Opening remarks by Executive Vice-President Dombrovskis at the read-out of the College meeting and press conference on adequate minimum wages

Thank you very much Valdis, thank you also for this overview and mentioning of the main arguments for this proposal. Three years ago in Gothenburg the European Pillar of Social Rights was endorsed by Member States, European institutions and social partners. Everybody wondered what would happen to these nice principles. One of them is about minimum wages, about setting minimum wages and respecting national traditions of the setting of wages.

Today, we are implementing principle number six of the European Pillar of Social Rights and it is certainly not the easiest one. It was quite a debate with many consultations. However, I think the Commission has delivered on a very important part of the social rights pillar.

Many questions have been put to us about what kind of legal instrument we needed. I heard also from, mainly the business side, that we should not have a directive, but should eventually have a recommendation and so on and so forth. In the end, the Commission decided that we should have a directive. The Vice President just mentioned why this is. There is from the beginning of this Commission a very strong message from the President on this issue. She used very, very, strong words talking about the dignity of work, fairness of work, the fairness of wages and the necessity of that works pay for people. After these words, we had to give a clear political signal. This clear political signal is this Directive.

This Directive is not imposing a certain system on the Member States. It is recognising the diversity of the Union. Six Member States have no statutory wages, but define minimum wages exclusively on collective bargaining. Twenty-one Member States have statutory minimum wages.

It has never been the question to undermine the system of collective bargaining. On the contrary, this Directive is about minimum wages, but also about setting minimum wages. It is thus about collective bargaining. There is an article on collective bargaining and the level of coverage it should have. We want Member States to go that way and extend their coverage of collective bargaining. It is included that this should be at least 70%.

When there is a statutory minimum wage system, we do not want to change the system. It is important to have objective criteria in order to adopt and adjust minimum wages to the economic but also to the living conditions in the different Member States. Therefore, we give tools and instruments to invite Member States to define objective criteria on growth of gross wages, productivity of the economies. These are the criteria which then should bring Member States to adjust and regulate the level of minimum wage, and also to evaluate if the level of minimum wages are too low because people in some Member States cannot make a living with this level of wage.

Now, how does this function then when this assessment has been made? The Commission will not impose any rule, but it builds a monitoring system. We have a lot of monitoring systems, so we build a monitoring system also for wages. This monitoring system allows us to first at look how wages are evolving, but also have a look on convergence. Because we have to work not only on economic convergence, which is extremely important, but also at the same time at social convergence and wage convergence in this Union. Because we cannot have, as the Vice President has mentioned, the big gap between the highest and the lowest. It is nearly one to seven. Productivity is not one to seven. Certainly living costs are different in the highest countries compared to the lowest, but they are not one to seven. This is the essential part of this proposal. We will have a yearly monitoring system on wages, just like we have monitoring systems on economic evolution, budgets and so on. I think this is a strong innovation, which makes sure that wages are not forgotten, as wages also are an important part of the economic context.

We think in this context of crisis, we have to signal that those who are at the bottom, those who are very much exposed to the risks of this crisis this pandemic, that they are not the forgotten ones. They are not the ones that have to pay the highest price for this crisis and they are not the ones who at the end will have to cut or freeze their wages. Therefore I think it is an important political signal, because we need precisely in this crisis more cohesion, more social cohesion and more collective bargaining to rebuild the economy. This is very much linked to the Recovery and the Resiliency Facility because we cannot have resilience when we have ten percent or more that feel they are the forgotten ones and who are ones who feel that they are losing out on social justice and social fairness. Building the resilience in our society is part of social fairness.

My last point, is to say that yes, we have to defend, and we have over the last months, the internal market. Because yes, this is the greatest instrument of our prosperity, but it does not become easy to defend the single market if the inequalities are too big and if people get the perception that the competition in this market is dependent on social systems and wages. It is not acceptable that low wages become the major instrument for competition. And the President has also insisted on this aspect. We want to build the European economy on the basis of knowledge, digital and green technologies, and by upskilling people. We have to respond to these challenges. We want to build the Union. And therefore, I think there is a very strong social message in this Directive, but there is also an economic message that we want to rebuild the European economy on higher productivity and a higher technological level.