committee of Experts notes that this form of collaboration relies on the
involvement of actors with different or conflicting interests and that the aim is to reach a
consensus. Direct participation of social partners should therefore take place under the
equality principle. Unlike consultation, the essence of which is to assist the competent
authority in taking a decision, direct participation consists of the active involvement of the


32Servais J.-M., nt. (24), 197.
33 International Labour Organization, Committee of Experts on the Application of Convention and
Recommendation, General Survey of the reports on the Minimum Wage Fixing Convention, 1970 (No. 131), and the
Minimum Wage Fixing Recommendation, 1970 (No. 135), Report III (Part 1B), Geneva, 2014, 101 ff.

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employers’ representatives and workers’ representatives in the decision-making process.34 In
my opinion, the direct participation of the social partners may be deemed a qualified form
of cooperation with public authorities in minimum wage fixing.
    Irrespective of the form of cooperation adopted in a given country, i.e. consultation or
co-decision, social partners are to participate in the minimum wage fixing mechanism on an
equal footing, in equal numbers and with equal voting strength. Employers and workers
should be free to choose their representatives. A choice free from external interference will
enable entities with a social mandate to represent their interests to participate in the
mechanism, which is important to ensure its effectiveness.
    The important role of the social partners is also noted in the draft Directive on adequate
minimum wages in the European Union. In the case of a statutory mechanism, states should
ensure the actual participation of social partners in fixing and adjusting minimum wages. The
provisions of the Directive do not set forth detailed rules for such cooperation but draw
attention to the need to have social partners involved in the activities of advisory bodies. The
actions of the latter are provided for in Article 5(5) of the Directive, according to which
Member States shall establish consultative bodies to advise the competent authorities on
issues related to statutory minimum wages. In particular, the consultation obligation pertains
to selecting and applying criteria and indicative benchmarks for determining the levels of
statutory minimum wages, adjusting rates of statutory minimum wages, establishing different
rates and deductions in statutory minimum wages, as well as collecting data and studies to
supply the bodies responsible for fixing statutory minimum wages with information.
    At the same time, one of the principal goals of the draft Directive is to enhance collective
bargaining in all member states of the Union.35 The draft underlines the importance of
collective bargaining in ensuring wage adequacy and states the need to create the conditions
in which it may take place. Recital 18 of the preamble recognizes that well-functioning
collective bargaining on wage fixing is a crucial means to ensure that workers are protected
through adequate minimum wages. Therefore, pursuant to Article 4(1) of the draft, Member
States should create a favourable environment in which the wages can be agreed upon
regardless of the adopted type of mechanism. To this end—in consultation with the social
partners— the states must take steps to increase the scope of collective bargaining in that
they, for example, support social partners to develop and strengthen their capacity to engage
in collective bargaining over wage-fixing at the sectoral or cross-sectoral level and encourage
social partners to engage in constructive, substantial and informed negotiations concerning
pay.
    The above instrument embodies the conviction that there exists a strong correlation
between collective bargaining coverage, the degree of wage dispersion and the size of the
low wage sector. States with more extensive collective bargaining coverage tend to have lower
wage dispersion and a more limited low wage sector. The positive impact of collective
bargaining on ensuring adequate wages is also observed in those states which adopted a
statutory mechanism of fixing minimum wages. In order to achieve adequate wage levels, the

34 International Labour Organization, nt. (31), 102.
35 Visentini L., Directive on Adequate Minimum Wages: European institutions must respect the promise made to workers!, in
Italian Labour Law e-Journal, 14, 1, 2021, 35. https://doi.org/10.6092/issn.1561-8048/13371

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statutory minimum wage does not suffice since comprehensive collective bargaining and
broad collective bargaining coverage are prerequisites.36 For this reason, the draft aims to
increase the scope of collective bargaining so that most workers in the EU states are parties
to collective labour agreements.37
   Article 4 of the draft Directive provides that countries in which the scope of collective
bargaining does not exceed 70% of the workforce should also establish a framework of
favourable conditions for collective bargaining, in consultation or agreement with the social
partners and adopt an action plan to promote collective bargaining. According to Recital 19
of the preamble, this framework should be established by law or by way of a tripartite
agreement. Should the draft come into effect, the obligation to strengthen collective
bargaining will apply to most EU Member States. Collective bargaining coverage exceeds
70% in only 10 out of 27 countries. In consequence, the implementation of the directive will
be most challenging in Greece, Ireland and the Central and Eastern European countries,
where collective bargaining coverage does not exceed 35%. 38
   It should also be noted that the draft Directive speaks of the important role of the state
in enhancing collective bargaining and ensuring compliance with the applicable minimum
wage, regardless of the fixing mechanism adopted. Article 9 of the draft binds the Member
States to take appropriate measures to ensure that in the performance of public procurement
or concession contracts, economic operators comply with the wages set out by collective
agreements for the relevant sector and geographical area and with the statutory minimum
wages where they exist. Article 10 of the draft provides for the establishment of national
methods to monitor the coverage and adequacy of minimum wages, whether established by
means of a statutory or agreement-based mechanism. Article 11, on the other hand, requires
the Member States to provide for the impartial and effective pursuit of claims for workers
for breaches of rights pertaining to the minimum wage fixed by law or a collective agreement;
they should also ensure safeguards against unfavourable treatment by the employer and
adverse consequences arising from action to enforce compliance with the rights pertaining
to the minimum wage fixed by law or agreement.
   A comparison of the legal solutions in Convention No. 131 and the draft Directive
demonstrates that both introduce participation requirements for the representatives of
employers and workers. However, they differ in terms of the scope and form of involvement
of the social partners. Convention No. 131 requires that the latter participate both when the
national mechanism is established and when it operates. It was recognised that participation
of the social partners at both stages is a prerequisite for the adopted mechanism to be
effective in practice39, while their involvement is a guarantee of a fair balance between the
interests of those directly concerned.40 Participation of the social partners should take the


36 Schulten T., Müller T., nt. (7), 12 ff.
37 Schulten T., Müller T., nt. (7), 5.
38 Source OECD, 2019 or more recent, https://www.oecd.org/employment/ictwss-database.htm (access:

30.06.2022).
39 International Labour Organization, nt. (31), 46-49.
40 The significance of the involvement of social partners in determining labour conditions is discussed in Hayter

S., Weinberg B., Mind the gap: collective bargaining and wage inequality, in Hayter S. (ed.), The role of collective bargaining

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form of consultation and, where possible, joint decision-making with the public authorities.
In contrast, the draft Directive sets forth that the statutory mechanism should provide for
advisory bodies which advise public authorities. Thus, social partners are entitled to become
involved in the functioning of the mechanism, but only through consultation since it does
not provide for making joint decisions with the public authority as a qualified form of
cooperation.
   The consultation stipulated in the draft Directive as a form of cooperation between public
authorities and social partners is in line with the solutions most commonly adopted in the
EU Member States. Only a few countries, such as Poland and Austria (with regard to the
minimum wage established by the Federal Conciliation Commission), provide for co-
determination involving social partners, with the exception that in Poland, negotiations
between the public authority and social partners are not always effective. In the latter country,
should the negotiations fail, the decision on the minimum wage is taken by the Council of
Ministers without the need to have social partners heard.41 If the Directive is adopted, Poland
will be required to introduce a consultation procedure between the public authorities and the
social partners in the event of unsuccessful negotiations concerning the fixing of the
minimum wage.42
   At the same time, under the draft Directive in question, Member States are placed under
obligation to define a framework for collective bargaining and to support such bargaining,
having found that an agreement-based method for fixing minimum wages may have a
positive impact on ensuring an adequate standard of living for workers. After all, increasing
pay rates is the core objective of collective bargaining. However, in view of the very general
nature of the provisions of the directive, resulting from the limited competencies of the
Union in the matter of pay, E. Menegatti anticipates that the efficacy of this legal instrument
will be limited.43


5. Participation of other actors in the minimum wage fixing mechanism.

   In order for the minimum wage fixing mechanisms to be established and to function,
public authorities may be compelled to cooperate with actors other than social partners.
Under the ILO Convention No. 131, this applies to instances which are justified by the
nature of the national mechanism. Pursuant to Article 4(3)(b) of the Convention,
collaboration with other actors assumes the form of direct participation when the mechanism
is implemented, involving persons having recognised competence for representing the
general interests of the country and appointed after full consultation with representative

in the global economy. Negotiating for Social Justice, Edward Elgar Publishing, Cheltenham—Northampton,
International Labour Office, Geneva, 2011, 138.
41 See more broadly in Hajn Z., in Hajn Z., Mitrus L., Labour Law in Poland, Wolters Kluwer International,

Alphen aan den Rijn, 2019, 130-131.
42 Surdykowka B., Pisarczyk Ł., The Impact of the Directive on Adequate Minimum Wages in the European Union on

Polish Labour Law, in Italian Labour Law e-Journal, 14, 1, 2021, 97. https://doi.org/10.6092/issn.1561-
8048/13374
43 Menegatti E., nt. (21), 30.



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organisations of employers and workers concerned, where such organisations exist and such
consultation complies with national legislation or practice. According to Chapter IV(9),
Recommendation No. 135, persons who represent the general interests of the country should
be independent and suitably qualified as well as, where appropriate, they may be public
officials engaged in the field of labour relations, economic and social planning, or economic
and social policy-making. Thanks to their involvement, the decision-making process is also
informed by the general interests of the country, which transcend the perspective adopted
by the social partners.
    In contrast, the draft EU directive on adequate minimum wages does not provide for the
participation of persons who represent the general interests of the country in the wage-fixing
mechanism. Only where a statutory mechanism exists, Article 5(5) of the draft obliges
Member States to establish appropriate advisory bodies, though it does not define their
composition. Apparently, therefore, there are no obstacles to the participation of
independent experts or persons representing the interests of the state in their proceedings.
    The draft Directive is focused on collaboration with social partners, which follows from
its objective to enhance collective bargaining by increasing its coverage and providing for
increased autonomy of the social partners where pay is concerned. This position is due to a
change in the hitherto neo-liberal methods of economic governance in the Union, in which
wages and collective bargaining have been instruments of pressure on the Member States.
For example, the Troika—the European Commission, the European Central Bank and the
International Monetary Fund—made far-reaching demands on Greece and Portugal to
reduce or freeze minimum wages when they received loans under the European Stability
Mechanism (ESM) in the wake of the crisis of 2008 and 2009. Other countries, including
France, have also faced pressure as the collective bargaining system became weaker.44 Such
an approach contributed to increased social inequalities and in-work poverty in the Union,
undermined opportunities for economic growth in many countries and created fertile ground
for Eurosceptic sentiments.45 Given the circumstances, it has been argued that economic
development and political stabilization require a change in the Union's labour and social
policy discourse,46 as evinced in the Directive’s emphasis on the importance of autonomous
collective bargaining in wage-fixing.
    It follows from the above that Convention No. 131 and the EU Directive differ with
respect to the involvement of actors other than social partners in the functioning of the
mechanism; Convention No. 131 requires that persons representing the general interests of
the country participate. Consequently, one ensures grounds for a comprehensive
consideration of the country’s social and economic factors in the decision-making process.
Conversely, the draft EU Directive concentrates on establishing a legal framework to support
collective bargaining.



44 Menegatti E., Challenging the EU Downward Pressure on National Wage Policy, in International Journal of Comparative
Labour Law and Industrial Relations, 33, 2, 2017, 200 ff.
45 Schulten T., Müller T., nt. (7), 5.
46 Lübker M., Schulten T., WSI Minimum Wage Report 2022. Towards a new Minimum Wage Policy in German and

Europe, Report No. 71, March 2022, WSI Institute of Economics and Social Research 2022, 4.

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6. Conclusions.

    The mechanisms for fixing minimum wages laid down in the ILO Convention No. 131
and in the draft Directive serve similar purposes, envisioning adequate pay and decent work
within the paradigm of sustainable social and economic development.47 For this reason, both
the ILO Convention No. 131 and the proposal for a Directive on adequate minimum wages
in the European Union share numerous elements in common.
    Both legislative acts allow for the social and economic differences between the states.
Consequently, they are left substantial leeway as they choose the mechanism and shape its
principles taking into account national law and the accepted practices. However, the draft
Directive confines the choice of states to the statutory and the agreement-based mechanism,
capping the range of legal solutions which exist in the Member States of the European Union.
Both legal instruments do not establish a hierarchy between particular types of mechanisms
but provide for fewer obligations for the states where the agreement mechanism is in place.
In such cases, social partners need not apply the criteria formulated for the statutory
mechanism, which constitutes an expression of respect for their autonomy.
    Concerning the modalities of involvement of the social partners in the minimum wage
setting, the ILO Convention No. 131 is more accommodating than the draft Directive as far
as the diversity of domestic legal solutions is concerned. Convention No. 131 provides for
consultation or co-determination involving public authorities and social partners, while the
draft Directive merely lays down compulsory consultation. In this case, as well, the draft
Directive is in line with the solutions prevailing in the EU Member States.
    As for the role of social partners in establishing the minimum wage, it has to be stated
that the analysed legal instruments differ to some extent in their perception. In Convention
No. 131, the involvement of the social partners is to ensure that the minimum wage is fixed
while taking the needs of employees and the capabilities of employers into account; at the
same time, it is intended to encourage compliance with the adopted regulation. The draft
Directive additionally seeks to enhance the autonomy of social partners and extend the
coverage of collective bargaining. The draft Directive should thus contribute to the
sustainable development of Europe based on balanced economic growth and price stability
and a highly competitive social market economy, as required by art. 3 of the Treaty in the
European Union48.
    The two instruments also differ with regard to the involvement of actors other than social
partners (e.g. independent experts). Convention No. 131 sees their contribution as an
opportunity to integrate a broader perspective which goes beyond the interests of workers
and employers. The draft Directive, on the other hand, admits the participation of such
actors on a consultative basis but links the fixing of an adequate minimum wage primarily to
the involvement of the social partners.

47 On the idea being grounded in social human rights see Mertens T., A Philosophical Introduction to Human Rights,
Cambridge University Press, Cambridge, 2020, 25; Collins H., Lester G., Mantouvalou V., Introduction: Does
Labour Law Need Philosophical Foundations?, in Collins H., Lester G., Mantouvalou V. (eds.), Philosophical
Foundations of Labour Law, Oxford University Press, Oxford, 2018, 13.
48 Treaty on European Union, O.J. C 326, 26/10/2012, P. 0001 – 0390.



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    It follows explicitly from Recital 7 of the preamble to the draft Directive that it had been
inspired by Convention No. 131 with regard to ensuring a minimum wage that enables decent
living. In the author’s opinion, references to Convention No. 131 relating to the wage-fixing
mechanism can also be found in the Directive. They are discernible in how the draft Directive
was formulated, specifically in terms of the allowances it makes for the distinct mechanisms
adopted in the individual EU Member States. Following the example of the Convention, the
draft Directive determines the obligations of the states differently, depending on whether
they have opted for an agreement-based or a statutory mechanism. At the same time, the
draft Directive as a legal instrument with a regional scope focuses on solutions tailored to
the needs of EU Member States. It is also informed by the needs of the common EU market,
e.g. it stresses the vital position of collective bargaining and seeks to enhance the social
dimension of European integration. Thus, the draft Directive does not create an entirely new
standard of adequate minimum wage. It draws on the solutions adopted in Convention No.
131 while adjusting them to the needs and circumstances of European countries.
    The ILO Convention No. 131 and the draft Directive espouse similar objectives, rooted
in the paradigm of decent work and sustainable development. Thus, the EU Directive on
adequate minimum wage may potentially be an effective tool to implement international
standards for minimum wage fixing in the EU Member States. Simultaneously, the draft
Directive pursues more ambitious objectives with regard to the involvement of the social
partners. As a result, it may boost the role of trade unions and employers' organizations in
the process of establishing a minimum wage.




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Copyright © 2022 Katarzyna Bomba. This article is released under a Creative Commons
Attribution 4.0 International License.




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