EN Official Journal of the European Union C 51/22

Opinion of the European Committee of the Regions — Standards of remuneration in employment in the EU

(2016/C 051/04)

Rapporteur: Mick ANTONIW (UK/PES), Assembly Member for Pontypridd

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS,

Legitimacy of debate

1. points out that responsibility for employment and social policy lies primarily with national or regional governments, that the EU has a coordinating competence in this area, and that any EU initiative on European wage standards must respect the principle of subsidiarity;

2. recalls that according to a Eurobarometer survey of attitudes of citizens to poverty, the vast majority (73 %) consider that poverty is a widespread problem in their country and want urgent action nationally (89 %) and at EU level (74 %) to tackle the problem (1);

3. affirms that the right of all workers to a fair remuneration sufficient for a decent standard of living for themselves and their families is laid down in the European Social Charter, which has been accepted by nearly all EU Member States;

4. considers that the democratic legitimacy of the European Union will be strengthened if Europe’s citizens recognise that social progress is also being addressed when employment and social dimension are fully integrated into the yearly cycle of economic policy coordination (the European Semester), alongside the promotion of growth;

5. recalls that the EU has committed to achieving the UN Millennium Development Goals and complying with the Resolution proclaiming the Second United Nations Decade for the Eradication of Poverty (2008-2017);

6. takes note that the ILO Convention C94 on Labour Clauses in public contracts is currently binding in nine EU Member States, and applied voluntarily in others. However, possible legal inconsistencies between ILO Convention C94 and the EU Treaty must be clarified;

7. notes the calls from the European Parliament with regard to the issue of minimum wages (2), including its latest invitation to the European Commission ‘to explore all options for strengthening the EMU and making it more resilient and conducive to growth, employment and stability, with a social dimension aimed at preserving Europe’s social market economy, respecting the right to collective bargaining, under which coordination of the social policies of the Member States would be ensured, including a minimum wage or income mechanism proper to, and decided by, each Member State’ (3);

Minimum wages and decent wages

8. affirms that poverty and social exclusion impede a decent existence, thus undermining people’s fundamental rights and suggests that all Member States should ensure a decent existence for people — for instance by providing the services needed to secure a decent living for them — and should pursue policies, especially labour market and social policies, that ensure fair wages over the working life cycle;

9. emphasises the urgency of this issue given that poverty and social inequalities have worsened since the economic crisis in the EU, and that subsequent austerity-only policies have exacerbated the problem; the numbers at risk of poverty have increased, with women and children particularly affected;

10. draws attention to the fact that the Europe 2020 poverty reduction target seems to be compromised and will have to be revisited when the Europe 2020 process is next reviewed, as the number of people at risk of poverty increased from 114 million in 2009 to 124 million in 2012 (4);

11. welcomes the fact that most EU Member States have minimum wage regimes which are either established by law or agreed through collective bargaining. Authority and responsibility for matters relating to wage-setting rest with the Member States and/or national social partners. The autonomy of the social partners and their right to conclude collective wage agreements must therefore be fully respected;

12. underlines that minimum wage regimes vary considerably and notes that in some countries the level set is below 50 % of the median wage (5) and that ‘in-work poverty’ is also a growing problem;

13. acknowledges the key role of collective bargaining in setting minimum wages but points out that in many sectors and SMEs, sectoral agreements do not exist and that therefore some workers are excluded. The CoR calls upon the national social partners to strengthen social dialogue at national, regional and local level;

14. maintains therefore that Member States should be encouraged to adopt an indicative fair wage, geared towards the use of 60 % of median wage as a benchmark, and based on reference budgets (6), which are a package of goods and services an individual needs to live at a decent level, together with a set of equitable terms and conditions of employment. According to a recent Eurofound study (7), a hypothetical scenario of a minimum wage set at 60 % of the median national wage would have benefitted — on the basis of 2010 figures — an average of 16 % of all EU employees;

15. draws attention to the work undertaken by the European Reference Budgets Network to develop a common methodology for reference budgets in Europe so that their contents, such as the food basket, is comparable across Member States;

16. emphasises the fact that private debt, which in the euro area reached 126 % of GDP in 2014, as opposed to 92 % for public debt, is a factor that worsens a situation marked by low consumption and falling investment; suggests in this context that fair wage structures are important economic stabilisers and a key tool to boosting non-price competitiveness, thus acting as a significant driver of economic growth and helping avoid stagnation; moreover, with a view to making household incomes more secure, thought must be given to putting in place an excessive debt management procedure at European level which, inter alia, addresses the conditions for the expropriation of family homes;

17. maintains that a fair wage means that the public sector may need to provide little or no support, for individuals in full-time work through top-ups or tax credits, which could potentially assist Member States to respect their fiscal obligations;

18. proposes to consider minimum wage provisions in conjunction with employment terms and conditions, in particular in the context of specific flexible arrangements;

19. maintains that a fair wage, together with equitable terms and conditions of employment and an adequate social protection system are some of the preconditions for fair competition between EU Member States so that they do not undercut one another through ‘a race to the bottom’ and ‘social dumping’;

20. underlines that this issue is particularly important in view of the Posted Workers Directive and subsequent European Court of Justice judgements, which have meant that companies do not have to abide by sectoral minimum wage agreements that have not been declared generally applicable (8);

21. urges national and regional authorities to fully apply the Posting of Workers Enforcement Directive; keenly awaits in this respect the European Commission’s announced review of the current legislation applying to posted, the objective being to fight social dumping and that the same work at the same place is remunerated in the same manner throughout the EU;

22. believes that further debate in this area could in particular be based on Articles 9 and 156 of the TFEU and should, to ensure respect for the principles of subsidiarity and proportionality, take place through soft processes such as the open method of coordination and as part of the European Semester, which has already addressed wage issues;

23. further argues that fair wages as an economic factor could also be addressed in country-specific recommendations, which already include wage-setting in the area of the labour market and also address wage moderation;

24. recognises that minimum wages vary considerably across those EU Member States that apply them. Underlines that fair wages proper to, and decided by, each Member State either by law or through collective bargaining, and in any case in full respect of its traditions and practices, could contribute to meeting the Europe 2020 target of lifting 20 million people out of poverty and social exclusion;

25. suggests that fair wages could assist in tackling unacceptable levels of inequality in Europe, which is a source of concern for social cohesion, a political matter and a risk to the EU’s future growth potential;

26. points out that there are examples of good practice in Member States where low-paid workers represent a small proportion of the total number of employees. In three of them — Sweden, Denmark and Italy — there is no statutory minimum wage or declaration of the generally binding nature of collective agreements; in these countries, wage-setting nonetheless works well on the basis of tradition and practice (9);

Regional dimension

27. encourages EU local and regional authorities to take the lead, in their capacity as employers, and work towards ensuring fair wages for their employees and calls for the exchange of best practices at EU level;

28. further welcomes the fact that some public authorities at the local and regional level have used their procurement policies to encourage and require contractors to pay fair wages to their staff. To this effect, notes with satisfaction that Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement, which will enter into force in April 2016, explicitly mentions that the application of terms and conditions of employment which are more favourable to workers should not be prevented (Recital 37) and stipulates that contracting authorities may not use ‘price only’ or ‘cost only’ as the sole award criterion of public contracts (Article 67). Moreover, warmly welcomes the judgement of the Court of Justice of the EU in Case C-115/14 (of 17 November 2015), stipulating that EU law does not preclude the exclusion from a procedure for the award of a contract of a tenderer who refuses to undertake to pay staff concerned the minimum wage (10).

Brussels, 3 December 2015. The President of the European Committee of the Regions Markku MARKKULA

(1) Special Eurobarometer report on poverty and social exclusion (2010).

(2) European Parliament Resolutions on: (1) the role of minimum income in combating poverty and promoting an inclusive society in Europe, adopted on 20 October 2010 (2010/2039(INI)); and (2) the European platform against poverty and social exclusion, adopted on 15 November 2011 (2011/2052(INI)).

(3) European Parliament resolution on the Commission work programme 2016 (2015/2729(RSP), point 16.

(4) COM(2014) 130 Taking stock of the Europe 2020 strategy for smart, sustainable and inclusive growth.

(5) Contours of a European minimum wage policy: study by Thorsten Schulten, Friedrich Ebert Stiftung, October 2014. http://epsu.org/IMG/pdf/Contours_of_a_Minimum_Wage_Policy_Schulten.pdf

(6) COM(2013)83 Social Investment Package.

(7) Pay in Europe in the 21st century: report by Christine Aumayr-Pintar et al., European Foundation for the Improvement of Living and Working Conditions (Eurofound), April 2014.

(8) Case C-346/06 Dirk Rüffert v Land Niedersachsen.

(9) Eurostat, Structure of earnings survey 2010, excluding enterprises with fewer than 10 employees, see in particular Figure 5.34.

(10) Legislation of a regional entity of a Member State requiring tenderers and their subcontractors to undertake to pay a minimum wage to staff performing the services covered by the public contract was found compatible with EU law.