Minimum wage could be on ETUC congress agenda

The minimum wage issue might pop up again during this autumn’s European Trade Union Confederation (ETUC) congress. ETUC has already decided this is a national issue, but many of the member organisations consider a statutory minimum wage to be a good idea. They have also got the support of the new Commission President, Jean-Claude Juncker, who has said he wants to work towards the introduction of minimum wages in all EU countries.

So far the Nordic countries, together with Italy, have managed to halt these proposals. There are several arguments against statutory minimum wages. The social partners in the Nordic countries seem to agree that wage setting is and should be their responsibility and not that of politicians. Trade unions consider a minimum wage to be a risk, because it could turn into a wage ceiling for many groups of workers. It is also considered to be bad for membership levels.

These arguments also had the support of the Confederation of German Trade Unions, DGB, until a few years ago. But as the reach of collective agreements shrunk along with union membership, DGB had to change tack. In 20 years — between 1991 and 2011 — union membership figures were halved from 36 to 18 percent. There was also certain ‘labour market reforms’ which led to the creation of a large low-pay sector in the labour market where hourly rates in some trades were as low as three to four euro. As a result, DGB did a U-turn and called for the introduction of a statutory minimum wage in 2006.

Broad support

The proposal got broad support in the 2013 general elections, and on 1 January 2015 Germany introduced a minimum wage of €8.50 an hour. This means three to four million Germans get a pay increase. The question is what happens next when Europe’s powerhouse has joined the majority of EU countries with a statutory minimum wage. Will the demand spread to the Nordic countries and might we expect proposals for a common European minimum wage?

A common European minimum wage is probably some way away, however. There are large differences between minimum wage levels within the EU; they stretch from €1.04 in Bulgaria to €11.10 in Luxembourg, according to a report from the German Institute of Economic and Social Research, WSI. Germany’s minimum wage lies between the UK’s €7.43 and France’s €9.53. 

“Your lowest collectively agreed wages in the Nordic countries are probably on a higher level,” said the WSI’s Thorsten Schulten during an NFS wage setting seminar at Gardermoen outside Oslo, where the report was being presented. 

From full time to part time

The seminar also heard Dierk Hirschel, chief economist at the German trade union Vereinte Dienstleistungsgewerkschaft, ver.di, present the background story for the unions’ U-turn. 

“The German labour market has been deregulated and full time jobs have been diced up into part time jobs. We were forced to stop the slide towards job insecurity and we could not do that without help from our politicians. 

“If we had had a membership of 60 to 70 percent like you have in the Nordic countries we wouldn’t have been talking about a minimum wage either,” said Dierk Hirschel. 

Meanwhile, other trade unions in Europe think minimum wages should be implemented in more countries. As the European Trade Union Confederation prepares for its Paris conference this autumn, many commentators believe the minimum wage will be a topic there. 

Yet the draft paper which is now being considered by the member organisations says only minimum wages “in those countries where trade unions consider it necessary should be increased substantially”. ETUC recommends a level equal to two-thirds of the national average wage. No country’s minimum wage is at that level today. France has the highest relative minimum wage at 62 percent of the average, and the Czech Republic is bottom with 36 percent.