Ref. Ares(2022)76652 - 05/01/2022
To the attention of: The EMPL Social Dialogue team
Subject: Feedback from European Furniture Industries Confederation (EFIC)
to First phase consultation of Social Partners on possible EU action
addressing the challenges related to fair minimum wages
24 February 2020
1. Do you consider that the Commission has correctly and sufficiently identified the issues
and the possible areas for EU action?
EFIC disagrees with the assessment of the European Commission on the challenges and
issues mentioned in the consultation document. EFIC believes that the document lacks
both an economic analysis, as well as a legal one.
Economic research as well as practical experience shows that minimum wages can have
positive, negative and even a neutral impact on parameters such as wage level,
employment, apprenticeship, productivity and competition. None of these parameters and
consequences have been carefully analysed.
Existing intelligence (see for example the second evaluation report of the German
Minimum Wage Committee, 2018) shows that minimum wages will only be able to reduce
social welfare and income support for approximately 3% of employees (mainly full-time
employed singles). At the same time, the impact of minimum wages on social security
systems (in particular pension systems) needs to be carefully monitored, since the
development of pensions usually follows the development of wages.
Moreover, regarding people working exclusively in marginal employment (Mini-jobs), a
decrease in numbers has been detected, after the introduction of minimum wages in
Germany 2015. Roughly half of those employees moved into an employment subject to
social security contributions, the other half withdrew from the labour market or registered
as unemployed. Effects on the length of working time have also been reported.
Finally, an increase of the wage cost and decrease of profit has been reported by
companies affected by minimum wages. At the same time an increase of consumer prices
in affected industries has taken place.
EFIC believes that the consultation document does not make an honest effort to assess the
legal validity of a possible binding instrument. EFIC strongly emphasises that the EU,
according article 153 (5) of the Treaty, explicitly, and for good reasons, lacks competence
EFIC – European Furniture Industries Confederation
Rue Montoyer, 24 BE-1000 Bruxelles
T: +32(0)22870886 |
W: https://www.efic.eu/ | E
: xxxx@xxxx.xx
EU Transparency register: 95910795422-52
in the area of pay. The consultation document does not consider the reasons for this
limitation, and instead follows a constructed line of argument to motivate its competence.
2. Do you consider that EU action is needed to address the identified issues? If so, what
should be the scope of that action?
EFIC does not see any need for EU-action.
The Commission states as objectives for an initiative in the area the promotion of well-
being among citizens in Europe, the fight against poverty (in-work), the increase of
purchasing power of low-wage earners, ensuring a level playing field on the Single Market
and to counter “wage dumping”.
Even if many of these ambitions can be shared as valid ones, the choice of instrument is
the wrong one. Wage is remuneration for work, and nothing else. It is not a tool for
politicians, certainly not at EU level, to achieve political ambitions. To politicise wages and
wage formation is both ineffective and dangerous. The challenges and ambitions described
in the consultation document should instead be addressed with other tools and processes
– and that at national level.
Although the Commission seems to exclude a one-size-fits-all approach, the foreseen
initiative would undermine labour models where wages and wage floors are negotiated in
collective agreements by autonomous social partners. These models have been identified
by the Commission as the most effective in reducing wage dispersion and generating “a
lower proportion of low paid workers”.
The Commission seems to believe that a European initiative on minimum wages would
strengthen collective agreements. EFIC disagrees. Mandatory rules on the level of wages
and coverage would rather weaken collective bargaining systems, as the incentives to self-
organisation would be weakened, both among employers and workers. An EU initiative on
minimum wages would not improve bad working conditions and low wages in some
Member States. Instead, the proposed measures would lead to negative side effects for
healthy wage setting systems.
As correctly set out by the Commission, nearly all EU Member States do have national
legislation, instruments or other kind of institutions and committees already in place to
deal with minimum wage setting. Annex I of the consultation document shows the variety
of national procedures and proceedings in each and every Member State. Any
shortcomings in these national instruments and regulations in place will not be solved by
a common instrument. Thus, both for theoretical and practical reasons there is neither
room nor necessity for further regulation at EU level.
EFIC – European Furniture Industries Confederation
Rue Montoyer, 24 BE-1000 Bruxelles
T: +32(0)22870886 |
W: https://www.efic.eu/ | E
: xxxx@xxxx.xx
EU Transparency register: 95910795422-52
3. Would you consider initiating a dialogue under Article 155 TFEU on any of the issues
identified in this consultation?
No.
For further information, please contact:
EFIC - European Furniture Industries Confederation A: Rue Montoyer 24, PO Box 2, BE-1000 Brussels
T: 0032 (0)2 287 08 86
E:
xxxx@xxxx.xx
EFIC – European Furniture Industries Confederation
Rue Montoyer, 24 BE-1000 Bruxelles
T: +32(0)22870886 |
W: https://www.efic.eu/ | E
: xxxx@xxxx.xx
EU Transparency register: 95910795422-52