The 1957 Treaty of Rome set out measures to build a single market through the liberalisation of trade within the European Economic Community. This document also included complementary social measures aimed at improving the living and working conditions of Europeans, maintaining high wages, addressing the imbalances caused by the restructuring of certain economic sectors and equal working conditions for men and women. In the following years little progress was made in social policies, which deteriorated during the crisis of the 1970s, and it was not until the adoption of the Single European Act in 1986 that the golden age of Social Europe began (Coman et al., 2020; Crespy, 2019).
At this time, the Economic and Monetary Union was established. Aware that it could have unpopular social consequences due to monetary and fiscal constraints, European leaders realised that economic integration could not be separated from a social dimension and began to deepen it. Among the measures taken in those years, we can point out the annex in the Maastricht Treaty of a Social Protocol in which a number of fundamental social rights were proclaimed; the establishment of a European Social Platform; or the European Employment Strategy. However, the financial crisis of 2008 and the debt crisis of 2010 were a setback for social measures that were subordinated to the economic imperatives of budgetary discipline and austerity. It is in this context that the European Semester was established in 2011, which was initially an economic exercise, but was extended to the coordination of economic, budgetary, employment and social policy measures (Coman et al., 2020; Crespy, 2019).
If we look at the state of Social Europe today, it is more focused on a soft coordination dynamic than on regulations, with more revisions and technical provisions than new initiatives. Under the Junker Commission, the Social Pillar of Social Rights was adopted in 2017, which sets out 20 principles and establishes concrete initiatives to make them a reality (Crespy, 2019). Among the initiatives that have been approved recently, the following stand out: the Directive on Transparent and predictable working conditions in the EU, the Revising Regulation on coordination of social security systems to clarify conditions of access for active and non-active people, the Directive on work-life balance for parents and carers, or the most recent and the one that will be further analysed, the Directive on Adequate Minimum Wages (Garben, 2018).
Background of the Directive
Minimum wages act as a tool to regulate the labour market, particularly affecting wage increases. In the European Union, we find a wide range of minimum wages, from 312 euros in Bulgaria to 2142 euros in Luxembourg (Lecerf, 2020). There are also differences in the procedures and institutions that determine this figure. Of the twenty-seven member states, six countries – Austria, Cyprus, Denmark, Finland, Italy and Sweden – have sectoral minimum wage systems in which wages are determined by collective agreements. The other twenty-one countries have a universal minimum wage regimes defined at the national level on a statutory basis (European Commission, 2020; ETUC, 2020).
Each member state has its own specificities and it is therefore difficult to compare minimum wages at absolute levels. Furthermore, states still have a lot of power at national level and at European level, few social measures are implemented, being some member states reluctant to comply with. The introduction of a provision on wages and income in the European Pillar of Social Rights -the principle 6- attracted much attention from the media and the governments, as it provided the legal basis for the EU to act in this domain and the European Commission proposed the Directive on Adequate Minimum Wages (Garben, 2018).
Directive on Adequate Minimum Wages in the EU
In 2020, the European Commission launched a new Directive on Adequate Minimum Wages. The aim of the directive is to promote adequate levels of statutory minimum wages, to promote collective bargaining on wage setting – with a coverage rate of at least 70%- and to improve the effective access to minimum wage protection of those workers wo are entitled to a minimum wage, in order to improve working and living conditions of EU citizens. As well, it will allow to collect data and report it to the Commission, to monitor de adequacy of minimum wage protection (Council of the EU, 2021).
the implementation of the directive must ensure access to employment and the effects on competitiveness and job creation. Furthermore, it respects national competences as well as that of the social partners, as it takes into account the specificities of each Member States’ labour market (European Commission, 2020). However, the directive was adopted this December amidst great reluctance from the Nordic countries, especially Sweden and Denmark, as they fear that the EU intervention might erode their labour market that are almost exclusively organised between trade unions and employers, and where a minimum percentage of employees are below the minimum wage. Sweden did accept the directive, but Denmark remained against it on the basis that the country only accepted the European integration because it assured that their labour market model would not be touched (Duxbury and Tamma, 2021).
Conclusion
The implementation of this directive is a historic step forward for Social Europe and the European Union itself, although some Member States already have minimum wages, this directive provides a single principle based on indicators, criteria and objectives or the different models that co-exist. This directive highlights the tensions between the national and European level, as well as the relationship between economic and social policies. Minimum wages, when set at adequate levels, not only have a positive social impact, but also produce broader economic benefits by reducing wage inequality, helping to sustain domestic demand, stimulating the economy and strengthening incentives to work.
The European Union seems to have realised the importance of social policies for the well-functioning of the European economy, increasing the number of social policies, as the approval of directives such as the one analysed, or the recovery instrument, NextgenerationEU, with the EU reacting in a more social way to the Covid-19 crisis than it did to the 2008 crisis. It is too early to affirm the start of a new model of Social Europe, but steps are being taken to make it happen.
Verónica Rodríguez Fariña
References
Coman, R; Crespy, A.; Schmidt, V. (2020). Governance and Politics in the Post-Crisis European Union. Cambridge University Press. Pp. 196-216.
Crespy, A. (2019). L’Europe sociale. Acteurs, politiques, débats. Editions de l’universite de Bruxelles. Introduction, pp.9-28
Council of the EU (2021). Council agrees on mandate for negotiations on a EU framework on adequate minimum wages. Avaialble at: https://www.consilium.europa.eu/en/press/press-releases/2021/12/06/council-agrees-on-mandate-for-negotiations-on-a-eu-framework-on-adequate-minimum-wages/
Duxbury, C and Tamma, P. (03/12/2021). Sweden back EU minimum wage after longtime opposition. Politico. Avaialble at: https://www.politico.eu/article/sweden-backs-eu-minimum-wage-directive-longtime-opposition/
ETUC (2020). Minimum wages should not be poverty wages. Policy Paper
European Commission, (10/2020). Advancing the EU social market economy: adequate minimum wages for workers across Member States. Available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_196
Garben, S. (2018). The European Pillar of Social rights: Effectively Addressing Displacement? European Constitutional Law Review, 11: 210-230.
Lecerf, M. (10, 2020). Briefing: Minimum wage in the EU. European Parliamentary Research Service. Available at: https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/659294/EPRS_BRI(2020)659294_EN.pd
By The European Institute for International Law and International Relations.
