The opening of
debate on minimum wages across the EU has precipitated a Nordic union reaction against
incursions on collective bargaining.
Last month, the European Commission
launched a formal consultation with the social partners ahead of advancing a ‘framework’
to ensure ‘fair minimum wages’ across the European Union. The proposal
instantly triggered vivid protest, notably from Scandinavian unions. While no
one can overestimate the difficulties involved in elaborating a legitimate and
effective EU framework on this issue, action is seriously needed at the
European scale to tackle poverty and the devaluation of work in listless economies.
The debate rapidly took an emotional turn, with the Danish, Finnish and Swedish unions seemingly feeling under attack from a threatening EU bureaucracy wanting to destroy their (high-performing) systems of collective bargaining. It is striking, though, that the argument against EU action is first and foremost one of principle.
In an op-ed published by EUObserver
just before the consultation, Therese Svanström, president of
the Swedish Confederation of Professional
Employees (TCO), wrote:
‘Most importantly [sic] … is the fact that the EU lacks legal competence
in the area of wages.’ Thus, rather than convincing arguments about why
precisely EU action would be bad, the piece primarily reflects a fear of losing
control and a defensive stance, asserting that ‘well-functioning systems for collective agreements
simply cannot be ordered from Brussels’.
While competence creep certainly
raises legitimacy issues, one can only admit that EU integration is a dynamic
process. From the jurisprudence to the initiatives of the commission during the
presidency of Jacques Delors, permissive interpretation of EU law has been part
of its DNA, especially (if not only) in the social realm.
When the financial crisis hit, the
course of action which prevailed relied on an intrinsically political logic. A shared
diagnosis about why EU action is needed to tackle a particular issue provides the
grounds to act—not the exact wording of the treaties. If a consensus could be
found on bailing out indebted countries and extending the scope of intervention
of the European Central Bank, why not on tackling poverty through minimum
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The commission has made clear that it
would not oblige countries which do not have a statutory wage to introduce one,
thus making most of the contenders’ arguments null and void. The framework
should focus on the objectives, in terms of coverage (the percentage of
the labour force receiving at least the minimum wage) and level (most
probably expressed as a percentage of the median wage), not on a specific type
Svanström hypothesises that ‘what
goes up, might come down’, implying that the EU could use the framework to
lower wages in times of crises. The history of EU social policy rather teaches
us that its regulations are always minimum standards. So these cannot be
used to lower national standards and what is already a minimum cannot be
Meanwhile, wages have been
substantially lowered in some instances at the national level, as a result of
the recession, whether the unions supported this or not. In fact, research shows
that where the EU does
not have minimum requirements and protective regulations in the social realm,
other dimensions of EU integration (linked to pro-market policies) will more
easily affect social conditions.
Twenty-two EU countries currently
have a minimum wage under 60 per cent of the median (the benchmark recommended
by the International Labour Organization). An EU framework could matter a great
deal for those countries, creating political pressure and institutional
incentives to improve wages and even, in the medium term, engender upward
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That the framework will most likely
be irrelevant for the remaining six countries which have higher minimum wages
is not a good reason to reject it. Again, the history of EU social policy shows
that EU minimum standards are always irrelevant for some member states.
Thus, as much as they are the
widely admired representatives of a more egalitarian welfare-state model, which
they legitimately seek to preserve, the Nordic social democrats cannot be
systematically camped on a defensive position, blocking what could be a
substantial progress of Social Europe for all the others.
The grounds for EU action are
tangible. It is well documented that the wage share is too low in Europe. This
brings in its train inequality (since incomes have grown for the better off)
and rampant in-work poverty, amid persistent imbalances among EU countries.
There is also a political need for the commission to meet expectations in the social realm. While the commission under Jean-Claude Juncker proclaimed the end of austerity, this has not necessarily been evident to Europeans at the bottom of the social ladder. Having promoted a strategy of adjustment through wages to tackle the recession (and been criticised for supporting pro-cyclical policies), the commission needs to act now as a progressive driving force.
Hard or soft
If we can agree that the current, troubling
situation regarding wages demands a positive intervention, this does not solve
the ‘how’ problem. What policy instrument can the commission come up with, which
will be able to accommodate the diversity of wage-setting systems across Europe
and keep its promise of not harming subsidiarity?
While hard law is always the best
way to ensure compliance, it is not certain that the commission will be able to
overcome the legal and political hurdles in this instance. It has often been underlined
153 of the Treaty on the Functioning of the European Union, on social
policy, explicitly excludes pay from the EU’s regulatory competences. If not
impossible, the search
for an alternative legal basis, in a spirit of legal creativity, seems
tricky and will be hotly debated.
If the commission fails to gather
sufficient support for a legislative breakthrough, it will have to rely on soft
law. The sixth principle of the European
Pillar of Social Rights, while leaving the door open to both paths, suggests
more emphasis on the second-best, non-binding option.
In that case, a recommendation from
the Council of the EU could be the chosen instrument. Anchoring it in the
European Semester would have the advantage of setting up a surveillance
mechanism, through which slow convergence could be promoted. As we know from
all socially-rooted recommendations of the European Semester, however, compliance
and implementation tend to be low.
Thus, the consultation over the
coming months will be crucial for the commission to find the right balance
between legitimacy and effectiveness. During this period, it is important for
progressive actors to remember that one cannot consistently call for a more
social Europe … and then end up shooting everybody in the foot when things