CESI support for EU minimum wage framework

In its statement, CESI:

• affirms that wages are best determined through collective agreements but that a statutory minimum wage can have a positive, supportive effect: Measures by the European Commission to encourage an increase in the scope of the coverage of collective agreements in the workforce, in combination with the need to at least match a given statutory minimum wage level, could increase the prospect of decent wages in low-paid sectors. Ambitious minimum wage floors can also increase positive pressure to raise the general wage level.

• advocates tying public tender awards effectively to the social clause of the Public procurement directive. Given the large monetary volumes that governments and authorities spend on public tenders, governed by binding EU minimum standards, this would represent a strong incentive and almost de-facto requirement for many companies and firms to pay minimum wages.

• Indeed, also in cases of subcontracting, a general undertaking liability for minimum wages would be a highly forceful tool to counter abusive employment conditions.
• calls, in order to set minimum wages at “adequate” levels, for the benchmark to consider as a minimum standard to follow the spirit of the commonly accepted ‘at-risk-of-poverty’ threshold rate and be set, correspondingly, to at least 60% of the national full-time median wage equivalent. Gross minimum wages should be pursued rather than net wages in order to avoid complicated and case-by-case calculations to determine the taxation and social security contributions to be deducted from gross earnings in order to arrive at net minimum wages. At the same time, to ensure that in all cases the fixed gross minimum full-time wage equivalents also allow for a decent real-world standard of living, country-specific baskets of representative goods and services should be established and applied to adjust the minimum wage upward, if required.
• affirms that eliminating existing loopholes and exemptions among de facto dependent workers, or at least reducing to them to a bare necessary minimum (e.g. for mandatory short-term education degree-related internships), must be a central deliverable of a new EU minimum wage framework. According to CESI, the EU minimum wage framework should apply also especially to the vulnerable solo self-employed, in order to decrease precariousness in the frame of their economic activity. In this context, minimum wages for the vulnerable solo self-employed should go hand in hand with the current initiative of the European Commission to give them the right to collective bargaining.
• stresses that the framework should also apply to the public sector. However, it should be sensitive to the situation of civil servants that are falling under the so-called alimentation principle, like for instance in Germany. As the German Federal Constitutional Court has specified, “the principle of alimentation imposes the obligation on the state (Dienstherr) to appropriately support civil servants and their families as well as to grant them an appropriate maintenance according to the development of the economic and financial situation as well as the general standard of living.”
• call for all social partners to be considered in the whole minimum wage setting, monitoring and updating procedures and processes.
• stresses that an EU minimum wage framework must make binding provisions for the Member States and not be restricted to mere recommendations.

More information about the consultation is available on the European Commission’s website.

CESI’s full consultation statement is available here.