Open letter to the European Commission - EU legislation on minimum wages is not the solution
We are deeply worried and concerned that the President of the Commission, Ursula von der Leyen, in her State of the Union Speech on 16th September 2020, did not close the door for a legislative initiative on minimum wage. Von der Leyen made it clear that the Commission will present a legal instrument on minimum wages and she promised that the proposal will respect national systems.
She did however neither specify which instrument is envisaged, nor did she explain how the Commission will safeguard well-functioning systems where wages are solely agreed through collective bargaining.
It is not only the concern for the autonomy of the social partners in our countries that makes us question a legislative initiative on minimum wage. A legal instrument on minimum wages, which does not respect the limitations in the Treaty can in general be counterproductive for a social Europe built on robust multiemployer collective bargaining. This is also why we, the Scandinavian trade union movement, on the 4th of September sent our own reply to the Commission on the second stage consultation on the minimum wage initiative.
The EU treaties protect national wage-setting, alongside with the freedom of association and the right to strike, from EU legislation. While there is a need for social cohesion and improved working conditions in Europe, article 153.5 clearly states that every member state is responsible for its own wage-setting system. This is a logical and necessary safeguard since labour market systems across the EU vary widely from one another. Accepting that the EU has the power to legislate on wages would put us on a dangerous path. Not only would we give the EU tools to either increase or decrease wage levels. It could also mean that other areas crucial to the functioning of labour markets, such as the right of association and the right to strike, could become subject to EU regulation and limited by the Court of Justice of the European Union.
Article 153.5 is and has been important for all countries with collective self-regulatory labour market systems and is an essential precondition for our countries’ membership or affiliation in and with the EU. Ever since then, these exemptions have constituted a crucial protection of the Nordic collective agreement models.
We need to protect the autonomy of the social partners, who are primarily responsible for the functioning of our labour markets. Neither our national governments and parliaments, nor the EU institutions, should interfere in wage setting.
The Commission has promised to protect the Nordic model – a promise which sounds good but which is impossible to keep in relation to the introduction of EU legislation on wages. A directive, once adopted, is applicable to all member states. Thorough legal analyses show that there are and will not be any waterproof exceptions for one or several countries or labour market systems.
We fear that EU legislation will both interfere with the social partners’ wage setting - and lead to an intrusion into the autonomy of the trade unions and employers. In our countries, a directive will have direct and negative effects on both collective bargaining and wage-setting, and ultimately on actual wage levels.
We do acknowledge the need for higher wages and better-functioning labour markets. But what Europe needs is more collective bargaining and stronger social partners, not a straitjacket on social dialogue and wage-setting. Those arguing in favour of minimum wage legislation often refer to this as a way to increase legitimacy of the EU in the eyes of citizens. But in many member states the contrary is the case: interfering in well-functioning labour markets will lead to a loss in legitimacy, and less support for the EU.
Much more could be done both by the EU and its member states to promote a Social Europe.
For example, at EU level, capacity-building and social dialogue should be promoted through a new, dedicated EU fund. The EU could support collective bargaining structures as well as systems for wage statistics and benchmarking, without disturbing the autonomy of the social partners. Benchmarking of statistics concerning wages and collective bargaining can also be a useful tool to put pressure on member states to promote collective bargaining.
The Laval case and its aftermath shows that the European Court of Justice has contributed to social dumping by putting free movement of services before the interests of decent conditions for workers. A revision of EU rules on public procurement, which would allow the state to create incentives to conclude and observe collective agreements, could be examined. A new EU initiative on minimum income schemes, safeguarding the right to a decent life and combatting poverty, can also be considered, if it respects national competences and social partners’ autonomy.
Any measures at EU level must safeguard the autonomy of the social partners as laid down in the Treaties. Any initiative must promote and protect sectorial collective bargaining, not undermine it.
Introducing EU regulation on wages will not be the silver bullet that will improve wages and working conditions for the workers of Europe. The Commission’s own figures illustrates that very clearly. In the countries where working people cannot make ends meet, already have statutory minimum wages. Instead, the Commission should propose an instrument that would make a real difference for workers in Europe and which promotes social dialogue and collective bargaining.
As confirmed at the Council meeting in the beginning of September, only a few EU member states can support binding legislation in the area of wages. A majority can only accept non-binding measures.
Commissioner Nicolas Schmit has declared that “what is not broken should not be fixed”. It is time to fulfil that promise and abstain from proposing EU rules that would undermine our collective bargaining models and labour markets.
Lizette Risgaard, President of the Danish Trade Union Confederation (FH, Denmark)
Bente Sorgenfrey, First Vice-President of the Danish Trade Union Confederation (FH, Denmark)
Hans-Christian Gabrielsen, President of the Norwegian Trade Union Confederation (LO, Norway)
Peggy Hessen Følsvi, Vice president of the Norwegian Trade Union Confederation (LO, Norway)
Ragnhild Lied, President of the Confederation of Unions for Professionals (Unio, Norway)
Kjetil Rekdal, Vice President of the Confederation of Unions for Professionals (Unio, Norway)
Erik Kollerud, President of the Confederation of Vocational Unions (YS, Norway)
Hans-Erik Skjæggerud, Vice president of the Confederation of Vocational Unions (YS, Norway)
Susanna Gideonsson, President of the Swedish Trade Union Confederation (LO, Sweden)
Therese Guovelin, First Vice-President of the Swedish Trade Union Confederation (LO, Sweden)
Therese Svanström, President of the Swedish Confederation of Professional Employees (TCO, Sweden)
Peter Hellberg, Vice-President, the Swedish Confederation of Professional Employees (TCO, Sweden)
Göran Arrius, President, Swedish Confederation of Professional Associations (Saco, Sweden)
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