The European Commission’s proposal for a European directive on a minimum wage lacks a proper assessment of the pandemic-led economic crisis and risks, creating a legal quagmire and leading to further divisions and inequality in Europe.

To be clear, as the Employers’ Group in the European Economic and Social Committee (EESC), we agree that more convergence on wages, including minimum wages, would help improve social and economic cohesion, eliminate the gender pay gap and improve living and working conditions while ensuring a level playing field in the single market. But it’s the way we go about achieving this goal that is questionable. We definitely don’t need a directive.

A number of member states, including Malta, are against having a directive and are in favour of a non-binding instrument, such as a council recommendation or the issuing of guidelines.

Even among our own Maltese MEPs, there is a mixed bag of views with the Nationalist MEPs having a view which is closer to that of the European Employers’ Group. Like us, the employers’ group, they are of the view that the commission should issue guidelines or set a framework within which member states would then set their minimum wage levels. This approach essentially leaves it up to the member states to decide.

On the other hand, Labour MEPs seem to be more in favour of the commission’s approach of issuing a directive, which leaves little room for flexibility in terms of how the member state regulates this matter.

This divergence of opinions exists within the EESC. Some committee members support the view that it should be within the competence of the EU to set minimum wages which allow a decent standard of living wherever they work. On the other hand, the employers’ group within the EESC is of the view that setting minimum wages is a matter for the national level, done in accordance with the specific features of respective national systems.

That is also the view of some Nordic trade unions, which are against legal interference in autonomous collective bargaining on wages among social partners.

It is our firm view that the commission’s proposal goes against the word and spirit of the EU Treaty, which protects national competences on pay and collective bargaining.

European statutory minimum wage policy could potentially also have a negative effect on employment, particularly in the case of young people and low-skilled workers, and could aggravate non-compliance, which, in turn, could also push a number of low-wage workers towards informality. 

Undeclared work leads to unfair competition, deteriorates the social and tax systems and disrespects workers’ rights, including the rights to decent working conditions and a minimum wage.

European statutory minimum wage policy could potentially also have a negative effect on employment- Stefano Mallia

This is why employers in the EESC are convinced that we need to let each member state decide, under its national conditions, in accordance with its industrial relations system, the appropriate coverage objective and the measures to be taken in the event the pay level falls below the nationally defined objective.

The commission should, therefore, reconsider and take a more balanced and cautious approach, seeking a genuine EU convergence through a non-binding instrument, in full respect of social partners’ autonomy and the different industrial relations models.

These are difficult times and we need to strive for well-thought and necessary legislation which delivers sustainable results.

The COVID-19 pandemic has hit Europe hard and we have still to see the light at the end of the tunnel because business investment remains low and unemployment continues to be high.

The crisis has weakened the financial situation of many SMEs, many of which are facing closure. The situation is a very serious one and, therefore, every new piece of legislation needs to be properly assessed before being introduced.

The one key question that needs to be asked is: will this proposed new legislation help the required economic recovery or could it have an actual negative effect?

Our assessment is clear: the issue of minimum wages has to remain firmly within the competence of the individual member states.

Stefano Mallia, president, Employers’ Group in the European Economic and Social Committee.

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