The European Commission proposed, on Wednesday 28 October, its proposal for a directive on minimum standards to ensure “adequate minimum wages” across the EU. Ursula von der Leyen, President of the European Commission, previously referred to this initiative as one of her top priorities. In the EU, minimum wage protection in Denmark, Italy, Cyprus, Austria, Finland and Sweden is provided exclusively through collective agreements, and the remaining 21 countries have statutory minimum wages set by governments.

The Commission asserts that the proposal fully respects the subsidiary principle: it sets a framework for minimum standards, respecting and reflecting Member States’ competences and social partners’ autonomy and contractual freedom in the field of wages. It does not oblige Member States to introduce statutory minimum wages, nor does it set a common minimum wage level. Nicolas Schmit, Commissioner for Jobs and Social Rights added during the press conference that “promising the same minimum wage for all Europeans would not be realistic, would be impossible and irresponsible”.

A first reading of the directive allows to determine the following key points:

  • The group of Member States that already have collective bargaining systems should ensure that 70 percent of their workers are covered by such a system.
  • Those who do not reach this level of coverage would have to prepare an action plan and to inform the Commission about how their plan to reach that minimum target.
  • Meanwhile, countries with statutory minimum wages are expected to put in place conditions for minimum wages to be set at adequate levels, including clear and stable criteria for setting, monitoring, and regularly updating the level.
  • These criteria should take into account the cost of living and the contribution of taxes and social benefits, the general level of gross wages and their distribution, the growth rate of gross wages, as well as labour productivity.
  • These Member States are also supposed to increase the engagement with social partners when setting and updating minimum wages.
  • Additionally, these Member States will also have to justify the use of different rates of statutory minimum wage, ensuring that variations for specific groups of workers are “non-discriminatory, proportionate and justified”.
  • All member states will have to inform the commission on developments annually.

The proposal must now be negotiated with the European Council and the European Parliament. Once adopted, Member States will have a short timeframe of two years to transpose it into national law.

Please find here the CEEP press release following the publication of the initiative.

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