IR Notes

During the night 6-7 June, the Council and Parliament reached a compromise on the proposed directive on “adequate minimum wages in the European Union”. The aim of this directive is to guarantee a decent income for workers on a minimum wage. The compromise remains in line with the proposal for a directive presented by the European Commission in October 2020 (see IR Notes 151). According to its many supporters, this text is an important milestone in the construction of a social Europe. However, workers receive no effective right that they can enforce to obtain a higher minimum wage. The directive does not require a minimum wage set by law: the five Member States which currently leave the question of minimum wages to social partners – namely Austria, Denmark, Finland, Italy and Sweden – will be able to continue to do so. The directive obviously does not require a minimum amount right across the EU or even a binding threshold that must be met, for example 60% of the median wage, which would have guaranteed that all full-time workers could reach at least the poverty threshold through the fruits of their labours. So why all the fuss? As is often the case, a Social Europe is moving forward through the creation of processes.

• The first process involves determining the minimum wage. According to the proposed directive, Member States with statutory minimum wages will have to put in place  a framework for setting and updating minimum wages and will have to provide data for comparison across Europe (see Council press release). Although it has no bearing on the way the minimum wage is set, the directive still requires guarantees. Progressively, Member States will have to show that the way they set the minimum wage is designed to provide a decent wage. So we will have to wait until the medium term to see an impact on the level of the minimum wage, which will then enable workers throughout the Union to earn decent pay.


• The second process, which will have the greatest impact, involves collective bargaining (see Collective bargaining). The Commission notes that “countries with a high collective bargaining coverage tend to have a low share of low-wage workers, less pay inequality and higher wages” (see press release). The text is based on the premise of strengthening collective bargaining with “the unions” to raise the level of minimum wages in Europe and, more generally, of all wages, which is currently a topical issue given the high level of inflation.  The directive also requires Member States where fewer than 80% of workers are covered by a collective agreement (instead of the target of 70% originally stipulated by the Commission) to establish an “action plan” to promote collective bargaining. This provision affects 20 Member States, as only 7 (Austria, Belgium, Denmark, Finland, France, Italy and Sweden) have a higher rate. Considerable effort will be required: firstly, a dozen countries have not yet reached half of the target figure (40%), and then the threshold can only be reached if there is “multi-employer” collective bargaining which covers the employees and employers in a sector. This level of dialogue does not exist in seven countries (Estonia, Greece, Hungary, Latvia, Lithuania, Poland and the Czech Republic). So the implementation and monitoring of these national “action plans” should, in the medium term, fundamentally alter industrial relations models. It is largely this effect of the directive that explains the tension on the part of certain trade unions and Ceemet, the European employers’ organisation which represents the interests of the metal, engineering & technology-based industries (see Social update), which is fully intent on fighting to the bitter end against this 80% target.

Women on boards : On 7 June, the European Council and Parliament reached an agreement to adopt the proposal for a Directive on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures (see Women in the labour market) (see Council press release and European Parliament press release). This text aims to set a quantitative target for the proportion of members of the under-represented sex on the boards of listed companies. The companies concerned should aim to have at least 40% of their non-executive director positions held by members of the under‑represented sex by 2026 (instead of 2027 in the Council’s position, see IR Notes 182). If Member States choose to apply the new rules to both executive and non-executive directors, the target would be 33% of all director positions by 2026.  If these targets are not met, a company would have to apply clear, unambiguous and neutrally formulated criteria when appointing or electing directors. The text grants flexibility to countries which, before the directive comes into force, have either achieved progress enabling them to move towards the objectives or have put in place equally effective legislation. These countries can suspend the directive’s requirements for the appointment or selection process. The text now has to be formally adopted by the European Council and Parliament, prior to publication in the OJEU.

Directive on minimum wages (reactions) : “While the EP rapporteurs claim that workers are the big winners” following the adoption of the directive on adequate minimum wages, Ceemet considers that “social partners and collective bargaining are significantly losing”. For this European employers’ organisation which represents the interests of the metal, engineering & technology-based industries, the objective of 80% collective bargaining coverage “obliges Member States to propose concrete measures if the coverage is below this threshold” and “this will likely result in the end of well-functioning collective bargaining systems”. In fact, in several Member States, the “only way to reach this target”, adds Ceemet, “may be by making collective agreements universally applicable”. This “will weaken social partners as it implies that the rules apply to all, even to those that are not members of an employers’ organisation or a trade union”. For Ceemet, “this interference goes against social partner autonomy and will weaken what the Directive sets out to strengthen” (see press release). Business Europe has already expressed its opposition to the text (see press release). The unions had long been calling for the directive. Even though support for it is not unanimous due to opposition from some Nordic trade unions, it is welcomed by the European Trade Union Confederation (ETUC): “If adopted and properly implemented, this directive will not only make statutory minimum wages fairer in those countries which use them, but will also protect and promote collective bargaining as the best solution for fair pay across Europe” (see press release).

Ban on products made by forced labour : on 9 June, MEPs voted by an overwhelming majority (503 for, 6 against, 4 abstentions) to adopt a resolution calling on the European Commission to draft a new instrument to ban the import and export of products made or transported by forced labour. More specifically, it would involve banning “products from a particular site of production, a particular importer or company, those from a particular region in the case of state-sponsored forced labour and those from a particular transport vessel or fleet”. This new instrument should also require “responsible companies to provide remediation to the affected workers prior to import restrictions being lifted”. This text would supplement the proposal for a directive on corporate sustainability due diligence that seeks to foster sustainable and responsible corporate behaviour along global value chains. “The Commission will have to define its methods by September” stated MEP Raphaël Glucksmann, who also expressed his satisfaction at the vote held on the same day for a resolution condemning the deportation of Uighurs as a crime against humanity and a “serious risk of genocide” and calling for sanctions against the Chinese officials responsible.

• First recommendations on AI: on 25 May, the IndustriAll Europe union federation, in its executive committee, adopted recommendations for action on artificial intelligence (AI) to ensure that AI contributes to quality employment and does not become a dystopian technology (see Artificial intelligence). The recommendations include principles for a “responsible and human-centric introduction” of AI in the workplace. The federation recommends that trade unions and worker representatives be “provided with the means to be assisted by software engineers or data scientists to support them in these discussions”. It adds that ad hoc working groups (including European Works Councils) “could be set up to build up a specific trade union analysis of the impact of the introduction of cutting-edge technology (i.e. in the fields of human-machine interaction, human-computer interaction and AI) on work and employment.

• Hospitals and health care : on 31 May, the European social partners in the hospitals and health care sector (Hospeem and EPSU) renewed their framework of action on recruitment and retention which was adopted in 2010. This new framework, which is designed to respond to a severe shortage of workers in these sectors, includes aspects related to Covid-19; work-life balance; gender equality and digitisation; psychosocial risks and stress; carcinogens, mutagens and reprotoxic substances (hazardous drugs); musculoskeletal disorders; and third party violence. (see press release).

Family leave : on 8 June, the Federal cabinet adopted a bill which transposes directive 2019/1158 on work-life balance for parents and carers into national law. The government believes that domestic law is already in large part compliant with the directive. Its bill extends the provisions which already apply to large companies to all companies, regardless of size. For example, all employers will now need to justify refusal of a flexible working request during the period of parental leave. Similarly, they will need to respond to family leave requests within four weeks from the date when the request was received and, if the request is refused, provide justification for their decision. The beneficiaries of this leave will be protected against dismissal during the leave period. Furthermore, the remit of the Federal Anti-Discrimination Agency is extended with regard to questions relating to discrimination in the area of work-life balance. For example, employees will be able to contact the agency if they believe they have been disadvantaged due to taking family leave. Finally, ministers confirmed the adoption of a draft law by the end of 2022 to introduce two weeks’ leave for the secondary parent after the birth of a child (see press release).

Minimum wage of 12 euros : as provided for in the coalition government’s programme, the statutory minimum wage will rise from 9.82 euros to 12 euros per hour from 1 October, following the vote in favour in the German Bundesrat. It is already set to go up to 10.45 euros at the beginning of July. The measure will apply to 6.2 million workers. The next adjustment is due on 1 January 2024 (see press release). Alongside this, the income limit which enables employers to use “mini-jobs” will rise from 450 to 520 euros per month on 1 October. The Ver.di trade union is unhappy about this measure which will “partly counteract the positive effects of the minimum wage increase in terms of the risk of poverty in old age and will primarily affect women, who more often have to work in mini-jobs” (see press release). “For those who have spent almost all their working lives in mini-jobs, this is a direct path to poverty in old age – and it’s mainly women who are affected”, laments DGB executive board member Anja Piel (see press release).

A guide on how to manage AI at work : on 10 June, the Minister of Labour, Yolanda Diaz, presented a guide on algorithmic information in the workplace, which brings together in a single document all rights and obligations pertaining to algorithmic information in the workplace. It describes companies’ obligations in terms of the information they must provide to workforce representatives and employees (see press release). The guide makes particular reference to the GDPR regulation and the recent Royal decree-law 9/ 2021 (“Riders” law) which seeks to guarantee employment rights for people working on digital platforms. This text enshrines the right of workers in all companies “to be informed by their employers about the parameters, rules and instructions which underpin any algorithms or artificial intelligence systems used to reach decisions which may affect working conditions, access to and retention of employment, including profiling”. The guide, hailed as a world-first by the Minister of Labour, calls for the introduction into legislation of a company’s obligation not only to provide information but also to hold negotiations with employee representatives on the variables, parameters and other characteristics of the algorithm or automated decision system.

Investment in remote working hubs : on 8 June, the government announced new initiatives to make “remote working more accessible and attractive for thousands of people”. Recognising the development of remote working as a powerful land-use planning tool, the government is proposing a voucher scheme (Connected Hubs Voucher Scheme) which will give remote workers free use of one of 242 local digital hubs. As part of the Town and Village Renewal Scheme, each Local Authority will receive €50,000 in funding to enable them to promote the remote working opportunities available in their areas. (see press release).

Creation of a Works Council : The management of the Austrian company Palfinger (11,700 employees), the world’s leading producer and supplier of innovative solutions in the field of cranes and lifting systems, has reached an agreement with a special negotiating body (22 members representing 16 countries) to set up a European Works Council. The first constitutive meeting will be held this summer. “Our goal is to inform all employees in Europe even better than before about important developments and to represent their shared interests efficiently,” explains Johannes Kücher, Chair of the Palfinger AG Works Council. For the CEO, Andreas Klauser, “It was important to us that all the countries in which Palfinger is represented in Europe receive one vote” (see press release).

• Purchasing power : Matters relating to wages and purchasing power are rarely addressed in European Works Councils. However, amid fast-rising inflation, this topic now features on meeting agendas. So, on 22 June, Thierry Defresne (CGT), EWC secretary of the French energy group TotalEnergies, will be questioning management on the subject during the plenary meeting of the European Works Council. The aim is to present a road map with three objectives, two of which relate to the living conditions of Total employees: 1/ Obtain detailed information from management on wages in countries and express them in terms of purchasing power parity so as to facilitate comparison and provide information for trade-union negotiators at local level; 2/ Create a European social framework to extend certain rights which exist in France to all European employees, starting with the issue of social protection (collective insurance against major risks, coverage of healthcare costs, etc.).