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EESC gives its input to the debate on decent minimum wages in Europe

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The European Economic and Social Committee (EESC) has adopted the opinion Decent minimum wages across Europe following the European Parliament's request for an exploratory opinion. The request was made after the Commission announced that it was considering proposing a legal instrument to ensure that every EU worker is entitled to a minimum wage allowing a decent standard of living.

Figures show that about one in ten workers in the EU earn around or below the national statutory minimum wage. In some countries, the existing minimum wage floors are currently not sufficient for workers to be lifted out of poverty by employment alone. The EESC said in the opinion that it remained concerned that poverty in general and in-work poverty were still significant problems in many member states. At the same time, it emphasized that high-quality employment continues to be the best route out of poverty.

In its view, fair minimum wages could help reduce poverty among working poor people, combined with person-centred, integrated and active inclusion policies. They could also help meet a number of EU objectives, such as achieving upward wage convergence, improving social and economic cohesion and eliminating the gender pay gap. Women currently account for the majority of low-wage earners, together with other vulnerable groups, such as older workers, young people, migrants and workers with disabilities. Wages represent payment for work done, and are one of the factors that ensure mutual benefits for companies and workers. They are linked to the economic situation in a country, region or sector. Changes may have an impact on employment, competitiveness and macro-economic demand.

The EESC said that it recognizes concerns regarding possible EU action in this area and does not underestimate the complexities of the issues involved. It acknowledges that the Commission will have to adopt a balanced and cautious approach.

It therefore stresses that any such EU initiative must be shaped on the basis of an accurate analysis of the situation in the member states, and must fully respect the social partners' role and autonomy, as well as the different industrial relations models. It is also essential that any EU initiative safeguards the models in those member states where the social partners do not consider statutory minimum wages to be necessary, notably those where wage floors are set through collective bargaining.

When setting statutory minimum wages, timely and appropriate consultation with social partners is important to ensure that the needs of both sides of industry are taken into account. The EESC regrets that, in some Member States, the social partners are not adequately involved or consulted in statutory minimum wage setting systems or adjustment mechanisms.

However, the three groups within the EESC, representing the EU's employers, trade unions and civil society organisations, have divergent views on the way ahead.

Rapporteur of the opinion, Stefano Mallia (Employers' Group), said: "The COVID-19 crisis has caused and continues to cause huge economic losses, which will inevitably take a huge toll on businesses. Minimum wages is a sensitive subject that must be approached in a manner that fully takes into account economic consequences and the division of competences between the EU and the member states, and that respects the specific features of national minimum wage setting and collective bargaining systems. The Employers' Group believes that the EU has no competence over pay, and pay levels in particular, and that setting minimum wages is a national matter, done in accordance with the specific features of respective national systems. Any misguided action on the part of the EU must be avoided, especially at this particular point in time. Where social partners need support, we should look into addressing specific needs by promoting exchanges of best practices and capacity-building and not fall into the trap of coming up with a one-size-fits all approach that could have serious negative consequences."

Rapporteur of the opinion, Oliver Röpke (Workers' Group), said:  "This opinion comes at an opportune moment for the European Union and I'm very pleased that the EESC can contribute to the discussion on minimum wages in Europe. The COVID-19 crisis has again thrown a spotlight on the dramatic inequalities in our labour markets and in society, not least the severe income and job insecurity felt by far too many working people. Ensuring that workers across the EU benefit from decent minimum wages must be an essential part of the EU's recovery strategy. For the Workers' Group, it is undisputable that all workers should be protected by fair minimum wages allowing a decent standard of living wherever they work. Collective bargaining remains the most effective way of guaranteeing fair wages and must also be strengthened and promoted in all the Member States. We therefore welcome the Commission's recognition that there is scope for EU action to promote the role of collective bargaining in supporting minimum wage adequacy and coverage."

President of the study group which drafted the opinion, Séamus Boland (Diversity Europe Group), said: "I believe this opinion will provide a high level of value to the many discussions across all EU member states on the subject of minimum wages. It asserts the value of social partnerships as well as ensuring that all relevant stakeholders are included. The opinion emphasises the need to guarantee proper dignity and respect for all workers, especially those employed in lower paid jobs in our economy. I believe that the EESC can be proud of the work done in completing this opinion and I encourage all stakeholders to read it.”

Background

The Commission launched the first phase of the social partner consultations in January 2020, setting out a number of ways in which EU action could prove beneficial in enabling all EU workers to earn a living wage.

In June 2020, the second-phase consultations were launched, with the Commission spelling out the policy objectives of a possible initiative: ensuring that all workers in the EU are protected by a fair minimum wage which provides them with a decent standard of living wherever they work. At the same time, the Commission said that access to employment would be safeguarded and the effects on job creation and competitiveness taken into account.

While preparing the opinion, the EESC held virtual consultations with stakeholders from five countries, chosen on the basis of their minimum wage setting mechanisms, which are included as annexes to the opinion. The stakeholders were sent a survey, the results of which were also included in the opinion.

The EESC also held a virtual public hearing which included contributions from Commissioner for Jobs and Social Rights Nicolas Schmit, several MEPs and members of some of Europe's top network organizations representing employers, workers and other civil society organizations, such as BusinessEurope, the European Trade Union Confederation (ETUC) and Social Platform.

coronavirus

COVID-19: How the EU fights youth unemployment

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Youth unemployment remains a key concern in the wake of the coronavirus crisis. Find out more about an EU initiative to help young people find work.

COVID-19 could lead to the emergence of a "lockdown generation", as the crisis hits young people’s job prospects. According to the International Labour Organization (ILO) the pandemic is having a "devastating and disproportionate" impact on youth employment, while the most recent figures show that young people face major obstacles in continuing training and education, moving between jobs and entering the labour market.

More about EU measures against youth unemployment.

Reducing youth unemployment in coronavirus times

Before the pandemic, EU youth unemployment (15-24) was 14.9%, down from its peak of 24.4% in 2013. In July 2020, it rose to 17%. The European Commission’s summer 2020 economic forecast predicts that the EU economy will shrink 8.3% in 2020, the deepest recession in the EU's history. To offset the impact on young people, the Commission proposed a new initiative called Youth Employment Support in July 2020.

Check out the timeline of EU measures to tackle the COVID-19 crisis.

The Youth Employment Support Package consists of:
  • A reinforced Youth Guarantee;
  • improved vocational education and training;
  • renewed impetus for apprenticeships, and;
  • additional measures to support youth employment.

What is the Youth Guarantee?

Launched at the peak of the youth employment crisis in 2013, the Youth Guarantee aims to ensure people under the age of 25 get a good-quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education.

A reinforced Youth Guarantee
  • Covers young people aged 15 - 29 (previously the upper limit was 25).
  • Reaches out to vulnerable groups, such as minorities and young people with disabilities.
  • Provides tailored counselling, guidance and mentoring.
  • Reflects the needs of companies, providing the skills required and short preparatory courses.

In a resolution adopted by the employment and social affairs committee on 22 September, MEPs welcome the Commission’s proposal but call for more money to be mobilised for the next phase of the Youth Guarantee (2021-2027). They also criticize the budgetary cuts for youth employment support that were made at the EU summit in July.

In addition, the committee advocates a legal framework to be put in place to ban unpaid internships, traineeships and apprenticeships in the EU. MEPs also criticise that not all EU countries comply with the voluntary recommendations of the Youth Guarantee and therefore call for making it a binding instrument.

MEPs will vote on the resolution during a plenary session in early October.

Parliament calls for more ambition

In a resolution on EU Employment Guidelines adopted on 10 July, MEPs called for a revision of the forthcoming guidelines in light of the Covid-19 outbreak, underlining the need to tackle youth unemployment through a reinforced Youth Guarantee.

In July Parliament also backed an increase in the budget for the Youth Employment Initiative, the main budgetary instrument for Youth Guarantee schemes in EU countries, to €145 million for 2020.

Parliament called for a significant increase in funding for the implementation of the Youth Employment Initiative in a resolution on the EU's next long-term budget adopted in 2018. MEPs liked how the initiative has supported young people, but said improvements are needed, including an extension of the age limit and the setting of clear quality criteria and labour standards.

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Employment

#COVID-19 - How the EU fights youth unemployment  

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A youth craftswoman is checking dimensions of finished plastic window using measuring tape ©JackF/AdobeStock  

Youth unemployment remains a key concern in the wake of the coronavirus crisis. Find out more about an EU initiative to help young people find work. COVID-19 could lead to the emergence of a "lockdown generation", as the crisis hits young people’s job prospects. According to the International Labour Organization (ILO) the pandemic is having a "devastating and disproportionate" impact on youth employment, while the most recent figures show that young people face major obstacles in continuing training and education, moving between jobs and entering the labour market.

Reducing youth unemployment in coronavirus times

Before the pandemic, EU youth unemployment (15-24) was 14.9%, down from its peak of 24.4% in 2013. In April 2020, it rose to 15.7%. The European Commission’s summer 2020 economic forecast predicts that the EU economy will shrink 8.3% in 2020, the deepest recession in the EU's history. To offset the impact on young people, the Commission has proposed a new initiative: Youth Employment Support.

Check out the timeline of EU measures to tackle the COVID-19 crisis.

The Youth Employment Support Package consists of: 
  • A reinforced Youth Guarantee;
  • improved vocational education and training;
  • renewed impetus for apprenticeships, and;
  • additional measures to support youth employment.

The Commission wants EU countries to increase their support for the young through the ambitious NextGenerationEU recovery plan and the future EU budget. Member states should invest at least €22 billion for youth employment. Parliament and EU governments will discuss the proposals in the framework of negotiations on the EU's next long-term budget.

What is the Youth Guarantee?

Launched at the peak of the youth employment crisis in 2013, the Youth Guarantee aims to ensure people under the age of 25 get a good-quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education.

A reinforced Youth Guarantee 

  • Covers young people aged 15 - 29 (previously the upper limit was 25).
  • Reaches out to vulnerable groups, such as minorities and young people with disabilities. 
  • Provides tailored counselling, guidance and mentoring.
  • Reflects the needs of companies, providing the skills required and short preparatory courses.

In a resolution on EU Employment Guidelines adopted on 10 July, MEPs called for a revision of the forthcoming guidelines in light of the Covid-19 outbreak, underlining the need to tackle youth unemployment through a reinforced Youth Guarantee.

In July Parliament also backed an increase in the budget for the Youth Employment Initiative, the main budgetary instrument for Youth Guarantee schemes in EU countries, to €145 million for 2020.

Parliament called for a significant increase in funding for the implementation of the Youth Employment Initiative in a resolution on the EU's next long-term budget adopted in 2018. MEPs liked how the initiative has supported young people, but said improvements are needed, including an extension of the age limit and the setting of clear quality criteria and labour standards.

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Conservative Party

Sunak pledges 30 billion pounds to stem unemployment crisis

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Britain’s finance minister has promised an additional £30 billion to head off an unemployment crisis, funnelling money to employers, homebuyers and beleaguered hospitality firms to drive a recovery, write Andy Bruce and David Milliken.

Rishi Sunak (pictured), who was already on course to take state borrowing to World War Two levels with £133bn of initial coronavirus emergency measures, said he would return the public finances to a sustainable footing over the medium term.

But the former Goldman Sachs analyst promised to press on with using the power of the state to shore up the economy, which has forced his Conservative Party to suspend its traditional pro-market instincts.

“I want every person in this House and in the country to know that I will never accept unemployment as an unavoidable outcome,” Sunak told parliament on Wednesday.

The world’s sixth-biggest economy shrank by 25% in March and April and could be heading for its biggest fall in 300 years in 2020, with the unemployment rate on course to more than double to about 10%, according to official projections.

Under a new bonus plan, employers will be paid 1,000 pounds ($1,256) after the furlough scheme expires at the end of October for every worker who returns to their job, provided they are kept on through to the end of January.

With more than 9 million jobs covered by the scheme, the cost of the bonuses could be as much as £9.4 billion pounds.

To help hospitality and tourism, hampered by social distancing rules, Sunak announced a cut in value-added tax for the sector to 5% from 20% for six months.

People eating out in August between Monday and Wednesday will receive a 50% discount of up to 10 pounds each, paid for by the government.

Shares in pubs and restaurant firms rose.

With close to 45,000 confirmed coronavirus-linked deaths, Britain has been hit harder by the pandemic than any other European country, leaving many people reluctant to return to life as before.

Sunak’s plan includes a £2bn ($2.5bn) fund to create six-month work placement jobs for unemployed 16-24 year-olds and more government-funded apprenticeships.

A further £3bn will be spent on improving the energy efficiency of homes and public buildings, which would support more than 100,000 jobs.

The £30bn cost of the plan includes around £5.6bn in accelerated infrastructure spending announced last week by Prime Minister Boris Johnson.

Some employers had urged Sunak to go further by cutting the social security contributions they must pay for their workers.

In a bid to breathe life into the housing market and the broader economy, Sunak raised the lower threshold for a tax on property purchases to £500,000, four times its current level, with immediate effect until 31 March.

Economists said the plan was unlikely to accelerate Britain’s recovery from the crisis.

“Overall this wasn’t a massive fiscal package, with other countries like Germany announcing much larger fiscal packages,” Jing Teow, an economist at PwC, said.

As well the uncertainties about how the pandemic will proceed, Sunak has to contend with the possibility London and Brussels fail to agree a post-Brexit trade deal by the end of this year.

“The chancellor is likely keeping his powder dry until the autumn,” Teow said, referring to a formal budget statement Sunak is due to deliver in late 2020.

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