The international seminar about “The pitfalls of keeping wages low”, organized by CNS "Cartel Alfa" / F.N.CORESI (Confederaţia Naţională Sindicală "Cartel Alfa" / Fundaţia Naţională CORESI) in partnership with EZA and financed by the European Union, took place between 19 and 22 September 2022 in Amara, Ialomița County, Romania. The seminar was in a face to face format, attended by 53 representatives of workers’ organisations from Romania, Albania, Bulgaria, France, Cyprus, Moldova, Italy and Portugal.
Presentations incited interesting and a lot of debate, showing that the topic was meaningful and relevant for the activity of the participants and their organisational projects.
Moreover, the topic of the seminar was considered particularly timely, as the proposal for a directive on adequate minimum wages in the European Union had just been adopted by the European Parliament and is pending approval by the Council.
The broad topics addressed were:
- National minimum wage – social policy instrument for convergence at European level
Notwithstanding the subsidiary principle of the European Union, the debate was centred on the effectiveness of the national minimum wage as an instrument of convergence at European level and its limits, when not complemented by a range of other instruments and policies, such as fair taxation and collective bargaining. Should there by a convergence of the taxation systems, at least for minimum wages across Europe? But what about the just prices, not only just wages? One conclusion that surfaced from the panel was that a new income policy and more adequate taxation must be implemented at national and European level. It is necessary to reform and create conditions for the sustainability of the pension, health and education systems.
- Minimum wage and collective bargaining. Views of the social partners on the European Directive on Adequate Minimim Wages – implications and action plans
The broad consensus was that the recent adoption and the provisions of the Directive is a positive development and an encouraging step in the right direction. Although not perfect, moderate in ambition, and largely ineffective as it leaves application to national legislatures, the newly adopted directive is a good starting point for improving the situation on the labour market, especially in Eastern countries, where the policies of the low wage competitive advantage of the past decades have deepened social inequalities, poverty and fuelled migration and brain drain.
- Minimum wages and collective bargaining for a decent living - a paradigm shift at EU level? Contexts and challenges for Romania.
Considering that the instrument of collective negotiations must remain the main instrument in determining wages, the Commission included in the Directive a condition for the coverage of employees with collective agreements in a proportion of at least 80% at the national level. Currently, in Romania, the collective bargaining coverage is only 20%. In fact, Romania is one of the most illustrative cases where the weakening of collective bargaining and union power by restrictive legislation (L62/2011- Social Dialogue Law) has led to low wages and income inequality. This is a reality that led last year to a European wide action organised by Cartel ALFA, denouncing the low wage policy in Romania and demanding action at European level, which lead to a condition included by the European Commission in Romania’s NRRP related to the modification of Social Dialogue Law.
- Experiences of the national social partners involved in negotiations with governments in implementing the future directive on adequate minimum wages.
Europe’s lowest paid workers have seen the value of their wages fall by up to 19% this year, representing the biggest fall in real minimum wages this century, ETUC research has found out of Eurostat data. It means the real value of statutory minimum wages has fallen by an average of 5,5%, leaving millions of workers in Europe struggling to afford the most basic costs of living like food, rent and energy. The European Minimum Wage Directive, which has been a hot topic lately, is not a one-size-fits-all solution. However, it takes into account the different traditions and starting points and strengthens the role of the social partners and collective bargaining. The experiences of the participants in Portugal, Cyprus, Bulgaria, Moldova, Albania, have been discussed.
- In-work poverty and wage inequality. Proposals for an anti-poverty strategy
In many countries, inequalities in the country are taking on dangerous proportions, and they have different dimensions – in income, in wages, in regional development, between small entrepreneurship and oligarchic business. They pose a huge risk to social peace and the preservation of democracy.
When we consider poverty, we also have to look at the data and the instruments for measuring poverty, as sometimes they may be misleading. For example, the standard measurement of relative poverty at European level, income below 60% of the median wage is only relevant when the wage distribution is balanced. On the contrary, when the great majority of wages are concentrated at the bottom, this indicator loses relevance. The presentation and comments on this panel lead to a lively debate on the meaning of „adequate”, as defined by the directive and the instruments for measuring the adequacy of minimum wages, the most important of which being the value of the basket of goods/the costs for ensuring a decent living.
The application part of the seminar included a case study of the collective bargaining and wage setting practices in a multinational company, situated in the proximity of the seminar location: Ulcom-Expur. The discussion enforced the message that constructive social dialogue and sustained collective bargaining are essential not only for ensuring a decent living for workers, but also for increasing productivity and achieving economic results.
During the seminar our invited speakers presented their materials and offered the participants the chance to comment upon them, to ask questions and to reflect on the data reported. The round-up for the conclusions of the three days of exchanges of ideas and best practices lead to a few points and directions for action that the participants agreed upon:
- The newly adopted Directive on Adequate minimum wages is a step in the right direction and an improvement, but at the same time we need to demand at national and European level better protection for working people;
- Among the instruments listed in the Directive for defining and measuring the adequacy of minimum wages, the most important is considered to be the value of the basket of goods/the costs for ensuring a decent living.
- A new income policy and more adequate taxation must be implemented at national and European level. It is necessary to reform the tax systems and create conditions for the sustainability of the pension, health and education systems.
- Social dialogue, essential for an effective implementation of the Directive on Adequate Minimum Wage.
- Trade unions must fight for a higher level of pay for workers in all spheres, so that the results of the economic activity are distributed fairly to all.