'i.rfwrai • . COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(93) 388 final 
Brussels, 01 September 1993 
COMMISSION OPINION 
on an equitable wage 
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Explanatory Memorandum 
INTRODUCTION 
Article 118 of the Treaty of Rome provides that the Commission "shall 
have the task of promoting close cooperation between Member States in 
the social field, particularly in relation to ... labour law and 
working conditions... To this end the Commission shall act in close 
contact with the Member states by making studies, delivering opinions 
and arranging consultations both on problems arising at national 
level and on those of concern to international organisations." 
Attached is the Commission's Opinion on the introduction of an 
equitable wage by the Member states, formulated after consultation of 
the Economic and Social Committee in accordance with Article 118 of 
the Treaty and section 2 of its Action Programme relating to the 
implementation of the Community Charter of Basic Social Rights for 
Workers. The Commission's Opinion takes account of the Opinions of 
the Economic and Social Committee(^) and of the European 
Parliament<2), to whom the draft Opinion was sent for information. 
In implementation of the Charter the Commission has also put forward 
a draft Council Recommendation on common criteria concerning 
sufficient resources and social assistance in the social protection 
systems (COM(91) 161 final)(3). ^ clear distinction needs to be 
made, however, between that document, which is essentially about a 
guaranteed minimum income from all sources, and this document, which 
is about fair remuneration for work performed with particular 
attention being paid to the more vulnerable members of the labour 
force. 
The Charter of Fundamental Social Rights establishes the principle 
that all employment shall be fairly remunerated, stating that "in 
accordance with arrangements applying in each country workers shall 
be assured of an equitable wage, i.e. a wage sufficient to enable 
them to have a decent standard of living". In order to implement the 
above Charter and in full respect to the principle of subsidiarity, 
the Commission has no intention either to legislate or to propose 
binding instruments on remuneration or to set operational 
definitions, since these can best be established at national, 
regional or sectoral levels. It considers, however, that it is 
appropriate to outline certain basic principles on equitable wages, 
while taking into account social and economic realities and using 
the normal instruments of economic and social policy, in particular 
those designed to raise productivity and stimulate economic growth, 
combat discrimination, and ensure solidarity across social groups. 
In this task, all partners in society have their part to play. 
In drawing up this Opinion the Commission took into account the 
various international instruments, that have a bearing on this 
issue, notably Article 23 of the Universal Declaration of Human 
Rights, the Council of Europe Social charter as well as Conventions 
and Recommendations of the International Labour Organisation. 
Furthermore, before drawing up this Opinion, the Commission 
undertook widespread consultations with the Member States and the 
social partners. 
(1) OJ No C 223, 31.8.1992, p. 57. 
(2) OJ No 
(3) This Recommendation was adopted by the Council on 24 June 1992 
(OJ No L 245, 26.8.1992, p. 46). 
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THE RELATIONSHIPS BETWEEN WAGES, PRODUCTIVITY, EMPLOYMENT AND SOCIAL 
FACTORS 
5. Differences in levels of average incomes from employment between 
economies are largely determined by differences in productivity. In 
the long-run, convergence in such income levels across the Community 
will result primarily from improvements in productivity in low wage 
areas of the community relative to high wage areas. 
6. Improvements in productivity result basically from increased capital 
investment, increased investment in human resources through training 
and education, and better business organisation as well as more 
effort on the part of workers and learning-by-doing. These are the 
main sources of increased wages - at any one time, there is only a 
limited opportunity for raising wages by reducing profit margins. 
However the process is dynamic rather than static. Increased wages 
and increased profits rather than being incompatible, tend to go hand 
in hand as the performance of enterprises improves. 
7. Improvements in productivity will be assisted by the completion of 
the Internal Market and the area without internal frontiers which 
encourage the exploitation of economies of scale within the 
Community, while taking into account the need to strengthen its 
economic and social cohesion. These improvements can also be promoted 
by encouraging firms to replace low wage - low productivity 
employment with high wage - high productivity employment. 
8. Long-run improvements in both incomes and levels of employment depend 
on achieving an appropriate balance through time between the rate of 
investment in capital and the rate of increase in wages. Increases 
in wage rates cannot run ahead of increases in productivity for 
long, or they will lead to reduced employment. Equally, however, if 
wage levels are held down through under-investment in education and 
training as well as in capital, the economy will be condemned to 
relying on low grade employment increasingly under threat from more 
efficient competitors in the world economy. 
9. What is true for the economy as a whole, however, is not necessarily 
true within enterprises or between different activities. Levels of 
relative wages do not reflect systematically relative levels of 
productivity. Relative wages within an economy are subject to a large 
number of forces - social, cultural and historical as much as 
economic. 
10. While relative wages reflect demand and supply to some extent there 
is no economic law which determines the "right" wage differentials or 
the ratio between higher and lower levels of pay or that interesting 
and satisfying jobs (which might be imagined to be poorly paid 
because they are intrinsically rewarding) should generally be well-
paid. 
11. Moreover, many jobs are priced administratively outside of any market 
mechanism, both in the public and the regulated professions. Indeed 
rates of pay are seemingly often related to certain principles which 
reflect notions of equity of some sort (e.g. that the more skilled 
should be paid more than unskilled or those having greater seniority 
more than younger workers), just as much as economic criteria. 
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12. In addition, there are many cases where - because of imbalances in 
the labour market or because of forms of social discrimination -
workers with particular skills, or doing particular jobs, or workers 
in particular sectors or types of firm, do not receive wages 
equivalent to what others are receiving for similar work. 
13. There can be several reasons for which employees can receive 
different pay for the same work. In some cases it may be seen as 
socially acceptable to make a distinction between different 
categories of worker, for example where young people are paid less 
than older workers for the same work. In other cases, discrimination 
cannot be tolerated for example, when immigrant workers receive 
lower pay than other workers for the same work. Another type of more 
indirect discrimination occurs because some categories of workers, 
particularly women, are often concentrated into low paid jobs. 
WAGE LEVELS WITHIN THE COMMUNITY AND INSIDE EACH MEMBER STATE 
14. There are very considerable differences in wage levels both within 
and between Member States, reflecting the sorts of factors discussed 
above. A comparison of relative levels of wages across the Community 
shows that there are substantial differences between the more 
prosperous, developed countries and the poorer, less developed Member 
States. For example, in April 1991 average hourly earnings of manual 
workers in manufacturing, gross of tax, ranged from over ECU 12 in 
Denmark and ECU 10 in Germany to around ECU 2 in Portugal and a 
little over ECU 3 in Greece. If differences in levels of prices and 
in patterns of consumption from one country to another are taken into 
account, the difference in earnings between Member states is reduced 
markedly. Tndeod the gap between Denmark and Portugal i a n»>.-u ly 
halved. A induction « » t lliono <! j w|mi i I lot* would i esiju I I o a » < .nva» .JCJI». a 
of their economies and the approximation of improvements in living 
and working conditions in the context of European integration. 
15. This Opinion, without neglecting these structural problems, focuses 
on the existence of low wages, especially those resulting from 
discrimination, inside each Member state and specific to each one of 
them. 
16. Differences in levels of wages within countries are less well 
documented. The Commission therefore set up an expert working party, 
to assist in the study of these issues, particularly with regard to 
low pay. The working party identified various categories of worker 
who are at the lower end of the earnings scale, notably women, young 
people and those in certain sectors such as agriculture, textiles, 
clothing, leather goods, footwear, retailing, hotels and catering and 
personal services. While inadequate statistical information is 
available about other low paid categories, these almost certainly 
include workers with low levels of qualification, those in less well 
developed regions, those in peripheral employment, the immigrant 
population and those with disabilities. 
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PRINCIPLES FOR COMMUNITY ACTION 
17. Within Member States a great deal is already being done using the 
normal policy instruments - legislation, administrative action, 
consensus building - in order to deal with problems of low wages and 
discrimination, community action needs to be varied and subsidiary to 
the main action in the Member States if it is to steer the European 
economy in the direction of employment expansion and decent levels of 
pay. 
18. This action by the Member states should be developed in the light of 
the following objectives: 
- to look for appropriate levels of equitable wages; 
to promote the objective of high quality, high productivity 
employment; 
to place particular emphasis on increased investment in education 
and training; and 
- to encourage a reassessment of attitudes to traditionally low 
paid groups and the strengthening of measures to combat 
discrimination. 
ACTION PROPOSED 
19. The Commission considers that these principles can best be 
implemented by action under the following headings. 
Improvement of labour market transparency 
20. Improved arrangements for the collection and dissemination of 
information about wage structures at Community, national and local 
levels would improve knowledge about the functioning of the labour 
market, enable more effective policies to be developed and thus 
remove some of the causes of unfairness, particularly in the context 
of the Internal Market. 
21. In addition, the Commission considers it to be essential to ensure, 
at the level of each Member state or at regional or sectoral levels, 
a widespread dissemination of provisions and practices with regard to 
existing reference wages. The Commission does not wish to put forward 
one particular model but suggests that the relevant bodies at the 
appropriate levels in each Member state should build on their own 
practices (agreements, legal provisions, etc.) in order to introduce 
the references which are best adapted to their own national context. 
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Action designed to ensure that the right to an equitable wage is 
respected 
22. Certain categories of workers on the labour market are particularly 
vulnerable and risk to be discriminated against. Protection against 
such discrimination might be provided by a combination of 
legislation, in particular the strict application of Community 
Directives on equal trearment between men and women, administrative 
arrangements, collective negotiations, development of codes of good 
practice and improvements in information about the labour market. At 
the same time, care is needed to avoid pushing low paid workers into 
the informal economy. 
23. Even when employees have agreed an equitable wage they do not always 
receive it. Measures are therefore needed to ensure that wages may be 
witheId, seized or transferred only in accordance with national law. 
Arrangements are also needed to ensure that employees are correctly 
paid in respect of periods of leave or sickness. 
Development of human resources 
24. The close relationship between productivity and wages has already 
been emphasised. It is appropriate to strengthen the measures already 
under way to increase productivity and thus the earnings potential of 
the workforce, in particular with regard to investments in human 
resource development at all levels: secondary and tertiary education, 
initial training, retraining, continuous training and individual 
development. The Commission will contribute towards a better matching 
of vocational training arrangements to the developing needs for 
qualifications and retraining of both workers and businesses, by 
ensuring the collection and dissemination of experiences in this area 
and encouraging co-operation between those concerned. 
ROLE OF SOCIAL PARTNERS 
25. The social partners at all levels - Community, national, regional and 
local - have a crucial part to play in the implementation of a 
successful policy to assure an equitable wage to all workers. The 
Commission expects that they will be fully involved within the Member 
States and for its part will support the development of discussions 
on this subject at Community level in the context of the social 
dialogue, as recommended by the Economic and Social Committee and the 
European Parliament. The social partners will also be invited to 
collaborate in the studies, which the Commission proposes to 
undertake, to promote a convergence of equitable wage policies within 
the Member States. 
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COMMISSION OPINION 
on an equitable wage 
THE COMMISSION OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Article 118 thereof, 
Having regard to the opinion of the Economic and Social Committee(1), 
Having regard to the opinion of the European Parliament(2), 
Whereas reinforcing social and economic cohesion within the community 
requires respect for the principles of equity and social justice; 
Whereas the completion of the internal market will bring dynamism and 
employment opportunities and will assist the growth of the European 
economy; whereas this increase in riches should benefit all the inhabitants 
of the Community; 
Whereas this development will enable the companies within the Community to 
establish a strong position with regard to those sectors of the market 
which have a potential for a high added value and for development; 
Whereas the quality, performance and commitment of the European labour 
force are fundamental advantages in world competition; 
Whereas the persistence of very low wage levels raises problems of equity 
and social cohesion, which could be harmful to the effectiveness of the 
economy in the long term; 
Whereas the Community Charter of the Fundamental Social Rights of Workers, 
emphasized, in its Point 5, the principle that all employment shall be 
fairly remunerated; 
Whereas the Commission in its Action Programme relating to the 
implementation of the said Charter acknowledged that wage-setting is a 
matter for the Member States and the social partners; whereas the 
Commission recognized that it has a responsibility for asserting its views 
on an important problem for a significant proportion of the working 
population; 
Whereas on 24 June 1992 the Council adopted Recommendation 92/441/EEC on 
common criteria concerning sufficient resources and social assistance in 
social protection systems^); and whereas this Opinion complements that 
Recommendation; 
Whereas the report of an expert working party has shown that in spite of 
the mechanisms already in place the problem of low pay is an issue in all 
countries of the European Community; 
(1) OJ No C 223, 31.8.1992, p. 57. 
(2) OJ No 
(3) OJ No L 245, 26.8.1992, p. 46. 
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Whereas it is recalled that with regard to pay Community Law prohibits 
discrimination on the grounds of sex(^) or nationality, 
HEREBY DELIVERS THE FOLLOWING OPINION: 
1. The right, referred to in the Community Charter of the Fundamental 
Social Rights of Workers, of all workers to be assured of an 
equitable wage should be reaffirmed, with particular attention being 
paid to the more vulnerable members of the labour force; the concept 
of "an equitable wage" means that all workers should receive a reward 
for work done which in the context of the society in which they live 
and work is fair and sufficient to enable them to have a decent 
standard of living. 
2. While operational definitions can best be established at national, 
regional or sectoral levels, the right can best be assured as far as 
the Community level is concerned by complying with the following 
principles: 
- the Community•s future in the world economy lies in achieving 
high productivity and high quality employment. This objective 
should be pursued throughout the Community not only by increasing 
the rate of investment in capital equipment, but also by 
increasing investment in education and training, particularly in 
order to meet the developing needs for qualifications on the part 
of companies and workers and by the promotion of good industrial 
relations; 
the pursuit of equitable wages is to be seen as part of the 
process of achieving the Community's basic objectives of greater 
economic and social cohesion and a more harmonious development 
within the framework of an increasingly integrated European 
economy; 
- wages are determined as much by social as by economic factors. 
While adjustments in wages may reflect structural changes of 
demand and supply in industries, regions and skills, the 
increasingly integrated Community labour market may well affect 
the social preferences which influence national wage hierarchies. 
The community should therefore seek ways of eliminating 
discriminatory wage practices, as part of its wider social and 
economic objectives; 
attitudes to traditionally low-paid groups should be reassessed. 
Discrimination should be combated and equal opportunities 
promoted in a variety of ways, including legislation, taxation 
and administrative arrangements or consensus or collective 
bargaining. 
3. To this end Member States should: 
give substance to their commitment given in the Social Charter to 
assure the right of all workers to an equitable wage, 
irrespective of gender, disability, race, religion, ethnic 
origin or nationality; 
(4) In particular: Article 119 of the EEC Treaty; Council 
Directive 75/117/EEC on equal pay for men and women; Council 
Directive 76/207/EEC on equal treatment between men and women with 
regard to access to employment; Council Directive 79/7/EEC on equal 
treament between men and women with regard to social security. 
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take account of the principles outlined in point 2 in the 
development cf their economic and social policies; 
take the following action to implement these principles : 
Action to improve labour market transparency with regard to wages 
Action is needed at all levels to improve the labour market, in 
particular : 
by improving transparency of the labour market by a better 
collection and dissemination of comparable statistical 
information about wage structures at Community, national and 
local levels to enable more effective policies to be developed 
and thus remove some of the causes of unfairness; employment 
services have an important role in this respect; 
by disseminating widely existing information about equitable 
reference wages. 
Action designed to ensure that the right to an equitable wage is 
respected 
Member States should take appropriate measures to ensure that the 
right to an equitable wage is protected, in particular by a re­
assessment of the adequacy of existing arrangements to protect the 
right to an equitable wage, including consideration of the following: 
further legislation including legislation on discrimination, in 
particular on grounds of gender, race, ethnic origin or religion; 
means of ensuring fair treatment for workers in all age groups 
and for homeworkers; 
mechanisms for the establishment of negotiated minima and the 
strengthening of collective bargaining arrangements. 
These arrangements could be supplemented by: 
development of codes of good practice with regard to the 
treatment of weaker groups of workers on the labour market 
who are susceptible to low wages; 
improved arrangements for providing information about the 
labour market, particularly with regard to rates of pay, 
while avoiding imposing undue burdens on small and medium-
sized undertakings; 
provision of information about discriminatory practices. 
The Member States should ensure that the measures taken do not force 
low-paid workers into the informal economy and do not encourage 
recourse to unlawful employment practices. 
The Member States should also ensure that the measures do not have a 
negative impact on job creation. 
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They should take the necessary measures to ensure that the wages 
agreed in contractual labour relationships are effectively and fully 
paid and that employees are correctly paid in respect of periods of 
leave or sickness. 
Action in favour of human resource development 
Member States should take the necessary measures to improve the long-
term productivity and earnings potential of the workforce. These 
measures should include a major effort to increase investment in 
human resources at all levels and at all stages of development, 
including secondary and tertiary education, initial training, 
retraining, continuous training and individual development. 
4. The social partners are invited to: 
address all the issues raised by this Opinion at Community, 
national, regional and local level, in particular to examine what 
contribution they can make to ensuring the right of every worker 
to an equitable wage. 
5. For its part the Commission considers that it is pertinent: 
to take appropriate measures to improve the quality of 
information available at community level, in particular with 
regard to wage structures. To this end the Commission proposes 
to undertake a new, revised, Survey on the structure of Earnings 
in order to provide more rapid information and to adapt existing 
statistical tools. The information so collected will be widely 
disseminated and can provide a basis for discussion at national 
and Community levels; 
to contribute towards a better matching of vocational training 
arrangements to the developing needs for qualifications and 
retraining of both workers and businesses, by ensuring the 
collection and dissemination of experiences in this area and 
encouraging cooperation between those concerned; 
to encourage the development of exchanges across the Community on 
the practices within firms with regard to remuneration; 
to undertake further studies, in collaboration with the Member 
States and the social partners, to seek to promote a convergence 
of equitable wage policies within the Member States. 
6. The Commission will submit a report to the Council, the Economic and 
Social Committee and the European Parliament, after consultation with 
the social partners, within three years after the adoption of this 
Opinion on the basis of information which will be requested from the 
Member States on the progress made and the obstacles encountered. 
Thereafter, progress will be monitored every two years. 
~M- ISSN 0254-1475 
Ï0M©3) 388 final 
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