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The Problem of Decent Wages

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The Council of Europe is not an institution of the European Union. It was founded in 1949 and one of its main goals is to protect human rights and work towards the standardization of legal and social protection in all its 46 member states. In 1965 the ‘European Social Charter’ entered into force. Article 4 paragraph 1 speaks on the “right to fair compensation’ and urges the signatory states: ‘Recognize workers’ right to compensation which will enable them and their families to enjoy a decent standard of living”. “The Council of Europe can examine the remuneration systems of the member states and assess whether they provide fair remuneration for their work based on their dignity”. For example, the Council of Europe concluded that in 2002 the national minimum wage in the UK (based on the rate in force in 2000) was too low to comply with Article 4. It also stated that it could not properly assess the situation in UK Britain because it failed to provide data on the net minimum wage of a non-family worker.

But the UK is not alone in this. In a recent summary of decisions taken under paragraph 1 of Article 4, the European Committee of the Council of Europe on Social Rights also concluded that Austria, Greece, the Netherlands, Slovakia and Spain did not comply with the Wages Directive. However, he refrained from reaching a conclusion on the situation in Denmark, Germany, Iceland and Norway pending further information.

If a country is unable to comply with the Social Charter, it should submit a timetable and publish a process showing how and when it can comply with the requirements of the Charter. The European Committee gives several some many warnings, recommendations and additional recommendations to ensure that this country acts by following per under the ‘Social Charter’.

Surprisingly, such regular assessments of the state of respect for social rights throughout Europe remain so restrained. Their reports cite cases of non-compliance with Article 4, paragraph 1, and also contain information on non-compliance by many countries with other provisions of the Social Charter, but it is doubtful that many trade unions across Europe are aware of this. The situation is similar with the issue of a ‘decent wage threshold’: it is clear that the discussion of this ‘threshold’ and the decision to change it are considered to be very much internal issues of the Council of Europe Committee on Social Rights and does not spread wider. Collective bargaining in solidarity. The main purpose of collective bargaining is to protect workers’ wages from inflation and to provide them with at least some of the benefits of any productivity gains. This is the basis of the guidelines adopted by the ETUC and several European trade union federations to coordinate the collective agreement. At the same time, attention is focused on increasing average national productivity, rather than on changes in labour productivity in specific sectors of the economy. The rationale for this is that low productivity industries must keep pace with high productivity industries.

This is a particularly important issue for the public service sector, where even achieving a widely accepted measure of productivity growth is a challenge. It is in this sector that several some many very important professions are employed, such as social services, which, however, is considered low productivity if the standard for measuring tools applied to them.

Solidary collective bargaining has come under pressure in recent years as governments and employers seek more localized elements of collective bargaining in centralized national and industry negotiations. In public services, deregulation and privatization have also contributed to the continuation of this trend of less wage bargaining at the local level, or of undermining collective bargaining, as well as of workers hired by outsourcing companies themselves being hired by organizations to apply collective agreements with even worse wages and working conditions, or avoid any collective agreements at all.

In general, since the 1970s, the long-term trend has been to reduce the share of wages in national income, as wage in many European countries lags behind productivity growth (Thorsten Schulten, 2002).

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This, in turn, has an impact on the economy as a whole and, in particular, has become a hotly debated topic in Germany.

The Trade Union, backed by researchers in Germany, France and Switzerland, has highlighted the economic role of wages in its ‘Theses on European Minimum Wage Policy’. They note that businesses increasingly view pay simply as “a factor in production costs and a variable in the international competition for company locations”. Thus: “the economic function of workers’ wages is pushed into the background as a significant component of national economic demand, without which a prosperous economy is impossible”. There is also the issue of getting a ‘decent income’ and the fact that workers are not a commodity, and that their income should not simply be left at the mercy of the market. The neoliberal argument is for markets to work, through the logic of a German website created to encourage people to apply for jobs by terminating other employees.

Even in some public service sectors, employers acknowledge that wage-setting cannot simply be left to the market. A study by the Bilateral Commission on Local Government Salaries (October 2003) on the state of wages in municipalities in the UK states: “Comparison of markets and their assessment it must be done scrupulously. The fact that it is possible to hire workers at a lower rate than what is offered is not a necessary indication that the proposed rates are too high”.

The International Labor Organization (ILO) points out why employers can support the minimum wage check as “to increase productivity by motivating workers’ and as a factor in ‘Reducing labour change’, which can be very costly for firms”.

Average hourly wages in 2017: 1) in EU countries – 26.76 euros per hour; 2) in the euro area countries – 30.33 euros per hour. Thus, the average salary in the countries of the European Monetary Union is higher than the EU average. According to the statistical agency Eurostat, in the first quarter of 2020, the largest increase in average wages was recorded in Romania (13%), Latvia (11%) and Hungary (10%). They are followed by the Czech Republic and Lithuania with a growth of 9% and Slovakia with a growth of 8.5%. For the first quarter of 2020, wage growth in the euro area countries was 2%, and in the EU countries (EU-28) – 2.7%.

To find out if the Council of Europe wage levels is adequate in a given country, its European Committee of Social Rights (SEBS) has proposed that 68% of gross average earnings be considered the norm. This was reminiscent of the definitions used by the OECD, namely two-thirds of the average earnings of full-time workers. The Council of Europe definition has gained some acceptance and has certainly become a key target for low-wage activists in the UK. However, according to the Council of Europe, it was never just a matter of assessing, for example, whether the national minimum wage was above or above this threshold. The Council of Europe Committee on Social Rights (ECSC) has said it wants to take other factors into accounts, such as taxes and social benefits. This proved to be an impossible task and the ECSC announced that it was unable to determine whether or not governments were providing sufficient revenue.

This committee then prepared another benchmark – 60% of net average earnings. The decision to make this change was attacked in the UK by low-wage activists. Carol Murray of the Scottish Low Wage Group said: “This group believes that such a redefinition not only hides the overall effectiveness of a decent wage threshold as a means by which poorer European citizens can hold their governments accountable for their policies but also bury the usefulness of the definition as a tool for analysis of unnecessary complexities that can only be revealed by statisticians in the service of the Member States” (Radical Statistics, No.85, 2004).

Thus, a key feature of any set goal should be its comprehensibility and ease of assessment when checking the salary level. This is especially important if the aim is to set goals or objectives for collective bargaining, lobbying and campaigning across Europe. “This group believes that this change in definition does not only serve to hide the overall effectiveness of a decent wage threshold as a means of which poorer European citizens can hold their governments accountable for their policies but also buries the usefulness of the definition as a tool for analysis among unnecessary complexities that only statisticians in the service of Member States can hope to resolve” (Radical Statistics, No.85, 2004).

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The Problem of Decent Wages. (2022, September 01). Edubirdie. Retrieved February 8, 2023, from https://edubirdie.com/examples/the-problem-of-decent-wages/
“The Problem of Decent Wages.” Edubirdie, 01 Sept. 2022, edubirdie.com/examples/the-problem-of-decent-wages/
The Problem of Decent Wages. [online]. Available at: <https://edubirdie.com/examples/the-problem-of-decent-wages/> [Accessed 8 Feb. 2023].
The Problem of Decent Wages [Internet]. Edubirdie. 2022 Sept 01 [cited 2023 Feb 8]. Available from: https://edubirdie.com/examples/the-problem-of-decent-wages/
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