Committee on Employment and Social Affairs Ordinary meeting ICM
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Mario Nava
For remembering, the employment rate in Europe was deemed to be around 70% in 2010. That was the famous Lisbon strategy. Now we have an objective of 78 in 2030. And for the next twenty years, the true fight, the true fight will be to go and get the 22% deactivation. There are about 50,000,000 workers out there in Europe that do not voluntarily "work" today.
More or less 10, 12 millions of them say that they would like to work if the conditions are there. The discussion on the quality of the job, the discussion of what a good minimum wage is, good other, what conditions are, and so on is essential if we want Europe to continue to live and prosper. Let me give you one data point which I think will stick with you. Every single year now, there are about 10,000,000 people who turn 65 and leave the labor market, and about 8 million people who turn 25 and enter the labor market. These are the 2,000,000 we need to cover.
And you can cover it with some productivity increase, but you need to cover it with lots of activation and greater participation in the labor market. And minimum wage is an essential part of it. That is why the minimum wage directive is a milestone in strengthening the social model. It sets up a common framework for the adequacy of the statutory minimum wage for promoting collective bargaining, and for enhancing effective access of workers to their rights. Since the adoption of the minimum wage directive, minimum wage have significantly increased across the European Union, have been accompanied by a reduction of the unemployment rate and by an increase in the employment rate as a proof of what I was just saying.
Speaker 4
Minimum wages, the increase of minimum wage has helped to offset the purchasing power losses. They have also increased faster than the average wage in most member states. They have also boosted some low wages, which are just slightly above the minimum. And in large part, thanks to the directive, the situation of the low-wage earners has improved substantially both in absolute terms and in relative terms to the other workers. As I said, these increases had no negative impact on employment in the U.
S. Now a record low unemployment and the record high employment rates, and this is exactly what we want to sustain. The discussion today, which will be, I'm sure, absolutely deep, is on the recent court judgment and on the state of play of the directives implementation. On the recent court judgment, Sacha's professors will speak after me. Let me say just two words, we should all welcome the judgment that was delivered last November on Denmark's actions of annulment against the directive.
This is a landmark judgment which says two things, confirms the validity of the minimum wage directive, and sends out a clear and strong message that the EU cannot act on pay related matters, provided it does not directly, the EU can act, sorry, on pay related matters, provided it does not directly interfere in the determination of pay as this competence lies with member states and social partners. So it's only the determination of pay for all the rest that the EU can act on pay-related matters. The judgment is not a football match. There is not someone who wins and someone who loses. The judgment is a major victory for Social Europe, a major victory for all the workers, and is a major victory for all the companies because they know exactly what is the basis.
Mario Nava
An anecdotal evidence, I published a post on my LinkedIn, I received 37,713 views, a stadium basically on the post on minimum wage. It also proves how much progress we have made. We have made huge progress in building Social Europe. Five years ago, a directive like the minimum wage directive would not have been even imaginable. We have imagined, we have brought it forward, the council and the parliament have adopted, the court has upheld it.
Speaker 4
So that is absolutely a very great proof of how we have been able to adapt to the changing dynamics of the labor market. On the next step. The next step is very clear, and we should first of all ensure complete and correct implementation. So, the full communication of the transposition, and we will check that the transposition is complete and correct. This is the large majority of them.
There are a few of them which have not yet transposed or have done it partially. The commission is closely monitoring the situation in the member states, and needless to say, the commission will take actions if they are needed. Second, we have already started a compliance assessment of all the national transpositions to ensure the completeness and correctness of the transposition. And third, and very importantly, we are currently working and discussing internally the commission on the first monitoring report to you, to the European Parliament, and to the council, which will be adopted in the course of this year. The report will contain, as it is foreseen in the directive, our analysis of the data on minimum wage protection transmitted by the member states, as well as the action plans to promote collective bargaining.
Mario Nava
And the report hopefully will also show the correlation between the two, and how collective bargaining sustains minimum wage. Let me conclude by saying that the minimum wage directive is a key instrument for improving working and living conditions across the EU. It has produced a very tangible effect that's creating momentum for minimum wage increases, and I insist that it has created momentum for labor market participation, which will be the theme that we will all find ourselves to discuss in the next 10 years. And it has fostered the promotion of collective bargaining. The commission, you can be sure, will continue to push for the swift, complete and correct implementation of the directive in each and every member state.
Speaker 4
Let me stress that you, the National Parliament, have an extremely important role to play in this respect. We will not be able to do what we want to do without you. You are responsible for the adoption of the national transposition measures. You are responsible for the subsequent monitoring of their effective implementation, and the Commission counts on you. Thank you very much.
Li Andersson
Thank you very much, Mr. Nava. So we will now start with the first session entitled what are the aims directive and how have they been impacted by the Court of Justice judgment, in case C 1923. As you know, in November, the Court of Justice delivered its judgment in this case, confirming the legal basis of the directive and the validity of the provisions of the directive relating to collective bargaining on wage setting. However, the court annulled two provisions of the directive on the criteria to be taken into account by member states with statutory minimum wages, as well as the prohibition on reducing minimum wages in case of automatic indexation mechanisms. The subject of this session will, therefore, be the impacts of this judgment.
Before we hear our expert speaker, I will shortly outline the modalities for how this debate will go. On your desk, you will find speaking cards. Members of national parliaments can use those to indicate that they would like to take the floor. Just fill in the card and hand it to the ushers. And for MEPs, I already have a preliminary list of interested speakers.
And if there are more MEPs that wish to take the floor spontaneously, please just raise your hand or your card, as we do normally during committee meetings. As for the timing, I will kindly ask you to limit your interventions to one and a half minutes, for us to be able to ensure that everyone that wants to also will have time to take the floor. And we will try to divide the speaking time so that we have two national parliaments followed by one MEP, then two members of national parliaments and one MEP, and so on. So, we will start with the keynote speaker in this panel, Missus Sasha Garbyn, who is permanent professor of EU law at the legal studies department of the College of Europe. She has already published a commentary on the topic of the legal challenge against the directive and the recent court judgment.
So she is the best placed to set the scene for us for this debate. Please, missus Garben, you have the floor for the next 6 minutes.
Sacha Garben
Thank you very much, and good morning to everyone. When the court of justice rendered its judgment on the EU minimum wage case, it was very keen to communicate with a press release issued shortly after, a positive message, namely that it largely upheld the directive. I've seen similar positive messages coming out of the other EU institutions, including this morning, warmly welcoming this judgment. And also, the social partners were positive. So it seems that the court of justice has been able to achieve the impossible, to make everybody happy.
Speaker 6
However, considering, first of all, the absolute rarity of the court annulling in full or in part a piece of EU legislation, whenever it does so, and we can count those on two hands, those instances across the decades. It is always a landmark ruling. And secondly, considering the enormous symbolic importance of the EU minimum wage directive as indeed a flagship achievement of social Europe and an act of social atonement to EU citizens, making up for the years of regressive European action on wages in the austerity years, all this celebration of a partial annulment is remarkable. Of course, I understand it. For one, it is explained by relief.
Speaker 8
It could have been so much worse, as the opinion of the advocate general outlined. That opinion, as everybody here, I think, knows, advised the court to annul the directive in full. Secondly, I also understand the political interest and the real-world value of now making sure that the remainder of the directive is implemented in full. But I am an academic, and I'm also a little bit contrarian. And so, I just want to insist for a moment on what was lost.
Sacha Garben
The court, in the judgment, applying its previously established analytical yardstick to determine the meaning of the exclusion of pay in the fifth paragraph of article 153, namely the direct interference with minimum wages or wage setting in the member states, annulled the criteria that article 5(2) of the directive required the member states to take into account when setting adequate minimum wages. These criteria provided some real teeth in legal terms to the more open-ended requirements of article five on adequacy of wages. And indeed, this is the tragedy. Because they were the most effective, they interfered directly and had to be annulled. The court, worryingly in my view, also annulled the guarantee that indexation of wages should not lead to the lowering of these wages.
Of course, we still have the so-called non-regression clause of article 16 of the directive, but that requires or that means that member states cannot use the directive as an excuse to lower wages, either through indexation or otherwise, but it does not provide nearly as hard a guarantee as article 5.3 of the directive, which is now to that extent annulled, did. Which is again, the tragedy, precisely because it was that hard guarantee, it had to be annulled because it directly interfered. So in this way, the judge, the judgment has blunted a knife that was already not as sharp as it should have been, and arguably could have been if another legal basis had been chosen or had been added as I had argued for in my writings on the topic. As to the lessons learned, it's not so clear, unfortunately. Can the EU act to directly interfere with wage setting in the member states?
Speaker 7
We just heard the interpretation from the commission. No. Apparently, after this ruling, it is clear that it cannot. Well, actually, it is clear that it cannot on the basis of article 153 and because of its fifth paragraph. But what about other legal bases?
Sacha Garben
What about socioeconomic cohesion? What about article 175, for instance? We don't know. I'm running out of time, so I will wrap up. In academic terms, this is an incredibly fascinating and interesting conundrum that academics will be writing on, including myself, for years to come, tying this into the discussions about the asymmetry between the market and the social in the EU constitutional, legal, and political construct.
In real world terms, the consequences are mixed. The negative part is that it seems towards EU citizens that still the EU can more powerfully interfere with wages through regressive and undemocratic methods, such as the European semester in the past, bailouts and so on, as well as institute wage competition as part of the internal market through, for instance, the posting of workers through the case law of the court in Viking and Laval, then it can act democratically for the adequacy of wages to ensure that we all can work and live in dignity and to reduce inequality within and between member states. So that's a pity, and I think it deserves to be mentioned that this is a pity. But, yes, on the other hand, so chair, I will also end on a positive note, the directive does live on. Maybe not as an EU minimum wage directive, but as a collective bargaining directive.
And in that sense, it can really make a difference. And also collective bargaining, mind you, was subjected to corrosive EU influence through economic policy coordination and internal market case law for decades. So here, the directive, forgive the pun, and indeed, on a positive note, is still worth its salt. Thank you.
Li Andersson
Thank you very much, Mrs. Karben. I think we got a lot of ingredients for the debate also from this presentation. Now we will continue to delve into this topic, starting with remarks from Member of the European Parliament, Mark May, who is the Co-Chair of the Minimum Wage Directive Monitoring Group here in the committee, followed by interventions by members of National Parliament. But please, Mrs.
May, you have the floor for the next 4 minutes.
Marit Maij
Thank you very much, Chair, and thank you also, Missus Garben. And it's a pleasure to be here with colleagues from national parliaments, in our inter-parliamentary committee. The minimum wage directive, I think, is by far the most important piece of legislation that we've had in the previous mandate, and the purpose was very simple, as was mentioned here already before. Everyone has a right to a minimum wage and has a right to a minimum wage that they can actually live off, a living wage. And besides that, the directive, which was also mentioned, asks member states to take action on collective bargaining and to make sure that at least 80% of workers are reached by collective bargaining.
Now this is clear, because Europe is not just an economic project or a peace project. It's cooperation strongly rooted in the belief that when one member state progresses, the whole union progresses and benefits. And quality working conditions and fair minimum wages are pivotal in that, something that the socialists and democrats in the European Parliament have already underlined a long time ago. And that we have this minimum rates directive is really great, and it's thanks to the great work of my previous colleague, Agnes Joergeres from The Netherlands, but also our colleague, Dennis Ratke, who will speak in the next panel. With their devotion, we managed to include strong wording in the directive and to have a minimum wage directive that really can help people in our member states.
But now we are looking at the implementation of this directive, and we see that the court case has given a number of member states the reason to stall, uphold, and also be a little bit sloppy with the implementation and the transposition of the legislation. The court case came out, and as Missus Garben has explained, it was overdue. It was not unexpected, but it was still relieving for us. The court case underlined what the European Parliament already said from the beginning: the minimum wage directive is a framework for improving working conditions. It leaves the wage determination to the member states and the social partners in the member states, and that is exactly what the European competence regarding working conditions should be.
The EU does not set wages, of which we are very well aware, but we create the framework, the guidance, and the steering for those minimum wages. The biggest implication of this ruling is that the member states cannot hide anymore, and they still have to do right now. They have to work with the outcome. All member states are obliged to see if their legislation or collective bargaining is in place and is sufficient for a decent life for their workers. This can have an enormous effect on thousands of people.
And we see, for example, my own country, the Netherlands, is a little bit sloppy with the implementation of the minimum wage directive. We have an exemption for young people, people 18, 19, 20, who are adults in the minimum wage. They get a youth wage, but we also have an exemption to deduce housing costs from the minimum wage, and this essentially only touches migrants, labor migrants. So this is also something that needs to be changed on the basis of the minimum wage. Now we have the tools, and we can clearly start pushing for it.
For the future, the court case is hopeful. It showed once again that the EU has competence to legislate in social policies, and we should not shy away from that. Of course, there are clear national competences that we should avoid touching, but a lot can be done at the national level, sorry. A lot can be done at the European level. We will not give up pushing for more legislation, for example, in the field of subcontracting, equal pay, or the right to disconnect.
Speaker 11
Because working conditions, my friends, are also a European competence. Thank you.
Li Andersson
Thank you very much, Missus Maille. And, I will now give the floor to Miss Sinem Dubwad Demir, who is a member of the European Affairs Committee in the Danish parliament. As Denmark was, in the origin of the legal challenge to the directive, it is very interesting to hear your views on the topic, and your perspective on the implications for national systems and the way forward. So your intervention will also help us better understand how member states with strong collective bargaining traditions view this directive, and the effect it will have. So please, missus Sinem de Bademir, the floor is yours for the next 4 minutes.
Sinem Dubwad Demir
Thank you. I'm gonna do this in Danish. This.
It was a fight for better living conditions for workers in Europe, which is extremely important. I'm a new politician, relatively speaking. And earlier, I was an employee, and I worked in the restaurant sector. And I saw that there were many challenges in that sector for wages, for working conditions. And the question as to what we do about this situation is extremely important for me.
I was asked to provide some context as to this directive and why we decided to refer it to the Court of Justice. I come from the left party, which is also represented here in the European Parliament as the Left. And we looked at how we could support the work being done on minimum wages. In my party, it's very important for us to ensure that all workers across the EU have a wage that enables them to live decently, and that the minimum wages aren't too low. So that's why this struggle is also our struggle.
We know that the conditions are very different if we compare across the different countries, if we look at trade unions, collective agreements, etcetera. And a directive like this can form part of the solution. That is something that we understand. And we know that this directive has also been useful for some countries, including for workers in Bulgaria, some workers in Ireland, for example, at the trade unions in Sweden and Denmark came to the agreement that they were going to be against this directive. We were very skeptical about the practical implementation of this directive.
We'd seen that the directive for Denmark and Sweden would be a real departure to what we had, and that's why we had to have stronger cooperation between us. And that was the answer to the first question as to what the background is, why Denmark decided to refer this directive to the Court of Justice. And just to understand all of this, you have to understand how our labour market operates in Denmark. In Denmark and in Sweden, employees have been negotiating their wages for 100 years without having to have minimum wages, and the state never got involved. It was the members of the trade unions who were the ones who made the decisions as to collective agreements, collective bargaining in general.
It wasn't the job of the politicians or the legislators in the courts. And we have the highest, or we had the highest, wages in Europe, and employees and employers decided together what to do there. We weren't against the idea of having a higher minimum wage in other European countries at all. But we were rather concerned about this directive and the EU trying to interfere in wage negotiations, which would have undermined the model that we have in Denmark. This might not happen overnight.
It might not even happen in three years' time, but we were afraid that it would happen at all. If the court of justice decided on a certain interpretation of this directive, then it's no longer a theoretical fear that we have. We have some real experience of this too. There was another ruling where the EU had used the voluntary basis to interfere in trade union negotiations. And we are always very skeptical about directives when it comes to the labour market.
This is why we have to understand how this is rooted in the treaties, and it very clearly says that the EU does not have competence on matters related to wages or how they are organized. This is something that was negotiated as part of the treaty. And for the Nordic countries, we wanted to be assured that the weakest parts of the labour market were protected. We wanted to see guarantees, and this is why we objected to it right from the start. Having a directive that wants to guarantee minimum wages is interference, and that was the case for article 153 five, which we decided was direct interference with wage setting.
And the EU agreed with Denmark's fears that this was indeed interference with wage-setting policy and should therefore be annulled. A directive on minimum wages should be there to improve wages, of course. But the court of justice did not agree that was what was happening. And articles five, three, and two are very important. It's very important to ensure that they are not breaking the rules.
Denmark wanted to carry out an evaluation, but we wanted to annul the whole directive. We wanted to look at the conditions in article four as well. But that's still there, and that's why we still see a risk that the Court of Justice will have the possibility to look at the limits of EU competencies versus national competencies and to undermine the latter. But we think that the challenges on the, on the labor market and I'm still a worker at the end of the day. It's very difficult for us, for those of us who only speak one language when we're trying to organize, when we're trying to talk to unions in other countries.
It's very difficult to talk to one another. It's very difficult to understand the challenges that others are facing. And that's why we want to see more translation, more dialogue. And, the Norwegian solution is slightly different from that adopted by Denmark or Sweden. And despite the fact there's no agreement in Denmark on certain matters, the goals are still the same.
It's about employees across Europe having better working conditions, better wages, and how we get there is something that I'm looking forward to discussing with you today. And I'm delighted to see how we will take up these challenges. Thank you very much.
Li Andersson
Thanks, Samitke. We will then go ahead with the other speakers. And as I said, one and a half minutes each, starting with Mr. Martin from Spain.
Speaker 14
Thank you very much indeed. We think that this directive is a step in the right direction, but we very much agree with what the professor said, that this ruling at the European Court of Justice has weakened it somewhat. At any rate, I just wanted to pass on to you what the experience of my country has been. We haven't yet transposed the directive, and the Spanish government has increased the minimum wage by 66% since 2018, which means a 32% increase in purchasing power for those workers. And, essentially, they have mainly been women and young people who have benefited from those wage increases.
That's meant that inequality in wages has been decreased, as well as the risk of poverty for employed people, the working poor. We said that it was very important to have that increase, especially because the employers' organizations wanted to destroy employment, and actually that didn't happen. It was the opposite. We've seen levels of employment in Spain that we'd never seen before, and we have the lowest level of unemployment in eighteen years. So what we've done in reality, what we've achieved, and thanks to increasing the minimum wage, at inter-branch level and also reforming the labor market, reduced the levels of temporary work by 26%, down to 11% in the private sector.
That is sending out a signal to the markets that it wasn't possible to be profitable anymore because of these poor working conditions. And that led to a major change in our economy, together with European funds. Spain is now a country with very resilient levels of growth despite the European context, despite the trade war going on, despite inflation triggered crises, despite all of that, we've managed to improve the working conditions. And we've sent out a signal that it's not possible to have profitability with poor working conditions. What we needed instead was to innovate.
And on the basis of that, our situation is different from other European countries. We've managed to direct investment into more productive, more innovative sectors, and a key factor in all of that has been increasing the minimum wage by 66%. Thank you.
Speaker 16
you. Good morning, chairman, colleagues. The Court of Justice decision clarified an essential principle. Europe can promote dignified wages, but cannot ignore the diversity of member states' situation. The court confirms that collective bargaining remains central competence of the national states.
The industrial systems in the various member states are profoundly different, and they cannot be covered by a single system given the national specificities. Specificities. This principle is valid in Denmark, but also in Italy, where our collective bargaining system for decades guarantees a fair balance between support for workers, competitiveness of the companies without using a legal minimum wage, a model based on responsibility of the social partners who are most familiar with the national specificities. Otherwise, the unions wouldn't exist. That's why our approach remains pragmatic, yes.
Speaker 17
Europe can promote dignified conditions, but without undermining the systems of the member states. On May 1, the national labor international labor day, the Italian government passed a decree to support wages without undermining the collective bargaining negotiations. The principle for comprehensive economic treatment of the contract signed to representativeness and fair wages. This shows that it is possible to support workers in an effective manner by respecting the national autonomy and the choices of the unions and the companies. Thank you.
Li Andersson
Thank you. Next speaker is a member of the European Parliament, Mister Radke from the APP.
Dennis Radke
Thank you.
Very much, Chair. Colleagues, thank you very much for giving me the opportunity to take part in this exchange of views. I think it's very important because we're coming to the very specific phase of implementation now. And I think it's good to take a little bit of time here to talk about different perspectives. And as someone who was a co-rapporteur for this directive and so bears a share of responsibility, I just want to take on board the arguments that have been put forward.
It was never the goal, never the objective to, reduce national systems to rubble. And it was clear right from the beginning that we wanted to make sure that we weren't introducing any additional obligations on introducing minimum wages across the European Union. That wasn't the goal, and no one was ever asking for that. To my understanding, this isn't any interference with collective bargaining autonomy. That was the fear that was expressed on a number of occasions, which I'd never understood.
Because here, this all turns around the question of collective bargaining. And luckily, now we have some clear targets. We have at least 80%. And even in the Nordic countries, now we're already on the other side of 80%, and that's a real success story, which those countries can be rightly proud of. And that doesn't mean, however, where we have that minimum 80% that had been met, that those member states then didn't have to come forward with an action plan and present it to the committee, to show that they'd already done their homework.
So I can only say that there's no interference intervention here with national sovereignty. It was really about strengthening social partners. Thank you.
Speaker 19
Thank you very much indeed. I can only say that a lot of work had been done by the parliament here within Denmark, but there were national discussions that took place, and we were asked to provide some input. So what's happened in Denmark with this ruling is very serious. It's something that we have supported from the Danish perspective. And as was previously mentioned, this model for negotiations that we had in Europe or that will be rolled out across Europe is the next task, and that is what is going to be implemented in Denmark.
Thank you.
From Spain.
Good.
Speaker 21
Morning, everyone. Logically, we do need to have decent salaries that are sufficient for families so that they can get to the end of the month, with money in the bank still. They have to work. They have to see that it's worthwhile working, and that it's more profitable to go to work than to stay at home, but wages have to be sufficient. You can't have a minimum wage, negotiated with just one of the parties or with one worker's representative, and leaving the employer's representatives out in the cold.
Speaker 20
We need to have proper negotiations. On the other hand, the increase in wages means that we've also increased social contributions, and that will then bolster our pensions systems across the board and the first pillar of pensions. However, we have to say that in Spain, yes, the minimum wage has gone up, but there are more and more working poor people. There are workers who need two or even more jobs just to be able to make it through because one wage is not enough to contemplate to offset the increase in rents, etcetera. This is a problem that we really have to grapple with and find a solution to.
Thank you.
Li Andersson
Thank you very much. And next speaker is a member of the European Parliament, missus Gaby Bishop from the SMB.
Gabriele Bischoff
Thank you very much. And indeed, I think it's very timely to discuss the impact of the court ruling and the implementation of this directive in times where we have really huge problems with increasing prices and where people are not able really and wages are not able to cope with these rising prices, be it energy, be it food, be it housing. At the same time, we have an idea after the first participants what a battle this was to achieve this directive. And that no one from the beginning was sure how it would end. But what we knew is that we have to do something at European level against the growing number of working poor.
And I think this is the importance, after this ruling of the court, that we now have to implement and we have to deliver here. And we got some new tools regarding also collective bargaining coverage that we have to use in our work here in the parliament when we look, for example, at public procurement, and other tools that we can use to achieve these goals. And I think Mario said it also in the beginning, there were a lot of people having doubts that Europe can do it. But at the same time, I still remember, we had the live hearing of the press conference that you, professor Garben, mentioned. And when the key sentence was expected, there was a disconnection from the court.
And this is, I think, a bit symbolic. So I think we know what we can do. And as one of the rapporteurs already said it, Dennis, we never intended that we replace collective bargaining from Europe, but that we can do and help to organize the framework that working poor will not exist in the future. And this is why we have to look so intensively at the implementation of this directive. Thank you very much.
Sigratzi.
Speaker 23
Thank you. Well, one worker out of 10 does not manage to have a dignified living standard, and this is a political judgment on the Europe we've constructed. Dignity comes from a decent wage. This is a scandal that we've seen. If we remember, a letter that was given to us from the president of the EIP concerned Draghi said that we should bring this back to the industry level.
So the result is that we're seeing problems in Europe with growing wages. The industry's profits have grown, but not wages. It's a dysfunctional model. This shared wealth only takes place if you distribute the wealth. Now we have a court of justice decision that says something that's uncomfortable, recognizes the problem, but then does not provide any tools to solve it.
It eliminates binding criteria for fairness. It is not a solution. It means all the states don't have any sort of obligations. That's the European Union par excellence. So the results of all of this, I've come from Italy where we have millions of workers who work full time, who are classified as working poor.
The Maloney government has just proposed and just approved a decree on a fair result. That would be good, but there's no legal minimum wage despite the fact that more than half a million Italians have signed a petition to acquire this. We need to have a way to get around this, strength of the strongest. I mean, we're seeing what's happening in Europe. If we don't guarantee rights for our citizens, has no moral power to promote democracy in the same way.
Speaker 24
First of all, we need to take care of our own houses, so that no one falls through the cracks. Thank you.
Thank.
Speaker 26
you. For years in Spain, we were told that this would destroy the economy, torpedo the economy. What we've seen is quite the opposite. The minimum wage has led to record levels of employment and supported our social security system. These measures have always been achieved when the trade unions, the government, and civil society managed to come together to cement rights.
Speaker 25
This making it easier to access work is not a brake to growth, and this has been particularly important for young people, women, and workers in the most vulnerable sectors. They've reduced inequalities and put a brake on rural poverty. We want a stronger Europe, a fairer Europe. The Spanish government defends competitiveness based on innovation, productivity, and high-quality employment, not low wages and precariousness. This is one of the foundations of democracy.
We want to strengthen our trust in our citizens in the European project, and this can improve the lives of our citizens. Thank you.
Li Andersson
Thank you very much. And next speaker is a Member of the European Parliament, Mrs. Stella Pizzacarion from Le Page.
Speaker 29
Thank you, chair. Ladies and gentlemen, our work should allow us to live with dignity, but workers' conditions are being worsened. Currently, wages or salaries do not allow employees to reach the end of the month. The director of minimum wage in previous terms said shed light on a number of problematic issues, and the court supported us on a number of the issues. It seems inconsistent that the treaties ban legislation on wages, but do allow us to do this if it is an indirect influence.
Speaker 35
This leads us to question the legal basis and the Commission's proposal. We think that this interpretation, handed down by the court, is somewhat worrying and could worsen the lives of our workers. It would lead to automatic indexation, which would undermine wage guarantees in a number of countries. Furthermore, we have lost key criteria, such as the cost of living. Without these references, it seems that the decision taken are more arbitrary.
Speaker 28
If a minimum wage has not yet led to ensuring people can live with dignity, we don't know whether the next steps will do so either. Mister Karabin was clear. We don't think this ruling is fit for purpose. Thank you.
Li Andersson
Thank you very much. And next, I have two members of the European Parliament on the list. So missus Thum from New is the next speaker.
Jana Toom
Thank you very much, chair. Thank you, colleagues. The whole saga of the minimum wage directive has been quite a roller coaster ride that started even before it was proposed by the commission, and it is finally looking like we will have less of a bumpy road after the court decision. The aim of the directive is quite clear: to improve living and working conditions, contribute to upward social convergence, and reduce wage inequality. I was always a bit skeptical of the criticism and resistance towards this directive, because these objectives are key and necessary elements for our European integration.
And during very difficult negotiations with the parliament and council together, I read that the text was almost completely without fault. The court made it clear that the directive left sufficient flexibility to the EU countries to act when trying to achieve the objectives of the directive, whether it is promoting collective bargaining or a statutory minimum wage. And it also reconfirmed the principle that asking for measures that will end up having an effect on the level of pay is not automatically off limits, because otherwise our hands will be tied when it comes to achieving anything in the social policy competences that union has. So the key lesson I draw is that we do not need to be so shy in the social policy area. We can find many common objectives aimed at improving living and working conditions across the 27 member states.
With the right considerations for national diversity and for the good mix of measures, we can find a way to agree to adopt legislation in this area. Thank you.
Thank you, chair. I'll speak in Portuguese.
João Oliveira
Members of parliament, the questions we're discussing here today are not just the issue of the interference of the EU and national competencies in the labor market. We're also talking about what the point of this interference is. And what we can note now is that the point of this seems to be to quash wages rather than to increase them. If you look at the specific recommendations, the country specific recommendations in the European semester, there are dozens of examples in the Portuguese case, for example, where wages have been lowered. And the very question of the minimum wage in Portugal has been weaponized by employers' organizations, saying that Portugal already has wages higher than the minimum wage, so we don't have to do anything.
We're looking at a minimum wage of between 800 and €900, and this simply isn't sufficient. But yet, the employers say there was no need to raise it because we are above the European minimum standards. This means that collective bargaining has been blocked in Portugal, meaning that workers' rights are no longer being protected, and contracts are being substituted, replaced with contracts that have worse conditions for employees. Collective bargaining is absolutely crucial. Yet the EU has interfered on minimum wages, but has not interfered when it comes to ensuring a collective bargaining.
Our rights, our workers' rights are being degraded once again, and the EU has not said a word about this. Quite the opposite. What we are hearing now, even from the European Commission, is that we have political intervention, political support of the Portuguese government. However, ladies and gentlemen, this is not just a problem of interfering with national competencies. That goes without saying that we're also looking at interference, which is running counter to the rights of our workers, including the need to increase their salaries.
Thank you.
Li Andersson
Thank you very much. And I have reached the end of the speaking request for this part of the session, which means we can have a break until eleven when we will continue with the other, oh, no. Sorry. My apologies. I'm actually, my apologies.
I'm giving the floor back to our experts before we end. Yes. So, to the speakers that started this debate, your reactions to the questions and the comments we have heard, as well as any final closing remarks you might have, I will go in the same order. So starting with Mrs. Sasha Garben, then Marit May, and then Missus Sinem Duvad Demir.
So please, Missus Garben.
Speaker 8
Thank you so much. I think it became very clear from the discussions we were having that some people look at the glass as half full and some people look at the glass as half empty. That is in the nature of things. I do think that one problem that emerges even more clearly now to me from the discussion is precisely that we do not know to what extent the EU in the future, if political winds change, can pause more progressively and more directly legislate on the adequacy of wages and maybe introduce a right to adequate minimum wages or not. We know this cannot happen on the basis of article 153.
That is clear from the Court of Justice's judgment. The advocate general in the opinion had also gone into some other alternative legal basis, like the one I had proposed, article 175, and dismissed that. But the court did not rule on this, so we do not know. And I just want to really put that out there because I'm hearing from the room as well as from the podium this unequivocal interpretation of the ruling that the EU cannot directly interfere in a positive way with the adequacy of wages. That is not clear.
There is no clear legal answer. And I know that is then fraught with risks. Because if you were in the future to have the political will to do something even more courageous, even more far-reaching for the benefit of workers at European level, you're going to have to take the risk of not knowing. And you may say, well, we have been now discouraged by this ruling from ever taking any risks again. But I would argue it's the opposite because it was too cautious approach to try and walk what I have called the tightrope of article 153 as a legal basis, and not do something more audacious and add at least 175 as a legal basis, or think of other routes, and to be more demanding on the member states and introduce a right, a legally enforceable individual right to adequate minimum wages, that would have maybe stood a better chance at the court to be upheld.
Right? So I would be sad if the message taken, the lesson learned, is to be ever more cautious about ambitious EU social legislative action. It's just a matter of having courage, real courage, and maybe also listening to the academics. Thank you.
Marit Maij
Yes. Thank you very much, chair. I think, here in the European Parliament, we are not discouraged. We obviously have a feeling that we have the possibility of working on social legislation, on legislation for social elements, social affairs, including, for workers, minimum wage, and other elements that we still see that are necessary in the European Union. We see this as an encouragement.
We also see, listening to the colleagues here, that there are, of course, differences in different member states, and we have to respect those differences. But still at the same time, we also have to respect the rights of workers and respect the rights, as we all have said, I think quite a number of speakers here have said, the rights of workers to have a fair minimum wage, to have a minimum wage that they can live off, a living wage that makes sure that if you have a job that you can actually live off that job and you don't need a second or a third one to be able to survive for yourself and with your family. I think these are goals that all of us within the European Union support, and these are goals that we support also with the social policies that we have common in the European context, also supported by the European Parliament. There's a number of other social policies, I think, that we have that we can start supporting and that we can support workers with to make sure that their position is improved. But this minimum wage directive is a very important one.
It's an important one on the level of the wage, and it's an important one on collective bargaining. Also, on collective bargaining, it gives the right to the social partners in the respective countries. But it does give them the obligation to do the collective bargaining and to make sure that collective bargaining reaches the largest proportion of workers possible, more than 80%. So I think that we feel supported by the ruling, absolutely not discouraged, maybe even encouraged a little bit, and it's good to also have the academics on our side. Thank you very much.
Li Andersson
Thank you very much. And next and last speaker in this part is Sinem Gebardemir, please.
Sinem Dubwad Demir
Magnusag for LD4SKELI, page two.
Thank you very much indeed, and thank you for the very different views. That's absolutely crucial. We need different opinions, different points of view, different methods in order to achieve our common goals. That is improving the working and living conditions for the workers of Europe. It would, of course, be best if perhaps we've taken Denmark and Sweden out of the equation, but we're very happy to see that the legal act successful, and we hope that we can improve conditions across the EU.
Speaker 36
We also hope that our model in Denmark and Sweden can be replicated elsewhere. Thank you.
Speaker 37
Thank you very much to all of you. This means we will have a 14-minute break until eleven, when we continue with the second part of this ICM. Alright, colleagues. We will continue with session number 2. I will give you a few minutes to call in your colleagues and get seated.
Li Andersson
Okay. So our second session will deal with the implementation of the directive, and I will start by giving the floor to Mr. Thorsten Schulten for his keynote speech. He's a political scientist and head of the collective bargaining archive in Hans Buchler Foundation. So please, the floor is yours.
Thorsten Schulten
Okay. Yeah. Hello, everybody, and thanks for having me here and to give me the opportunity to give you a little bit of insight about the implementation of the EUME directive. What I will say in the following minutes, and then I hope it's not working. Oh, yes.
I know what it is. Is based on research I did together with my colleague, Thorsten Muller, from the European Trade Union Institute. And I can already announce that we will come in the coming weeks with a paper, especially on the national action plans on collective bargaining, and a kind of first assessment of these plans. So I will start with the formal implementation. As far as we know, most of the countries have implemented formally the directive, but they did it in very different ways.
So there is a bulk of countries who have only made a very minimalistic way in introducing it. So they basically sometimes say, we do not have to change anything because we already fulfill the directive with our national law. Some did minor changes. But there is also a significant group of countries who have really substantial changes in the national minimum wage and labor law. I have to recommend there's, unfortunately, one mistake in that slide, and this is regarding Spain.
Spain already has a comprehensive draft on how to implement the directive. But as I heard this morning, it's not finally been adopted. So I have to put it on the not formally implemented way. Anyway, the formal implementation is one thing, but the really practical impact could be very different from that. So even countries who might have right minimalistic formal implementation, they can have introduced measures which might have a much larger impact, and I will immediately switch to the minimum wage.
So, what is the impact on minimum wages? Here, you see the recent figures: statutory minimum wages as a percentage of median wage and average wage. These are the latest figures from the UECD for 2024. And here, you see that only France and Slovenia are so far the countries who have fulfilled these recommendations of 60% of the median and 50% of the average wage. So there's still a long way to go.
Also, if we look to more recent minimum wage developments, we can see there is a strong dynamic in minimum wage developments. We see many member states where minimum wages grew above the average wages, especially during the inflation crisis. And we also see that there is a strong impact of the EU directive in the national debates on minimum wages. And if you look to the further slide, we, oh, this was one. Choose to, oh, wow.
I want to come back. Sorry. Well, this is not really good work. I hope to come back. No.
I'm going in the wrong direction. You already see the conclusion, but you don't want to see that. But, I don't know. Yeah. I need to go back.
Maybe someone can help. Yeah. Anyway, what I wanna say, yeah. One slide before. Now the next one.
Okay. Okay. Next. And the next one, please. And the next one.
So what I want to say is that most countries, in the meantime, use these indicative reference values for determining their minimum wages. They use it in different forms. You can see here just a list. You see that, I mean, the national state have the autonomy to determine the specific reference value they wanted to use. But I would say it's already a success of the directive that most of the countries use it.
And they use it in the following way. When can I see the next slide, please? Yes. You can see that as far to our knowledge, 17 out of 20 new member states with statutory minimum wages, they use this indicative reference values. Most of them use not the median, but the average.
The medium is only used in very few countries. And this shows that probably the medium as a criterion, especially in low wage countries where the overall wage levels are relatively low, of course, also the medium is low, and some of them rightly say, if we make the medium reference, Portugal was mentioned, for instance, in the session before, it is still the poverty wage. So these countries choose to use the average wage. There are only three states so far who use the median. Some of them use both references.
When they use this reference, most of them stick to the recommendation of the directive. So they use a 50% average or the 60% median wages. Some even use higher thresholds. For instance, I think Spain use the 60% average but average wage, not the median wage, so a higher threshold. Some of them also use lower values.
And yes, the instruments also differ. Some already put this reference value into the national minimum wage law. Some have it more as a kind of general recommendation. So we have also different forms of legal bending, and yes, the degree of bending of these values differs. Anyway, I would say we can say that the minimum wages directive really has an impact on minimum wages.
Coming to collective bargaining. Know these are still the figures which we have so far. I could say a lot about the definition of bargaining coverage. There are some problems, of course. But according to the recent OECD figures, we know there are nine states which have a bargain coverage above 80 percent and eighteen countries where it is below 80%.
So these 18 countries are required to set up a national action plan for the promotion of collective bargaining. And if I look to the next slide, please, you can see that so far, 11 countries have submitted a national action plan, but there are still a significant number of seven countries that have not. Also, the deadline was the end of last year, but there are still 7 countries which have not delivered. There are also nine countries, the one above 80% who are not required. So why do they not have levered?
I mean, as a general observation, you can say the national action plans are almost everywhere very contested. So there are really hot, controversial debates about what to bring into this action plan. And there are also, and I have to say that because it's just a matter of fact, it's in particular the business, the employer side, who often block more substantial regulation. Next slide, please. Looking a little bit at what's in there.
So we try to give some criteria on how to judge this action plan. First of all, is, of course, the implementation procedure. We see that almost half of the countries which have an action plan have a clear time frame, which also means that, of course, another half have no time frame. And that's, of course, a problem because the directive required this time frame. Some of the countries set up a kind of tripartite structure to monitor and evaluate the implementation process together with unions and employers' associations.
Some are not. And some countries even provide additional financial resources for the implementation. And again, half are not doing or not providing additional sources. Yes, coming more to the content, and that's the next slide, please. In our study, we distinguish between soft and more substantial measure.
We see a clear focus on so-called soft measures in the National Action Plans. What do I mean by soft measure? First of all, there is this big word awareness creating. So there it goes from advertising and making announcements that how good collective bargaining is to bring it into public debates and so on. So these kind of things just showing the value of collective agreement.
This is in almost all of the national action plans. There is also a strong issue with the quality and availability of data on collective bargaining. And also a lot of countries try to promote research, to fill the gaps of data. As a researcher, of course, I very much endorse that they are doing these research programs in the national action plan. So anyway, but these are more the soft issues.
Coming to the next slide, please. And even a more substantial issue is what they call capacity building. Sometimes, in many countries, we have the situation that often, yeah, the social partners organization did not have the capacities. They are rather weak, and so on. And here, it is in many of the plans, they try to support them.
They support them through training courses, to all kinds of materials. When it comes to the union specifically, it's only a minority of two countries who have the issue of strengthening trade unions who want to engage in collective bargaining to make sure that there are no sanctions or whatsoever. Some other countries also try to strengthen employers to give them a better opportunity to enter collective bargaining. And the next slide, it's finally, I mean, we all know, in order to get a higher collective bargaining coverage, we have to increase sectoral bargaining. So without sectoral bargaining, you can't get 80% or even more than 50%.
If you only stick to company bargaining, you will have only a minority of people covered by collective agreements. So sectoral bargaining is the most crucial thing. And here, you see a couple of issues which are mentioned, sometimes in a more concrete, sometimes also in a very vague way. This is the extension of collective agreements, public procurement rules, the possibility for confederations to get engaged into sectoral bargaining, setting up new sectoral structures, and so on. So there's a lot of details, but these are probably the more hardcore, more substantial measures.
But you see, it's only always a minority of the countries who took over these points. Next slide, please. I don't want to go to the detail of the single countries, but I just want to mention one country as a good practice example, and this is the example of Greece. So Greece is, I mean, we all know the story about the troika and the bad things also the European Commission did to Greece in the past. And now the government has a clear commitment.
We wanna get rid of these troika measures, and we wanna really increase, regain, call it, strengthen collective bargaining in our country. Greece is the only country where the National Action Plan really is based on a proper tripartite agreement among unions, employers, and the state. And they have a clear commitment. We wanna have 80%. We want to reach that goal.
That's a clear commitment by the government. And we already saw a quite substantial labor market reform, which has already adapted in, I think, in January, about facilitating extension of collective agreements, full ultra activity after the expiry of an agreement, and strengthening of sectoral agreement through a stronger role of the configurations. Again, here, this is probably the best plan. We will have a clear, concrete and precise time frame, and they install a Secretary working group to monitor and evaluate the support of the implementation. So I think this is more or less if you take the directive and or the directive won, I think Greece probably did it at best.
Yes. Coming to my conclusion, concluding the last slide. As I said before, the implementation is highly controversial. Most of the, in terms of minimum wages, I think the directive is quite successful. It's really used as a political term and a political reference in the national debates and the national policy regarding minimum wages.
In cultural bargaining, it's still much weaker. So we are also even in an earlier stage. We see that there is a strong focus only on soft measures, which has to do with that the soft measures are often, yes, the smallest compromise you could reach between state and social partners. So they could be much more ambitious at Wernher in a more right way. And I think, finally, there is, of course, a big task also for the EU level to guarantee a proper monitoring and evaluation of these developments in order to promote good practices.
Li Andersson
Thank you very much. I think an excellent summary, also with very interesting national examples. So, well, very good scene setter for the discussion at hand. We will now go on to hear from members of parliament, social partners, and members of European Parliament, starting with Mister Dennis Radke, our co-rapporteur on the minimum wage directive and also the cochair of the minimum wage directive monitoring group. So please, Dennis, the floor is yours for the next 4 minutes.
What did you say? Twenty-four minutes?
Twenty-four?
Yeah.
Dennis Radke
Thorsten colleagues. Thank you very much, firstly, for your input. From my point of view, it's extremely important not only in order to be able to answer the question as to where we currently stand in this process, but also to think about where we go from here. When it comes to the implementation, I would say that this is always the case with every directive. Some move faster, others move more slowly.
If I look at the ruling from the European Court of Justice as well, we've already talked about the content there. But there are some substantial arguments to say before we implement the ECJ, let be before we implement it, let's wait for this ruling to be implemented, and maybe some things will sort themselves out. So this is perhaps a justification as to why we're running after this implementation. But as you've said, on the question of seeking a minimum level of compromise with the action plans, I think that when it comes to the discussions with the commission that we have as a parliament, once the first round has been concluded, we have to make some assessments, and we have to think about whether this is something that we want to see from a political point of view. We've already had a number of concerns expressed this morning about direct intervention in national systems.
That was never the aim, and that shouldn't happen in the future either, this interference. But the question of achieving that 80% minimum level, ultimately, it can't be achieved only with nice statements. It's going to need direct political action to be taken in the member states. And that's why we're going to have to analyze this very closely indeed, and then make decisions about what we do with it when it comes to an additional round. But, if I put my German hat on in this discussion, the first country to implement the national minimum wage directive was Romania.
And I went to Romania quite quickly after the implementation, and I spoke to trade unions there in Romania. And I wanted to know what that meant for them in their practical work. All of these apparent collective bargaining rounds that were happening, these employee representatives had been sought out by the employer representatives. It had nothing to do with our ideas about collective bargaining or what should legally feature in collective bargaining rounds. All of that would no longer be possible.
And in Romania, everything was implemented very quickly indeed, and the social partners were then put in a position of having to do everything, negotiate everything all over again. And that only didn't lead to new dynamics on the trade union side of things, but also on the employer organization side as well. They have a completely different structure in a country like Romania. So it shows that if you apply this instrument correctly, this instrument that we have designed, then ultimately, it can offer prospects of being a game changer if we all have the same political willingness behind it. Thank you.
Li Andersson
Thank you very much. And, I will next give the floor to mister Jeroen Rutte, who is director for employment and social governance analysis at D. J. Employed in the European Commission. So please, the floor is yours.
Jeroen Rutte
Thank you, madam chair. Dear honorable members of European Parliament and members of National Parliament, very important moment for us to have a first discussion after the adoption and the ruling. Thank you for inviting us. And you have all heard Mario Nava, my director general, underlining the importance we see, we attach to the full implementation of this directive and the aims it entails, that are both national but also European interests. Ensuring that work pays a fair living wage is one of the key principles of the European social market economy.
Speaker 44
And in times of labor and skill shortages, adequate wages are really a pull factor for people currently outside the labor market to rejoin it. And therefore, we are moving forward with the first monitoring report on the implementation of this directive that we hope to publish, we expect to publish still before the summer this July. As concerns the transposition of the directive, the majority of member states have notified the full transposition. And the commission expects a few remaining member states to do so without further delay. We are actively engaging with those countries to speed up where it is necessary.
Speaker 45
We closely follow the state of play. In parallel, we are carrying out our assessment of the completeness, correctness of the national transposition measures that have been notified. And again, we're actively engaging there where there are questions, there where, indeed, we detect possible issues. Now the directive contains a periodic monitoring and reporting mechanism in order to be able to follow progress also in terms of our aims and ambitions. Every two years, member states have to transmit information to the European Commission on minimum wage protection and collective bargaining coverage.
Speaker 44
And then we should analyze this information and report on it to the parliament, European parliament, and council. All member states have complied with this obligation to report the information at the end of last year. This is obviously step number one to be able to assess the situation. The monitoring report that I mentioned will also include the Commission's assessment of the action plans to promote collective bargaining. We already heard a little bit about it.
We have slight differences, but the sense of direction is the same. Strong collective bargaining contributes to ensuring an adequate minimum wage protection. And member states with a high collective bargaining coverage rate tend to have a small share of low-wage workers and high minimum wages. This is why the directive requires member states with a collective bargaining coverage rate below 80% to establish, with the involvement, obviously, of social partners, an action plan to promote collective bargaining. 18 member states, as you saw, have a collective bargaining rate below 80%.
Speaker 45
We have received 12, not 11, of these action plans from the member states. We are still awaiting those from Croatia, Hungary, Cyprus, Luxembourg, Germany, and Slovenia. And these countries are still engaging with their social partners and are expected to establish them in the coming months. Again, we insist that, of course, good engagement must take place, but it cannot also be an excuse to await things too much. Indeed, I do agree with mister Ratke that the ruling may have delayed, of course, in a number of countries progress.
Speaker 44
We have seen so far, and we are largely aligned on the views we have, with the previous presentation, that the action plan contains a variety of concrete measures, generally appropriate to promote collective bargaining. 11 out of 12 countries have, for example, also touched upon the field of regulatory action. Greece was mentioned. Also, Netherlands, for example, takes some concrete steps in this regard, but there are also many countries where more operational concreteness, a clear timeline would indeed be welcome. So broadly aligned with what should be there, but maybe a more ambitious approach by including concrete regulatory reforms might have more of a direct impact on the coverage rate and also help enable sectoral collective bargaining.
Of course, in the report that the commission will adopt in the course of July, you will find a detailed assessment. Let me conclude by underlining again that the commission is closely monitoring, following, engaging with member states. And only when it is implemented, it can have a full assessment and view on the positive impact on people's lives, and that contribute to improving the living and working conditions in the EU. We also will use and are using already this information in the context of the European semester. As you may know, European semester, we analyze each country, fiscal but also sectoral policies, for example, education, wage setting, health care.
Reports will come out on June 3 together with country specific recommendations. And also in that context, the information we get, the conclusions we draw, will be used. And, obviously, last but not least, we count on support of the European Parliament, in particular of this committee and its monitoring working group, as well as on national parliaments to make best use of this directive and help those that need a fair wage to not be poor, to have a decent living through the directive, see progress on the ground. Thank you very much.
Li Andersson
Thank you very much. And we then move on to the social partners, starting with Missus Theo Jach, who is the confederal secretary of the European Trade Union Confederation. So, please, the floor is yours for the next 4 minutes.
Tea Jarc
Thank you very much, especially for this hearing. For us as the trade unions, of course, this is a groundbreaking directive that we have only dreamed of. And then when it became reality, we knew that it was going to change the things in Europe for the working people. And I think it actually did. And I think what Thorsten has been confirming is that the directive had a huge impact on wage setting systems, and it's more and more having the impact also on collective bargaining systems.
So even before the deadline for the transposition came, some of the countries rushed in already transposing this or following the objectives. We have seen this huge progress, and then our role in all this time has really been to support the trade unions in all of those countries to work also with the governments, with the ministers to ensure the very ambitious transposition of a directive. And in order to do that, we, at the European Trade Union Confederation, have established a monitoring tool, a system where we can track progress in each and every one of 27 member states, where we basically break down the directive into each and every single provision or even a line, and we see how each of the country is performing on this. So we have identified 30 different parameters that we are tracking, and we have identified the country reports and reported all of this on the website that is called Wage Up. So if you're interested in minimum wage setting procedures, you can find this for each and every one of the 27 member states, and you can even compare them along themselves.
And if you're interested in collective bargaining systems, you can also do this at this website, where we also report about the progress that it's made. Because right now, indeed, most of the countries have transposed the directive. They are implementing. They are achieving those objectives. But we also want to see, are the wages increasing?
Speaker 47
How are they increasing? Is it only nominal wages that are increasing, or is it also real wages that are increasing? We want to see how collective bargaining is improving, especially now with the action plans. So we are monitoring all of this and supporting the trade unions and the member states in this process. And maybe now to focus more on the aspect of collective bargaining.
Tea Jarc
We are very much looking to see all the reports. Also, all of the reports available are published on this website. But to see what it's actually working to strengthen the collective bargaining system, what we realized is that there is no one size fits all. There are different methods that could be implemented together, but what works, it's basically a coherent system. So what it's proven, it's a system where the collective bargaining is taking place not only at the company level, but at the sector level.
Speaker 47
So the countries where the dominant system of collective bargaining is at the sectoral level has the collective bargaining coverage the highest. Then another finding is that, yeah, strong collective bargaining structures must be supported by effective and actively used extension mechanisms. So, again, the countries where they have sectoral collective bargaining and extension mechanisms have the collective bargaining coverage the highest. Then, of course, the coverage also very much depends on the capacities of social partners to negotiate. And here, of course, trade unions are the ones that are always willing to negotiate, but when the negotiations fail, organizing capacities play a crucial role.
So because of this, the access for the trade unions to the workplace and to the workers is crucial. Also, digital access. Then the fourth, yeah. Aspect that seems to be working in most of the countries, it's, of course, the enabling system so that the government plays a role as well so that there is a culture of a social dialogue, of collective bargaining, that this is nurtured, and that, of course, the ongoing policy supported this. One very concrete example, it's public procurement rules, but also funding conditionalities or social conditionalities that can incentivize companies to respect the collective agreements as well.
Tea Jarc
And maybe, yeah, just as a last aspect as well, what we are doing now at the ETC here at the European level, it's ensuring that, especially after the court ruling, there is this recognition that indeed European institutions need to play a role in strengthening collective bargaining system as well. The court has confirmed this, and now it's the next step ahead of us, ahead of the European Parliament, ahead of the European institutions. And for this, we're calling to enable collective bargaining system also at the European level through the new legislative initiatives such as Quality Job Act, but also through multi-annual financial framework, through public procurement directive, and, of course, through the European semester and other monitoring groups that should track the implementation of this directive. Thank you very much.
Li Andersson
Thank you very much. And next speaker is Mister Maxim Seruti, director of the social affairs department in Business Europe. Please, the floor is yours.
Maxime Cerutti
Thank you, chair. Good morning, members of the European Parliament, and also to the national representatives from national parliaments. I mean, for us in Business Europe, what is, of course, crucial in this political term is really to have a stronger focus on competitiveness. And this is true across the board, but this is also true for EU social policy. And when we reconnect this to the issues that we are discussing this morning on minimum wage, what is, of course, a key indicator for us is productivity growth, because productivity growth is basically going to help us increase the wages in a way that makes sense economically.
Speaker 49
And, of course, the reality is that in Europe, we've been in a very significant period now of low productivity growth. And, of course, if we want to change the possibilities for wage increases, we need to first work on increasing productivity growth in Europe. So, what is very clear also is that we are here discussing what has been in the European directive on minimum wage, the rules that have been put in place. And the ECJ ruling that was discussed in the first panel, in our view, has made clear that the EU should avoid overstepping national competencies. And so, of course, this is important to keep that in mind for the next steps.
Maxime Cerutti
And as we know, there is a very diverse collective bargaining culture across Europe. But I think it's very important to encourage the collective bargaining and to make sure that the social partners have the capacities needed in order to engage in collective bargaining. And so this focus on collective bargaining is important. We are also looking into the action plans that are being prepared by the member states. We'll, of course, be interested in what the commission will put in its monitoring reports.
But for us, what is really the important parameter to improve is in each country to make sure that there is, in the labor law, good space for collective bargaining and that there are the possibilities well acknowledged in the labor law. And, of course, this is broader than the minimum wage, but it is very important that all the countries go in this direction. And, of course, it is also important to acknowledge at the same time the autonomy of the social partners when they engage in collective bargaining. So when we look at this, of course, it means that the collective bargaining needs to be made attractive for the worker side, and we acknowledge that, but importantly for the employer's side. And so these discussions should really be going in a direction that is supported by the key players here.
And, of course, for the employers, what makes it attractive is also the possibilities to negotiate in the collective bargaining process things which may be different to what is in the labor law. And so this adaptability through collective bargaining to respond to the flexibility needs of the companies and of the workers in a changing economic and social context is very important for the next steps in the member states. Of course, in the action plans, we've heard there is a significant focus on capacity building of social partners. We support the needs for increasing the focus on capacity building of social partners on the European as well as on a national level. The truth is that the ESF support has been improved to an extent in the last years, but we are now with a question mark in the new MFF context what's going to be done.
So it's important that the European Parliament also closely looks into that, because, of course, we need to have the right resources for social partners. And the current reality is that the ESF is supporting more civil society organizations than the social partners. So if we want to really strengthen the capacities of the social partners, it should be reflected in the ESF prioritization. Then I also want to highlight that, of course, we need to keep watching the minimum wage increases which are happening because we are in a context of inflation, and it's important to avoid the wage price spiral. So this is something that has been consistently on the radar, but it should remain and that we really avoid that.
I also want to have a quick comment on the working poor to say that working poor, of course, is something that all of us, we need to work on to make sure that people can live decently with a wage. But in the data that is available, there is one thing which is missing, which is the working time intensity of the people. So, of course, when people work a few hours, you cannot expect that they have the same level of income as in a full-time job. And we know that a lot of people who are in vulnerable positions may not be working on a full-time basis. And last thing I wanted to highlight is that there is this new council recommendation on human capital.
And as we need to work on productivity growth, we really encourage the member states to step up the skilling and make sure that people will be at their best in increasing productivity. Thank you.
Li Andersson
Thank you very much. And now we have the intervention of Mister Marius Umelico, who is the chair of the committee on labor, family, and social protection from the Romanian Senate. Please, the floor is yours for the next four minutes.
Marius Humelnicu
Thank you, chair. Dear colleagues, we go through a very important moment in redefining the European social model. The balance between economic performance and social justice must be built in a coherent and sustainable way. For Romania, the first country that transposed this directive, it was more than a legal obligation. It was a catalyst for profound structural reforms.
We went from a formal approach to a predictable mechanism to set the minimum wage based on objective economic criteria, and in line with European principles respecting the workers' right to adequate wages. In February 2025, we finalized this process by setting up an objective formula to establish the minimum wage in consultation with the social partners. Setting and updating the minimum wage is done through a process that takes into account inflation, and its objective is to maintain the purchasing power and correlate the minimum wage with economic performance. We use the guidelines from the European level, and we consult the social partners. We are about 45% to 55% of the average net salary.
We already started to update the minimum wage. The salary must function in a coherent system of social policies regarding employment, competencies, and competitivity. This coherence is essential in order to maintain a balance between the minimum wage and social benefits, so that the social policies support employment. Work needs to be attractive, be paid adequately, and offer dignity to workers. Another strategic front is social dialogue, which needs to be modernized.
The European context shows us that we need modern mechanisms of representation and collective bargaining adapted to an ever more mobile workforce. This requires a set of support measures in keeping with fundamental principles such as the compulsory character of working contracts, which is an essential pillar of the social dialogue. Access to financing also remains essential for the member states and for the social partners. In this sense, the European Union can award supplementary support for the development of a European network of cooperation. These measures could contribute to the development of collective bargaining and its efficiency at a European level.
We still have a few essential questions for the next period. What new solutions can we find to attract young people and women to the workforce because their experience, their professional experience, makes them more vulnerable to the requirements of the new labor market? How can we adapt collective bargaining to the new economic realities, the digital world, and the emergent forms of organizations such as digital trade unions? Finally, our message should be clear and strong: Europe is built through people, and people need adequate wages, stability, and respect. Romania remains an active partner involved in this process, with a clear direction and result-oriented attitude.
Speaker 51
We support the consolidation of this process over the next few years. Thank you.
Li Andersson
Thank you very much. And, next speaker is Sir George Lawler, who is a member of the Committee on Enterprise, Tourism and Employment of the Houses of the Oireachtas. You have to tell me how I should pronounce it, but the floor is yours for the next 4 minutes, please.
George Lawler
Thank you, chair. And Arachtas is perfect pronunciation. I very much welcome the discussions here this morning, and I would like to focus on the transposition and implementation of the adequate minimum wage directive in Ireland. Ireland is committed to the full implementation of the directive and transposed it into national law by the transposition deadline back in 2021. By way of background, Ireland introduced a statutory national minimum wage in 2000.
The Low Pay Commission was then established by statute in 2015 and is made up of equal members of employee and employer representatives, and independent experts. The commission makes annual recommendations on the appropriate rate of the minimum wage after considering a number of statutory criteria. Minimal changes were required to Ireland's wage-setting framework to bring it into line with the directive. Perhaps one of the most important changes was introducing the statutory criteria for the commission to consider the adequacy of minimum wages with reference to the 60% median wages benchmark as required by article five of the directive. But as been seen from mister Shelton's slides, in terms of median wage and average wage, we still languish towards the bottom of those leagues, and this is something we certainly need to work upon.
And we also have the difficulty of young people who are excluded from the full protection, minimum wage with people 18 being paid just 70% of the minimum wage. Low legislation was needed in Ireland to transpose the collective bargaining elements of the directive. Although proceedings were before the Court of Justice of the European Union on the directive, Ireland remained committed to progressing and delivering a national action plan to promote collective bargaining ahead of the court's decision, and we fulfill that commitment in November 2025. Ireland's action plan to promote collective bargaining was launched in November 2022, and this is an area that Ireland must do much more on if we are to catch up with our European colleagues in strengthening the industrial relations framework and enhancing the quality of working life across the country. The EU average for collective bargaining, as we've been told, is roughly 75 to 80%, while Ireland once again anguishes near the bottom of this list between 34 40%.
We simply must do better. The collective bargaining plan was developed by the Ministry of Enterprise, Tourism, and Employment in close consultation with the social partners, the Irish Congress of Trade Unions, and the Irish Business and Employers Confederation. Ireland's action plan is firmly grounded in the requirements of the directive, and provides a structured program of measures to promote collective bargaining across the state. This simply cannot be a talking shop, and it simply has to succeed in improving the collective bargaining coverage across the state. The action plan sets out 22 targeted actions across five pillars, understanding the impacts of collective bargaining through enhanced research and data collection, empowering and encouraging participation via capacity building programs and recognition initiatives, promoting awareness and best practice without legislative overreach, protecting the rights of workers and trade union representatives through legal reviews and safeguards, and supporting the Workplace Relations Commission and Labor Court with digital innovation and institutional strengthening.
The implementation process is underway and is being overseen by a technical group consisting of the social partners as well as government officials. It is important to highlight that Ireland has models of bipartite and tripartite dialogue through various forums such as the labor economic, labor employer economic forum known as LEAF. Under the auspices of LEAF, social partners have been involved in the design and implementation of key employment and social policies. In recent months, Ireland has also seen the establishment of thematic subgroups under LEAF on targeted key issues, such as transposition of EU directives, collective bargaining, and migration. Alongside existing collective bargaining mechanisms, joint labor committees or JLCs are statutory bodies that bring together employer and worker representatives in specific sectors in Ireland, where collective bargaining coverage is low.
Their role is to negotiate minimum pay and conditions for the workers in that sector. Once agreed, these terms are formalized in an employment regulation order, which is legally binding for all employers and employees in the sector. However, currently, there are only three active EROs for workers in the contract cleaning, early years learning, and security sectors. And resistance has been met to the joint labour committees in some sectors. For instance, the hotel industry refused to attend these committees and therefore, ridiculously have a veto over the entire process, which is ludicrous.
I welcome today's discussions, and I do hope that my words can contribute in some way to the debate here this morning. Thank you very much.
Li Andersson
Thank you very much to all of you. We now move on to your interventions, with the same mode of working as we did in the last session. So I will start with Mister Sata from Italy. And one and a half minutes. Thank.
Speaker 53
You, chairman, colleagues. As far as the implementation of the minimum wage directive, we need to start with one fact. There is a model for determining wages, but it shouldn't exist. It has made clear choices. Generally, implementation of the directive.
See, in the Senate, we passed a resolution asking the European legislators to clarify the provisions and the directive where we need to ensure that the employers and workers' organizations that are the most representative participate. Otherwise, we wouldn't be able to distinguish between collective bargaining, which is the most representative organizations, which are the only ones we should be promoting for collective bargaining. Collective bargaining done by organizations that are not representative, we run the risk of ending up with contractual dumping. And that's the path followed by the government in its decree adopted on May 1 where they confirm the collective bargaining approach. But in the contract signed by the most representative organizations, the reference is to define a fair wage and broad representation, fair jobs, and quality jobs.
In Italy, we've got record jobs. We've got high women unemployment. We've got low unemployment, stable jobs. The new declaration looks at special economic areas of women and young people, binding them with a fair wage defined on the most representative of collective bargaining. The idea is to promote quality wages.
Speaker 58
In that way, the companies that guarantee fair wages for their employees would have a stronger role in the regulations. Thank you.
Li Andersson
Thank you very much. And next speaker is Mister Severa Pinard from Spain.
Speaker 54
are concerned about transposition of this directive by the Spanish government, with regulatory changes without a debate or any type of due process in parliament. And, we want to take this opportunity of transposing the directive, which is there to be technical, so that it can be used for the wage model and also collective bargaining systems that are already in place. Of course, collective bargaining needs to offer coverage for over 90% of salaried workers. We are running the risk of turning the minimum wage into something that would be closer to a basic wage, and that would change the model of payments and the Spanish legal framework. An increase in the minimum wage is necessary.
Yes. But doing so doesn't automatically resolve the structural problems that the labor market has in Spain, such as unemployment, which despite the fact it's at a minimum level, has seen a decrease in productivity and an increase in absenteeism. Making these changes sustainable means that, firstly, we need to be in a position to work better so that we can resolve these structural problems. That's what we want to do. And, therefore, we are calling for proportionate transposition that respects collective bargaining and is in line with the economic reality of the labor market in each of our countries.
Thank you very much.
Estelle Ceulemans
Thank you very much. Next speaker is Missus Kullimas from the SND. Thank you, madam chair, and thank you.
Very much for this discussion, which has been extremely interesting with our colleagues from national parliaments talking about the state of play of the transposition of the minimum wage directive and on both sides of it. Because here, both sides are essential when it comes to implementing the treaty of the European Union. And the first side looks at implementation as such in the EU's member states to make sure that there are adequate minimum wages. And this is a question of implementing the principle of convergence of living conditions and conditions for workers all across Europe, and also upwards convergence rather than the other way around, including on the issue of wages. It's this transposition which is essential at a time like this when the European Commission is launching an antipoverty strategy because, obviously, adequate minimum wages are the first line of defense against poverty, especially because today, working just to be poor is not only unacceptable from a societal point of view and runs counter to our European values, but it's also economically unproductive because wages are still the driving force of the economy.
On the second side, which is also this question of 80% of coverage of collective bargaining, there's also a question of recognizing the key role that collective bargaining plays as a vector, not only for positive social and economic development, but also pillars of social convergence all across the European Union. Perhaps we need to remember that this directive, unlike what was said previously, is not at all at odds with our national social bargaining systems. I have two questions that I'd like to ask today, and particularly to the representatives from the ETUC, but also Business Europe. What do you think the main obstacles are in the different member states on both parts of this directive? As I've mentioned, the adequate minimum wage side, but also the social partner side.
Speaker 85
And what do you think the best way of responding to those obstacles is? Thank you.
Speaker 61
Good morning. Thank you, madam chair, colleagues. Behalf of the delegation from the Assembly of the Republic in Portugal, I welcome this debate on a key tenet for cohesion for our European project. In Portugal, the principles of fair pay and the existence of a minimum wage that can guarantee the dignity of our workers are pillars set out in our Constitution. Therefore, the implementation of the directive has been welcomed by us as a natural next step towards this commitment, and we have based our work on dialogue within the heart of the Social Conciliation Committee.
Speaker 62
Our country is now in a cycle of predictability, which is a result of the tripartite agreement 2025-2028. Today, Portugal has a minimum wage of €920, and our goal is to reach at least €10.20 by 2028. This legislative and executive effort is a direct response to the challenges of ensuring adequate wages against the backdrop of economic pressure. For the Portuguese government, this approach needs to be based on three priorities: relaunching collective bargaining in order to fully assess our average wages and avoid career stagnation, incentives to ensure competitiveness via tax benefits for companies which increase wages, and tax relief for productivity bonuses. We believe that social justice requires robust business.
Speaker 61
Strong parliamentary oversight. The role of our parliament is absolutely crucial to monitor the impact of these measures and ensure that the directive respects the particular characteristics of the national labour market. Improving living conditions in the EU requires a balance between living wages for those who work and policies which strengthen and support those who produce. This is the path which the Portuguese government will be taking in order to achieve a more socially fair Europe. Thank you.
Speaker 60
I would like to give a brief overview of the progress Lithuania has made in transposing and implementing the directive on adequate minimum wages. Lithuania transposed the directive on time since 10/17/2024. Minimum wages in our country are set in accordance with the provisions of the directive. The amendments we made to the Labour code ensured the full implementation of a directive. The work of the Tripartite Council has been an important step.
Already back in 2017, the social partners agreed on a formula for setting the minimum monthly wage. This formula has been used since 2024 as an indicative value, and it helps depoliticize the setting of a minimum monthly salary. The salary amount is approved by the government upon the recommendation of the Tripartite Council, taking into account other indicators and criteria. In addition to adequate minimum wages, the directive places a strong emphasis on strengthening collective bargaining. Lithuania is implementing this objective through the 2024, 2028 action plan to promote social dialogue and collective bargaining.
The plan provides for training, consultations, information campaigns, and other measures aimed at enhancing the competencies and engagement of the social partners. However, we need to acknowledge that the coverage of social agreements in Lithuania is still low. Currently, they cover around 25% of workers, while the EU average stands at 56%. Most agreements are conducted in the public sector, while only about one third are conducted in the private sector. This is why we have a very clear goal.
Collective bargaining should not be seen merely as a formal element of the implementation of the directive, but rather as a real tool for safeguarding wages, improving working conditions, and strengthening social cohesion. In conclusion, Lefiane has made significant progress in transposing the directive, but the real success will depend on us strengthening social dialogue and ensuring that decent wages are not only set in law, but are a reality. Thank you very much.
Speaker 63
Thank you very much. And next speaker is Missus Della Pizzacarion, MEP from the page.
Speaker 29
Thank you, chair. In Spain, we have a pretty bad experience with the application of this directive. We have seen that the purchasing power of a Spaniard has increased. We continue to have a high level of employment, but many companies, families, and farmers have increased their costs but not their income. Therefore, crucial sectors such as farming have lost 100,000 plus jobs.
This is not social justice. We have seen we have a few jobs, lower wages, and fewer working hours. Living wages cannot appear out of thin air. We need greater productivity. That is what creates jobs.
Increasing the minimum wage will not benefit the workers, but we need to take a more global approach. The Pedro Sanchez government is breaking records in terms of tax income. Would it not be better to reduce taxes so that the money can go where it's needed, to the families? The EU does not have competence for wage setting, and the implementation of this directive could actually have this impact. Wager transparency would be more helpful.
There was a worrying trend that minimum wages are also seen as the most common wage. It's a race to the bottom. Do you want the same wage or minimum wage, as we say in my country? We are looking at a wage inequality regardless of the training, responsibilities, or number of people managed. We think this is a way of encouraging a lack of effort.
Thank.
Thank.
Speaker 66
You, chairman. Italy has coverage, which covers 99% of private industry. Collective bargaining is the usual way, and it's a way of reinforcing our actions. It works because it's based on trust between the parties, because it brings together industrial and union relationships. And this provides support and guarantees for the companies as well as the workers, and it's a procedure which governs complex and comprehensive systems, rights, working conditions, quality jobs, and goes far beyond simple wages.
In fact, on May 1, as every year, the Italian government, the Meloni government, released a provision of promoting jobs for women, young people, and others promoting a fair wage. This covers not just wages, but all of the aspects that are covered in a contract defined by the collective bargains that were assigned to by the most representative employers and employees' organizations. And this is the way of maintaining balance between productivity, competitiveness, quality of work, and wages in order to ensure that economic growth and social cohesion remain continuous. Thank you.
Thank.
Speaker 14
thank you very much. As I said earlier and as we heard in the presentation, the minimum wage in Spain is not formally implemented, but in practice it has been implemented pretty much across the board, and we've seen increase of 67% over the last few years. This means an average increase of 6.5% over the last eight years, a 32% increase in purchasing power. Our commitment is to increase the minimum wage to 60% of the net average wage. And I must underscore net, because this is free of tax and social security contributions.
This is up to 90% of the average wage. So this falls within the provisions of the directive and complies with a charter signed by Spain. Now such a quick implementation has led to another problem. That is, we have too many workers earning minimum wage at 13% of all workers. And what we have to do now is ensure that collective bargaining reacts to this situation.
We have very broad coverage of collective bargaining. As my colleague said, 92% of workers are covered by collective bargaining. But we have a very low level of membership of trade unions, which is 10%. This means that negotiations are weighted in favor of the employer, which means that all the labor market reforms that we need that were also implemented during the recession are not necessarily positive. We now want to strengthen collective bargaining by ensuring that the labor market observatory work is done correctly so that all sides are negotiating on the basis of the same complete information.
There's no asymmetry there. And we hope this will lead to an increase in minimum wages across Spain that will allow us to put a stop to the differences in purchasing power, which can be found in each of our autonomous communities. Thank you.
Li Andersson
Thank you. And next speaker is a member of the European Parliament, Mrs. Guamini from Renu.
Speaker 69
Okay. Thank you, madam chair. Actually, I've got a question for professor Scholten. Your data was incredibly interesting. So it's absolutely true that there has been an impact, from the European directive on the level, I would say, of minimum wages and also on the narrative as well.
Speaker 68
So this is very true. So the fact that, you know, in the national member states, the debate on minimum wages really has incredibly increased. So we have had this sort of influence. But my question is another one, and it is, do you have any data or perception about the level playing field? Because one of the goals was also to harmonize or to create more equality among the different member states, because we have very high minimum wages, I don't know, in Luxembourg and very low, of course, in some other Eastern European countries.
So is there, I don't know. Was there an effect of equalization, so to say? Thank you.
Speaker 71
Thank you, chair. Good morning, everybody. The European directive on adequate minimum wages is a key framework for Social Europe, and underscores a basic principle. No one who works should live in poverty. Living wages are a basic condition for social cohesion, economic justice, and trust in the European project.
In Portugal, 2015 and 2025, as a result of a tripartite agreement and political choices, the minimum wage increased significantly around 90% with consequent increases in purchasing power, fewer inequalities, and at the same time as in other countries, high level of employment, some of the highest over the last few decades. But we continue to have structural challenges, such as increasing the minimum wage. It's still very low on a European level, and ensuring convergence with the EU, guaranteeing that all workers regardless of their type of contract are protected, but also and above all strengthening collective bargaining, which is one of the pillars of this directive and absolutely crucial to improve working conditions and salaries as well, salaries across the border. This directive is extremely important. It doesn't threaten national models but strengthens them because it forces us to relaunch a collective bargaining and increase it. It also allows us to means we have to guarantee clear criteria for adequate wages now and in the future rather than imposing national models.
Speaker 72
It gives us the tools to increase wages in a sustainable and fair manner. And as already been said, this is a victory for everybody, workers, employers, and the state, as well as for our economies. We want a Europe that values hard work, an economy that works for those who work. We want a social Europe. Thank you.
Speaker 19
Thank you so much. Although this 80% line is a fixed line and Denmark is above it, we are not required to do action plans, but the government in Denmark would constantly work together with partners on the labor market in order to increase the coverage. And in line with the TEAG, I can only encourage other countries to do the same. The headline of this session is how can we improve the living and working conditions in the EU? And I think it's also the most important to say that economic growth and productivity is the tool here.
We need to focus on national parliament and on the European parliament on how do we make Europe more competitive. When we increase growth, when we increase productivity, it goes directly into creating better lives, into the wages. This is the tool. The directive is a framework. So we need to focus on this point.
Li Andersson
Thank you very much. Next speaker is Missus Demiral, member of the European Parliament from the left.
Thank.
Özlem Demirel
You, chair. Thank you, Lee. I'll be speaking German. I'm going to talk a little bit about Germany, but I wanted to make a more general comment to start with. Now I personally hope that this directive, whether we're talking about minimum wages or increasing collective bargaining, I hope that in this time of crisis, in this time where across Europe, we are facing new attacks on our social rights, on the trade union movement.
I hope that this will serve as a sort of break, and perhaps Greece is a great example as Totten Shelton said. We've seen the Troika measures have been withdrawn, and I really hope that there won't be any new Troika measures in the future. But at the same time, I have to say we've heard from Business Europe and the Commission, they both underscored the fact that we have to focus on competitiveness and productivity, increasing productivity. You could argue that good wages and good collective bargaining are also an advantage for competitiveness, but I've been a left wing politician for a while. And when I wasn't here in the parliament, I was working with the trade unions.
And I perhaps wouldn't put it so diplomatically. If you want to be competitive or if you present competitiveness in this way, then you see wages are so low across member states. Then you can see what this competitiveness is actually based on. And I don't think businesses across Europe, I don't think we can say that our businesses aren't innovative enough and so they're not competitive. I mean, okay.
Coming back to what we heard from Torsten Schultz and his results. You set out how much progress we've made, and I saw that Germany has no action plan for the time being. And perhaps that isn't great when such an economically strong country such as Germany hasn't actually taken any steps in that direction, because that really sets a bad example and is a bad sign when other countries which are not doing so well, how are they going to follow? Now I think it is a question of political will more than anything as I come from Germany, and you can also perhaps you could go a little bit more into how the situation in Germany is viewed at the moment with the increase of collective bargaining and the potential action plan. My last comment is it's clear that in Europe, we have governments that say this is a directive that showed all they have to do under this directive is set up an action plan, but they don't have to actually implement any of it.
Now it's true that here in the European Parliament, we do have a monitoring group, and the Commission has to monitor very clearly what's happening with these action plans. I think we're talking about paper tigers here. Really, we find ourselves in a situation in which a number of many member states have appalling collective bargaining coverage, low wages, low working conditions, low appalling working times as well. Thank you.
Speaker 75
You, chair. The discussion on minimum wages and working conditions is absolutely crucial for the future of the EU, but we have to start by acknowledging a simple fact. Member states have very different economies, productivity levels, and corporate structures. This directive 2022, 2041 is designed to guarantee minimum wages, adequate minimum wages, and to strengthen collective bargaining. However, it has given rise to an important concern, that is the risk of creating one-size-fits-all solutions for very different economic realities.
In Portugal, wage increases, which are untethered to economic growth and productivity, can result in excessive pressure on SMEs, which form the foundation of our economy. This could lead to less investment, less competitiveness, and problems when it comes to job creation. We defend living wages and better living conditions, but this can only be achieved with sustainable growth, a true appreciation of the value of work, and a strong economy, not by imposing one-size-fits-all goals. Collective bargaining must respect the reality in each country and in each sector. A strong EU does not treat all its countries in the same manner.
It respects its differences and guarantees that member states have the flexibility to determine their own path. Let me conclude with a question. How can the EU guarantee that this directive does not restrict the member states' flexibility or undermine its capacity to react to its own economic realities? Thank you.
Li Andersson
Thank you. And next speaker is Missus Toccelova from the Czech parliament.
Speaker 76
Good afternoon. I will be speaking on behalf of Czechia in a way because I am personally thankful for the directive as it has significantly motivated our government to actually finally implement automatic polarization on minimum wages, which makes the whole situation a lot easier and a lot more systematic and predictive for all parts of this strategic agreement. On the other hand, as was shown in the data before, we are not that successful when it comes to collective bargaining and when it comes to work reunions, most probably because of our historical consequences. And a lot of people are not part of work unions, and they do not have much effect and much power in our country. And, while we have adapted the action plan, which I'm very grateful for, it's still only a paper.
Speaker 79
And exactly as I've been mentioned to be here before, I really hope there will be a certain level of pressure and motivation towards countries to actually implement these things, because I believe we all strive for the collective goal of actually making life better for the workers in the European Union and making our conditions at least somewhat similar, because as we are sharing the work and the trade and the services, it should be our common goal. So, thank you.
Li Andersson
Thank you very much. Next speaker is member of European Parliament, Miss Saharia from the.
Mister.
Maria Zacharia
Shulta, you present Greece as a country with a good practice. I think that maybe you're misinformed. The government did not restructure, did bring back the collective bargain. The minister decides the salaries, and the employers are not obliged to negotiate agreements. We have the President of the Confederation of Workers has a stronger role.
The sectoral agencies, we have a unilateral appeal approach, and we do not have the necessary defense for the workers. The agreement was secret that was made in the presence of the President of the Workers. We are not talking about a social agreement of the workers. It's a political agreement achieved by the government of Mitsotakis. We have 13 and four at the workers' place.
We have accidents at the workplace that are breaking records. So we don't have the additional working condition. This is a success story. How you can never reach the 80% coverage by collective bargaining. And it's called a success story of the employer.
Thank.
Océane Godard
you. I'll be speaking French. And let me start by saying, as we have heard, this is a great initiative, this directive on minimum wage, and that underscores the importance of social Europe. It is crucial for social justice in order to increase the attractiveness of certain jobs and to increase social democracy. I also wanted to say something on competitiveness, because I've heard a little bit about this.
I don't think it's competitive depends solely on productivity. Rather, it's related to management issues, development of skills, as well as working conditions. And in this area, the directive will improve working conditions and allow for a living wage. Now I talked about social democracy, but this is related to collective bargaining and sexual bargaining. And this is a first step towards tackling this emergency that we have, the importance of working better, not just working more.
We are having this discussion in France as well. The fact that French citizens should work more, work harder, but I think it's an issue of working better, because our labor market is now quite fractured. We're not just looking at full-time jobs. I think it's now the time to work better, ensure that everyone can participate. Thank you.
Li Andersson
Thank you very much. This was extremely interesting. I have no further requests for the floor from the members, which means that we will give the floor back to our experts and initial speakers. There were also questions posed to some of you, so please feel free to answer them. We'll start with Mr. Schulten.
So please, the floor is yours.
Thorsten Schulten
Okay. Thank you very much. Yes. Thank you. Thanks a lot for all the good comments and also the more critical comments.
I try to answer them. As far as I see, there were basically three questions put on my side. The first one, the question, to what extent has the minimum wage directive contributed not only to increase minimum wages, but also to narrow the gap between different countries? That was your question. And Jerome was so kind to give me the figures here.
But it's obviously, first of all, you can say, yes, they contributed, because simply because of the fact that in classical low-wage countries, minimum wage increases were much faster than in the more developed countries. So the figure you gave to me before some years ago, it was the lowest minimum wage in Europe was 6x or no, the highest was 6x higher than the low. Now it's only 5 times. I say only 5 times. I mean there is still, of course, a significant gap.
I think the lowest minimum wage rate in euro is in Bulgaria at the moment, it's 3.5 and the highest is about €15 in Luxembourg. So we still have a big spectrum here. Of course, we also have to look at the living costs and the price levels in the different countries. So if you do this purchasing power parity observation, then, of course, the gap would be much narrower, and it's only around 2.5 percent, which we still have the net. So then on Greece, yes, maybe we have different sources of information.
But as far as I know, I mean, Greece was suffering a lot by the TROCA measures. Before the troika measures, you had a bargaining coverage above 80%, and then it goes down to 15% according to the Krieger's in the mid of the last decade. And since then, it's slightly increasing again. And you have an increasing number, for instance, of new sectoral agreements, which contribute to this. And the action plan, as far as I see, improves extension.
It improves the ultra-activity. So the regulation that when an agreement ends, it will still be enforced until you have a new agreement. It strengthened the role of configurations here. I will, I do not say that all problems regarding the Greek labor market are solved with that program. Of course not.
But if you see, I mean, there are, if you see, where Greece is coming from, I would say there are significant improvements. And also what we did to compare it with the other national plans, it's relatively concrete. It has concrete measures. You had a big labour market reform in January. And in that sense, I think it's improvement.
But, of course, it might not solve all the problems in Greece, and then you are probably much more expert here. And the final question was on Germany. Yeah. I find it also striking coming from Germany that this is, as the largest economy in Europe, has not set up an action plan. Also, saw a clear declining tendency in the coverage by collective buying coverage.
In Germany, we talk about only every around 50% still are covered by collective agreements. This is a big problem. If you look at the coalition agreement of the current government, there's a clear statement. We want to increase collective bargaining coverage. But that's it.
And how to increase, and why? There are, of course, a lot of different views, and it's very contested. Germany recently adopted a law on public procurement so that you only get public contracts if you stick to collectively agreed wages. But this shows again the contested character and the battles which going behind that. There are a lot of exceptions in that agreement.
So it is not covering all public contracts, what was the idea, but there is a significant number which are not covered. So, therefore, the effect would be limited. And as far as I know, it is still also both between employers and trade unions. There are big differences, but also within the government between, let's say, the classical, the Ministry of Labor and the Ministry for Economic. They have very different views on what should be in the national plan.
Speaker 84
And at the moment, it seemed to be blocked that they did not find a compromise. Yeah.
Jeroen Rutte
Thank you very much, madam chair. I think many of the questions were resolved and many issues came up. And let me pull this a little bit in a broader context. And I'm wondering a little bit to what degree the members of national parliaments know the European pillar of social rights. 20 texts about basic rights that everybody basically can subscribe to, nine years ago adopted by member states, by the European Parliament, social partners, and so forth.
And this really sets a compass. And since that time, you see that European Commission has been much more forthcoming in terms of ambitious proposals in the broader social domain. The pillar is not just about social aims. It's not underpinning only a moral belief. It is also about competitiveness.
Competitiveness in the context where Mario Nava mentioned very significant demographic change. Companies that are struggling to find workers with the right skills, where we need to have people with the right skills to be competitive in a world that's changing because of AI, because of climate change, in an international context where, ultimately, we often look inside to our member states, but we stand together on the global stage. We must not forget this. And in that context, fair wages are key. For example, to peel people into the labor market, the directive is key, and the directive needs to be delivered through collective bargaining, because that's how we get fair wages, reasonable wages that are in line with our ambitions of competitiveness in order to also respond to the honorable member from Portugal.
Very little was mentioned about labour union membership. To have good representation on the labor union side, but also the business side, we also need to look at the membership. It's a point that we don't see enough in the action plans, for example. And there are other points that will come forward in the report in July, that are very important. Excellent action plan from Ireland, but a little bit light on where it really matters: regulatory change.
So many things that play. The directive is key. The directive is not everything. There are other actions that member states need to undertake much more ambitiously also on human capital, our educational systems. Things do not go well.
Speaker 45
Commission therefore came with a message of urgency in the human capital recommendation adopted by member states, by the ESCO Council, and we urge you to take action. Social media has an impact on academic record and also the mental well-being of our kids and many other things. We need more STEM skills, for example, just to name one. So we are ambitious. We are actively engaging.
We are pushing member states also on the forthcoming spring package of the European Semester through recommendations. And we are monitoring very closely the progress, in particular, of the directive that we have discussed here today. Thank you very much for your attention.
Tea Jarc
Thank you very much. Maybe I would also start by remembering the times when we started talking about this directive. Indeed, as Yaron said, as Thorson said, it was really the times after the previous economic and financial crisis, where we were faced by austerity measures that also increased inequalities, increased unemployment, huge social dumping. And I think that, yeah, it took us some time as Europe to rebuild, to introduce the European Bureau of Social Rights, and to also shift the narrative of understanding. Because at that time, especially in the time of crisis, wage coordination, wage increases, and social and collective bargaining were seen as an obstacle.
And I think that the minimum wage directive proves this shift of the narrative where one of the sudden, decent wages and collective bargaining are not seen as an obstacle anymore to the European economy, but they are actually recognized as a catalyst for the striving economy, for the competitiveness as well, because it contributes to the cohesion. It contributes to the upward convergence. It contributes to the economy that we're all wanted, and that we're striving for. But at the same time, we cannot be naive because in all this time, what we have seen, and this brings me, of course, to the union membership, is that the trade unions indeed have lost a little bit of power, not by chance, but because we were subject to the deliberate trade union busting from the employer side, but also sometimes from the government sides. For example, on the restriction of the right to strike, which is under threat in many of the countries.
Speaker 47
Retaliation against the trade union members, lack of protection of the trade union members. So, of course, it weakened the capabilities of collective bargaining coverage. So I think that minimum wage directive recognized this as well, and this is why it set up the target of 80% collective bargaining coverage, because it does recognize that collective bargaining is still the best mechanism to improve working and living conditions. With this, it gives all the flexibility that many of the member states are asking for, to basically implement the directive and to address the challenges that could be different in different countries, but also in different sectors. But, of course, if you ask me, Estella, what are the obstacles on both parts in implementing this?
It is the bigger framework as well. So public procurement can help in increasing the collective bargaining coverage. The government and the European institutions have to play a role as well. Then access to the workplace. Yes.
If the trade unions don't have access to talk with their workers, it's very hard to organize them and to engage in collective bargaining, also to digital access. Then, for example, ultraactivity of collective bargaining agreements that, yes, if the employers don't want to negotiate, that collective bargaining agreements remain valid until the new one. Then also removing limitations for some of the workers because there are some categories of workers that cannot even organize in a union or conduct collective agreements such as public sectors, so on and so forward. So we have developed a full list of the measures that could be introduced at the national or even the European level. But what I think needs to be, like, reminded again, and why I started with the past, it's exactly because I think that now we are coming back to the situation where we think that wages and collective bargaining are an obstacle to competitiveness.
And I think this is again the wrong approach. With competitiveness agenda, which many times also hides deregulation agenda, we are basically encouraging the right, the race to the bottom because we are pushing wages down. We are, again, putting obstacles to the collective bargaining, thinking that this is going to help competitiveness. It's not. Europe, the biggest advantage for the competitiveness, is exactly its social model where workers are receiving a fair share.
And maybe, yeah, just to close this, what we see now is that in Europe, the CEOs of top 100 companies earn about 110 times more than the average worker, not the minimum worker, the average worker. So those are not fair wages. This is basically greed. And what the minimum wage is trying to ensure, it's at least to balance the scale a little bit. So I will finish with this.
Speaker 89
And, yeah, indeed, just encourage everyone to fully engage in the transposition. Thanks.
Maxime Cerutti
Thank you, chair. So I'll also try to respond to any big comments, but also reflecting a bit on what was said. I think it is clear from the exchange that there is a very diverse situation also across the national parliaments and that there are different views in this room. So I think, of course, it is important to understand the complexity of the issue and to make sure that the next steps are going to be balancing all this in a good way. I mean, the question on the obstacles, already started responding to in the first intervention.
But what I can say is that on our side, we support strong social partners on both sides in all the member states. So, I mean, a big obstacle is when you have weak social partner organizations. Then there is, in the statutory minimum wage context, of course, there needs to be a genuine involvement of the social partners in the wage setting. So, there are provisions, but, of course, this has to do with the way in which the decisions are made on the minimum wages when they are updated. So, of course, respecting the autonomy of the social partners is also very important.
But I think, overall, the main challenge is really to make the collective bargaining attractive to both employers and workers on both sides. And that then the policymakers in the member states are really supporting this going in the right direction. Thank you.
Marius Humelnicu
Is it absolutely necessary for me to take the floor? I strongly believe that since Romania has implemented this directive, which is very important for workers and not only them, I think we must keep a balance between public policies, employment, social protection and competitiveness, competitivity and competencies. Also, lodging is important since we are speaking about productivity and economic growth. This is Romania's stand, and we believe it's a correct one. Thank you.
Thank you very much. And Mr. Lawler?
George Lawler
Thank you, chair. I very much enjoyed this discussion. I think it goes to the core of why the EU exists for the betterment of the lives of ordinary people and indeed ordinary workers and their families, right across Europe. I know that the introduction of the minimum wage has improved a lot of many low paid workers in Ireland, and somebody said that too many workers are earning the minimum wage. And, of course, this is true.
But can we imagine a scenario where the minimum wage did not exist? If you look across the water to our friends in The United States where we have people in their sixties, seventies, and eighties, and even younger, working two and three jobs just to exist, living on tips in the hospitality sector because a minimum wage structure doesn't exist. There are many people in Ireland who still remain in poverty despite the fact that they are earning the minimum wage, but they're in poverty because of the greed of other sectors. In the housing sector in Ireland, for instance, which caused the collapse of our economy. In the housing sector, we see greed coming to the fore yet again, particularly in the private rental sector where people who are in the minimum wage simply cannot afford to live in many of our major towns.
We have our supermarkets who refuse to produce their profit sheets every year in Ireland, and their grossing our net returns are running to billions. Our economy collapsed, we all know, as a result of greed and disastrous economic policies. We're now one of the strongest economies in the EU, following the hard work, and it was ordinary workers who did that. It was ordinary workers who put their shoulder to the wheel to do that. And I believe that the minimum wage is a baseline.
It's not a high line. It's a baseline from which we must move upwards, because you will not see people on the minimum wage invest in stocks and shares, but you will see them invest in their local economies. And that circular economy movement is crucial if we are to improve the lot of everybody across Europe. But, certainly, these discussions today are helpful as we move in that direction. Thank you.
Li Andersson
Thank you very much. And, dear ladies and gentlemen, I really want to thank you all for this very interesting discussion today. So I think this also confirms the importance of the minimum wage directive as one tool through which we can ensure decent minimum wages in the European Union to fight against poverty, also against in-work poverty, but also contribute towards economic competitiveness and employment, as was also mentioned by the commission, that these are not opposite goals, but really goals that go hand in hand. And as was also mentioned, U. National parliamentarians are in the most central role for enacting this legislation.
So we, of course, in the committee here, will be following closely the implementation process on a national level, also through the monitoring group that we have established, to hopefully see even more development within the European Union towards upward social convergence and changes that really benefit every person that is working in the EU. So thank you again, and please be reminded that you are all invited to the networking lunch from one to two in the 3Q catering area in the Antal Building. So thank you very much, and have a good day.
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