European Union. Minimum wage: Agreement between the States and MEPs to create a common framework

On Tuesday, MEPs and Member States reached an agreement to agree on common rules for guaranteeing a minimum wage in all countries.

European Union. Minimum wage: Agreement between the States and MEPs to create a common framework

On Tuesday, MEPs and Member States reached an agreement to agree on common rules for guaranteeing a minimum wage in all countries. This will ensure "a decent standard living", despite opposition from Sweden and Denmark.

After lengthy negotiations, the compromise provides binding rules for 21 EU countries with a minimum wage. It promotes its rise by providing greater transparency about how it is determined. However, it doesn't fix a uniform European minimum threshold.

It does not require the establishment of a minimum income in six countries without one, where income levels are determined through collective bargaining (Austria.

In a press release, the Parliament explains that the 21 countries concerned will have to evaluate whether their current legal minimum wage is adequate to provide a decent standard for living. This will be done taking into consideration their socio-economic conditions and purchasing power.

The agreement can also include benchmarks such as "60%" of the gross median income or "50%".

"Through this legislation, we are reducing the pay inequalities. We push for the lowest-paid workers in Europe to receive higher wages," commented Agnes Jongerius, a Dutch MEP (S).

Based on an October 2020 proposal by the European Commission, the agreement aims to fight social dumping within EU and promote "upward" convergence in pay levels.

Stockholm and Copenhagen, despite the exemption, warned Tuesday that they would not support the text. However, that shouldn't prevent it from being adopted by a qualified majority in a formal vote at the Council.

"Wage setting can be best managed by those who are closest to it." Swedish Labor Minister Eva Nordmark explained to reporters that this means unions in Sweden. It is free from political interference.

"We fought to ensure that [this directive] doesn't interfere directly with our basic principles", Petter Hummelgaard, his Danish counterpart, stated in a press release.

The new European legislation will also strengthen the role of collective bargaining. States where less than 80% are covered by a collective contract must create an action plan to increase coverage and include the social partners in reviewing remuneration levels.

Sylvie Brunet, MEP (Renew, centrists, and Liberals) welcomed "This directive will stimulate socio dialogue, it's particularly important in the current inflationary environment".

Due to the variety of national pay-fixing mechanisms, the EU-27 has been historically divided on this topic. According to 2021 figures, minimum wages can vary greatly across the EU. They range from EUR332 for Bulgaria to EUR2,202 for Luxembourg.

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