Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

Nevertheless, the combination of activation policies and placing the low
skilled in the labour market has generally led to an increase of low paid
employment, particularly in the service sector. While this has contributed
to a steady rise in employment levels throughout the EU, the question
remains whether low pay can be contained or reduced by minimum wages
without detrimental effects on employment, or whether policies should
focus on guaranteeing minimum incomes which consist of a combination
of pay and transfer payments. In any case, it is important to stress that
first, both low pay and in-work poverty are highly related and second,
that there is no direct connection to employment levels. In other words,
countries with high numbers of workers in low paid employment and at
in-work poverty risk can also be countries with relatively low employment
levels. Or put the other way round: it is possible to achieve both high levels
of employment and relatively well paid jobs at the lower end of the labour
market.
Do statutory minimum wages
diminish in-work poverty?
The debate on minimum pay and standards of living has been resumed
at the EU institutional level as well as at the national levels with various
successes. While from an academic perspective, the demand for a European
minimum wage has been discussed more thoroughly 9 there is also an
increasing number of voices at the European level asking for a European
minimum wage, such as Jean-Claude Juncker. This topic was resumed
during the German presidency in January 2007 and put on the agenda
of the EU Ministers for Employment and Social Affairs. The concluding
document entails a call for fair and adequate wage setting mechanisms.
Statutory minimum wages are primarily a sign of the weakness of collective
bargaining systems. Countries with comparatively weak collective
bargaining institutions and weak social partner organisations tend to have
statutory minimum wage policy. The EU member states without statutory
minimum wage are also among the countries with the highest collective
bargaining coverage rates, which leads to the conclusion that in these
countries, the majority of employees are covered by a sectoral minimum
wage agreement. 10 Moreover, minimum wages that are determined by
collective agreements tend to be higher than statutory minimum wages.
While collective bargaining institutions, particularly the coverage of
employees by wage agreements, have a dampening effect on the in-work
poor, the effects of the statutory minimum wage on the incidence of
low pay are harder to establish. In any case, countries with a statutory
Chapter 9 – Anke Hassel 137