The European Parliament has enacted legislation on minimum pay for workers. This decision was taken by 505 votes in favour to 92 against, with 44 abstentions.

Dennis Radtke (EPP, DE), said after the vote that: “The current situation clearly shows once again that we need a well-functioning, strong social partnership in Europe. Politics cannot give a comprehensive answer to every aspect of this crisis.”

The directive sets standards for what an adequate minimum wage should be. These standards will have to be implemented in national laws or complied with through collective bargaining.

The minimum wage in all countries of the European Union is intended to ensure a decent standard of living and working. On the other hand, it is the responsibility of member states to promote wage arrangements through collective bargaining.

In the European Parliament’s opinion, collective bargaining at sectoral and inter-industry level is an important factor in determining adequate minimum wages.  Therefore, they should be supported and promoted pursuant to the provisions of the just adopted Directive.

The new directive will apply to all workers in the EU who work under an employment contract or employment relationship.

Member states, when setting minimum wages, will now have to ensure that such wages provide workers with a decent living, taking into account the cost of living and general wage levels. In order to assess the adequacy of the existing statutory minimum wage, member states can define a national basket of consumer goods and services based on market prices. Or they can set it at 60% of the gross wage median or 50% of the average gross wage.

Importantly, member states where the minimum wage is secured through collective bargaining only, will not have to introduce a statutory minimum wage. Nor will they have to ensure that the Directive’s provisions are generally applicable.

Key changes:

• the minimum wage is to ensure a decent standard of living,
• EU legislation will not affect national wage-setting practices,
• countries where less than 80% of workers are affected by collective bargaining will have to define, in cooperation with their social partners, an action plan to include more workers in such bargaining.
• in case of infringement, workers, their representatives and union members will have a right to seek claims.

The text approved by the members of the European Parliament also provides for EU member states to introduce an enforcement system.  This is to include credible monitoring, checks and inspections. This will ensure compliance with the regulations and combat abusive subcontracting, fictitious self-employment, undeclared overtime and increased rate of work intensity.

It is expected that the Council will officially approve the arrangements in September. Member states will then have two years to implement the directive.