The Council today agreed its position on a Commission proposal for an EU law on adequate minimum wages in the EU. Fair wages that provide for a decent standard of living are one of the principles of the European Pillar of Social Rights. To improve working and living conditions, this draft law establishes a framework to promote adequate levels of statutory minimum wages, to promote collective bargaining on wage setting and to improve the effective access to minimum wage protection of those workers who are entitled to a minimum wage.
Work should pay. We cannot accept that people who put all their energy in their job, still live in poverty and cannot afford a decent standard of living. This law will be a great step forward towards this goal.
Janez Cigler Kralj, Slovenian minister of labour, family, social affairs and equal opportunities
Promotion of collective bargaining on wage setting
Countries with a high collective bargaining coverage tend to have a smaller share of low-wage workers and higher minimum wages than those with low collective bargaining coverage. That is why ministers agreed that countries should promote strengthening the capacity of social partners to engage in collective bargaining. If their collective bargaining coverage is below 70%, they should also establish an action plan to promote collective bargaining.
Adequacy of statutory minimum wages
In order to promote the adequacy of statutory minimum wages and thus to achieve decent working and living conditions, member states with statutory minimum wages are tasked to put a procedural framework in place to set and update these minimum wages according to a set of stable and clear criteria. The statutory minimum wages will be updated in a regular and timely manner. Their amount may in addition be adjusted by automatic indexation mechanisms.
Ministers also agreed on a number of measures to enhance the effective access of those workers to minimum wage protection, who are entitled to minimum wages: appropriate controls and inspections, easily accessible information on minimum wage protection, a recall of the existing rules on public procurement, a right to redress and penalties for non-compliant employers.
Data collection and reporting
The agreed text also foresees that member states should monitor the coverage and adequacy of minimum wages. In addition, they will be asked to report every two years to the Commission on the rate of collective bargaining coverage, the level of the statutory minimum wages and the share of workers covered by them. Member States with exclusively collective agreements shall report on the lowest pay rates set by collective agreements and on the wages of those not covered by collective agreements. The Commission will analyse this date and report to the Council and the European Parliament.
Background and next steps
In the EU large differences between member states in the coverage of workers by collective agreements and the level of minimum wages exist. This is also the effect of the very different labour market models in member states. While respecting these differences, the draft law sets a procedural framework to promote a better and more effective minimum wage protection in all member states.
The European Commission proposal was put forward to the two co-legislators on 28 October 2020.
The general approach reached today provides the Council presidency with a mandate for negotiations with the European Parliament. Both the Council and the European Parliament will need to agree on a final text.