IR Notes

Working together to build a social Europe

An independent, reliable and impartial source of information on industrial relations and labour law in Europe.

IR Notes 69 – Acceleration in minimum wage increases

  IR Notes 69 – 15 February 2017
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  Interview
Karel Fric, Research Officer at European Foundation for the Improvement of Living and Working Conditions

Can you estimate how many years it will take for the difference between the lowest minimum wage and the highest minimum wage, where the ratio is currently 1 to 8.5, to be significantly reduced?
This is a difficult question as we cannot foresee future economic and political developments. If the current growth rates were sustained, it would take about 10 years for the statutory minimum wage in Bulgaria to reach a quarter of the Luxembourg level. However, current growth rates may not be economically and politically sustainable. Already now we see that, in some countries where the minimum wage level has grown rapidly, the proportion of minimum wage earners appears to be higher than in countries with moderate growth rates. If future minimum wage growth is not accompanied by sufficient growth in labour productivity, employment in certain sectors could come under strain in the long term. All things remaining equal, it could take another 10 to 15 years before the lowest minimum wage rate in an EU country is about a quarter of the highest EU minimum wage.


Your report highlights an increase in collaboration with social partners and expert committees when setting the minimum wage. Does this collaborative approach lead governments to increase the minimum wage by more than previously?
I am not of opinion that the collaborative approach necessarily leads to higher increases in the statutory minimum wage. Rather, a minimum wage setting system with transparent rules provides more clarity for the business sector about future development in the statutory minimum wage. Moreover, it is less sensitive to the political cycle and its effects. Similarly, the setting of a statutory minimum wage is not done in a vacuum and in many countries this has important implications for the social security network and / or is influenced by the tax system and changes to it. The involvement of more parties in the setting of the minimum wage doesn’t make the process necessarily easier, but the result reflects the needs of various parties better than if the minimum wage is set solely by government. On the other hand, an increase in the involvement of expert committees also means that the social partners lose some of their autonomy in the setting of pay.


What are the main obstacles to adopting a minimum wage at EU level as wished by Jean-Claude Juncker?
There are a number of countries which do not have a statutory minimum wage (such as Austria, Denmark, Sweden, etc.), and the introduction of such an instrument would mean that they would have to change their system of minimum wage setting considerably. In many such countries the minimum wage is set on a sectoral level in an agreement between the social partners. The social partners are often opposed to the introduction of the statutory minimum wage as this would mean that their position could be weakened. If the proposal included linking the setting of the minimum wage to the average wage, for example, there would also be opposition to Juncker’s proposal in countries where a potential EU-wide approach could lead to a considerable increase in the minimum wage level. This would be the case in some new member states. In these countries, employers and possibly also conservative political parties would be amongst those most opposed to the EU-wide approach.

 
  Agenda

16 February
Strasbourg
Extraordinary meeting of the Committee on Employment and Social Affairs of the European Parliament dedicated to the proposed revision of the posted workers directive.


2 March
Paris
Eurogip Discussions on “Occupational health and safety, a performance lever for businesses“, with contributions from European social partners.


3-4 April
Valletta
Informal meeting of Employment and Social Affairs Council.


28 April
Paris
Conference of the AFDT (French association for labour and social security law) on measuring the representativeness of trade unions and employers’ organisations.


29 April
Bordeaux
Comptrasec (Centre for Comparative Labour and Social Security Law) (UMR 5114 – CNRS, a joint research unit operated by Bordeaux University and the National Scientific Research Centre) is holding an international and interdisciplinary conference on innovation and protection of health in the workplace, with Professor Robert Karasek, father of the job demand/control model for assessing work-related stress.


4 May
Paris

High-level conference organised by the OECD and the Foundation for the Improvement of Living and Working Conditions on social mobility and equal opportunities.


15-16 June
Brussels
Employment and Social Affairs Council

 

IR Notes is a fortnightly newsletter produced by 
IR Share and its network of experts, and is available in several European languages. It offers Europe-wide monitoring of employment law, labour relations and employment policy. It is available by subscription for 15 euros per month (excluding tax), via the IR Share website. IR Share is a privately- owned, independent, apolitical company whose aim is to inform and assist all players involved in social dialogue within and outside Europe. It has been the correspondent organisation for France and Luxembourg of the Dublin Foundation since 2009 and for Bulgaria since 2014.

 

Lead story
Acceleration in minimum wage increases


The European Foundation for the Improvement of Living and Working Conditions (Eurofound) on 9 February published its annual report on statutory minimum wages in the EU (in English). The report highlights: 1/ An acceleration in the growth of minimum wage rates, with marked increases in the new member states, bringing about a gradual convergence of minimum wage levels. 2/ A continuing strong disparity, with the minimum wage in Luxembourg being eight-and-a-half times higher than the minimum wage in Bulgaria. 3/ A statutory minimum wage exists in 22 of the 28 member states, although the countries not covered apply minimum wage levels set in collective agreements. 4/ The report reveals a more collaborative approach to determining the minimum wage in a certain number of countries, with the involvement of the social partners and input from expert committees. The results were corroborated by Eurostat which, on 10 January, published its review of minimum wages. As of 1 January 2015, Eurostat found that minimum wages in the EU varied by a ratio of 1 to 10, a gap reduced to a ratio of 1 to 4 when purchasing power standards are taken into account (see press release). In its latest publication, Eurostat states that, as of 1 January 2017, the raw differential has decreased to 1 to 9, whereas the gap is reduced to a ratio of 1 to 3 when expressed in purchasing power standards (see press release). Elsewhere, the report affords a reality check on the plan supported by the European Parliament to establish a minimum wage in all the countries of the EU set at 60% of the median gross earnings in each country. According to Eurostat, the minimum wage has reached or exceeds 60% in only three countries: Portugal (64%), France and Slovenia (both 62%). While nine further member states have rates between 50% and 60%, others by contrast are a long way from the target – Slovakia (46%), Spain (45%), Ireland (45%), Estonia (40%), Czech Republic (39%). To reach the level of 60% would therefore require a major convergence effort. These two reports will inform the debates that will be held as part of the discussions on establishing the European Pillar of Social Rights and the proposed implementation of a European minimum wage, an objective voiced again by the European Commission President, Jean-Claude Juncker, on 23 January (see IR Notes 68).



1. European Union
Legislation

  • Working conditions in the fishing sector: Directive 2017/159 of 19 December 2016 has been published in the Official Journal of the European Union. It transposes the agreement of the European social partners in the fishing sector dated 21 May 2012 on the implementation of the ILO convention relating to work in the fishing sector.

  • Exposure to chemical agents: Directive 2017/164 of 31 January 2017 has been published, establishing a fourth list of indicative occupational exposure limit values for 31 hazardous chemical agents.


Case law

Weekly rest periods taken inside the vehicle do not constitute rest: The Advocate General of the European Court of Justice, whose opinion is very frequently followed by the Court when it issues its judgement, has ruled in a Belgian case with major implications for the road transport sector (CJEU, opinion, case C-102/16, Vaditrans BVBA). The case concerns a transport company which contested a fine imposed because one of its drivers had spent his weekly rest period on board his truck. The question was to establish whether this practice is permitted under European social legislation relating to road transport. Several member states which have incorporated a ban on making drivers take their weekly rest period on board their vehicle in their legislation believe that the rest period must be spent outside the truck, while others, such as Estonia and Spain, maintain that it is quite acceptable for a driver to spend his rest period in his vehicle, especially in view of improvements in cab comfort. The Advocate General has given his interpretation of the relevant provisions of European law, that is article 8, paragraphs 6 and 8 of Regulation No. 561/2006. He concludes that “the driver may not take regular weekly rest periods referred to in Article 8(6) inside the vehicle”. The European Transport Workers’ Federation (ETF), which had sent a letter to the European Commission denouncing the practice of making drivers spend their rest periods in their vehicles, welcomed the Advocate General’s opinion in a press release.


Sectoral social dialogue

  • Employability in the sport and active leisure sector: The European social partners in the sport and leisure sector have drawn up a joint opinion on “strengthening employability in the sport and active leisure sector”.


2. Member states
Belgium

  • Wording of the interprofessional agreement: The social partners on 2 February signed the interprofessional agreement 2017-2018 highlighted in our last issue. The wording of the agreement is now available.
    > Also see press releases of the FGTB and CSC trade union federations and the employers’ organisation FEB.


Italy

  • Agreement on commercial policies in the banking sector: The social partners in the banking sector on 8 February signed a national agreement on sales policies and work organisation which in particular reflects the issues raised by the “sales vs. advice” campaign launched by the UNI Global Union trade union federation to prevent abuses relating to the sale of financial products and protect employees from unrealistic targets (see Frankfurt declaration, 16 April 2010 and UNI Finance press release).


Luxembourg

  • Greater flexibility of working hours: The law of 23 December 2016 on the organisation of working hours entered force on 1 January 2017. One of the key measures allows employers to extend the legal reference period from one month previously to four months. In return, they must grant employees additional leave days, depending on the duration of the reference period. However, as before, the social partners can negotiate a collective bargaining agreement to extend the reference period to up to 12 months, while at the same time negotiating compensation measures that meet the needs of both the company and employees. The employers consider the reforms to be too rigid and costly for businesses (see Practical guide issued by the Fedil employers’ organisation).
    > For an overview of the law, see the analysis published by the law firm Arendt & Medernach.


3. Companies
European works councils

Eiffage: The French construction and concessions group, Eiffage (70,000 employees), on 30 December 2016 signed a new European works council agreement. The EWC has 22 members (with a ceiling set at 30) and meets twice a year. The select committee has five members (three from outside France), who meet quarterly. A representative of the EFBWW European trade union federation can attend meetings. Between two plenary meetings, the agreement encourages the management to communicate interim information to the select committee “in order to help involve the committee more closely in current transnational issues and group developments”. The EWC can also request information from company management about the group’s international construction sites. Should a case of exceptional circumstances arise, the select committee is “previously informed and convened for a meeting at the initiative” of company management. For such a case to arise, a decision must affect either at least two countries and involve a significant percentage of the staff at each entity under consideration when the problem is one of employment; or else a single country, provided that the importance of this event necessarily entails a national or transnational impact with regard to the staff. Members of the select committee may visit the sites concerned. The EWC has an operating budget of 60,000 euros.



  • Geberit: The EWC of the Swiss Geberit group (“Europe Forum”) will convene on 2-3 March in Munich for an information and consultation meeting concerning a restructuring plan that threatens two production sites and 250 jobs in France. Production is due to be transferred mainly to Portugal, but also to Poland and Italy. The meeting, secured by the lawyer of the joint trade union body representing the two French sites, is overdue since the plan was originally presented to representatives of the French workforce in May 2016. The French consultation process has not been concluded yet, and the current legal dispute between the trade union representatives and the management could result in the latter having to start the process all over again.

  • Syndex: Having trained more than 300 trade union officials and EWC members since 2015 as part of a European project entitled “Working together for European recovery: workers’ involvement in companies’ future as a cornerstone”, the consultancy Syndex has placed online a “toolkit” (www.syndex.eu), available in several languages, as an aid to training for EWC members. The project was managed by Syndex in partnership with four European trade union federations, the ETF, EPSU, IndustriAll Europe and UNI Europa.


Trade unions


  • Axa: Axa’s trade union alliance, established by the European trade union federation UNI Europa Finance, has denounced “attacks on the social rights of AXA Group workers” in a press release, with reference to the recent termination by management of a French group agreement concerning a working time account scheme.



Company-level agreement

  • UniCredit: An agreement signed between the management of the Italian bank UniCredit and the five trade union organisations affiliated to UNI Finance on the social impact of the plan to transform the bank will result in 3,900 voluntary redundancies and a scheme allowing employees to take early retirement up to 54 months before they would normally retire (see press release of UNI Finance, in English, of the joint trade union body, in Italian).


4. Studies and reports

Slowdown in offshoring: According to a report from the European Foundation for the Improvement of Living and Working Conditions (Eurofound), the number of cases recorded in the EU of restructuring linked to the relocation of activities has been in decline since the economic and financial crisis (see summary). The study underscores that such relocations were never “a large source of job loss, despite dire predictions that a very large number of jobs in Europe and elsewhere in the developed world were potentially offshorable”. Thus, according to the European Restructuring Monitor (ERM), a tool developed by Eurofound, “between 2003 and 2007, offshoring accounted for 7% of all announced job loss in the ERM. This declined to 4% in the depths of the recession (2008–2010) and continued to decline to under 3% in 2015–2016.” The ERM also found that, in manufacturing, offshoring has declined in the pre-2004 member states – where the share of associated job losses fell from 14% to 7% between 2003–2007 and 2015–2016 – while it has increased by a factor of four in the EU13 (from 4% to 15% over the same periods). The destinations of production offshoring are countries where labour costs are lower.

 

IR Notes

An introduction

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  • Lastly, IR Notes keeps you informed about the main studies and research carried out on the world of work.

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