Second phase consultation of Social Partners.

The EU-Commission has started an initiative ‘to ensure that all workers in the Union are protected by a fair minimum wage, allowing for a decent living wherever they work’.

As part of this initiative, the European Commission published a consultation document on 3 June which presents the results of the first round of consultations in January/February 2020. Workers’ organisations pointed out that minimum wages are too low and cannot be called ‘fair’ if they do not meet the target of 60% of the national median wage. They also criticised the fact that the Commission has not taken into account self-employed workers.

As far as any future European action is concerned, the workers’ organisations (with the exception of CESI) did not explicitly advocate a legally binding framework. On the employers’ side, BusinessEurope suggested that adequacy should be assessed with reference to net wages. Some organisations also questioned the suitability of minimum wages to combat in-work poverty. However, there was agreement regarding opposition to a binding EU initiative, as there is no legal basis for this.

Subsequently, the Commission is clearly critical of the Member States’ practice of setting minimum wages. Only four Member States have a quantifiable target at all, in most countries the level was too low on both a gross and net basis, and there were too many gaps or exceptions. Accordingly, it is necessary to base the definition and updating of the statutory minimum wage on ‘clear and stable’ criteria.  

After examining the various opinions expressed, the Commission unsurprisingly concluded that action at EU level was needed. The Commission has stated that this action does not involve any plans to harmonise the level of minimum wages across the EU or to establish a uniform mechanism for setting minimum wages. Rather, the Member States are free to set a minimum wage either through legislation or collective agreements. However, an ‘EU framework on minimum wages’ must be created which ensures that minimum wages are set at an adequate level. This seems to boil down to a set of binding targets in the sense of a ‘toolbox’ from which the Member States can choose, but where inaction is not an option. The Commission’s preferred instrument is an EU Directive or a Council Recommendation. A Directive would contain a set of ‘minimum requirements’ and ‘procedural obligations’.

In contrast to the employers’ groups, the Commission is firmly of the opinion that there is a European competence to act. It bases this on Article 153(1)(b) of the TFEU, according to which the Union shall support the activities of the Member States with regard to working conditions.

The Consultation Document of 3 June 2020 [C(2020) 4570 final] is available here.