Finland supports the aims of EU minimum wage initiative to combat in-work poverty

On 28 October 2020, the European Commission presented a proposal for a Directive on adequate minimum wages in the EU. The Government supports the proposal’s objective to combat in-work poverty, for example by improving the role of labour market organisations in wage formation and their ability to negotiate and agree wages through collective agreements.

“Our Government Programme stresses the importance of social dimension in the EU and considers reducing inequality one of the key areas of EU cooperation. The Commission’s initiative responds to both of these issues,” says Minister of Employment Tuula Haatainen.

The aim of the Commission’s proposal is to ensure adequate pay and a decent income to workers across the Union. Member States would not be required to introduce legislation on minimum wages or determine the level of minimum wages. The proposal aims to strengthen the role of labour market organisations in wage formation in countries where minimum wages are based on law.

On 10 December 2020, the Government submitted a Union communication to Parliament concerning the Commission’s proposal and the Government’s position on it. Based on an initial assessment, the Directive does not appear to cause significant legislative changes in Finland. The processing of the proposal at EU level has only just begun, so Finland will clarify its position with time.

No significant changes in Finnish legislation are expected

The proposed Directive would provide a framework for addressing minimum wages in the Member States and for monitoring them at EU level. The changes would apply in particular to EU countries with a statutory minimum wage. The proposal aims to ensure that minimum wages comply with certain criteria and that labour market organisations participate in determining and monitoring the level of wages.

The Directive does not propose a uniform minimum wage for the EU. Nor does it propose a statutory minimum wage for Finland or other Member States where wages are determined by collective agreements. According to the proposal, Member States should promote collective bargaining. Finland stresses the need to respect the contractual autonomy of the social partners in wage formation.

The Commission proposes that Member States be required to provide statistics and reports on the development of minimum wages.

“In some Member States, statutory minimum wages have fallen behind and in-work poverty has increased. Monitoring at EU level would support balanced wage development and thereby even out competition for companies in the internal market,” Minister of Employment Haatainen adds.

Inquiries:

Liisa Heinonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 064 131