The proposed Minimum Wage Directive

 European Parliament, Nov. 25, 2020

Following a two-stage consultation of social partners launched in February 2020, on 28 October, the European Commission published1 its proposal for a directive on adequate minimum wages in the European Union. It is a watershed2 in the history of European social and economic integration: for the first time, the Commission is initiating legislative action not only to ensure fair minimum wages but also to strengthen collective bargaining.

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Legal basis of the directive, objectives and measures

The proposal for the Directive is based on Article 153 (1) of the Treaty on the Functioning of the EU (TFEU) which covers working conditions. Art. 153 (5) TFEU, however, excludes interventions related to pay. The draft therefore leaves the main responsibility for defining the concrete level of a minimum wage to the Member States. The Commission sees valued added of action at the EU level3 in providing the necessary momentum for reforming minimum wage setting systems. While setting minimum wages remains a national competence, an EU framework would ensure that progress is not partial or uneven, thus supporting the process of upward social convergence to the benefit of the EU economy as a whole. The draft has two fundamental objectives: first, to ensure that workers across the EU are protected by adequate minimum wages, allowing for a decent living wherever they work in Europe and second, to strengthen collective bargaining as the main instrument to ensure fair wages and working conditions. Hence, the draft directive does not impose an obligation on Member States to introduce a legally binding instrument. This means that the six Member States without minimum wages set by law (Austria, Cyprus, Denmark, Finland, Italy, and Sweden) are not obliged to do so. For both systems the draft proposes: (1) The promotion of collective bargaining on wage setting and (2) Annual reporting by Member States to the Commission alongside structured dialogue. For the 21 Member States with a statutory minimum wage the draft also suggests: (3) Clear and stable criteria for setting and updating statutory minimum wages; (4) Strengthened involvement of social partners in statutory minimum wage setting; (5) Limited use of variations and deductions in statutory minimum wage setting and (6) Ensuring compliance and effective enforcement.

In full: https://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL_ATA(2020)658208

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