From 22 to 24 May 2024 took place in Larnaka / Cyprus a seminar about “Strengthening collective bargaining to ensure fair and adequate minimum wages”, organized by KIKEA-DEOK (Cypriot Institute of Training/Education and Employment (KIKEA) - DEOK), in cooperation with EZA and funded by the European Union. Representatives of workers’ organisations from Cyprus, Greece, Italy, Romania, Bulgaria, Spain, Belgium participated in the seminar.
Important aspect(s) of the seminar
The seminar offered an excellent opportunity to trade union leaders and other workers’ organizations and stakeholders, to listen, discuss and exchange views regarding the policies that have to be make in order to support the directive. The union leaders participating in the project shared presentations and observations of implementing this among the member states. A representative of the European Commission presented the directive and its implementation process. The Ministry of Labor also presented the process of implementing the minimum wage in Cyprus. The employers' association took part and gave an overall picture of the implementation of the minimum wage. Furthermore, the seminar focused on the role of social dialogue and the consultation that has to take place before national measures to complied until September 2024.
Significance of the seminar’s taking place at this period of time
The seminar took place in a crucial period before the European Commission deadline on the September 2024 when member states must comply with the new rules. Employees and trade unions need to be prepared and exchange views between delegates in order to be able to meet the challenges and seize the opportunities that will be given. It addresses multiple intersecting issues affecting workers globally, from economic inequality and post-pandemic recovery to labour rights and social justice. Strengthening collective bargaining is a key strategy to ensure that workers receive fair and adequate wages, contributing to more equitable and stable societies.
Discussion topic fields
European Pillar of Social Rights: Adequate minimum wages in the EU
Understanding collective bargaining and minimum wage: Challenges and opportunities
Fair and adequate minimum wages: The situation in the EU member states and the role of trade unions
Strengthening collective bargaining to ensure fair and adequate minimum wages: The role of the social partners
The Basis of European Competitiveness and Collective Bargaining
Results
The Minister of Labor of Cyprus noted that tripartite cooperation has always existed and will exist in Cyprus. The State together with the Trade Unions and the other Social Partner is in close cooperation on all labour issues. For the Government, healthy labour relations are very important. Even when there are disputes in Cyprus, the Industrial Relations Code, an agreement exists between the Cyprus Employers and Industrialists Federation, the trade unions and the Ministry of Labor and Social Insurance which sets out detailed procedures for the resolution of labour disputes.
On behalf of the European Commission, Mr. Christos Koulouteris noted that in most European countries the minimum wage is determined by legislation and in some countries, it is protected exclusively by collective agreements. Between European countries there are big differences in the level of the minimum wage. The institution of Collective Bargaining has declined significantly in many countries over the last two decades. The 2022 Adequate Minimum Wage Directive in the European Union aims to ensure that workers in the Union are protected by adequate minimum wages that enable a decent living wherever they work. The challenges of institutionalizing minimum wage systems are varied. The directive is a major step forward in ensuring adequate working and living conditions for EU workers, and in building fair, resilient and inclusive economies and societies. It is one of the key deliverables of the European Pillar of Social Rights action plan adopted in March 2021. It will contribute to the achievement of the EU's 2030 targets set at the Porto summit, in particular those related to employment (78 % of the population within the age range 20 to 64) and reducing the number of people at risk of poverty or social exclusion (at least 15 million less).
The purpose of the minimum wage is to prevent in-work poverty, or a situation where jobs do not pay enough for the worker to maintain a decent standard of living, and to ensure labour market stability by limiting wage competition. On the one hand, some groups of workers find it difficult to form unions and the minimum wage does not protect them, but on the other hand, workers who may have formed a union may decide that unions are not needed as they receive the minimum wage anyway. These workers become "jumpers," benefiting from union action to maintain the minimum wage, but without paying dues or providing political support to the labour movement.
The situation in the EU Member States and the role of trade unions
Greece
In Greece, the minimum wage and the minimum daily wage have been regulated by law since 2012. It is noted that employees who are paid the statutory minimum or daily wage, the period of a dependent labour contract or employment relationship with any employer and in any specialty before 14 February 2012 and after 1 January 2024, is recognized as previous experience. However, for all employees, 12 years of work experience does not count as it was the period of the financial crisis under memorandum restrictions. Greece ranks eighth worst in the European ranking that compares the level of the minimum wage in purchasing power units. In fact, the monthly salary in Greece reaches 1,031 purchasing power units and falls short of the minimum wage of countries such as Romania, Croatia, Lithuania, Slovenia and Poland. This important element is highlighted by the analytical report of the GSEE Labor Institute, which refers to the organization's proposal to increase the minimum wage to 908 euros. Greek unions also raise the issue of Greece's lag in collective bargaining and collective labor agreements. According to the latest estimate of the Labor Institute, in 2023 the percentage of workers covered by collective labor agreements reached 31%. And at this moment when the relevant EU Directive stipulates that the member states, with the participation of the social partners, should undertake an action plan to increase the percentage of collective bargaining coverage to at least 80%.
Belgium
In Belgium, minimum wages are not set by law. In some other countries, applicable minimum wages have traditionally been set by collective bargaining agreements (CBAs) concluded in joint committees (PCs) or sub-committees (PSCs). Collective agreements include provisions that set out the general bases for calculating wages according to different qualifications and levels of work. If the sectoral collective agreement provides for a minimum wage, the individual agreement cannot grant a lower wage, but it can grant a higher wage. The wage setting system in the private sector in Belgium is essentially contractual. Wages in Belgium are determined by collective labour agreements and by sector of activity. The first minimum wage in Belgium came about in the 1930s at the initiative of a joint commission, the National Joint Commission of Mines. The establishment of a minimum wage was slowly adopted by other joint commissions, but some workers were not covered by a joint commission and therefore were not entitled to the minimum wage. It was in the inter-professional agreement of 1973 that the employers' organizations agreed to the demand of the trade unions, in order to preserve the autonomy of the sectors: “The signatory parties have thoroughly studied the demand of the trade unions for the establishment of a guaranteed minimum monthly wage. for all workers, in order to guarantee them a living and social minimum".
Spain
During 2024 there was an increase in the minimum wage in Spain. This increase benefits 2.5 million people and has particularly affected women, young people, workers on fixed-term contracts or those working in the agricultural sector or services. This new minimum wage increase comes at a time of high inflation, even if price rises have slowed significantly in recent months. Inflation stood at 5.8% in January, after peaking at 10.8% in July, the highest rate since records began 38 years ago.
Romania
Since 2000, the minimum wage has been calculated taking into account the "basic monthly consumption basket". Unfortunately, this process stopped in 2004 and led to a disconnect between wage policies and living standards. By 2024, Romania has committed to overhauling its wage-setting mechanisms to ensure a minimum wage that matches purchasing power and productivity levels, in line with the EU Adequate Minimum Wage Directive. Romania is one of the most unequal countries in the EU in terms of low minimum wages and significant geographical disparities. In addition, Romania is the second EU country with the lowest minimum wage. About 28% of the employed are paid the minimum wage and 70% below the minimum wage.
Bulgaria
In the Bulgarian economy almost 1/5 of the employed are employed at minimum wage. Over 2 million Bulgarians work outside the country – perhaps the most competitive part of our workforce. In fact, the Bulgarian working abroad is highly qualified and receives security in the foreign labor market. Out of 27 EU countries, Bulgaria ranks 7th in terms of workplace quality – Bulgarians feel more supported by their colleagues and employer, but we are lower than the European average in workplace noise indicators work and learning opportunities outside the workplace.
The role of the social partners
In order to be able to design and achieve the best policy for the institutionalization of an appropriate minimum wage, the social partners should be united and strong. In a time of digital transformation, the challenges are many and need the will from all sides to achieve. The organizations of the social partners must be supported. With the aim of increasing the coverage of collective bargaining and facilitating the exercise of the right to collective bargaining for the determination of wages, Member States, with the participation of the social partners, in accordance with national law and practice:
promote the building and strengthening of the capacity of social partners to engage in collective wage-setting negotiations, in particular at sectoral or cross-sectoral level
Encouraging constructive, meaningful and evidence-based wage negotiations between the social partners, on equal terms, where both parties have access to appropriate information to carry out their duties in relation to collective wage-setting negotiations
take measures, as the case may be, to protect the exercise of the right to collective bargaining to determine wages and to protect workers and trade union representatives from discriminatory acts against them in relation to their employment because of participation or of their desire for collective bargaining to determine wages
with a view to promoting collective bargaining for the determination of wages, take measures, as appropriate, to protect trade unions and employers' organizations participating or wishing to participate in collective bargaining against any acts of interference between themselves or representatives or members of the other in the establishment, operation or administration of trade unions or employers' organizations.
In addition, each Member State in which the collective bargaining coverage rate is less than the 80% threshold provides a framework enabling conditions for collective bargaining, either by law after consultation with the social partners or by agreement with them. Such a Member State shall also draw up an action plan to promote collective bargaining. The Member State shall draw up an action plan after consulting the social partners or following an agreement with the social partners or, following a joint request by the social partners, as agreed between the social partners. The action plan sets out a clear timetable and concrete measures to gradually increase the coverage rate of collective bargaining, with full respect for the autonomy of the social partners.