Brussels revives the debate on the European minimum wage

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It was a promise made by Ursula von der Leyen in July to MEPs to win the support of the Social Democrats when she was elected president of the European Commission. Here is the fact: less than two months after taking office, the new European executive sets in motion a mechanism to achieve a “Legal framework for minimum wages in the Union”.

A social agenda on the table

The committee set the agenda for discussions over three months: six weeks of consultation with the social partners, then another six weeks to work on a specific text with the European emanations of trade unions and employers. A legislative proposal will then be submitted to the Member States and the European Parliament “At best at the beginning of summer or otherwise at the beginning of September”, announced the European Employment Commissioner, Social Democrat Nicolas Schmit.

→ DEBATE. Should we set a minimum wage in all EU countries?

The European executive has two guidelines. “It is neither a question of fixing a uniform European minimum wage, nor of obliging countries to introduce a minimum wage”, said the Vice-President of the Commission, the Latvian Valdis Dombrovskis. This subject is coming back to the fore, largely due to social dumping in some countries, with heightened competition between workers in the European Union, and multi-speed competitiveness.

Against worker poverty

Today, 22 countries have established a national minimum wage enshrined in law. The latest is Germany. The others (Italy, Cyprus, Austria, Denmark, Sweden, Finland) rely instead on minima negotiated by sector. In gross value, the levels range from € 184 per month in Bulgaria to € 1,923 for Luxembourg. The idea is therefore to set a base salary, then to make them converge smoothly.

The other big mission of the European minimum wage is to benefit the poorest workers. Valdis Dombrovskis thus calls for a “Legal instrument to ensure that workers earn enough to support themselves”. In the consultation document sent by Brussels, a minimum wage is set at 60% of the median wage in the country concerned, which at the same time corresponds to the poverty line as defined by Eurostat. The presidential majority, during the European election campaign, advocated a base at 50% of the median income, but this symbolically amounted to ratifying the situation, while the share of the working poor in the euro zone rose from 7.3% in 2006 to 9.5% in 2016.

→ MAINTENANCE. “There is an urgent need to create a European minimum wage”

Pitfalls to avoid

The minimum wage is a very delicate tool to handle, nevertheless believes Andrea Garnero, an economist in the “employment” division at the OECD, believes that. “Putting forced equality in place prematurely would indirectly strengthen the informal economy in some countries”, He says. This expert considers that a threshold that is too high can, for example, reinforce the use of machines to reduce the wage bill. “France, which has the highest” relative “minimum wage in the EU, is the only one where you can see so many ATMs in supermarkets”, he takes as an example.

The EU has few international benchmarks for implementing its European minimum wage, apart from what has been implemented in large federal states such as the United States, Mexico or Canada. In these countries, the convergence threshold is set very low so as to take account of territorial inequalities. The fixed floor is therefore not very restrictive. “In the United States it’s $ 7.30 an hour at the federal level, but for example in a wealthy city like San Francisco, where the cost of living is very high, a clean threshold had to be set at 15 dollars an hour “, illustrates Andrea Garnero.

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