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 9 – The question of the minimum wage

  IR Notes 9 – 7 May 2014
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The team This issue was produced by: Tamás Gyulavári and Frédéric Turlan. Find out more about the IR Share team on our website.


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  Interview
Tamás Gyulavári, Labour law professor and head of the Labour Law Department at Pázmány Péter Catholic University (Budapest)

Following the legislative elections won by the conservative party of the current prime minister Viktor Orban, what should we expect in terms of labour law and social relations?
It is difficult to answer this question because this election has taken place without debate, without discussion and without an official programme. Ultimately, we know very little about the government’s intentions apart from a few campaign promises. The general direction of travel is to continue the work carried out in the past four years. For employment, this means pursuing the target set in 2010 of creating one million jobs between now and 2020 for an active population put at 3.8 million people in 2010. Now the active population has risen to 4.05 million.


So there has been an improvement in the employment situation?
Yes, apparently so, but on the one hand a further 700,000 jobs need to be created between now and 2020 to reach the target set. And on the other hand, the vast majority of the 300,000 jobs created are state-sponsored as part of public work schemes. Most of the people who take these jobs are paid 200 euros per month; then, when the contract has ended, they return to unemployment, where they will receive benefit for three months (instead of the nine months prior to the reforms undertaken by the current government), before taking another state-supported job. The proportion of those who return to the labour market is low (only 4% of public workers). Thus, only around 50,000 jobs are likely to have been created on the labour market in four years (2010-2014). Furthermore, the statistics also include Hungarian workers who make their living outside Hungary, even those who have done so for a number of years. In conclusion, one can say that the employment situation is improving very slowly.


How does the government expect to achieve its target?
In principle, with the same tools as before: by making labour law even more flexible, having already fundamentally reformed the Labour Code in 2012; by developing community jobs and reducing taxes, in particular income tax. This is currently set at a flat rate of 16% of income, regardless of the remuneration level, and the government has promised to bring it down below 10%. However, taxes on consumption are likely to increase.


What will be the impact on social dialogue?
The situation could hardly be worse. Social dialogue at a national level no longer exists or, if it does exist, then only on paper. The principal negotiating level is that of the company. Moreover, it appears that employers have made relatively limited use of the opportunity afforded by the 2012 Labour Code to negotiate exemptions in collective agreements aimed at granting lesser rights than those envisaged by the Labour Code.

 
  Diary

13 May
Liège
Conference/debate on the future of Europe and in particular on the direction of economic and social policies, organised by HEC-ULG, with Philippe Herzog, former MEP and founding president of Confrontations Europe.


14 May
Paris
Jones Day’s European Labor & Employment Conference 2014


14 and 15 May
Geneva
Global dialogue forum on employment relationships in the media and culture sector, organised by the International Labour Organisation.


15 and 16 May
Lyon
Colloquium organised by Erds-CERCRID and IETL (Université Lumière Lyon) on the extent of flexibilities in labour law, with contributions in particular by Sylvaine Laulom (“Les flexibilités du droit social européen” (The flexibilities of European social law) and Farida Khodri (“Les normes sociales fondamentales : un rempart efficace aux flexibilités?” (Fundamental social norms: an effective buffer to flexibilities?)). Link to the programme.


15 to 17 May
Berlin
9th Global Labour University Conference “Inequality within and among Nations: Causes, Effects, and Responses”


18 to 23 May
Berlin
3rd ITUC World Congress


20 May
Créteil, France
Conference organised by RT 18 (Relations professionnelles/Professional relations) of the Association française de sociologie (French Sociological Association) entitled “Syndicats et nouveaux acteurs face aux défis des restructurations multinationales” (The challenges of multinational restructuring facing trade unions and new players). Contact:dkessel11@gmail.com


23 May
Avignon
Mediterranean Seminar on labour law, organised by the French Labour Law Association (AFDT) in conjunction with the Spanish and Italian labour law associations. The topic is “religion in companies”. Link to the programme.


26 to 28 May
Copenhagen
The Danish National Research Centre for the Working Environment (NRCWE) is organising the 3rd International Wellbeing at Work conference.


4 to 5 June
Berlin
International conference on “Personnel policy in transnational companies as a guarantor of sustainable industrial policy“, organised by the Hans Böckler Foundation and the IG-BCE trade union.


12 and 13 June
Paris
International colloquium “Trajectoires professionnelles et dispositifs publics en action” (Professional trajectories and public programmes in action) organised by seven research institutions (CEE, IDHE, Ires, Irisso, Lest, Lise and Printemps).


20 June
Brussels
Employment and Social Affairs Council.


10 to 16 August
Sofia
43rd Congress of the International Transport Workers’ Federation (ITF)


1 to 3 October
Bordeaux
9th Congress of the International Network for Research on Organizations and Sustainable Development (RIODD – Réseau international de recherche sur les organisations et le développement durable) organised by the Centre for Comparative Labour and Social Security Law (COMPRASEC) of the University of Bordeaux on the subject of “The environment and work: how do they relate?”.

 
  Appointments

  • Maurizio Landini, secretary general of the Italian FIOM-CGIL trade union federation, was re-elected by a large majority during the 25th Congress, which was held in Rimini from 10 to 12 April.

  • Josef Středula was elected to the post of president of ČMKOS, the Czech-Moravian Confederation of Trade Unions, the country’s largest such organisation, during its congress, which was held in Prague from 25 to 26 April.

  • Jiri Marek, vice-president of the OS Kovo federation, was temporarily appointed to succeed Josef Středula as the organisation’s president following the latter’s election to the head of ČMKOS.

 

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 ; 150 euros per year (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
The question of the minimum wage

The employment ministers of the EU gathered for an informal meeting of the Council at Athens on 29 and 30 April 2014 to discuss in particular the question of the minimum wage. It is the first time that the subject has been raised at this level. Yet the Treaty on the Functioning of the EU does not confer any competence upon the Union with regard to wages and salaries: the wage-setting mechanisms come under the national industrial relations systems of each of the 28 countries. However, this does not prevent the European Commission from intervening in this area within the exercise of the “European Semester” (when monitoring the economic and budgetary policies of the Member States) or in the framework of financial assistance programmes. Thus, it has criticised the automatic indexation systems for the minimum wage in Belgium and Luxembourg, and has encouraged the Greek government to cancel the minimum wage negotiated by the social partners. If the Union succeeds in finding a legal basis with a view to establishing a Europe-wide minimum wage, it still has to reach agreement on its level. Setting a uniform amount for the EU is impossible as long as differences remain substantial (from 174 euros in Bulgaria to 1921 euros in Luxembourg, Eurostat, January 2014). The other possibility is to decree that each country should set a minimum wage which would be the equivalent of 60% of the average national wage level. A recent study published by Eurofound underlines that the impact would vary greatly from one country to another, and that this level would “disproportionately affect women and young workers”. The press release of the Presidency of the Council suggests the level at which consensus for a minimum salary might be obtained: it “should operate temporarily as a mechanism to tackle poverty”, to assist with integration on the employment market and to “prevent the beneficiaries from being trapped” by these schemes. In other words, the minimum wage must be low and is only envisaged as an instrument to combat poverty.


1. European Union
Legislation

Draft legislation

Social update

  • Corporate social responsibility: The European Commission on 29 April launched a consultation exercise to obtain the opinion of interested parties on the impact of its strategy concerning corporate social responsibility (CSR) in the past three years, and on the role it should play in the future. To this end, a questionnaire has been posted online (currently in English, but versions in other languages are coming soon), which will be available until 15 August. It can be completed by all interested parties, in particular the social partners, businesses and staff representative bodies. They are invited to give their opinion on: 1. The role of the Commission as regards CSR; 2. The effectiveness of the action taken by the Commission; 3. The future role that the Commission should play in this connection. The Commission will subsequently publish a technical report on the results of the consultation at the end of the summer which will serve to prepare for the plenary meeting of the Plurilateral Forum on CSR scheduled for late 2014. This forum is to set the course of future Commission policy on CSR post-2014.


Sectoral social dialogue

  • Several sectors criticise the European Commission: The social partners on the sectoral social dialogue committee of central government administrations on 24 March wrote to European Commissioner Laszlo Andor. They asked him what stage the cost/benefit study had reached which the Commission had wished to undertake two years ago before initiating the procedure to convert the agreement on health and safety, signed on 26 April 2012 by the social partners of the European hairdressing sector, into a Council decision.


Belgium

  • Psychosocial risks: A new law relating to the prevention of psychosocial risks at the workplace will enter force on 1 September 2014 (see press release and link to the legislation, in French or Flemish). The new legislation from now on covers “psychosocial risks at work” which must be taken into account in a company’s risk prevention policy alongside all the other risks which may adversely affect the health and safety of the workforce. The legislation defines the role of the different players in the undertaking, in particular that of the “person of confidence” who serves as a point of contact and assists individuals who feel they have been the victim of harassment and psychosocial risks. It also stipulates the internal procedures open to victims which must be set up. The legislation now protects the victims of non-malicious acts which, if repeated, characterise wrongful conduct.


France

Italy

  • Labour law reform: The lower house of parliament on 24 April passed the decree on the reform of the labour market in the framework of a vote of confidence requested by the government. The wording, which will now be examined by the Senate, makes it easier to engage workers on fixed-term contracts: it will be possible to conclude such contracts for a period of up to three years, during which they can be renewed up to five times (and not eight as envisaged by the initial draft). Employers will be able to employ up to 20 % of their workforce on the basis of fixed-term contracts.


Luxembourg

  • New collective agreement in the banking sector: The ABBL employers’ organisation and three representative trade union organisations in the banking sector on 23 April successfully concluded a new collective agreement for the years 2014 to 2016, broadly along the same lines as the accord which expired at the end of 2013. The collective agreement, which will enter force on 1 January 2015, provides for wage moderation measures and, in particular, a freeze on salaries in 2015 and 2016.

  • New collective agreements in the sector of temporary agency work: The Fedil Employment Services employers’ organisation and the OGBL and LCGB trade unions on 10 April renewed the collective labour agreement for permanent employees of temporary employment agencies, as well as the collective agreement for temporary agency workers. The two agreements cover some 4,800 full-time equivalent employees. The extension (“declaration of general obligation”) of both texts has been requested by the signatories (see OGBL press release).


3. Companies
European works councils

  • Deutsche Post DHL: The president of the European works council of the Deutsche Post DHL group, Elmar Kallfelz, has launched a “call to the ballot box” (French only), on behalf of the council in order to encourage the group’s European employees to take part in the European elections from 22 to 25 May. “By voting, we can play a decisive part in ensuring that the workers’ demands are taken into account,” he explains. “If we are successful in strengthening workers’ rights in Europe, we too at Deutsche Post DHL stand to gain”.

  • GDF Suez: The management of the French energy group GDF Suez and a group of negotiators mandated by the IndustriAll Trade Union Europe and EPSU trade union federations on 29 April began to negotiate a European agreement on well-being at work, as revealed in IR Notes No. 8. The previous day, the employees’ negotiators met to prepare without the management, which had sent an initial draft document. An important point in the negotiation, according to the EPSU, will be the question of the method and resources utilised to ensure the agreement is implemented in all the group’s establishments. Further preparatory sessions are planned for 15 and 16 May, while meetings with management are scheduled for 16 June and 9 and 10 September. (Link to the EPSU press release).


4. Studies and reports

  • Deteriorating working conditions: On 28 April the European Commission issued the results of a telephone survey involving a representative sample of 26,500 European participants (Flash Eurobarometer No. 398), concerning their perception of working conditions. 53% of respondents consider their working conditions to be good, but the rate drops in those countries most seriously affected by the economic and financial crisis: in Slovenia, Romania and Portugal to 32%; Italy (25 %), Spain (20 %), Hungary (18 %) and Greece (16 %). A majority of European workers (57 %) say their working conditions have deteriorated in the past five years, but there are eight countries which push down the results: France, which is the first of the eight to exceed the EU average, with 62 %, followed by Cyprus and Hungary (75 %), Portugal (78 %), Slovenia (84 %), Italy (85 %), Spain (86 %) and Greece (88 %).


Phrase of the fortnight
Corporate social responsibility

The European Commission defined corporate social responsibility (CSR) for the first time in 2001 in a green paper, as a “concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. In 2006, this work resulted in the “European Alliance for Corporate Social Responsibility”, an initiative led by companies and business, whose inherent flaw was that it was borne by only one stakeholder group, namely the employers. In a new communication on its 2011-2014 strategy, the Commission has redefined CSR as “the responsibility of enterprises for their impacts on society”. “Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility,” the Commission stresses. It is this strategy which the Commission today wishes to evaluate (see Social Update, above) before defining its new policy on this matter. See the European Industrial Relations Dictionary for further details.

 


Désabonnement

IR Notes

An introduction

IR Notes is an independent, reliable and balanced briefing note on industrial relations and labour law in Europe.

Published in 6 languages and sold by subscription, this newsletter gives you access to concise, targeted and practical information on the major themes of both social Europe and transnational social dialogue.

With our experts and national correspondents, we adopt a dynamic, practical and useful approach to European social monitoring.

As a result, we select the most relevant topics, which are a source of cross-disciplinary and inspiring ideas.

Each issue includes:

  • An interview with someone working in the field of industrial relations who offers their unique take on a current social issue, an agreement, or an example of best practice.
  • Updates on EU legislative and case law developments.
  • Monitoring of labour law developments in EU Member States.
  • Updates on the latest developments concerning European Works Councils and SE Works Councils.
  • Lastly, IR Notes keeps you informed about the main studies and research carried out on the world of work.

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