10.6092/issn.1561-8048/13371
The contribution aims at presenting the position and main messages of the European Trade Union Confederation on the Commission’s recent proposal for a Directive on Adequate Minimum Wages in the EU, which is currently under discussion in the European institutions.
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Luca Visentini
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Italian Labour Law e-Journal
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Directive on Adequate Minimum Wages: European institutions must respect the promise made to workers!
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Luca Visentini
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Directive on Adequate Minimum Wages: European institutions must respect the promise made to workers!
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Directive on Adequate Minimum Wages: European institutions                      Italian Labour Law e-Journal
must respect the promise made to workers!                                              Issue 1, Vol. 14 (2021)
Luca Visentini                                                                               ISSN 1561-8048
generalsecretary@etuc.org                                     https://doi.org/10.6092/issn.1561-8048/13371




        Directive on Adequate Minimum Wages: European
         institutions must respect the promise made to
                            workers!
                                               Luca Visentini



 1. The need for action. 2. Stronger collective bargaining and higher statutory minimum wages
 are good for the economy. 3. A strong Directive on Adequate Minimum Wages in the EU
 is legally possible. 4. The Directive: necessary improvements. 5. Final remarks.




                                                   Abstract

     The contribution aims at presenting the position and main messages of the European Trade
     Union Confederation on the Commission’s recent proposal for a Directive on Adequate
     Minimum Wages in the EU, which is currently under discussion in the European institutions.

     Keywords: Minimum wages; Collective Bargaining; EU social policy.




 1. The need for action.

    The Covid-19 crisis has highlighted once more the unfair conditions that many workers
 in the European Union currently face. Workers in essential services have been publicly
 praised because of their contribution to society during the pandemic. Now meaningful
 actions must follow to ensure that work is properly valued. Necessary and urgent action must
 be taken to guarantee that workers earn a remuneration from which they can at the very least
 make ends meet. Action is necessary and urgent to make sure that the right to collective
 bargaining is fully respected everywhere in the European Union and that trade unions can
 bargain for fair and just working conditions for workers.



 
     General Secretary, European Trade Union Confederation.
Luca Visentini                                                                            Italian Labour Law e-Journal
                                                                                                 Issue 1, Vol. 14 (2021)
                                                                                                        Section: Theme


   Without European action, the situation is getting worse. Almost one worker in ten in the
EU27 is at risk of poverty. The share of workers at risk of poverty has increased in the last
decade.1 70% of minimum wage workers report having some difficulty in making ends meet.2
   At the same time, the number of workers covered by a collective agreement is down in
22 of the EU’s 27 member states.3 As pointed out by the ETUI’s Benchmarking Working Europe
2020, the “consequence of the partly EU-induced dismantling of sectoral collective
bargaining in the context of the handling of the 2008/2009 economic crisis was a drop in
the overall bargaining coverage in the EU27 from 73% in 2000 to 61% in 2018”.4 Several
Member States are ignoring their responsibility to promote and ensure the right to collective
bargaining is respected. The Conclusions of the Council of Europe’s European Committee
of Social Rights (ECSR) confirm that several Member States are not in conformity with the
right to organise and to bargain collectively as defined in the European Social Charter.5
   The EU has the objective of ensuring continuous improvement of living and working
conditions. Without effective and meaningful action in the areas of collective bargaining and
statutory minimum wages, Member States would be allowed to (continue to) compete in a
race to the bottom with regard to working conditions, including on poverty wages and non-
respect of the right to collective bargaining.
   In 2019, European Commission President, Ursula von der Leyen, promised to deliver
(within the first 100 days of her mandate) “a legal instrument to ensure that every worker in
our Union has a fair minimum wage. This should allow for a decent living wherever they
work. Minimum wages should be set according to national traditions, through collective
agreements or legal provisions”. She also added: “I am a firm believer in the value of social
dialogue between employers and unions, the people who know their sector and their region
the best”.6
   In May 2021 in Porto, EU Heads of State and Government, EU institutions, social
partners and the Social Platform committed to the implementation of the European Pillar of
Social Rights and its Action Plan and stressed the need to guarantee progress for a Social
Europe, leaving no one behind. They stressed the importance of ensuring decent wages and
an enabling framework for collective bargaining. The European Council committed to
“defending fair wages”.7
   Today – almost two years after the promises made by Commission President Ursula von
der Leyen to workers, it is high time to deliver! It is high time to take concrete steps to
improve the living and working conditions for workers. The proposed Directive on Adequate


1 European Commission, Impact Assessment Accompanying the Proposal for a Directive of the European Parliament and
of the Council on adequate minimum wages in the European Union, 28 October 2020, SWD(2020) 245 final, 18, 144.
2 Eurofound, Minimum wages in 2020: Annual review, 4 June 2020.
3
  European Commission, Impact Assessment Accompanying the Proposal for a Directive of the European Parliament and
of the Council on adequate minimum wages in the European Union, cit., pp. 11-13, 153-156; European Trade Union
Institute, Benchmarking Working Europe 2020. Covid-19 and the world of work: the impact of a pandemic, 2021, 110-
111.
4
  Ibidem, 110.
5 European Trade Union Confederation, ETUC REPLY to the Second Phase Consultation of Social Partners under

Article 154 TFEU on a possible action addressing the challenges related to fair minimum wages, 2020, 8.
6 Ursula von der Leyen, A Union that strives for more. My agenda for Europe. Political guidelines for the next European

Commission 2019-2024, 2019, 9-10.
7 Informal meeting of heads of state or government, Porto, 7-8 May 2021, The Porto declaration, par. 9.



https://doi.org/10.6092/issn.1561-8048/13371                                                                               34
Luca Visentini                                                        Italian Labour Law e-Journal
                                                                             Issue 1, Vol. 14 (2021)
                                                                                    Section: Theme


Minimum Wages in the EU has the potential to bring direct positive changes for workers,
provided it achieves its stated objectives.
   The Directive must ensure that the right to collective bargaining is fully respected for all
workers and guarantee real increases in collective bargaining coverage. It must include
effective measures against union busting practices, which are on the rise also in Europe. The
Directive must ensure that statutory minimum wages are adequate and guarantee a decent
standard of living for workers. The Directive should introduce a threshold of decency of
60% of the gross national median wage and 50% of the gross national average wage, below
which statutory minimum wages must not be paid. Social partners must be fully involved in
setting and updating statutory minimum wages. The Directive must include an obligation on
Member States to end exclusions from statutory minimum wages and sub-minimum rates.
Employers must be prevented from making their own deductions from statutory minimum
wages.


2. Stronger collective bargaining and higher statutory minimum wages are good for
the economy.

    Research on the effect of increases in minimum wage has shown no adverse economic
effects and no negative impacts on employment levels. Increases in statutory minimum wages
would create a level playing field without adverse effects for international competitiveness.
Increases in statutory minimum wages would not endanger, but would boost economic
growth. At the same time, measures to promote collective bargaining are necessary because
fair minimum wages will only be created in labour markets with vibrant collective bargaining
that raises the whole wage structure. Strengthening collective bargaining is not only
important to ensure fair working conditions and remuneration for workers, but it is also
decisive to promote a sustainable economic growth with high social standards. The EU’s
economy is mainly demand-led and wage-led. Wage increases through higher statutory
minimum wages and stronger collective bargaining, in particular at sectoral level, would boost
internal demand and thus economic growth.
    As highlighted by the European Central Bank and the European Commission ‘upward
wage convergence’ is urgently needed for the correct functioning of the internal market and
for the economies of Central and Eastern Europe. In order to reach this objective, stronger
sectoral collective bargaining is necessary to ensure a general increase of wages, including
minimum wages. Higher wages are also necessary to retain a skilled and educated workforce
in Central and Eastern Europe.
    In May, an open letter signed by professors Mariana Mazzucato, Thomas Piketty and
other renowned economists from across Europe stated that: “the proposed Directive is a
step in the right direction, but stronger measures are needed to guarantee the respect of the
right to collective bargaining for unions to negotiate better pay and conditions for workers
and raise statutory minimum wages to a level which ensures at least a decent standard of




https://doi.org/10.6092/issn.1561-8048/13371                                                           35
Luca Visentini                                                                           Italian Labour Law e-Journal
                                                                                                Issue 1, Vol. 14 (2021)
                                                                                                       Section: Theme


living. Adequate minimum wages and strong collective bargaining are not only good for the
people, they are clearly also good for the economy.”8


3. A strong Directive on Adequate Minimum Wages in the EU is legally possible.

    The EU cannot set pay nor can it establish an EU Minimum Wage however this does not
mean that the EU is prohibited from dealing with all matters relating to wages. The CJEU
case law confirms that Article 153(5) must be interpreted restrictively and it cannot be read
as a full exclusion of competence of the EU to act on the issue of wages/pay. Such an
extensive interpretation would not only deprive Article 153(1)(b) (to improve working
conditions) of its meaning and effectiveness but also Article 151 TFEU which enshrines the
social policy objectives, including the improvement of living and working conditions. Several
EU Directives provide for indicators or thresholds in levels of pay/payments. Protecting
workers’ right to unionise and collectively bargain is a human rights requirement, and
included in the EU Treaties by the EU Charter of Fundamental Rights.9
    Also, subsidiarity is not an issue. Under Article 5(3) TEU the EU should not intervene if
the objectives can be better achieved by Member States themselves, this is called the
“principle of subsidiarity”. It is clear that on the issue of wages, and poverty wages in
particular, the situation is getting worse and requires action at EU level. In addition, the EU
has an obligation to act in order to achieve the objective of continuous improvement of
living and working conditions (Art 151 TFEU). The European Pillar of Social Rights
establishes the principle that “workers have the right to fair wages that provide for a decent
standard of living”. Promoting collective bargaining cannot be considered an unjustified
interference, as it is a fundamental human right and an essential precondition for the “social
market economy”. Taking no action means that the objectives and obligations of the Treaty
would be denied, and Member States would be allowed to compete in a race to the bottom
on poverty wages and lack of respect of collective bargaining rights.
    The recent opinion of the legal services of the Council confirms what trade unions have
been saying all along: a Directive is possible and the proposed Directive is drafted on the
correct legal base, i.e the protection of working conditions (Article 153(1)(b) TFEU in
conjunction with Article 153(2) TFEU). There are now no more excuses or alibis. The
Directive is about workers’ lives, about the possibility for workers on minimum wages to
make ends meet, to pay the rent, to put food on the table for them and their families. The




8 Mazzucato M., Piketty T., et al., Higher statutory minimum wages and stronger collective bargaining are good for the
economy, ETUC, 2021.
9 Article 153(1)(b) TFEU “working conditions” includes pay/wages/financial components. Article 153(5)

TFEU puts some restrictions, however CJEU case law (C-307/50 – Del Cerro Alonso, C-286/06 – ‘Impact’
and C-395-396/08 – ‘Bruno’) confirms that the exclusion in Article 153(5) TFEU must be interpreted
restrictively and cannot be read as a full exclusion of competence for the EU to act on the issue of
wages/pay. There are ways/formulations to set levels of pay/wages in EU primary/secondary law. It is
possible to promote and enhance the role of collective bargaining/agreements in EU secondary law next to
regulating/in support of primary working conditions.

https://doi.org/10.6092/issn.1561-8048/13371                                                                              36
Luca Visentini                                                                Italian Labour Law e-Journal
                                                                                     Issue 1, Vol. 14 (2021)
                                                                                            Section: Theme


Directive is about the guarantee of the right of trade unions to negotiate fair conditions for
workers. Governments and MEPs must take their responsibilities.10


4. The Directive: necessary improvements.

    The ETUC considers that the proposal for a Directive is critical and we call on the
European institutions to support and improve it. The failure of the Council of the European
Union to reach a general approach on the Directive during the Portuguese Presidency, due
to the resistance of several governments that make continuous efforts to water-down the
proposed Directive, is a worrying signal and a missed opportunity. A watered-down Directive
will fail to deliver on its promises to ensure decent pay for workers and guarantee the respect
of the right to collective bargaining. The Directive cannot be weakened in the discussions in
the Council and the Parliament, but must be improved on key aspects.
    The Directive must be amended to protect against unintended consequences and
detrimental impacts and to ensure that it lives up to its stated aims, thus ensuring adequate
statutory minimum wages that protect workers and guarantee a decent standard of living, the
respect of the right to collective bargaining and real increases in the number of workers
covered by a collective agreement concluded by trade unions.
    In order to achieve these objectives, improvements to the Directive are needed in order
to:
         • Replace “workers organisations” with “trade unions” in the definition of
             collective bargaining. Collective bargaining is the prerogative of trade unions. It is
             unacceptable if the Directive allows employers to replace trade unions with works
             councils or other non-union entities. Indeed, this would be contrary to ILO
             Conventions 98 and 154.
         • Guarantee real increases in the number of workers covered by collective
             agreements and to ensure the respect of the right to collective bargaining. It is
             also necessary to ensure that Member States introduce measures that protect
             against union busting and guarantee trade union access to workplaces to meet
             with workers for purpose of collective bargaining.
         • Ensure adequate statutory minimum wages. Member States should be required to
             ensure that their statutory minimum wages are not paid below a threshold of 60%
             of the national median gross wage and 50% of the national average gross wage.
             Member States would retain the competence to decide the level at which their
             statutory minimum wages are to be paid (above the threshold). Member States
             should be required to guarantee that their statutory minimum wages are
             “adequate”, having regard to what is needed to ensure a decent standard of living.
    It is also necessary to delete “productivity” from the criteria for determining the level of
statutory minimum wages. Social partners should be fully involved in setting and updating
statutory minimum wages.


10Statement of the ETUC Collective Bargaining and Wage Coordination Committee, Opinion of the Council
Legal Service on the Directive on Adequate Minimum Wages in the EU – Better late than never!, 2021.

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Luca Visentini                                                                       Italian Labour Law e-Journal
                                                                                            Issue 1, Vol. 14 (2021)
                                                                                                   Section: Theme


           •   Include an obligation on Member States to end exclusions from statutory
               minimum wages and sub-minimum rates (for example for young workers,
               domestic workers, migrant workers). Employers must be prevented from making
               their own deductions from statutory minimum wages.
           •   Ensure that companies that access public procurement contracts are party to a
               collective agreement negotiated with trade unions and that any employer who
               denies workers their trade union rights is prevented from accessing public
               contracts and funds.
           •   Strengthen the controls and intensity of field inspections and guarantee that
               inspectorates and other bodies, as well as trade unions responsible for the
               enforcement of statutory minimum wages, have the necessary human and
               financial resources.
           •   Correct the monitoring mechanism to ensure: (i) the full involvement of social
               partners at national and EU level in the monitoring mechanism; (ii) that the
               purpose of the monitoring mechanism is to guarantee that statutory minimum
               wages are adequate, that collective bargaining coverage increases and the right to
               collective bargaining is respected (i.e. the monitoring mechanism cannot be used
               to push wages down or to undermine collective bargaining).


5. Final remarks.

   In 2019, Commission President Ursula von der Leyen promised to ensure that every
worker in our Union has a fair minimum wage that allows for a decent living. In May 2021,
the Porto Summit has stressed the need to guarantee progress for Social Europe and Member
States committed to “defending fair wages”.
   The Directive on Adequate Minimum Wages in the EU is essential to deliver on these
promises and to leave no one behind in the recovery. The ETUC considers the adoption of
a Directive that achieves its stated objectives – i.e. with the above-mentioned necessary
improvements – to be critical.
   The Directive with the necessary improvements has the potential to increase wages for
more than 24 million workers in Europe.11 The Directive also has the potential to lay down
rules to guarantee the right of trade unions to negotiate fair conditions and wages for
workers.
   Now is the time for European institutions to take their responsibilities and deliver an
essential instrument to improve living and working conditions, and to build a more inclusive
Europe that leaves no one behind.
   Now is the time for European institutions to take their responsibilities and deliver on the
promises made to workers in the EU.




11   European Trade Union Confederation, 24m could get pay rise under EU directive, 2021.

https://doi.org/10.6092/issn.1561-8048/13371                                                                          38
Luca Visentini                                                              Italian Labour Law e-Journal
                                                                                   Issue 1, Vol. 14 (2021)
                                                                                          Section: Theme


                                               Bibliography

European Commission, Impact Assessment Accompanying the Proposal for a Directive of the European
Parliament and of the Council on adequate minimum wages in the European Union, 28 October 2020,
SWD(2020) 245 final;
European Trade Union Confederation, ETUC REPLY to the Second Phase Consultation of Social
Partners under Article 154 TFEU on a possible action addressing the challenges related to fair minimum
wages, 2020;
European Trade Union Confederation, ETUC calls for improvements to the Directive to achieve fair
minimum wages and collective bargaining, 2021;
European Trade Union Confederation, 24m could get pay rise under EU directive, 2021.
European Trade Union Institute, Benchmarking Working Europe 2020. Covid-19 and the world of
work: the impact of a pandemic, 2021;
Mazzucato M., Piketty T., et al., Higher statutory minimum wages and stronger collective bargaining are
good for the economy, ETUC, 2021.




Copyright © 2021 Luca Visentini. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/13371                                                                 39
