Minimum wages in Europe EMF CB Committe summer school Cyprus 12-16 September 2009 Béla Galgóczi

Slides:



Advertisements
Similar presentations
Lisbon - Copenhagen - Maastricht Consortium December 2004 Tom Leney VET – Challenges and research agendas.
Advertisements

Case Study On The EU.
From a Political Resolution… to a Work Programme
East-West dialogue: problems of mutual comprehension Mária Ladó Ministry of Labour and Social Affairs, Hungary.
The Crisis and Precarious Work Irish Economic Policy Conference 2014 Dr. Thomas Turner & Dr. Michelle O’Sullivan, University of Limerick.
DEPARTMENT OF SOCIAL POLICY AND INTERVENTION May 15, 2015 Who Adjusts? The Economic Crisis and Labour Market Outsiders.
Wage develpments, collective bargaining and minimum wages in Europe China EU Forum, workshop 38a Beijing 9-10 July 2010 Béla Galgóczi
Long-run Pension System Reforms in Europe and Central Asia Anita M. Schwarz Lead Economist Human Development Department Europe and Central Asia Region.
Sandra Polaski Deputy Director General for Policy International Labour office (ILO) The Global Role of Wages: Productivity, Employment and Equity.
What questions would you like to ask?. From which country does the UK import the most services? (1) Germany To which country does the UK export the most.
1 THE PENSION GAP AND POVERTY OF ELDERLY WOMEN July 2008.
Who belongs to the European Union?
Economic Overview June Production Productivity Employment, working hours Inflation, output prices Wages, unit labour cost Trade balance Outline.
Dr. Thorsten Schulten Theses for a European Minimum Wage Policy GUE/NGL in Cooperation with Forum Social Europe Conference on “The European Social Model”
How is the budget raised The own resource system – The overall amount of own resources needed to finance the budget is determined by total expenditure.
THE ECONOMIC INDICATORS 1.  An economic indicator is simply any economic statistic, such as the unemployment rate, GDP or the inflation rate, which indicate.
Precarious employment in Europe Conference on qulaity of employment, 28. and 29. February 2008 Janine Leschke European Trade Union Institute for Research,
EU Enlargement: Impact On The Social Policy and Labour Markets of Accession and Non- accession Countries BACKGROUND FOR ESTONIA Epp Kallaste PRAXIS Center.
Minimum Wage Fixing: Basic Principles and Lessons Learnt Seminar organised by the International Training Center Catherine Saget, ILO Integration Department.
Labour Market Inequality in India and Brazil: Comparing Labour Market Institutions in India and Brazil Taniya Chakrabarty 18th December 2014.
Inequality and efficiency – a post crisis view from European perspective FES round table debate Zagreb 7. April 2011 Béla Galgóczi
Metal Industries 2012 * Structure and current developments Crisis and transformation Situation of the MET industries Labour Market: main developments Major.
1 Training of Trainers Social Dialogue Construction Industry Presentation by Sven Ljung Byggnads – Swedish Building Workers Union Florence 9 February 2006.
1 The Informal Economy – Strengthening the Role of Trade Unions. Trade Union Response Needed Sergejus Glovackas, ICFTU CEE Unit.
International Trade – What’s in it for the Trade Union ? The Case of Denmark and the European Union.
Exchange Rates And Comparative Advantage. Exchange Rates When trade is free—unimpeded by government- instituted barriers—patterns of trade and trade flows.
Industrial Relations Central and Eastern Europe MGT 4330.
THE EUROPEAN SOCIAL DIALOGUE THE ITALIAN EXPERIENCE Kiev 5-6 December 2013 Presentation by Cinzia Del Rio.
EPC EDUCATION AND TRAINING – Applications for Membership of the EU Turkey - April 1987 Cyprus - July 1990 Malta - July 1990 Hungary.
Alexander Consulting Enterprise 10/16/2015 The European Union and the EURO.
Globalization and Recent Economic Developments Chapter 1.
Work Programme Collective Bargaining & Social Policy Introduction Anna-Lena Börgö Etaat Bart Samyn.
The challenges for social dialogue in the cleaning sector: Research findings Conference “Minimum wage systems and changing industrial relations in Europe”,
1 Cohesion Policy and demography By Ronald Hall Director Directorate-General for Regional Policy 28 April 2010.
The importance of innovation in the European Union’s 2020 strategy Lambert van Nistelrooij Member of the European Parliament, EPP- Group/CDA 8 September.
Economic Overview October Production Productivity Employment, working hours Inflation, output prices Wages, unit labour cost Trade balance Outline.
CONGRESS PRIORITIES IN THE FIELD OF COLLECTIVE BAGAINING AND WAGE COORDINATION CBCC MEETING 5 November 2015.
Trends in collective bargaining in the EU Final conference: “Collective bargaining in Croatia and EU today” Zagreb, 14 October 2015 Dr. Torsten Müller.
Labour law in contemporary world: discussion of selected issues in light of European experiences Corinne Vargha International Labour.
Economic Overview December 2015.
MEASURES TO CONFRONT UNDECLARED WORK THROUGHOUT EUROPE PIET RENOOY Presentation to the EMPL Committee European Parliament, Brussels September 23, 2014.
Ms. Podpeskar International Politics THE EUROPEAN UNION.
An attempt to revitalize social dialogue and national industrial relations systems in some of the CEECs.
Trade Union Training on Employment Policies – Focus on Youth Turin, 10 July 2007 Kristian Weise, ITUC.
Europe: a portrait. GDP of EU members, 2013 Great variation in size of European economies.
Youth on the Move A new impetus for improving youth employment in Europe Policy coordinator Youth, Human Capital, Social.
Collective bargaining: trends and developments Susan Hayter International Labour Office Geneva D I A L O G U E.
Course Orientation A Trade Union Training on Collective Bargaining for Union Leaders (Francophone and Anglophone Africa) 18 to 29 July 2011.
THE EUROPEAN UNION Background 11 June Image by Rock Cohen. Used with permission europa.eu – official website of the EU.
Economic Overview April Production Productivity Employment, working hours Inflation, output prices Wages, unit labour cost Trade balance Outline.
Wage trends and policies within the crisis Training seminar on Wages, Turin, June 29, 2010 Turin, June 29, 2010.
Organizing & CB Coverage (2004, in percent) Sweden Finland Denmark Belgium Norway Austria Italy Spain Source:
ILO Workers’ Group Priorities: implications for research A Trade union training on research methodology, TMLC, Kisumu, Kenya 6-10 December.
INTERNATIONAL TRAINING CENTRE OF THE ILO/TURIN A Trade Union Training on Collective Bargaining for Union Leaders (Francophone & Anglophone Africa)
The importance of innovation in the European Union’s 2020 strategy Lambert van Nistelrooij Member of the European Parliament, EPP- Group/CDA 4 October.
Zápatí prezentace Notion and system of European Labour Law.
Globalisation and Multinational Business.  Current issues in the global economy  Defining globalisation ◦ global economic interdependence ◦ implications.
ACTRAV Symposium on the Right to Organize and Collective Bargaining “Challenges and developments in collective bargaining in specific countries/regions”

An attempt to revitalize social dialogue and national industrial relations systems in some of the CEECs.
THE NATIONAL MINIMUM WAGE
Meeting IndustriAll Europe East region
Developments in and challenges for industrial relations in Europe
PRECARIR meeting, September 17-18, 2015, Bratislava
Manifesto for Labour Law
SOCIAL DIALOGUE IN THE SOCIAL SERVICES SECTOR IN EUROPE
ACTRAV Symposium on Collective Bargaining Geneva, October 2009
Global & Asian Wage Trends: Implications for Wage Policy & Union agenda Data Source: Malte Luebker, Senior Regional Wage Specialist, ILO Regional Office.
WAGES AND COLLECTIVE BARGAINING IN THE AFTERMATH OF THE CRISIS
Presentation transcript:

Minimum wages in Europe EMF CB Committe summer school Cyprus September 2009 Béla Galgóczi

2 Minimum wages in Europe – the context ● At the time of increased capital mobility and globalisation, when cca. 1 billion workers got integrated in the world economy (China, India, eastern Europe) – the previous balance between labour and capital has shifted ● Wage moderation is characteristic for most EU15 countries for the last 10 years ● Wage shares in GDP are falling ● Wage differentials are growing ● The danger of a downward spiral is real ● Crucial role of the MW in crisis – in safeguarding purchasing power and to avoid social exclusion

3 Minimum wages in Europe – the background ● Decent pay – as basic principle – make work pay – a basic function of the European Social Model ● Reduce wage differencials ● Background: large low pay sector in Europe (20 million employees on law pay in Europe), precarious jobs ● lack of proper bargaining coverage in several sectors/countries ● Labour migration – migrant workers` wages and labour conditions ● Freedom of services (Vaxholm case)

4 Function of the minimum wage ● Function of MW also depends on the institutional setting of industrial relations in the given country ● Might be playing a substitute role in countries where collective bargaining coverage is low (or particular sectors are not covered) ● Might also be a way of stimulating wage growth – a tool for wage policy ● In several countries important reference value for certain welfare provisions ● Level of minimum wage can have an impact on undeclared economy and on tax and social security contributions revenues of the state

5 Minimum wage: at the centre of policy debate in Europe and in certain MS-s (Germany) ● Poul Nyrup Rasmussen and Jacques Delors presented a report to the 7th PES Congress, where they call for “decent minimum wages in Europe” ● and demand the introduction of a “EU target for the minimum wage in terms of GNP per capita” (Rasmussen and Delors 2006) ● the goal of guaranteeing every employed person a decent minimum wage represents a concrete political project of “social Europe”. ● To oppose to the spread of precarious conditions of employment. ● Today more than 15% of all employees in the EU 15 – i.e. more than 20 million wage earners – work in the low-paid sector (that is earn an hourly wage less than 2/3 of the national median wage)

6 Minimum wages in Europe: an overview ● In Europe minimum wages are regulated either by law or by collective agreement ● 20 out of 27 EU member states have a general statutory minimum wage laid down by the government, usually a say in the process by trade unions and employers. ● Seven EU member states have no national statutory minimum wage: Denmark, Sweden and Finland – as well as Germany, Austria, Italy and Cyprus rely on collective agreements alone ● most of these countries have functional equivalents (high coverage of collective agreements and a functioning system of collectively agreed minimum wage protection) ● in Italy, the constitution contains a clause on fair wages, interpreted by labour courts – only Germany is not having a functional equivalent – hot debates currently

7 Emphasis on minimum wage all over Europe ● The existence of statutory or collectively agreed minimum wages in so many European countries, ● former critics of MW such as the OECD (2006) say now that appropriately set minimum wages are not harmful for employment. ● on the contrary, they encourage labour supply and can form an important element in broader ‘make work pay’ strategies. ● UK - when the national minimum wage was introduced in 1999 predictions said, jobs would go and people would be worse off. ● This did not happen – employment grew, unemployment fell

8 Bargaining structures ● Legal Framework across countries ●  Parties entitled to conclude Agreements ●  Parties covered by Agreements/Extension Mechanisms ●  Levels of Bargaining ●  Bargaining Coverage ●  Influence of Tripartite Concertation ●  Relationship of different Bargaining Levels ● In CEE: low CB coverage, weak extension mechanism, weak branch level bargaining ● Focus: tripartite negotiations, strong legally anchored minimum levels

9 Parties covered by Collective Agreements Source: Eiro

10 Hourly minimum wages in Europe 2009

11 Hourly minimum wages in Europe 2009, PPS

12 MW in relative terms

black line: poverty thresold (60% of national AW) 13 Relationship of minimum wage levels to EU median (= 100, in PPS, 2008)

14 High increases in countries with low MW In 2008 MW increases with 2008 forecast for 2009 (not valid anymore due to the crisis): ● Latvia % (2009: +12.4%) ● Romania % (2009: +20.0%) ● Bulgaria % (2009: +9.7%) ● Estonia % (2009: 0.0%) ● Poland % (2009: +13.0%) ● Lithuania % (2009: +4.5%)

15 Comments to latest minimum wage trends ● Minimum wages do not seem to enjoy a `positive discrimination` or special attention ● They follow the general wage trends in most countries ● Minimum wages range between 32,5% (Latvia) to 46,6% (Portugal) of the average wage ● There are no significant differences in share between old and new member states ● For all countries it is true, the share of min wage is under 5 ● 60% of the average wage ● It must be added that in some countries minimum wages enjoy tax preferences (in Hungary they are tax free), thus their share in net wages is higher than in the gross wages

16 Country example: Ireland ● the partnership model of centralized wage bargaining has proved successful in the period between 1995 and 2005 to improve competitiveness but still maintain a sustainable wage growth ● In 2000, a statutory minimum wage was introduced in Ireland as a mechanism aimed at fighting against low pay and poverty. ● Initially, it was set at 55% of the average industrial wage. Following a report elaborated by the National Minimum Wage Commission appointed by government and including members of social partners, the Irish government decided to implement it (at a lower rate..)

17 Ireland ● Number of employees directly effected was highest in the retail industry (11.6%), followed by hotels, restaurants and bars (8.9%), and textile manufacturing (7%). ● Since its introduction in 2000, the minimum wage has increased at a lower rate compared to the evolution of average earnings of full-time industrial worker, but the trend was reversed in 2004 and ● The increase in earnings dispersion had become under control and increase of wage differentials in the early 2000s (due to high wage growth in qualified jobs) has not been accompanied by any significant increase in low pay employment.

18 Portugal ● Since 1994, the increases of the national minimum wage (Salário Mínimo Nacional, SMN) have oscillated around the general evolution of wages, and the trend over the decade was a gradual decrease of the SMN in relation to the average wages. ● According to the Labour Code (2003), the official designation of the Statutory Minimum Wage is “Retribuição Mensal Mínima Garantida” (RMMG), but the term SMN is still dominant. ● The SMN has lost some of its importance in the sense that the share of employees who receive the SMN decreased between 2003 and 2005 from 6.2% to 4.5%. ● Hotels & restaurants and manufacturing belong to the sectors with the highest rate of workers receiving the SMN

19 Conclusions ● The importance of the minimum wage is clearly increasing across Europe, even in countries, where it was not a priority before ● Experiences in the UK, Ireland and Portugal are positive, not negative effect on employment had been observed ● Germany has a crucial debate on the issue and a certain kind of a national MW will most probably be introduced soon ● Minimum wage targets – as measures in % of average wage or GNP/capita – are also discussed ● It is a difficult debate even trade unions have diverse views (Denmark, Italy have serious reservations) – fears that TU influence would be undermined or that a low European target level could be used to get national standards under pressure