From 1 to 3 July 2024 took place in Sofia / Bulgaria a seminar about the “Directive on Adequate Minimum Wages transposition – key ingredient for the future of work: job quality, social protection and inclusion”, organized by PODKREPA CL (Confederation of Labour PODKREPA), in cooperation with EZA and funded by the European Union.
47 representatives of workers’ organisations from Bulgaria, Germany, France, Serbia, Austria, Romania and Poland participated in the seminar.
The conference’s objective
-To bring together legal and trade union experts to discuss on the transposition of EMWD may guarantee the possibility to negotiate fair conditions and wages for working people.
-To exchange on the trade unions' priorities, which must be included in the future action plan to achieve 80 per cent collective-bargaining coverage.
-Identify capacity-building needs as a way to achieve strong, representative, autonomous and mandated workers’ organisations.
-Provide opportunity for trade unionists from various countries to meet and engage in a frank discussion about the future of social dialogue and collective bargaining on behalf of working people.
Description of the conference
The International conference started with greetings to participants and political messages on the importance of the EMWD as a historic victory for European workers and all progressive forces.
Opening panel was followed by experts’ presentations on:
-The strength of EU’s diversity: adequate minimum wages could be a starting point for more balanced social cohesion in Europe.
-The new Directive on Adequate Minimum Wages: decisive step to ensure adequate level of social protection and to guarantee decent living standards for workers and their families.
-Economic and social effects from adequate minimum wages in short and in long run.
Next two panels are devoted to the national interventions:
-Policy measures to alleviate the effects of the cost-of-living crisis - national wage setting, collective bargaining, working conditions.
-A session for exchange on the trade union involvement in the transposition of EMWD into national legal order – obstacles and possible solutions provided space to deepen the debate on how to profit from this new instrument for strengthen the national bargaining systems.
During the Conclusive round table: Make the minimum wage a right, not an obligation, from a trade union point were analysed the possibilities to build on the EMWD for other legal initiatives that can improve the living standards of EU workers.
After every panel was forseen time for questions and answers.
The International conference has been closed by session for conclusions and evaluation on the presented materials and on the discussion and exchange between participants.
Key ideas
-From social and trade union point of view, the EC legislative initiatives during the past five years are positive steps in right direction, especially the Directive on adequate minimum wages. After many years of attacks on workers’ rights, the Directive provides to trade union movement an opportunity to rebuild and strengthen its influence, while improve collective bargaining. They are still about four months to November 15th - the deadline for the transposition in the Member states legislation. After that date, all European countries will be legally obliged to promote collective bargaining, especially where it covers less than 80% of working people. From this arise two challenges –to urgently strengthen the bargaining capacity of trade unions and to establish a genuine procedure of dialogue with employers, real committed to negotiate.
-In order to have harmonious development, EU is trying to strength economic, social and territorial cohesion by reducing disparities between its various regions. Logically, EU cohesion policy is the main investment policy in support of economic growth, for the creation of jobs, competitiveness, sustainability, environmental protection. Policies on social cohesion are aiming to build inclusive societies in which everyone can enjoy social rights, especially those from vulnerable groups and young people. The fight against poverty goes hand in hand with the creation of quality jobs, and the implementation of strong social and labour policies. In that respect, adequate minimum wages are main prerequisite to speed-up EU social cohesion, the tool to combat in-work poverty and inequality. Differences in the EU are making it strength and are helping through dialogue to overcome existing internal dividing lines. In that respect, the adequate minimum wages could be a turning point for acceleration of social cohesion in the EU. Unfortunately, EU currently manage to achieve only convergence in prices, but not in income and living standards, or social convergence for which it less developed regions have been striving for more than 20 years.
-After the pandemic and mainly in result from the multiple crises and the inflation, the purchasing power of the minimum wages in the EU has been constantly eroded. Such a decrease in purchasing power logically is pushing-up the general risk of social exclusion, and in particular the in-work poverty. At present, having a job does not necessarily protect workers from material deprivation. For these, earning minimum wage, the cycle of living paycheck to paycheck is a harsh reality - overall 7 out of 10 workers at the minimal wage are facing difficulty in making ends meet, and women are overrepresented among minimum wage earners. In that respect, the EMWD may be regarded as a chance to overcome the risk of exacerbating inequalities in the EU and will help working people and their families to be no longer left living in poverty.
-Minimum wages in EU countries vary widely, and currently the gross monthly minimum wage varies from 477 euros - in Bulgaria, to 2 571 euros - in Luxembourg. Eurostat data shows that the goods and services that Bulgarians can afford with their income is 64% of the average for the EU. That is mainly due the very low level of wages. The second reason may be found in the income inequalities, which are the largest in the EU. In addition, social protection systems have not been reformed for a long time and do not meet properly the needs of the working population. From a trade union point of view, adequate incomes and higher living standards are crucial tools to oppose to economic and social insecurity and to stop fueling populism.
-Recent decades collective bargaining and social dialogue have been under pressure across the EU and the proportion of workers covered by collective agreements was in decline. For the first time, the EMWD has recognized the erosion of collective bargaining coverage and the rise of non-standard and precarious forms of work. In addition, the Directive introduces first-ever binding commitments, especially in terms collective bargaining coverage and on the protection of trade unions, their representatives and members. It mandates appropriate action plans is to be adopted following consultation with the national social partners and to be reported on to the EC by the end of 2025 at the latest. The plans should set out a clear timeline and concrete measures to progressively raise the rate of collective bargaining coverage. So far, only few states were taking concrete actions needed to strengthen collective bargaining and restore coverage levels.
-The EMWD has also changed the landscape on wages setting - it lists four criteria and offers indicative reference values, establishing a ‘double decency threshold’. The double decency threshold’ has direct influence on wages’ level. For Bulgaria, Labour Code was amended in 2023 to stipulate that statutory minimum wage would be set at 50 per cent of the average gross wage on September 1st each year. In addition, the benchmark for 80 per cent bargaining coverage is influencing reform debates related to the establishment of an action plan to promote collective bargaining. At the moment only eight member states meet the coverage threshold / Spain, Denmark, Sweden, Finland, Belgium, Italy and France/, so the others will be required to produce such an action plan.
-In anticipation of the implementation EMWD in Bulgaria, the national parliament has decided that violations of workers’ rights to freedom of association will be punishable by one to five years’ imprisonment or a fine of up to 2024 EU / 4000 BGN. Those new rules cover all offences, whether involving force, threats or any other unlawful means, against the right of workers to join a trade union, forcing them to renounce membership or preventing them from forming a trade union structure.
-In most of the EU countries a large share of workers earns the statutory minimum wage. Due to the rise of consumers and energy prices, combined with high inflation, those minimum wages do not guarantee to those workers decent living. Thus, during the transposition of the EMWD trade unions must pay particular attention to meet the criteria of the double decency threshold. Only by insisting on that point, trade unions will ensure that the postulated amount will be really able to ensure decent standard of living to workers and their families. Only by applying the double decency threshold, an adequate level of the minimum wage may be guarantee and in-work poverty will be avoided. In addition, it is extremely important not only to adopt a transparent and clear mechanism for determining the minimum wage, but also to foresee a coherent methodology for its updating.
-The EU countries differ in their tax burden on labour, but in general the average wage earner in Europe is paying one third of its income in taxes. It is obvious that wages face heavier taxation than capital income as well, the tax share of income paid by the very highest-income employees is lower than for the low-paid workers. At the same time, mainly due to the increased movement of capital and the weaknesses of international taxation rules, many big enterprises are able to shift their profits to low tax countries, thus avoiding taxation. While paying less taxes their profit is increasing, and tax burden is disproportionally borne by middle- and low-income worker.In simple words this is pushing the value of minimum wages down, but employers register huge increases in profit. So, there is an urgent need for measures to tackle the present redistribution of excess profits and wealth issue, with a strong solidarity approach with measures to ensure workers receive a fair share of productivity gains.
Conclusions and recommendations
-The EMWD is an attempt to repair past mistakes, representing historic victory for EU workers with the paradigm shift in view of wages and collective bargaining. Moreover, her success depends on the willingness to accept trade unions as equal partners in the economic and labour policy-setting. Just because the actual significance of this new legal instrument in terms of promoting more social Europe will ultimately be decided by its implementation.
-The Directive’s real significance depends first on the correct transposition into national law, second on the effective application by national actors. The easiest and most effective way to ensure the desired outcomes in terms of ensuring adequate minimum wages is to include the decency threshold into national law. The crucial lesson so far is that the implementation of the EMWD needs to be fought for at national level by all progressive actors striving for more social convergence and less wage inequality and in-work poverty.
-Minimum wages must be considered adequate, only when they provide a decent standard of living. This means trade unions should consider several factors including purchasing power, productivity levels and the general growth of wages, so that the most vulnerable can be protected properly. For trade unions the target for statutory minimum wages is to reach at least 60% of the median wage, even more. Obviously, this cannot be done overnight, but the target should be set because increasing minimum wages to 60% of the median or average wage would greatly reduce in-work poverty and drive economic growth.
-European industry is facing enormous challenges in international competition, policy gaps and shortcomings are decreasing the effectiveness of all efforts to stop deindustrialisation. According to Eurostat, by November 2023 industrial output in the EU27 was down by 5.8% compared with November 2022. As regards manufacturing jobs data reveal a loss of 550.000 jobs in the last four years. The main question is how to avoid deindustrialisation in the future. For this, trade unions have to produce good and effective ideas to strike the balance between global market mechanisms, taxation and labour standard setting.
-Public procurement must become an important tool while ensuring quality jobs. Public money has to be spent according strict social and labour conditionalities. It must go to companies that respect workers’ and trade union rights, that negotiate with trade unions and whose workers are covered by collective agreements.
-The implementation of the national action plans to reach 80% collective bargaining coverage demand urgent measures to strengthen to the capacity of trade unions to negotiate. To deal with these new challenges, trade unions must foresee new structures for collecting up-to-date data and for analyzing the productivity and the wage dynamic by economic sectors, by size of enterprises and by working condition. For the moment trade unions are having information from statistical offices and from those sectors, where they have structures. In addition, trade unions have to set up a comprehensive and holistic framework where fiscal, taxation, labour market and social policies build a coherent system.
-Trade unions must make the most of the provisions included in the EMWD for the benefit of workers. To do so, they should look for common ground with employers’ organizations and government for re-orientation of the public agenda with regard to include main lessons regarding the consequences of the cost-of-living crisis, especially on the poor job quality. That will help to bring the different interests or positions closer and to deliver effective income policies, with guarantee that all workers receive decent earnings.
-The trade unions’ vision of solidarity is regarding to the EU as to a community of people and nations where everyone is free to live in peace and work without fear of poverty, insecurity, disrespect, discrimination. To make the EU a great place to live and to work, now trade unions must go on offensive and demand a coherent and effective implementation of the MWD in practice - quality jobs, adequate wages, good working conditions and workers with a real say over their future.