BEERG Newsletter - EU: Deal on minimum wage and collective bargaining agreed

Last Monday, June 6, negotiators for the European Council, the European Parliament, and the Commission agreed a deal on the proposed Directive on an adequate minimum wage. The deal will require formal ratification by the Council and the Parliament, and member states will then have two years to transpose it into national law, which should see it come into force sometime in 2024.

At the time of writing the text of the agreement is not available and as the devil is always in the detail we cannot be certain as to what exactly has been agreed.  From what we do know member states will collect data on minimum wage coverage, assess prices for common household items and promote the principle of collective bargaining to help enforce adequate minimum pay rates. The Directive will also impose obligations on member states to establish clear criteria for updating minimum wages every two to four years and to set up consultative bodies in which social partners will be involved.

As readers of this newsletter will be aware, our main interest in the proposed Directive has been around its provisions on the promotion of collective bargaining. A press release from the Commission says that member states will have to promote and facilitate “collective bargaining on wages by trade unions and employers.” 

“Countries with high collective bargaining coverage tend to have a lower share of low-wage workers, lower wage inequality and higher wages,” the Commission said. Member states whose collective bargaining coverage is assessed at less than 80 per cent of workers will have to set up a plan to facilitate such talks between employers and workers, it added. A statement from the European Parliament said:

The provisional agreement between the Council and the European Parliament in particular foresees that where the collective bargaining coverage rate is less than a threshold of 80% member states should establish an action plan to promote collective bargaining. The action plan should set out a clear timeline and concrete measures to progressively increase the rate of collective bargaining coverage.

However, as the text of the agreed Directive is not yet available, how extensive this obligation will be is unclear. No doubt, there will be considerable debate around this issue in members states, where collective bargaining coverage is low, or in which employers are not obliged to recognise trade unions. 

“This is a good day for social Europe. We have reached an agreement on the directive on adequate minimum wages in the EU. This is especially important at a time when many households are worried about making ends meet,” said Nicolas Schmit, European commissioner for jobs and social rights.