EU Developments on reducing inequalities and in-work poverty

By Prof. Luca Ratti (University of Luxembourg)

Last 10^th February, the European Parliament adopted a Resolution on how to reducing inequalities with a special focus on in-work poverty, stressing in particular the decline of collective bargaining coverage and the increase of precarious and instable working arrangements.

The debate at the Parliament revolved also around the proposal, submitted by the EU Commission last 28^th October 2020, for a directive on adequate minimum wages across the EU.

Backed by the political vote at the Parliament, the directive on adequate minimum wages certainly represents a remarkable step forward both for Member states that already have in place statutory minimum wages and for those based on collective agreements.

The combat of in-work poverty finds its policy rationale in principle No. 6 of the EU Pillar of Social Rights, which combines a general principle on fair wages providing for a decent standard of living with the commitment to prevent in-work poverty in Europe.

Still, introducing a binding instrument on “pay” constitutes a high-stakes risk for policy makers at EU and national levels, for the apparent lack of competence based on Article 153 TFEU.

Reducing inequalities and in-work poverty is a relatively recent political commitment for the EU, but it seems the time has come for the EU Parliament and Council to eventually welcome the proposed directive. It remains to be seen at which conditions they will approve it.