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The Brief: Consultations begin on EU scheme of minimum wage

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A supermarket employee working with a face mask and gloves during the coronavirus pandemic in Brussels, Belgium
A supermarket employee working with a face mask and gloves during the coronavirus pandemic in Brussels, Belgium   -   Copyright  Source: EC - Audiovisual Service
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The European Commission launched a new consultation with social partners on Wednesday to ensure a minimum wage for all workers which it argues is necessary for the bloc to recover from the economic impact of the pandemic.

"The EU has been particularly hit by the coronavirus pandemic, with negative effects on member states' economies, businesses, and the income of workers and their families," the Commission said in a statement.

"Ensuring that all workers in the EU earn a decent living is essential for the recovery as well as for building fair and resilient economies, and minimum wages have an important role to play"," it added.

From €312 to €2,142

According to Eurostat, the EU's official statistics agency, 21 of the bloc's 27 member states have a minimum wage but their level varies widely.

Monthly minimum wages are generally below €600 in the east and above €1,500 in the northwest of the EU. Bulgaria had the bloc's lowest gross minimum wage in January 2020 at €312. Completing the bottom trio were Latvia (€430) and Romania (€466).

At the other end of the spectrum is Luxembourg, where workers on the minimum wage earn a gross monthly salary of €2,142. It is followed by Ireland (€1,656) and the Netherlands (€1,636).

The EU's consultation does not intend to establish a European minimum wage across all EU countries. Instead, it wants to set a series of conditions that member states have to apply to establish their own minimum wage.

Nordic countries, where the minimum income is the result of collective bargaining on a national level, are likely to be resistant to this initiative.

"Always when we touch something which works well in some member states, there is the fear that the European regulator will lower the standards, but this is not the case. We are speaking about minimum standards not maximum," Yana Toom, an Estonia MEP with Renew Europe and the European Parliament rapporteur on the minimum wage proposal, said.

The Commission is evaluating whether or not to introduce binding legislation to make sure member states apply the rules they will propose.

"There is no need to continue to issue recommendations that nobody implements, So I believe we need that these things are binding and it is absolutely clear that minimum wage has to ensure people at least decent working conditions," MEP Yana Toom also said.

70% find it difficult to make ends meet

The Commission's proposal is backed by the European Trade Union Confederation (ETUC).

"We need to boost demand to get out of the crisis we are going to come in the wake of the Coronavirus crisis and how do we do that? We make sure that people have money to spend and people with low wages spend more and all of their wages because they have to," ETUC deputy general secretary Esther Lynch told Euronews.

"So this is a really important way for in which member states and the EU can make sure that there is money in the economy and people are able to spend," she argued.

Business associations declined our interview request.

The launch of the EU consultation — which will conclude on September 4 — comes just after Spain sped up the implementation of guaranteed minimum income.

Statutory minimum wages were raised in most EU countries for 2020, a report released on Thursday by the European Foundation for the Improvement of Living and Working Conditions (Eurofound) noted.

The increases were substantial in member states including Poland, Slovakia and the Czech Republic, which hiked their minimum wages by a respective 17%, 12% and 11%.

According to Eurofound, 9% of the EU's workforce earned the minimum wage in 2017, with women more likely than men to be on it.

It also found that seven out of ten minimum wage workers report at least some difficulty in making ends meet, compared to fewer than half of other workers.

"The report’s findings suggest however that increases in the relative level of minimum wages within a country on its own may not be sufficient to decrease the share of workers who report that they find it difficult or very difficult to make ends meet," Christine Aumayr-Pintar, senior research manager at Eurofound, noted.

"It’s the level of minimum wages and what they can buy that matters more," she added.

The report concluded, however, that as European governments grapple with the economic crisis unleashed by the pandemic, "minimum wages can have an additional role in the policy mix to stabilise incomes and thus counteract a downward spiral into recession or depression."