DIRECTIVE (EU) 2022/2041 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 19 October 2022
on adequate minimum wages in the European Union
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 153(2), point (b), in conjunction with Article 153(1), point (b), thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Economic and Social Committee (1),
Having regard to the opinion of the Committee of the Regions (2),
Acting in accordance with the ordinary legislative procedure (3),
| Pursuant to Article 3 of the Treaty on European Union (TEU), the aims of the Union are, inter alia, to promote the well-being of its peoples and to work for the sustainable development of Europe based on a highly competitive social market economy, aiming to ensure full employment and social progress, a high level of protection and improvement of the quality of the environment, while promoting social justice and equality between women and men. Pursuant to Article 9 of the Treaty on the Functioning of the European Union (TFEU), the Union is to take into account, inter alia, requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, and the fight against social exclusion.
| Article 151 TFEU provides that the Union and the Member States, having in mind fundamental social rights such as those set out in the European Social Charter (ESC), have as their objectives, inter alia, the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection and dialogue between management and labour.
| Article 31 of the Charter of Fundamental Rights of the European Union (4) (the ‘Charter’) provides for the right of every worker to working conditions which respect his or her health, safety and dignity. Article 27 of the Charter provides for the right of workers to information and consultation. Article 28 of the Charter provides for the right of workers and employers, or their respective organisations, in accordance with Union law and national laws and practices, to negotiate and conclude collective agreements at the appropriate levels. Article 23 of the Charter provides for the right to equality between women and men in all areas, including employment, work and pay.
| The ESC establishes that all workers have the right to just conditions of work. It recognises the right of all workers to a fair remuneration sufficient for a decent standard of living for themselves and their families. It also recognises the role of freely concluded collective agreements, as well as of statutory minimum wage-setting mechanisms, to ensure the effective exercise of this right, the right of all workers and employers to organise in local, national and international organisations for the protection of their economic and social interests and the right to bargain collectively.
| Chapter II of the European Pillar of Social Rights (the ‘Pillar’), proclaimed at Gothenburg on 17 November 2017, establishes a set of principles to serve as a guide towards ensuring fair working conditions. Principle No 6 of the Pillar reaffirms workers’ right to fair wages that provide for a decent standard of living. It also provides that adequate minimum wages are to be ensured, in a way that provides for the satisfaction of the needs of the worker and his or her family in light of national economic and social conditions, while safeguarding access to employment and incentives to seek work. Furthermore, it recalls that in-work poverty is to be prevented and that all wages are to be set in a transparent and predictable way, according to national practices and respecting the autonomy of the social partners. Principle No 8 of the Pillar provides that the social partners are to be consulted on the design and implementation of economic, employment and social policies according to national practices and that they are to be encouraged to negotiate and conclude collective agreements in matters relevant to them, while respecting their autonomy and the right to collective action.
| Guideline 5 in the annex to Council Decision (EU) 2020/1512 (5) calls on Member States that have in place national mechanisms for the setting of statutory minimum wages to ensure an effective involvement of social partners in wage-setting, providing for fair wages that enable a decent standard of living, while paying particular attention to lower and middle income groups with a view to upward convergence. That Guideline also calls on Member States to promote social dialogue and collective bargaining with a view to wage-setting. It also calls on Member States and the social partners to ensure that all workers have adequate and fair wages by benefitting from collective agreements or adequate statutory minimum wages, and taking into account their impact on competitiveness, job creation and in-work poverty, while respecting national practices. The Commission communication of 17 September 2020 entitled ‘Annual Sustainable Growth Strategy 2021’ states that Member States should adopt measures to ensure fair working conditions. Moreover, the Commission communication of 17 December 2019 entitled ‘Annual Sustainable Growth Strategy 2020’ recalled that, in the context of growing social divides, it is important to ensure that each worker earns a fair wage. Country-specific recommendations have been issued to a number of Member States in the field of minimum wages with the aim of improving the setting and updating of minimum wages.
| Better living and working conditions, including through adequate minimum wages, benefit workers and businesses in the Union as well as society and the economy in general and are a prerequisite for achieving fair, inclusive and sustainable growth. Addressing large differences in the coverage and adequacy of minimum wage protection contributes to improving the fairness of the Union’s labour market, to preventing and reducing wage and social inequalities, and to promoting economic and social progress and upward convergence. Competition in the internal market should be based on high social standards, including a high level of worker protection and the creation of quality jobs, as well as on innovation and improvements in productivity, while ensuring a level playing field.
| When set at adequate levels, minimum wages, as provided for in national law or collective agreements, protect the income of workers, in particular of disadvantaged workers, help ensure a decent living, as pursued by International Labour Organization (ILO) Minimum Wage Fixing Convention No 131 (1970). Minimum wages that provide for a decent standard of living and thus meet a threshold of decency can contribute to the reduction of poverty at national level and to sustaining domestic demand and purchasing power, strengthen incentives to work, reduce wage inequalities, the gender pay gap and in-work poverty, and limit the fall in income during economic downturns.
| In-work poverty in the Union has increased over the past decade and more workers are experiencing poverty. During economic downturns, the role of adequate minimum wages in protecting low-wage workers is particularly important, as they are more vulnerable to the consequences of such downturns, and is essential for the purpose of supporting a sustainable and inclusive economic recovery, which should lead to an increase in quality employment. To ensure sustainable recovery, it is vital that businesses, in particular microenterprises and small enterprises, thrive. In view of the effects of the COVID-19 pandemic, it is important to assess the adequacy of wages in low-paid sectors that have proven to be essential and of great social value during the crisis.
| Women, younger workers, migrant workers, single parents, low-skilled workers, persons with disabilities, and in particular persons who suffer from multiple forms of discrimination, still have a higher probability of being minimum wage or low wage earners than other groups. Given the over-representation of women in low-paid jobs, improving the adequacy of minimum wages contributes to gender equality, closing the gender pay and pension gap, as well as elevating women and their families out of poverty, and contributes to sustainable economic growth in the Union.
| The crisis caused by the COVID-19 pandemic is having a significant impact on the services sector, microenterprises and small enterprises, which have a high share of low-wage and minimum-wage earners. Minimum wages are therefore also important in view of the structural trends that are reshaping labour markets and which are increasingly characterised by high shares of precarious and non-standard forms of work, often including part-time, seasonal, platform and temporary agency workers. Those trends have led, in many cases, to an increased job polarisation resulting in an increasing share of low-paid and low-skilled occupations and sectors in most Member States, as well as to higher wage inequality in some of them. It is more difficult for workers with non-standard contracts to organise and negotiate for collective agreements.
| While minimum wage protection exists in all Member States, in some that protection stems from legislative or administrative provisions and from collective agreements while in others it is provided exclusively through collective