There’s an increasing demand in
Europe to introduce some kind of common minimum wage across the EU, and
the Nordic opposition to this is viewed as being selfish and lacking in
solidarity according to a new report from Norway’s Institute for Labour
and Social Research (Fafo).
None of the Nordic countries have a statutory minimum wage. Wages,
including minimum wages, are regulated exclusively through collective
agreements. In addition to this, Finland, Iceland and Norway have
systems which bind all employers within a certain trade to minimum
wages set out in collective agreements.
Elsewhere in the EU only Italy, Germany and Austria do not have any
statutory minimum wage. Yet despite the widespread implementation of
such minimum wages there is a growing call both from the European
Parliament and from the European Trade Union Confederation (ETUC) to
introduce an EU-wide minimum wage representing 50 to 60 percent of each
country’s average wage. The reasons given are the increasing poverty
which has come as a result of the financial crisis, a weakening of
collective agreements in several countries and the increased risk of a
further economic downturn and social dumping as a result of increasing
labour mobility from east to west.
Nordic trade unions are not among those calling for a pan-EU minimum
wage. They don’t want the state to interfere in wages at all, let alone
opening for EU regulations in this area. But in order to build a
knowledge base for further debate, trade union confederations in
Denmark, Norway,Sweden,Finland and Iceland have commissioned a group of
researchers from Fafo to create an overview of how minimum wage systems
work in a number of countries and to analyse which conditions might
reduce the need to introduce statutory minimum wages in the Nordic
countries.
The researchers, Line Eldring and Kristin Alsos, note that
particularly trade unions in countries where they are weak (and where
they have also lost a lot of power in recent years) are more likely to
support the introduction of a statutory minimum wage. Obvious examples
are Germany, Great Britain and Ireland, where unions more or less have
given up on using collective agreements as a tool for pursuing their
objectives regarding wages. But introducing minimum wages in countries
where collective agreements cover much of the workforce could challenge
the system.
The researchers also say there is little research into the effect
statutory minimum wages might have on union membership and the
negotiation of collective agreements. One theory says it could have a
positive effect by bringing the social partners together in order to
negotiate the size of the minimum wage. That theory is less relevant in
countries which already enjoy well developed relationships between the
social partners, like in the Nordic region. Here the debate centres on
whether a minimum wage would complement or compete with the collective
agreements.
The researchers can see several reasons for Nordic scepticism in
this area. Firstly a statutory minimum wage would to a large degree
deviate from the principle of the autonomy and the contractual freedom
of the social partners – both of which are very strong in the Nordic
region. Secondly, collective agreements have a strong ‘infectious
effect’ on wages, also in areas which are formally not covered by them.
With a statutory minimum wage it would become acceptable to relate to
that rather than to the collective agreement’s minimum wages, which in
the long term could put strong pressure on the collective agreement.
Thirdly, the parties fear the motivation to organise can be weakened
both among employers and workers. In the end the entire basis for the
Nordic model could be completely eroded.
On the other hand, the researchers argue, even Nordic countries
might find positive sides to establishing a national basis for wages.
Here too union membership is falling while low-salary competition
increases. A statutory minimum wage would protect vulnerable groups in
areas where union membership is low, and where regulation through
collective agreements is less relevant. This could also prevent the
emergence of new low-paid groups and would guarantee all workers a wage
they could live off. It would also be a simple regulation which would
be easy to communicate to workers and employers – an advantage
especially in relation to foreign companies.
It is unlikely the EU Commission will propose European minimum wage
legislation in the near future. It has so far turned down any such
requests, arguing that the EU has no competence to adopt such
legislation. But the debate on a European minimum wage seems to carry
on in the European Parliament and at the ETUC. There, the Nordic
attitude is easily interpreted as being solely focused on domestic
conditions while it fails to recognise the size of the low-pay problem
in some countries. At worst the Nordic organisations are being
perceived to be self-centred and lacking in solidarity.
The challenge facing Nordic trade unions now is to show
solidarity with trade union movements in other countries while at the
same time work against solutions which can undermine the collective
agreement system. Citing a colleague, the researchers say the Nordic
players enjoy a strong influence in European organisations, but that
they use it more to apply the breaks than to move things forward and to
set the agenda. But, the researchers say, because of the Nordic trade
unions’‘ strong involvement in handling challenges like low-salary
competition and social dumping at home, they should on the contrary
have a great potential for being active and constructive participants
in the development of strategies and a policy which could unite the
European trade union movement.
