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The Advantages of an Adequate Minimum Wage

The Advantages of an Adequate Minimum Wage Economy Near Us (XL)

The individual wellbeing as a component of social wellbeing 

We find today, in the specialty literature, analyses and studies that focus on the quality of life, and these frame the concept of wellbeing as concerning the individual and referring to a state. In these works, the semantic features of the concept of wellbeing are formulated as follows: wellbeing refers to the person (the individual) – it considers the individual himself, not a certain social-historical individual; wellbeing refers to a state (static profile) – it is a “photograph” of the components of a state vector considered appropriate, representative, relevant and practicable for researching such a concept; wellbeing refers to a moment – the establishment of empirical values ​​of the state vector that refers to the individual, at a certain moment. This is observed, from a theoretical and philosophical point of view, both at the level of the individual, as individual wellbeing with a strong idiosyncratic accent, and at the level of society as social welfare with an objective character. The concept of wellbeing remains in our attention also in this period when we attach great importance to individual safety issues, and I am referring here to health issues.

Taking into account a causal perspective, we can say that between individual welfare and social welfare we identify a relationship of co-evolution, consequently a certain level of social welfare generates a certain level of individual wellbeing which, in turn, transmits an impulse for welfare variation at the social level and so on.

Considerations set out above show that theoretical aspects of these concepts are still being developed and analysed, but they are also under the attention of the legislative authorities at the level of the European Union that formulate proposals in this regard. Such a proposal results in ensuring a minimum level of wellbeing at both individual and society level and concerns the protection of individuals working in the Member States of the European Union by guaranteeing an adequate minimum wage. This article presents the main advantages and recommendations of such a framework directive. One last mention: in the development of this topic, I will keep the same rigorous wording regarding the minimal wage (actual wage, generated by the market) and the minimum wage (the salary established in an administrative way, often called itself the minimum wage), that we already used in other interventions under this heading. 

The necessity of an adequate minimum wage 

Last autumn, the European Commission proposed a framework directive on adequate minimum wage in the European Union, aiming to protect everyone working anywhere in the Union by obtaining the means to secure a decent living. It was concluded that the guarantee of fair working and living conditions can be done only by ensuring an adequate minimum wage for employees, but also for other categories of workers who have an employment contract or employment relationship, being included here domestic workers, seasonal workers, those working on vouchers, those working on digital platforms, trainees, apprentices, etc. An appropriate level of the minimum wage would have a positive social impact and would have multiple economic benefits, would reduce wage inequalities that have increased as a result of labour market polarization (the pandemic period showed a decline in employment with average wages and an increase in low-wage employment in the retail, cleaning, tourism, hospitality, long-term and residential care sectors, etc.). Other benefits considered by the framework directive refer to the reduction of in-work poverty, the reduction of gender pay gaps, the provision of fair working conditions, the protection of employers who ensure decent wages for employees, etc., so that investments in the labour force lead to an increase in labour productivity both during the pandemic and in the period immediately following the relaunch of all economic activities. Some important aspects of the European Commission’s proposal will be discussed in the following. 

Principles to apply the framework directive 

Respecting the decisions taken at national level by the Member States, the provisions of the framework directive do not imply the obligation to introduce a legal minimum wage, nor do they set a common level of the minimum wage. Within the European Union, the two ways of setting the minimum wage, through collective bargaining or by law, divide Member States into two broad categories. Thus, a number of 21 states have a minimum wage set by government decision and a number of 6 states (Denmark, Italy, Cyprus, Austria, Finland and Sweden) have the minimum wage set through collective bargaining between employers and unions. States where the minimum wage is set by collective agreements resulting from negotiations between the social partners have been recommended to increase the share of employees protected by such collective agreements and to monitor the adequacy of this income. States that increase the minimum wage by law have been recommended to identify clear and stable criteria, benchmark mechanisms and to update their minimum wage levels regularly and in a timely manner. The current legislative provisions in Romania have taken into account the recommendations of the European Commission and at the moment there is a legislative proposal that regulates the increase, in equal annual instalments, of the minimum basic wage per country guaranteed in payment (rigorous called the minimum gross monthly wage, on economy, guaranteed in payment), starting with January 1st, 2021, so that by December 31st, 2024 it will represent 60% of the average gross earnings used to substantiate the state social insurance budget. It is expected that, starting in 2025, the minimal gross monthly salary in the economy, guaranteed in payment by each Member State, will be updated annually in order to maintain the ratio of 60% of the average gross salary in December of the previous year used to substantiate the state social insurance budget.

The Member States of the European Union have a period of two years to transpose this Directive into their national law, under threat of initiating infringement proceedings if they do not comply with European Commission regulations. There is an obligation on the part of the Commission to submit an annual evaluation Report to the European Parliament and the European Council, based on data provided by Member States (level of minimum wage and share of employees in this category, rate of employees covered by collective agreements, variation and share of employees who are affected – information agreed with age, gender, people with disabilities, size of the organization, sector of activity, etc.). The effectiveness of this initiative will be measured by assessing the adequacy and coverage of employee protection throughout the European Union.

The role of the European Commission’s support in completing and shaping working conditions in the Member States is materialized by the subsidiarity and proportionality of the measures adopted, they do not intervene in the measures taken at the national level in the Member States and intervene only enough and as little as possible in order to protect workers from in-work poverty and ensure conditions for a single market with equal conditions of competition for wages.




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