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EU agrees deal to ensure fair minimum wages for workers

Politicians in Brussels have reached an agreement on how EU countries will ensure adequate minimum wages in a move that will protect workers at a time of rising inflation and a cost of living crisis.

In the agreement agreed between the European Council and parliament on Tuesday, member states will collect data on minimum wage coverage, assess the prices of common household items and promote the principle of collective bargaining to help companies pay fair salaries.

“This is a good day for social Europe. We have reached agreement on the directive on adequate minimum wages in the EU. This is especially important at a time when many households are concerned about making ends meet,” said Nicolas Schmit, European Commissioner for Jobs and Social Rights.

MEPs, member states and the European Commission agreed to establish a framework for setting statutory minimum wages. They include obligations for Member States to set clear criteria for updating minimum wages every two to four years and the establishment of consultative bodies in which “social partners” such as trade unions can participate.

EU countries should also collect data on minimum wage coverage and adequacy, and ensure workers have access to dispute resolution mechanisms, the EU executive said.

“The new rules will protect the dignity of work and ensure that work pays,” committee chair Ursula von der Leyen said in a statement. Twitter post

The preliminary agreement is expected to be signed by parliament and member states this month and then published in the EU’s official journal. Countries have two years after publication to apply the rule.

The new law will include provisions to promote and facilitate collective bargaining on wages by trade unions and employers in all Member States.

“Countries with high collective bargaining coverage generally have lower proportions of low-paid workers, lower wage inequalities and higher wages,” the committee said. Member States whose collective bargaining coverage was estimated at less than 80 percent of workers should put in place a plan to facilitate such conversations between employers and employees, it added.

Agnes Jongerius, one of the MEPs who supported the proposed law in parliament, said: “Over the past decade, wages have lagged behind productivity gains. Workers caught a smaller piece of the pie. This is especially true for those with the lowest wages.”

She said workers had fallen victim to policymakers pushing for a reduction in the scope of welfare systems after the global financial crisis.

While the directive only requires a qualified majority of member states to pass, Denmark is likely to vote against it because it believes the EU should not meddle in pay issues, said two people familiar with Denmark’s position. In recent years, other Scandinavian countries had also expressed concerns that such a law would undermine their collective bargaining systems.

Separately, the committee, parliament and member states are close to agreeing a law that would require companies to achieve a 40 percent share of women on their boards of directors. The commission first proposed the directive in 2012, but encountered opposition from, among others, Germany and some Scandinavian and Baltic states.

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