Maltese MEPs nuanced over proposed law for an EU minimum wage

Maltese MEPs are largely supportive of a European directive on adequate minimum wages proposed by the European Commission. But they are cagey on a call by European trade unions for a mandatory ‘threshold of decency’, which would peg minimum wages to average wages in member states, so far only an “indication” in the Commission’s proposal.

While largely supportive of the EC bid to set minimum wage standards across the bloc, Maltese MEPs were either opposed or wanted flexibility on a demand by the European Confederation of Trade Unions for a mandatory “decency threshold” that pegs minimum wage in each country to its average wage.

ETUC wants the threshold to ensure statutory minimum wages could never be paid at less than 60% of the median wage and 50% of the average wage in a member state.

The Commission has included the threshold in its draft directive but only as an indicative guide for member states. But the ETUC is working with MEPs to make this a mandatory bottom line when the directive comes before the European Parliament.

The ETUC also wants an ‘adequacy’ requirement so that member states pay minimum wages above the threshold, but also that statutory minimum wages are always enough to ensure a decent standard of living.

Former Labour PM now head of the Labour delegation to the EP, Alfred Sant, was most categorical in his disagreement with ETUC’s proposal. “At this stage, I agree with the ‘threshold of decency’ as an indicative not as a mandatory threshold for adequate minimum or living wages and this for two reasons,” he told MaltaToday.

Consistent to his sovereignist positions, Sant said he does not like EU intervention or interference to spread in a mandatory fashion to internal economic and social running of member states. “When the Union operates in this way, it becomes counterproductive, though for social reasons, I can understand and sympathise with the point the ETUC proposal is making.”

Secondly, Sant said the decency threshold as stated, did not seem to take into account social welfare, security and other measures like income supplements, family allowances, tax relief and other subsidies that apply in different ways in different member states to sustain “real” incomes. “Neither does it take into account the temporal and geographical circumstances that determine the needs of populations living within different latitudes and time-zones of the Union; as well as the economic and financial ‘distortions’ in remuneration scales applying within a given society due to the particularity of its internal social structures.”

However Sant does not exclude future adjustments to the directive. “I think it makes sense in any proposal for a regular review... say, every five years... to be undertaken by the Commission to examine the state of play and open the matter up for further discussion.”

Nationalist MEPs: Roberta Metsola (left) and David Casa (right)

Agreement with social partners needed say PN MEPs

Nationalist MEPs Roberta Metsola and David Casa recognised that low wages in Malta were creating a hole in its social fabric, but insisted that the EU’s role should be that of setting guidelines. The actual implementation should be in the hands of member states. “Our role, as European policymakers, is to ensure that member states adhere to guidelines which improve the quality of life of their respective citizens, with each Member State facing different realities and challenges.”

The two MEPs said member states should be provided with a framework, including guidelines, on how to increase its minimum wage, but in agreement with the social partners of that respective country, “ensuring the backing of both employers and employees and the respect for subsidiarity… so our call is for consensus between social partners on this important matter going forward.”

Still the two MEPs also expressed concern that Malta has been flagged as one of nine EU member states where, in 2018, the statutory minimum wage did not protect minimum wage-earners against the risk of poverty. Moreover in Malta, women represent over 70% of minimum-wage earners; close to one in four of minimum-wage earners are younger than 25. “These holes in our social fabric must be closed and our delegation is in close contact with different social partners, employee and employer representatives to see how best this can happen in Malta and Gozo. These discussions are ongoing, but we are clear in that the fight against in-work poverty must be stepped up,” Metsola and Casa said.

The other Labour MEPs were more inclined to support the proposed decency threshold “in principle”, while also focusing on another part of the directive, which calls for wider coverage of workers through collective bargaining.

(Left to right) Labour MEPs: Josianne Cutajar, Alfred Sant, Cyrus Engerer and Alex Agius Saliba

Labour MEP Alex Agius Saliba recognised that the COVID-19 crisis led to a worsening of wage inequality, leading to severe precariousness and unprotecting of workers and their families. “It is essential to ensure that every worker in the Union is protected with adequate minimum wage.”

In principle Agius Saliba believes the minimum wage should provide at least a decent standard of living, and be set consistently above the defined poverty risk threshold. “In this regard, I welcome the proposal for a directive on adequate minimum wages, aiming to increase the collective bargaining coverage and ensure that workers in the European Union are protected.”

He also agreed that statutory minimum wages should be set at an adequate level and above a decency threshold. “Such an approach will reduce in-work poverty, guaranteeing an income for every worker above the poverty level while considering the variations in costs of living within the Member States.”

Labour MEP Josianne Cutajar also believes that the threshold should be included in the legislation concerning minimum wages, but adds that a degree of flexibility should be retained. “Fighting in-work poverty and ensuring decent standards of living for everybody is consistent with the need of protecting workers amid the swift dynamics of the labour market and is in line with the enforcement of the European Pillar of Social Rights.”

But she said economic and social developments also vary greatly across the bloc. “That’s why I am in favour of a certain level of flexibility, which would allow national governments to implement labour market policies tailor-made to domestic needs and to address workers’ concerns in the most effective manner”.

Like Sant she also advocates a regular assessment of the state of play on these important social aspects.

Labour MEP Cyrus Engerer also augured that a right to a minimum wage as enshrined in Malta in the 1970s, could be universally applied across the continent. “While this is an issue of national competence, the right to a minimum wage introduced in Malta in 1974 made a positive difference in the life of Maltese workers and in their social mobility,” Engerer says, saying it is now time for all member states to follow suit.

“We must make sure all workers in the EU are guaranteed a minimum wage that leads to a threshold of decency.”

Both the Maltese government and the Nationalist opposition in the national parliament are opposing the EC’s proposal to set minimum wage standards across the bloc. In a reasoned opinion to Brussels last month, the Maltese parliament said wage conditions were a national prerogative and the EU lacked authority to legislate in this area.  “Since parts of the proposal are proposed to be binding for all member states, the Maltese parliament sees this as an infringement on national mechanisms for wage formation.”

A European Commission study found that Estonia, Malta, Ireland, Czechia, Latvia, Hungary and Romania had minimum wages below 40% of the national average wage. In 2018, in nine member states, Malta included, the statutory minimum wage did not protect minimum wage earners against the risk of poverty.