The European Commission wants a legal minimum wage to be introduced everywhere in the European Union as soon as possible. The Member States themselves can determine how high this should be. According to European Commissioner Schmit, too many people in the EU are still living at or below the poverty line because their wages are too low. Later today he will officially present his plans.
At present, 21 member states have a legal minimum wage, while in the Scandinavian countries, for example, the social partners make agreements about the level of the wage. Italy, Cyprus and Austria also do not have a legal minimum wage.
Commission President Ursula von der Leyen promised when she took office that workers everywhere in the EU could earn a minimum wage. She needed that promise in the summer of 2019 to win over the Social Democrats in her election to the European Parliament.
Frans Timmermans, at the time the leader of the European Social Democratic list (the Spitzenkandidat), had won the elections with this theme. His party wanted to make ends meet, otherwise Von der Leyen would not get the necessary votes to be elected chairman.
Not enough
That promise has been translated into a directive (a bill), which is presented today. According to the Luxembourg European Commissioner Schmit, it is urgently needed to protect people with low incomes. “During the corona crisis, people in tourism and retail were particularly affected. All people who hardly earned the minimum wage.”
According to the European Commissioner, that minimum wage is not enough in many countries to be able to survive properly. That is why he proposes to make agreements about the height. The European Commission prefers, according to the documents, that the minimum wage is about sixty percent of what is earned on average in a country (the middle income).
Strictly formally, the European Commission is not allowed to make proposals on the level of incomes and benefits. That has been agreed in the Treaty of Lisbon. But Schmit gets around that by making recommendations to the member states. Indicators, as they are called in European jargon. And those indicators should be used by the Member States when setting the minimum wage.
Social dialogue
To begin with, social dialogue must be held in every country. Schmit calls this collective bargaining. And the European Commission would prefer that from now on the minimum wage is determined according to a fixed calculation, but according to lawyers the European Commission would then exceed its powers. So only suggestions are made in the bill.
From now on, all member states must submit a report every year to Brussels stating exactly what measures have been taken, how the social dialogue has developed and what the development of the minimum wage is. The European Commission then advises the member states on what can be improved.
If the plans of the European Commission are followed in all countries, according to calculations, between ten and twenty million employees could earn more. This is partly paid by the companies. Consumers pay about three quarters of the bill, the European Commission expects, as product prices will rise. But, according to an explanation of the proposals, because people with a minimum wage will spend more, the economy as a whole will hardly decline.
After the presentation of the proposals, the European Parliament and the Council of Ministers still have to consider them. Moreover, the measures still have to be approved by the parliaments of the different countries.
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