Advertisement

66 pages
6 views

A Coordinated EU Minimum Wage Policy?

Please download to get full document.

View again

of 66
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Description
A Coordinated EU Minimum Wage Policy?
Transcript
  Cornell University ILR School DigitalCommons@ILR  International PublicationsKey Workplace Documents10-1-2013  A Coordinated EU Minimum Wage Policy? Enrique Fernández-Macías  Eurofound  Carlos Vacas-Soriano  Eurofound  Follow this and additional works at:hp://digitalcommons.ilr.cornell.edu/intl Tis Article is brought to you for free and open access by the Key Workplace Documents at DigitalCommons@ILR. It has been accepted for inclusionin International Publications by an authorized administrator of DigitalCommons@ILR. For more information, please contact jdd10@cornell.edu.   A Coordinated EU Minimum Wage Policy?  Abstract [Excerpt] Minimum wages exist in all EU member states, even if, as we shall see in this report, they are set upand established in very dierent ways. Minimum wages, in fact, can be considered as a cornerstone of the“European Social Model”. Yet, the on-going process of European integration has so far had very lile to do with them. Wages are explicitly excluded from the competences of European institutions in the existingtreaties, contrary to other areas of work and employment such as working time or health and safety.But in the context of increasing European integration, it seems at least plausible that sooner or later there would be some aempt of coordinating this important aspect of social policy across countries. As we will seein this report, the idea has been discussed at the European level several times since the EU was born, and itseems to be gaining momentum the context of the current economic crisis. Of course, the discussion is by nomeans seled, as many important European and national actors consider that this area should remain withinthe remit of national governments and according to national traditions and practices. It is certainly possiblethat wages, and minimum wages, would remain squarely at the level of national competence in the foreseeablefuture.Still, it seems like a worthwhile exercise (useful to the debate) to explore what kind of implications would beassociated with such a coordination of European minimum wage policy. Tis is what we will try to do in thisreport. Without taking ourselves a position, we will try to provide arguments and facts that we hope can beuseful in this debate. Te report is organized in two big sections. In the rst one, we will discuss the theoreticaland policy considerations around a coordinated EU minimum wage policy. We will review the social sciencesliterature on the eects of minimum wages, present a broad picture of the current debates around thecoordination of EU minimum wage policy and discuss the institutional diculties that such a coordination would in our view have to face. In other words, that section will try to provide a balanced summary of thetheoretical and policy arguments around this debate. Te second big section will try to complement thearguments with some facts, by carrying out a “simple accounting exercise” to evaluate how many and whattypes of workers would be most aected by a hypothetical coordination of minimum wage policy in thedierent countries, using a baseline scenario of a single national wage oor of 60% of the median national wages and drawing from the two most recent EU-wide data sources on wages and income.Eurofound was established in 1975 with the mandate of contributing with knowledge to the planning anddesign of beer living and working conditions in Europe. We hope that this report can at least contribute tothe debate. Keywords Europe, minimum wage, economic policy  Comments Suggested Citation Fernández-Macías, E. & Vacas-Soriano, C. (2013).  A coordinated EU minimum wage policy? Dublin: EuropeanFoundation for the Improvement of Living and Working Conditions. Tis article is available at DigitalCommons@ILR:hp://digitalcommons.ilr.cornell.edu/intl/301   1 A coordinated EU minimum wage policy?   Enrique Fernández-Macías and Carlos Vacas-Soriano Eurofound, October 2013 Introduction 2   Part 1: Theoretical and policy considerations around a coordinated EU minimum wage policy ..... 2   1. Review of the literature on the effect of minimum wages 4   2. Debate on the EU minimum wage policy 9   3. Varieties of minimum wage systems in Europe and the difficulties of coordination 15   Part 2: A simple accounting exercise ............................................................................................. 18   4. Methodology 18   5. Evaluating the impact of a hypothetical common EU minimum wage threshold 22   6. Workers most affected by the introduction of an EU minimum wage 36   7. Two further explorations: the potential impact on poverty and on competitiveness 53   References 61     2 Introduction Minimum wages exist in all EU member states, even if, as we shall see in this report, they are set up and established in very different ways. Minimum wages, in fact, can be considered as a cornerstone of the “European Social Model”. Yet, the on -going process of European integration has so far had very little to do with them. Wages are explicitly excluded from the competences of European institutions in the existing treaties, contrary to other areas of work and employment such as working time or health and safety. But in the context of increasing European integration, it seems at least plausible that sooner or later there would be some attempt of coordinating this important aspect of social policy across countries. As we will see in this report, the idea has been discussed at the European level several times since the EU was born, and it seems to be gaining momentum the context of the current economic crisis. Of course, the discussion is by no means settled, as many important European and national actors consider that this area should remain within the remit of national governments and according to national traditions and practices. It is certainly possible that wages, and minimum wages, would remain squarely at the level of national competence in the foreseeable future. Still, it seems like a worthwhile exercise (useful to the debate) to explore what kind of implications would be associated with such a coordination of European minimum wage policy. This is what we will try to do in this report. Without taking ourselves a position, we will try to  provide arguments and facts that we hope can be useful in this debate. The report is organized in two big sections. In the first one, we will discuss the theoretical and policy considerations around a coordinated EU minimum wage policy. We will review the social sciences literature on the effects of minimum wages, present a broad picture of the current debates around the coordination of EU minimum wage policy and discuss the institutional difficulties that such a coordination would in our view have to face. In other words, that section will try to provide a balanced summary of the theoretical and policy arguments around this debate. The second big section will try to complement the arguments with some facts, by carrying out a “simple accounting exercise” to evaluate how many and what types of workers would be most affected by a hypothetical coordination of minimum wage policy in the different countries, using a baseline scenario of a single national wage floor of 60% of the median national wages and drawing from the two most recent EU-wide data sources on wages and income. Eurofound was established in 1975 with the mandate of contributing with knowledge to the  planning and design of better living and working conditions in Europe. We hope that this report can at least contribute to the debate. 1   Part 1: Theoretical and policy considerations around a coordinated EU minimum wage policy   Broadly speaking, a minimum wage is a level of pay under which no employment relation is  permitted. The existence of a minimum wage is primarily justified on moral grounds: although in a market economy the determination of wages is in principle the result of the (individual or collective) negotiation between employers and workers, the society might consider that there is a 1   The authors would like to thank Kristin Alsos, Christine Aumayr, Line Eldring, Andrea Garnero, Damian Grimshaw, Stephen Kampelmann, Rafael Muñoz de Bustillo Llorente, Mark Smith, Donald Storrie, Christian Welz and the members of the advisory committee on Industrial Relations and Working Conditions of Eurofound for very useful input to earlier versions of this report. We would also like to thank the Eurostat team dealing with the European Structure of Earnings Survey for their support.   3 threshold of pay below which employment is not acceptable, even if there would be employers and workers willing to trespass it. The operationalization of such threshold may take different forms, as we shall see: most importantly, it may be set by the government through regulation, or  by social partners through collective bargaining. Although there may be other justifications for the existence of minimum wages (for instance, the stimulation of aggregate demand within a Keynesian policy framework), the ultimate rationale behind the existence of minimum wages is normative. Since the 19th Century, trade unions have tried to introduce (and raise) wage floors for their constituencies, but wide-coverage minimum wages only became established in the second half of the 20th Century. Where unions were strong, minimum wages were often established through collective bargaining, usually sector-specific and sometimes non-binding (ie, only affecting union members, which were nevertheless the vast majority of employees). Where unions were less strong, governments established statutory minimum wages or extended by law collectively agreed wage floors, in most cases with a single national threshold and no exclusions. Those different srcins are behind the different existing systems of minimum wage setting in Europe 2 , shown in table 1. Statutory regulation Collective agreements Single national minimum wage Western countries:  France, Luxembourg,  Netherlands, Ireland, UK Southern countries:  Malta, Spain, Portugal  Eastern countries:  Croatia, Czech Republic, Hungary, Latvia, Lithuania, Romania, Slovenia  Bipartite agreements:  Belgium, Estonia, Greece Tripartite agreements:  Bulgaria, Poland, Slovakia Sectoral and/or occupational minimum wages Cyprus  Nordic countries:  Denmark, Finland, Sweden Continental countries:  Austria, Germany, Italy Table 1: Different systems of minimum wage settings in Europe (source: Schulten 2012) Today, the majority of EU member states have national statutory minimum wages, as can be seen in table 1. The predominance of this system was reinforced by the EU enlargement to the East,  because most of the acceding countries adopted it in the 1990s. But even in the old member states, recent developments have reinforced the predominance of the statutory model: most importantly, the adoption of national statutory minimum wages in the UK and Ireland at the turn of the century, and the possible introduction of a national statutory minimum wage in Germany in the near future. 3  So although the diversity in the mechanisms and structure of minimum wages across Europe is still important, such diversity has been considerably reduced in recent years, and it is likely to be even further reduced in the future. Such convergence can facilitate considerably the design and implementation of a hypothetical common minimum wage policy across the EU. 2  For obvious reasons, the historical srcins of the minimum wage systems in Eastern European countries do not fit entirely this narrative. But although they were established much later and in very different circumstances, the fact that they all opted for the statutory system is surely related to the weakness of their industrial relations systems. 3  See http://www.eurofound.europa.eu/eiro/2013/03/articles/de1303019i.htm. 
Related Documents
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x