Bargaining for Decency: ETUC Orientation Document on Promoting Collective Bargaining and Improving Wages in Europe

Adopted at the Executive Committee Meeting of 17-18 December 2019

Overview

Working is still the best route out of poverty, but this is not the case for a significant number of workers in Europe. One in ten workers live in households that are at risk of poverty, that is an alarming 20.5 million persons.

Despite improved economic performance and growing productivity, many workers have seen their pay flatline and their conditions of employment put under threat. The wage share in the EU has been decreasing for decades with no significant signs of recovery. Almost all Member States have seen a drop in collective bargaining coverage since the start of the economic and social crisis. At least 14 Member States present today a collective bargaining coverage of less than 50% of the workforce, and only seven Member States have a percentage of more than 80%. In addition, in several Member States a negative process of decentralisation of collective bargaining mechanisms was brought forward.

Wage increases are necessary to provide workers with a fair share of the wealth they helped to create, to provide a living wage and to reduce inequalities between and within countries. There is no path to economic justice without collective bargaining, no fairness at work without it and there is no social market economy when workers are not empowered to bargain for their fair share.

From a macroeconomic point of view, the excessively low level of wages in most EU Member States and the increasing divergence in terms of wage developments between countries and between sectors within countries, with wages often lagging behind living costs and productivity, are depressing internal demand, increasing inequalities and unfair competition, so harming the potential of the internal market to deliver sustainable growth. As repeatedly pointed out by the ECB and the European Commission upward wage convergence is urgently needed. While increases in minimum wages can only ever be a first step in delivering such convergence, well-coordinated sectoral collective bargaining is in fact the only tool able to achieve it.

The main instrument to improve wages and working conditions and address inequalities should be collective bargaining, particularly sectoral collective bargaining. However, workers’ right to organise and to bargain collectively is not respected in several Member States. In many EU countries, workers are still denied the right to organise. In other places they are threatened with reprisals when they try to organise and bargain collectively or employers flat out refuse to deal with trade unions.

A legal instrument to guarantee collective bargaining rights for workers will do more to stimulate economic growth and reduce inequality than well-deserved increases in statutory minimum wages. Fair minimum wages will only be created in labour markets with vibrant collective bargaining that raises the whole wage structure in the EU Member State, thus also lifting the minimum wage. The ETUC, therefore, stresses the need for action from the Commission to promote workers right to organise and collective bargaining as part of their minimum wage initiative.

Need for Action and State of Play

The President of the EU Commission, Ursula von der Leyen, has recognised that it is ‘still too difficult for hard working families to make ends meet in Europe’. She went on to state, in the political guidelines for the next European Commission: ‘“within the first 100 days of my mandate, I will propose a legal instrument to ensure that every worker in our Union has a fair minimum wage. This should allow for a decent living wherever they work. Minimum wages should be set according to national traditions, through collective agreements or legal provisions”.

The discussions in the European Commission are underway and Commissioner Schmit has stated – “I will put forward a legal instrument to ensure that every worker in our Union has a fair minimum wage. It is not about setting one single EU wage level, and I will pay particular attention to social models of different Member States. […] This frame for minimum wages by no means […] will put into question the system based on collective bargaining, which provides for good wages in the countries where it applies, and we will not force – by no means – these countries to change their very old and very well-established tradition. I think we will not put disturbance or put this system into trouble by creating this kind of a European frame for minimum wages. We have to preserve what works well. Don’t fix what works well. So, this is a guarantee I can give you”.

President Ursula von der Leyen has declared that this legal initiative will be proposed by the first 100 days. It is expected that the Commission will set out in a Communication its intentions for the minimum wage initiative. It is likely that the Communication will propose a Framework Directive in combination with a Recommendation. It must be recognised that other legal instruments are available, such as a Council Decision.

The ETUC needs to engage robustly with the European Commission to ensure that their minimum wage initiative contributes to the achievement of the following objectives and does not cross any of our redlines. We need to be active to ensure that we make advances and at the same time, fight back against restrictions on collective bargaining already created by the EU along with ensuring against future intended or unintended negative consequences for workers, their unions and well-functioning collective bargaining systems.

Objectives for Promotion of Collective Bargaining

Fair minimum wages can only be created in labour markets with effective collective bargaining systems which ensure an adequate coverage. The reason being, minimum wages are benchmarked against median of wages in a national economy, so increasing all wages in a Member State is key to increasing its minimum wages. That’s one of the reasons why the ETUC stresses the need for action from the Commission to promote collective bargaining, in particular sectoral collective bargaining.

Member States should be required, when their collective bargaining coverage is below 60-70% of the workforce, to take positive actions, in consultation with the social partners, to promote collective bargaining and to bring the level of collective bargaining coverage to that threshold as soon as possible.

The legal instrument should ensure that Members States properly promote collective bargaining, in particular sectoral collective bargaining, inter alia by:

a) Having the necessary institutions in place to support collective bargaining, in particular sectoral collective bargaining; along with resources and legal backing especially protecting workers and their unions:

b) Ensuring that collective bargaining is available for all sectors of the economy (including the public sector) and for all workers, regardless of their employment status; this means non-standard and self-employed workers should have access to trade union representation, collective bargaining, collective agreements and collective actions;

c) Ensuring the right to organise for collective bargaining is properly respected, for example by guaranteeing right for unions to access the workplace, including digital access, to be able to meet with the workforce along with protection for workers and unions from threats, reprisals, victimisation and other union busting actions;

d) Tackling collective bargaining dumping (e.g. by/via agreements with less protections and weaker standards signed by ‘yellow’ unions) and to overcome situations in which private and public sector employers’ refuse to recognise trade unions and/or to enter into collective bargaining;

e) Guaranteeing that Member States introduce representativity requirements/extension mechanisms, only if they are proposed jointly by the social partners;

f) Ensure proper implementation of ILO Conventions, the European Social Charter and the European Convention of Human Rights;

g) Require that public procurement, funding, grants, structural funds and CAP payments etc support collective bargaining by requiring tenders/setting conditionalities to respect workers’ right to collective bargaining and the full implementation of collective agreements;

h) Ensuring adequate resources (national and EU) are ringfenced to promote and support sectoral collective bargaining including through capacity building and training initiatives;

i) Ensure effective and dissuasive sanctions so that employers do not breach the right to organise and collective bargaining;

j) Including the respect of right to collective bargaining as part of review of the EU Rule of Law so that violations of right to organise/collective bargaining should lead to sanctions in terms of EU funding;

k) Ensuring that social partners are fully involved in the transposition and implementation of the legal instrument at national level and in monitoring its effectiveness, including in the setting of national legal frameworks to promote collective bargaining, where requested by social partners;

l) In addition, the initiative should provide for the exchange of practices and to set benchmarks to promote and measure upward convergence in terms of overall coverage by collective agreements.

Objectives for increasing minimum wages

Member States should ensure that social partners are genuinely involved in setting statutory minimum wages

Member States should be free to set the rate of their statutory minimum wage – where it exists. In any case, it should be established that the lowest statutory minimum wage has to quickly reach a level of at least 60% of the full-time national median wage;

Statutory minimum wages should always progressively increase and the threshold target of 60% of the national median wage should be tested for its adequacy in real price terms by the use of appropriate reference budget methodologies established in consultation with social partners (e.g. priced baskets of goods and services that represent a living standard for a specific target population);

Statutory minimum wages should cover all workers and remove all sub-minimum rates (e.g. exclusion of domestic workers, non-standard/self-employed workers, seafarers, long-term unemployed workers, disable workers, or lower rates for young workers…).

Deductions from statutory minimum wage (e.g. for buying uniforms, breakages or other equipment necessary for work) should be prohibited and tips and other extra-payments, such as overtime, should be excluded from the calculation of the statutory minimum wages (these should be paid on top of them).

The term ‘minimum wage’ suggests that the worker can expect a minimum amount of money to be earned each week (or month – or day, for specific categories). However, minimum wages often only define a minimum hourly rate and therefore do not guarantee the provision of a sufficient weekly, monthly or annual salary. Thus, progress is also required towards ensuring that workers have sufficient weekly/monthly/ (daily, for specific categories) hours of work to enable them to achieve a real decent wage. The inadequacy of hourly minimum rates as an effective mechanism to ensure a decent pay for those on short or irregular working weeks/contracts of employment needs to be addressed as well.

Redlines

EU initiatives and legal instruments in the area of collective bargaining and minimum wages need to recognise that one size will not fit all. They must not aim at harmonisation or the introduction of a single system of industrial relations or a minimum wage for the whole of the EU. Wording will be critical and the ETUC will resist any instrument that will damage existing rights to bargain or undermine collective agreements, particularly sector level collective agreements. The impact of the proposals will be assessed against each national system and the ETUC will actively oppose any instrument if it will negatively impact on trade union rights anywhere in the EU.

Wages, as a fundamental rule, are autonomously agreed by national social partners, therefore minimum wages should not be introduced in countries where social partners do not consider them necessary.

When establishing objectives for improving minimum wages, the legal instrument must recognise that not all member states have a statutory minimum wage (6 EU Member States do not have a statutory minimum wage) and no Member State should be required to introduce a minimum wage system. Likewise, many Member States have multiple minimum wages, for example a national minimum wage set in law along with higher sector minimum wages set through collective agreements, and it is equally important that these systems are safeguarded.

Any initiative in this area should guarantee the full involvement of the social partners. It should not be prescriptive about how the objectives should be reached rather that collective bargaining is to be guaranteed and that minimum wages should increase. The instrument must be clear that the purpose is not to make collective bargaining subject to EU rules, but rather to guarantee the promotion and the respect of collective bargaining. Any initiatives must be taken in full consultation with social partners and must always strengthen and not undermine social partners’ autonomy to negotiate, conclude and enforce collective agreements.

The legal instrument should not give any possibility or means to the Commission to enforce austerity policies on minimum wages or collective bargaining, including by holding minimum wages back or introducing obstacles to collective bargaining.

It is clear that an EU instrument in this area must include a strong non-regression clause to ensure that this legal instrument cannot in any case be used to lower the level of protection for collective bargaining or minimum wages.

Finally, the legal base chosen for the initiative will be crucial and it is clear that it should be placed firmly in the frame of continuous improvement of living and working conditions, as defined in Article 151 and Article 153. It should not be grounded in the logic of economic governance.

Next Steps on the initiative announced by the President of the Commission

The ETUC will lobby the EU Commission and the other institutions to ensure that the initiative on minimum wages includes measures to promote collective bargaining and to ensure that it achieves our objectives and respects our redlines.

The ETUC will take action to ensure a proper social partner consultation in accordance with Article 154 TFEU.

With regard to the choice of the legal instrument, there are undoubtedly benefits and drawbacks associated with a directive or a recommendation or even other legal instruments. The ETUC will have to assess and make a decision on the legal form of the instrument in light of the Commission’s proposed content and the extent to which they correspond to the objectives and respect the redlines of the ETUC. The ETUC will actively engage to secure our objectives/redlines and in particular will propose “firewalls” to ensure against negative impacts and interpretation.

The Secretariat will regularly report back to the ETUC Executive Committee and will keep the Collective Bargaining and Wage Coordination Committee informed on the developments. The Secretariat will assess the proposals as they develop and are announced against the objectives and the redlines. Accordingly, the Secretariat will make recommendations to the Executive for decisions and appropriate actions.

Affiliated unions are requested to support the achievement of the objectives by adopting this Orientation Document and by actively promoting the objectives and the respect for the redlines among their members and with their Governments and by supporting the lobbying actions of the ETUC.

LPSK proposals