European minimum wage must not endanger collective bargaining in the Nordics
“All EU legislation requires broad support. This means that the Commission must listen to the opinions of the member states and find a sufficiently flexible solution,” says Josetta Nousjoki from PAM. Photo: Eeva Anundi
The goal of the new European Commission is to guarantee a fair minimum wage for every worker in the European Union. Josetta Nousjoki, Advisor for International Affairs at PAM, sees a great deal of good in the Commission’s proposal.
Ursula von der Leyen, the President of the Commission, promised at the establishment of the new Commission that she would bring a proposal for a European-wide minimum wage to the Commission in the first months of its operation. The Commission has now organised a first-stage consultation about the minimum wage, during which European social partners presented their opinions on the initiative.
PAM participated in the consultation in cooperation with national and European labour market organisations. PAM took part in preparing the statement from the Central Organisation of Finnish Trade Unions SAK. The Commission hopes to reach a Europe-wide solution which would motivate employers to raise the minimum wage and to improve overall salary levels. PAM agrees with this goal.
“At the same time, a shared European solution must ensure that Finnish collective agreements can remain universally binding,” says Josetta Nousjoki, Advisor for International Affairs at PAM.
The problem with the first phase consultation at the Commission is that it features insufficient practical means to bolster collective bargaining in EU member states. European employee organisations emphasise that the ability of labour market organisations to improve salaries through collective bargaining must be safeguarded while the minimum wage initiative is pushed forward.
“Negotiations between employer organisations and trade unions on equal footing should be the primary way to determine salaries. The Commission must support such negotiation structures in countries where they are weak or non-existent. Action is also needed to protect the right of employees to organise,” Nousjoki continues.
“There are tremendous discrepancies between the standard of living among workers both between and within EU member states. For example, minimum wages in some countries in south-eastern Europe are so low that workers cannot make ends meet.”
Nousjoki points to Bulgaria, where the minimum hourly wage is €1.70.
“Unlivable wages are a problem we have not been able to fix with national measures. This is why some European employee organisations have also called for higher-level solutions,” she says.
Nordic autonomy in wage determination in the labour market
Different European countries determine minimum wages in different ways. A total of 22 have a statutory minimum wage. In Finland, the minimum level of salaries is determined through collective bargaining between employee and employer unions and entered into collective agreements.
“There is no need for a statutory minimum wage in the Nordic countries. State interference in labour market negotiations is incompatible with our systems,” says Nousjoki.
However, there are differences between the Nordic countries in terms of labour market systems. For example, Sweden does not recognise any universally binding collective agreements. The country has been more critical of the proposed European minimum wage than Finland
However, the countries share the goal of ensuring that EU-level regulation does not weaken the Nordic system of collective bargaining.
What are the benefits of European regulation?
The initiative is driven by the desire to reduce poverty and wage discrepancies in Europe. Another key goal is to limit wage dumping.
The EU’s employment legislation seeks to protect workers while preventing cost dumping that erodes worker rights in the internal market. However, this principle has not been applied to salaries – there have been no limits to enhancing competitiveness by lowering pay. Restrictions to wage dumping could improve the position of Finnish workers.
As the largest EU countries, Germany and France, want a European minimum wage, there is sufficient political momentum to push the matter forward. The Commission has not yet announced whether it would regulate minimum wages through a directive, a recommendation or another method. It is now analysing the statements from the first consultation and will then draft a proposal for another round of consultations.
“Any EU legislation must have broad support. This means that the Commission must listen to the opinions of the member states and find a sufficiently flexible solution,” says Nousjoki.
Talking about a European minimum wage
Minimum wage – what is it about?
International human rights conventions include the right to fair wages that provide for a decent standard of living. This principle is also enshrined in the European Pillar of Social Rights on Wages, which EU institutions approved in 2017. According to the Pillar, adequate minimum wages must be ensured to provide for the satisfaction of the needs of the worker and their family. In addition, in-work poverty must be prevented.
Read more about minimum wage in the European Commission’s release from 14 January 2020.