Framework Directive on Minimum Wages
Protection through statutory minimum wages or collective agreements.
JS – 11/2020
At the end of October, the European
Commission published the long awaited proposal for an EU
Directive on Minimum Wages (we reported on the previous steps here).
The directive aims to ensure that workers are paid at a level which enables
them to have a decent standard of living at their job location.
The COVID-19 pandemic has specifically
highlighted the importance of low-wage sectors in society, such as cleaning
services, retail, agriculture, care and health. The Commission has also taken
forward the debate on the value of work in this context. In-work poverty should
not be allowed. This also follows from principle 6 of the European
Pillar of Social Rights.
Ursula von der Leyen, President of the
European Commission, commented on this when the proposal was published:
proposal for adequate minimum wages is an important signal that also in crisis
times, the dignity of work must be sacred. We have seen that for too many
people, work no longer pays. Workers should have access to adequate minimum
wages and a decent standard of living."
Social and economic objectives
Adequate minimum wages should also
contribute to reducing the gender pay gap: a large proportion of the workforce
in the low-wage sectors mentioned above are women, so they could benefit from
this. In sectors traditionally dominated by male workers, such as the
automotive industry, protective mechanisms have often been put in place through
The European Commission also sees the
proposal as relevant for a sustainable and inclusive economic recovery:
domestic demand should be supported and incentives to work increased. Fair
competition should protect those employers who pay adequate wages.
No Europe-wide minimum wage level
The proposal aims to ensure that an
adequate minimum wage level is set, either in the form of a statutory minimum
wage or through collective agreements. Therefore, there should be
no obligation to set a statutory minimum wage. Instead, all Member States
should encourage collective pay bargaining to set wages.
The directive also does not intend to
specify the level of minimum wages. The minimum wages should be
"adequate". This adequacy is based on criteria such as purchasing
power, taking into account taxes and social benefits, general gross wage levels
and wage distribution, and the growth rate of gross wages.
The proposal also aims to introduce better
enforcement and monitoring of the respective minimum wage protection: the
Member States are to report annually to the European Commission on the
situation in their country.
The European Commission's proposal is based
on Article 153(1)(b) of the Treaty on the Functioning of the European Union
(TFEU) on working conditions. However, the competence of the EU in this respect
The proposal must now be approved by the
European Parliament and Council. Once adopted, Member States are obliged to
transpose the directive into national law within two years.