IR Notes

How will the EU’s economic, budgetary, social and environmental policies evolve in the coming months? The answer lies in the first part of the “Autumn Package”, presented by the European Commission on 26 November (see press release). This is one stage of the European Semester, introduced in 2010, which provides an annual framework for coordinating the proposed budgetary and economic policies adopted in the EU and the euro zone (see European Semester). It is the first exercise undertaken since the reform of the EU’s new economic governance framework entered into force in April 2024 (see Council press release). In June, the Commission sent Member States guidelines for drawing up their medium-term fiscal-structural plans. These plans set out the States’ budgetary targets, and their priority reforms and investments. They were submitted in September and the Commission has just endorsed them, sometimes conditionally. In the meantime, Mario Draghi’s report inviting the EU to invest heavily in order to tackle the decline in its competitiveness in relation to the United States and China, has been submitted to the Commission (see IR Notes 236). Officially, the new framework will help States to achieve macroeconomic stability, growth and fiscal sustainability, “which are critical for the EU’s economic strength in today’s challenging global environment”. It “also encourages reforms and investments that will lay the foundations for long-term economic stability and sustainable growth”. Lastly, “it helps build a more resilient, fair, competitive, and secure EU economy for the benefit of citizens”. Among other things, this exercise therefore aims to bring about “a gradual and realistic reduction of public debt levels, which significantly increased following the COVID-19 pandemic and the subsequent energy crisis”. This goal must feature in the medium-term plans for reforms and investments adopted by each country, in order to address common EU priorities (green and digital transitions, social and economic resilience, energy security and the build-up of defence capabilities). Once these medium-term plans have been endorsed by the Council, the Commission will monitor whether Member States are respecting their commitments. States will then present annual progress reports. In the coming weeks, the Commission will present the second part of the European Semester Autumn Package, which will include the Annual Sustainable Growth Strategy, the euro area recommendation, the Alert Mechanism Report and the proposal for a Joint Employment Report. Will this new exercise be able to rescue the EU’s economy from stagnation? The Commission’s guidelines, which are not very transparent and seek to achieve a compromise between, on the one hand, Member States who are opposed to any joint expenditure, and on the other, those who expect the EU to borrow heavily in order to finance the ‘investment shock’ advocated by Mario Draghi, offer the best guarantee that Europe will remain stuck in a rut. Ludovic Voet, ETUC’s Confederal Secretary, is critical: “These plans bear no resemblance to the economic challenges faced by Europe, its industries and workers”, he says, adding: “These plans make clear once again that the Stability and Growth Pact places self-defeating restrictions on member state spending. Europe needs a fiscal policy which promotes investment, prioritises the wellbeing of working people and protects the planet”.

Forced labour : On 19 November, the Council adopted the regulation prohibiting products made using forced labour. This law prohibits the marketing within the EU and the making available on the EU market, as well as the export from the EU market, of any product made using forced labour (see press release and IR Notes 192 and IR Notes 229). The regulation will enter into force after it has been published in the OJEU, and will become applicable three years later.

Electronic posting declarations: : On 13 November, the Commission unveiled a proposal to create a single digital declaration portal for service providers posting employees to another Member State. This mechanism is provided for by the proposal for a regulation “on a public interface connected to the Internal Market Information System for the declaration of posting of workers and amending Regulation (EU) No 1024/2012”. This platform, which was inspired by the one introduced for posting declarations in the road transport sector, is intended to: 1/ cut the administrative burden linked to posting of workers, with the amount of time companies spend on making declarations expected to fall by 73% on average; 2/ promote cooperation between Member States, as this portal will be part of the Internal Market Information (IMI) system; 3/ strengthen protection for workers, in particular by making it easier for “effective and adequate inspections” to be carried out within Member States. These States will be able to use this system on a voluntary basis, and according to the Commission, nine of them have already announced that they would like to introduce this mechanism. However, the General Secretary of the European Trade Union Confederation (ETUC) is critical of the “social cost of this proposal”, which “would far outweigh the small savings for companies”. She sees it as an example of a “false economy” resulting from the “Commission’s Trump-style deregulation agenda”, which aims to cut bureaucratic burdens by 25% (see ETUC’s letter). EFBWW General Secretary Tom Deleu is another critic of the proposal: “This proposal will make it easier for letterbox companies to continue and even increase their business model of fake postings”. For their part however, the employers support the plan. In their recent statement on the report on the application of the Posting Directive, the employers called on the Commission to swiftly introduce the single electronic declaration. BusinessEurope too, is pleased with the initiative and believes that in the long-term, the single market “would benefit from having only one single notification portal with unified information and documentation obligations” (see press release).

• Revision of the European Works Council Directive : On 3 December, MEPs on the European Parliament’s Committee on Employment and Social Affairs will vote on Parliament’s negotiating mandate to commence negotiations with the Council, with a view to adopting the proposal for a directive put forward by the European Commission (see agenda).

Traineeships Directive : On 20 November, six employers’ organisations published a joint statement calling for the withdrawal of the proposal for a directive on quality traineeships, on which some Member States are trying to reach agreement. The employers argue that the proposed directive “does not adhere to the principle of subsidiarity” and that it is misaligned with the Commission’s goal of simplifying business processes. “Given the diversity of national systems and regulatory frameworks, the signatories believe that the issue of traineeships should be addressed at the national level”.

Directive on “adequate minimum wages” : EU Member States had until 15 November to transpose the directive on adequate minimum wages into their domestic law (see IR Notes 192 and IR Notes 188). In a press release, the European Commission expresses its satisfaction that the directive “has already started to produce positive effects even before the end of its transposition period, prompting debates at national level on the adequacy of minimum wages”. Eurofound’s annual review of minimum wages revealed that “linking of minimum wages to certain percentages of average or median wages, as suggested in the directive,” continued in 2023, “with an increasing number of countries adopting this practice.” The Commission also emphasises that “over the past two years, statutory minimum wages have increased significantly in most Member States, compensating the impact of high inflation on the purchasing power of low-wage earners”. The Commission states that it will assess whether the directive has been incorporated into national law in a complete and correct way by each Member State, and take action if and when necessary. The European Trade Union Confederation’s view, however, is a much less positive one. It acknowledges the positive effects set out by the Commission (see European Trade Union Institute study) but condemns the fact that most EU countries have failed to meet the transposition deadline (see press release).

Competitiveness and invitations to tender : At his confirmation hearing before MEPs, on 12 November, Stéphane Séjourné, the European Commission’s Executive Vice-President-designate for Prosperity and Industrial Strategy, set out his vision of the EU’s future industrial policy and also addressed a number of social issues. Among other things, he called for the creation of a European Competitiveness Fund, combining public guarantees and private capital, and for the development of new savings products at European level. He promised to promote the idea of introducing a number of mandatory social conditions, such as better working conditions, into public invitations to tender. He emphasised the need to ensure a supply of quality jobs, while at the same time defending an approach that strikes a balance between social progress and economic competitiveness.

Boosting skills and quality jobs : Like that of Stéphane Séjourné (see above), the confirmation hearing of Roxana Mînzatu, Executive Vice-President-designate for People, Skills and Preparedness, was among the last ones scheduled for confirming the new Commission’s composition. The aim here is to approve the appointments of Conservative and far-right Commissioners, before approving those from the Renew and the Socialists and Democrats Groups. The appointment drew criticism of her job title from the Chairs of the Committees on Employment (EMPL) and Culture (CULT), who pointed out that it did not include the words “employment” or “social rights”. In reply, Roxana Mînzatu stressed that these issues were among her top priorities. In her first speech, she highlighted the need to promote quality jobs and encourage lifelong learning, emphasising the importance of skills portability. She also called for better inclusion of persons with disabilities in the jobs market, and encouraged the use of new technologies, such as AI, for developing key skills. She is promising to implement an ambitious new action plan for the European Pillar of Social Rights (see hearing report and written answers to MEPs).

Wage agreement in the metalworking sector : On 12 November, at negotiations conducted on an experimental basis at regional level, social partners in the metalworking and electronic industries reached a new collective bargaining agreement covering Bavaria and Germany’s coastal Länder. The outcome will also be adopted in Germany’s other regions. This agreement provides for a 2% wage increase on 1 April 2025 for the branch’s 4 million employees, followed by a 3.1% increase in April 2026, accompanied by a 600 euro one-off bonus paid by February 2025. The industry’s 230,000 apprentices will be granted a 140 euros per month pay rise from January 2025. IG Metall also secured a “social component” for its members, with an 8 point rise in the “agreed annual bonus”, which will rise from 18.5% to 26.5% of the benchmark pay level in February 2026, i.e. from 630 to 900 euros (see press release). (Foto: Frank Rumpenhorst).

Hearing prior to dismissal : On 18 November, the Social Chamber of the Supreme Court issued an important ruling that will require companies to hold a hearing for employees prior to any disciplinary dismissal proceedings. Currently, this requirement applies under Spanish law only in exceptional circumstances. The only formal requirement is for a letter of dismissal to be sent before the actual date of termination of the employment contract. Even though the employer’s decision can be challenged at an employment tribunal, the fact is that the employee is not entitled to defend themselves against the company’s accusations before they receive their letter of dismissal. The Supreme Court has applied ILO Convention 158, Article 7 of which stipulates that “the employment of a worker shall not be terminated for reasons related to the worker’s conduct or performance before he is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide this opportunity”. In this ruling, the Supreme Court makes changes to its previous case law, which dated back to the late 1980s. This doctrine held that the comprehensive dismissal letter system met the requirements of Article 7 of the Convention and that this article could not be considered to be directly applicable without a legislative intervention. However, the Court now considers that Article 7 of the Convention is a directly applicable provision. With effect from the publication date of this ruling, any disciplinary dismissal must be preceded by a hearing of the employee (see article by Professor Francisco Javier Gómez Abelleira and Supreme Court press release).

Minimum wage : The “European minimum wage” law, which transposes the European directive on adequate minimum wages, has been promulgated by President Klaus Iohannis. The minimum wage will rise to 4,050 leu (approx. 815 euros) on 1 January 2025. This amount has been negotiated between the government, the trade unions and employers (see press release).