29.11.2021

WILL THERE BE A MINIMUM WAGE BALANCE IN EUROPE?

For more than 15 years, the European Union has been looking for ways to harmonize minimum wages in the Member States, trying to find a balance between protecting workers, respecting the principles of competition and social justice.

On Thursday (November 25th), the European Parliament gave the green light to start negotiations with the Council on a directive that will guarantee all workers in the EU a fair and adequate minimum wage (MW). The regulation is expected to be adopted in the second half of next year.

Finding a minimum wage that ensures a dignified life for the lowest paid members of society, without putting pressure on companies and provoking them to export jobs to other countries, has been the subject of heated debate since the minimum wage was first introduced in the world. - in New Zealand in the middle of the 19th century.

Gradually, the institute covers more and more categories of employees and expands geographically, and is currently in force in 21 of the 27 EU member states. Universal minimum wage is not provided for in the legislation of Italy, Denmark, Cyprus, Austria, Finland and Sweden, where wages are regulated by collective agreements.

The minimum monthly wage in the EU varies greatly - from 332 euros (650 levs) in Bulgaria to 2202 euros in Luxembourg and given the gradual deepening of integration and price dynamics, this huge difference provokes social discontent and political tension in both countries on both ends of the income scale. .

The issue of the minimum wage at European level is among the hottest in the current term of the European Parliament. Involving European and national institutions, employers' organizations, expert and civic groups, it has been further exacerbated by the severe economic and social crisis caused by the Kovid-19 pandemic.

The proposal for a directive was presented by the European Commission on 28 October 2020 and aims to ensure that "minimum wages are set at an adequate level and workers have access to protection guaranteed by the minimum wage in the form of a legal minimum wage or remuneration, determined in accordance with collective agreements ".

According to Art. 153 of the Treaty on the Functioning of the EU, the possible determination of the minimum wage falls within the competence of the member states and therefore the planned directive does not set a minimum pan-European wage threshold, but rather principles to ensure fair and sufficient remuneration for workers in individual member states.

The reference value by which the adequacy of the minimum wage is assessed is the ratio of the minimum wage to the average wage of 50 per cent and respectively 60 per cent of the median wage.

In BULGARIA, CITUB representatives propose to increase the minimum wage to BGN 764 from January 1, 2022, through which our country will meet the reference value, exceeding the ratio of 50 percent of the average wage.

Among the EU member states, in addition to the size, there are significant differences in the regime of negotiation, determination and scope of the minimum wage.

THE GREAT ECONOMIES

GERMANY is among the countries that have relatively recently applied a single minimum wage - since the beginning of 2015. The single minimum wage was introduced after lengthy discussions that took over much of the campaign ahead of the country's 2013 parliamentary elections.

It was a major election promise of the German Social Democratic Party (GSDP), and was supported by the Greens and the Left. Opponents of the measure, especially from the conservative and right-wing political space, feared job losses and damage to businesses due to rising company costs and distortions of competition - worries that were not justified. The flat rate has replaced sectoral collective bargaining, but German unions continue to play an important role and periodically negotiate and enter into agreements with employers in individual industries for higher wages and better working conditions.

The determination of the amount of the minimum wage was entrusted to an independent commission, which in its decisions must balance between protecting workers, ensuring fair competition and employment, without interference for political reasons. When the minimum wage was introduced, it was EUR 8.50 per hour and gradually increased, as from January 1, 2022, according to the plans of the commission, it should have become EUR 9.82 per hour, and from July next year - EUR 10.45 per hour.

The coalition agreement of the "traffic light coalition", reached last week, set a minimum rate of 12 euros per hour, thus interfering in the sphere of activity of the commission in fulfillment of election promises. However, the coalition partners from the Social Democrats, the Greens and the Free Democratic Party (SDP) are adamant that this is a one-time increase at the political level and they do not intend to decide on the issue again in the future, returning it to the special commission. Following the increase, the monthly minimum wage in Germany will exceed the threshold of 2,000 euros for full-time employees.

The minimum wage in FRANCE is among the highest in the EU, it is guaranteed by law and employers are subject to criminal penalties if they do not comply with the requirements for its size. consumer prices and overall wage development in the country. Revaluation of the minimum wage is made on January 1 each year.

It applies to all types of remuneration of private sector employees, whether working time (hourly or monthly), productivity, assigned tasks or commissions, applicable in mainland France and the overseas territories.

In 2021, the monthly gross minimum wage in France is EUR 1,589.47 or EUR 1,258 net on the basis of the statutory 35-hour working week, or EUR 10.48 gross per hour. The annual minimum wage is EUR 19,073 gross or EUR 15,084 net.

Every year on January 1, the government re-evaluates the monthly interprofessional salary in accordance with the Labor Code, and a particularly important criterion is the inflationary pressure on the 20 percent of households with the lowest incomes.

On September 28, 2021, SPAIN announced an increase in the minimum wage to 965 euros. With this amount, which came into force retroactively on September 1, 2021, Spain is closer to other leading countries in Europe and the next goal is in 2023 to reach 60 percent of the average salary in the country, which was 2064.37 euros per month in the second quarter of 2021.

Authorities in Madrid took this path in 2019 with a sharp rise in the minimum wage - by 22.3 percent to 900 euros. In 2020 and 2021, its amount was set at 950 euros, to which an additional 15 euros were added in September. Despite the increase, the country did not climb the list of countries with the highest minimum wage and maintained its seventh position.

The calendar for the next increase in the minimum wage in Spain shows the different positions between the departments of the executive branch. While the Ministry of Labor, headed by Yolanda Diaz, is pushing for a new increase in January, other agencies are more restrained and leave the door open for a similar step later in 2022.

The minimum threshold of 965 euros was exceptionally agreed only with unions without the involvement of employers' organizations, after the minimum wage was frozen due to the economic shock caused by the pandemic.

The government has not yet initiated a debate and unions have not been invited to the negotiating table for the expected new increase next year. The labor ministry expects discussions to begin in December.

ITALY is one of the six EU members that do not have a single minimum wage, although in the last year there has been increasing discussion about setting the minimum level to the law, not just collective bargaining, as is currently the case. There are many proposals for regulating the minimum wage on the Apennine Peninsula, but so far none of them has been accepted or approved by the social partners.

In Italy, there are uniform minimum pensions, while the level of minimum wages is negotiated by sector. According to the National Council for Economics and Labor, 888 national collective agreements are currently in force.

Due to the lack of a law on the minimum wage in Italy, everything is based on collective bargaining, in which trade unions have enormous power, especially those with a larger number of members. In Italy, however, the collective agreement does not have to be applied in individual employment contracts and the consent of the trade unions is not required, so that each company can make a unilateral choice.

In this way, some employees risk being left without the protection of a collective agreement.

The minimum wages in some sectors are: tourism - 7.48 euros per hour; textile industry - EUR 7.09 per hour; social services - 6.68 euros per hour.

Italy also has a problem with the phenomenon of the "working poor", whose incomes are below the corresponding relative poverty line, as they are part-time, even though they are regularly employed. According to the latest report "Internal Poverty in the EU" in Italy, 11.7 percent of employees receive a salary that is below the agreed minimums.

For this reason, some political forces even before the European proposal called for the introduction of a minimum wage at national level. The aim is to overcome the scheme of collective agreements and to regulate the minimum threshold for agreements between individuals.

An interesting institute in Italy is the "civic income", which was introduced in 2019. It is an economic support to supplement family income, which is associated with reintegration into the labor market and social inclusion. Recipients of this income sign agreements committing them to start work as soon as possible and to join the social processes.

In the draft budget for 2022, the Italian government introduced some changes in civilian income. From 1 January 2022, it will be reduced by EUR 5 per month, starting with the first refusal of a job offer. The right to receive it is lost after the rejection of two job offers (currently the limit is three).

THE SCANDINAVIAN CHOICE

The Scandinavian countries stand out as a characteristic group not only by being at the top of the EU income scale, but mostly by the specific structure of their labor regulation. The EU member states of this group do not have a single legal minimum wage, but rely on agreement between the social partners. From these countries comes the strongest opposition to the directive proposed by Brussels, mainly due to fears of political interference in an issue that is considered social and labor in Scandinavian societies and is estimated to harm the autonomy of the social partners.

The model on which the labor markets of SWEDEN and DENMARK are built is characterized by a wide range of collective agreements, high wages and high levels of membership in trade unions and employers' organizations. The rate of syndication in this group of countries is among the highest in the world - in Denmark it reaches 67 percent, in Sweden - 66 percent, and in Finland - 65 percent.

It is proposed that the resistance of these countries be overcome by including in the directive an "option to negotiate through the social partners", which will allow Member States not to transpose the common requirements if they meet three requirements: they do not have a mandatory uniform minimum wage system, declaring collective agreements to be generally binding; the protection of minimum incomes is carried out exclusively through collective bargaining between autonomous social partners; and if the implementation of this option is requested jointly by the social partners in both the private and public sectors.

EASTERN EUROPE

Eastern European EU members are generally a diverse group, with large differences between them, although they are generally at the bottom of the minimum wage rankings. However, they are also the countries with the strongest growth of the indicator - a trend most pronounced in the Baltic States, which are enjoying not only some of the fastest economic growth rates in the world in the last 30 years, but also a stable recovery from shock of the coronary crisis.

LITHUANIA from January 1 next year will reach a minimum wage of 730 euros compared to only 238 euros in 2010 - according to the Ministry of Social Security and Labor, the increase of 88 euros compared to the current year is among the largest for the last decade. According to local labor legislation, the minimum can only be paid for unskilled labor. The social partners in ESTONIA last month agreed to increase the minimum wage to 654 euros next year or 3.68 euros per hour, which is 39.5 percent of the basic salary, according to estimates by the Estonian Central Bank for 2022, after last year's minimum wage was frozen due to the coronary crisis. In 2023, the ratio of the average wage is expected to rise to 40 percent, as it was in the year before the pandemic.

LATVIA in 2021 increased its minimum wage to 500 euros, after it was at the level of 430 euros from 2018. At the same time, the country supports its citizens with the lowest incomes through a tax-free minimum, which will increase from 300 euros this year to 350 euros in the first half of 2022 and 500 euros in the second half of the year, equaling in practice with the minimum salary.

In the region, CYPRUS is the only country without a fixed uniform minimum wage. Instead, minimum wages are negotiated each year in nine sectors where trade unionism and the scope of collective agreements are weak - salespeople, clerks, support staff, support staff (eg babysitters) in crèches, kindergartens and primary schools, security guards, carers and cleaners. For security guards and cleaners, the minimum rate is fixed on an hourly basis, and for other categories - on a monthly basis. For the lowest paid categories, a minimum wage of about 870 euros per month is formed.