15 November was the deadline for the transposition of the Directive on adequate minimum wages in the European Union (‘Minimum Wage Directive’) by EU Member States into national law.
Torsten Müller is Senior Researcher at the European Trade Union Institute
Cross-posted from the ETUI website
Torsten Müller, Senior Researcher at the European Trade Union Institute, sat down with Communication Officer Bethany Staunton to discuss the current state of play regarding the transposition of the Directive and the progress made so far on its two key dimensions of adequate minimum wages and collective bargaining promotion.
BS: The deadline for the transposition of the Minimum Wage Directive has arrived. What is your assessment of the transposition process so far?
TM: I think we can say that the transposition process has been quite disappointing, There have been two key trends. The first is that many countries are late and have not met the deadline. This can be because they’re still discussing draft legislation or because the government sees no need for action. The second trend is that, where the transposition has been done, it has been very minimalistic – this is the case, for example, in Hungary and Germany. Here, the transposition essentially consists of confirming that existing legislation [in the country] is in line with the Directive.
Most Member State governments voted in support of this Directive, but now, when push comes to shove, we’re seeing a lack of ambition. Of course, we have to take into consideration that there have been government changes in some countries. Political conditions at national level are not what they were in 2022 when the Directive was adopted.
‘Most Member State governments voted in support of this Directive, but now, when push comes to shove, we’re seeing a lack of ambition.’
So does this mean that the Minimum Wage Directive has done little to impact minimum wage levels in Europe?
No, in fact it has. We can actually see various examples where the Directive’s reference values of 60% of the (gross) median wage and 50% of the (gross) average wage – we can also call this the ‘double decency threshold’ – have influenced statutory minimum wage-setting in various countries. This has happened in three different ways.
One example is when this double decency threshold has been put into national legislation, thus turning the soft law of the Directive into hard law. This is the most effective way to ensure these minimum wages. Bulgaria brought in a law in 2023 setting the statutory minimum wage at 50% of the average wage. In Poland, draft legislation of August 2024 suggests a level of 55% of the average wage – but this is still being discussed. Existing Slovakian legislation even refers to 57% as the level that will be set by law if unions and employers do not come to an agreement on a minimum wage increase. This ‘hard law’ approach has mainly been chosen by central and eastern European countries.
The second method is that the double decency threshold is used as a political guideline when determining statutory minimum wage increases. Croatia, Ireland and Estonia have all taken this approach (for more details, see the ETUI policy brief ‘Dawn of a new era? The impact of the European Directive on adequate minimum wages in 2024’). This is weaker than putting it into law but it still has influence. Five years ago, nobody was even talking about these thresholds.
And the third way is where the Directive has prompted a discussion about the adequacy of minimum wages more generally. We’re increasingly seeing this in the national context, and it is an opportunity for the unions to engage in. In the Netherlands, for example, the FNV (Federation of Dutch Trade Unions) ran a campaign to achieve 60% of the median wage which would amount to an hourly minimum wage of 16 euros. This is actually very bold to build a campaign on the concept of the ‘median’!
‘[The Directive’s reference values] have influenced statutory minimum wage-setting in various countries. […] Five years ago, nobody was even talking about these thresholds.’
But even if it is applied, is this ‘double decency threshold’ for minimum wages high enough – considering the level of average wages in Europe today, particularly following the cost-of-living crisis?
It’s a very valid question. We know that in many countries it is not. We need to assess whether a minimum wage is ‘adequate’ with a two-step procedure. The first step is to set the statutory minimum wage at the double decency 60/50 threshold. This would already be an improvement in most countries, as only two have achieved this so far [Slovenia and France].
Then we need to carry out a ‘reality test’. We need to measure this level against a calculated ‘basket of goods and services’ that is required to ensure a decent and secure living. This can only be done at the national level. Once again, the Bulgarians are an interesting example. CITUB (Confederation of Independent Trade Unions of Bulgaria), for instance, calculates such a ‘basket’ every year to keep track of this.
The Minimum Wage Directive also has the goal of increasing collective bargaining coverage in Member States. What kind of impact is it having in this area so far?
In contrast to the minimum wages part of the Directive, here we actually have the legal obligation for Member States to formulate an action plan if collective bargaining coverage is below 80%. And trade unions and employers need to be involved in this process. Only eight countries currently have this level of coverage, which means 19 Member States need to take action.
Here the deadlines are a bit different. The Member States have until November 2025 because the action plan is not part of the transposition process but rather the implementation. So we are still in the discussion phase about what these plans should look like, and countries are currently at different stages as regards the discussions between governments, unions and employers. In some cases, governments initiated a process to have a more sound empirical basis to assess coverage.
Certain criteria were formulated by the European Commission for these action plans: Member States need to set out a clear timeline and concrete measures, while plans should be updated at least every five years, made public, and notified to the European Commission.
The 80% target can be daunting for countries like Poland, Greece and Romania, where coverage is 15% or lower. The important point is that this Directive is a trigger for action: if you don’t have 80% then this may be a long-term goal, but you need to take action to be moving towards it.
‘Only eight countries currently have this level of [80% collective bargaining] coverage, which means 19 Member States need to take action.’
What kind of steps can Member States take to achieve 80% collective bargaining coverage?
Measures in any action plan would have to consider two main areas. The first would be to strengthen unions’ capacity to act – but also that of employers’ organisations, as collective bargaining agents. This is often overlooked, but one of the key problems, especially in central and eastern European countries, is that unions don’t have a counterpart to negotiate with. Or when there is one, the organisation claims not to have a mandate to negotiate.
And the second area would be to strengthen institutional support for collective bargaining. One can think of a whole range of measures here, but a key example would be leveraging public procurement to ensure that public contracts and financial support more generally are only made available to companies that respect collective bargaining.
[See table below for more details of how collective bargaining can be promoted.]
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