Minimum wage: what it is, the proposals, how it works in the rest of Europe

In recent weeks, the question of the minimum wage has returned to the center of political debate, after the relaunch of the proposal by the leader of the 5-star Movement, Giuseppe Conte, and by the secretary of the Democratic Party, Enrico Letta.

According to the definition of the International Labor Organization, the minimum wage is the amount of minimum wage that a worker receives by law for work performed in a given period of time, and which cannot be reduced in any way by collective agreements or by private contracts. It is therefore a salary limit below which the employer cannot go down.

Last September 24, during an initiative organized by the CGIL in Bologna, the secretary Maurizio Landini praised the minimum wage, as a tool to avoid a return “to the pre-pandemic period”. Even the president of INPS, Pasquale Tridico, said he was in favor, saying that a minimum wage rate of nine euros gross could be decisive “especially for women and young people”.

Fratelli d’Italia and Forza Italia opposed the proposal, as did the president of Confindustria Carlo Bonomi, according to whom with the introduction of the minimum wage there is a risk of companies fleeing from collective bargaining.

As emerges from a recent analysis carried out for the Chamber of Deputies, in the EU countries that have introduced it, the minimum wage has in fact been added to and not substituted for the collective agreements stipulated between trade unions and employers’ organizations.

The only European countries that have not introduced the minimum wage are Italy, Austria, Finland and Sweden. But in these last three countries, wages have risen and only a small percentage of workers do not enjoy collective agreements. In Italy, on the other hand, the OECD calculates that from 1990 to 2020 the average wage of a worker fell by 2.9 per cent. Furthermore, in 2020 the percentage of workers without collective agreements was over 55 per cent. Over the same period, average wages in France and Germany increased by more than 30 per cent.

In Germany, the law on the minimum wage, which became effective in 2015 during the third Merkel government, set the basic wage at 8.5 euros per hour. Here too the measure was introduced because the national contracts were no longer able to cover the new emerging forms of work (the so-called minijobs). In the public debate that accompanied the approval of the law, opponents of the measure feared that this would lead to an increase in the cost of labor for companies, a decrease in their competitiveness and the consequent arrival of numerous layoffs.

A recent study by University College London (Ucl) on the impact of the minimum wage in Germany shows a completely different picture. According to the research, workers who received a lower salary before the law (about 15 per cent of employed persons) not only saw their salaries rise, but were also pushed to take a path towards better-paid positions.

“As this study shows, companies themselves benefit from the measure. If wages increase, companies are encouraged to compete no longer through wage compression, but by investing in technology and development with a consequent increase in productivity ”, Guendalina Anzolin, a researcher at King’s College London, told Internazionale.

In the French labor code, however, the minimum wage has existed since the seventies and its amount is periodically recalculated with an automatic mechanism supervised by the government. The mechanism depends on various variables and attempts to safeguard the purchasing power of workers even in the event of a rise in prices. At the moment it exceeds 10 euros gross and 90 percent of workers are also covered by collective agreements.

“Looking at France and Germany, it is clear that the introduction of the minimum wage did not lead to a weakening of trade unions or national contracts”, Simone Fana, co-author of the book, explains to Internazionale No more starvation wages (Laterza 2019), together with the economist Marta Fana. According to the two authors, it would be enough to support collective agreements and prevent wages from falling below a certain minimum wage threshold.

Curated by Madi Ferrucci