Unió Europea i el Món

Social dimension and labour policies in the European Union

Article written by Jordi Castellana, Secretary for Labour and Economic Policy at Esquerra Republicana, in the context of the party's proposals for the conference on the future of Europe

Since its beginnings with the Coal and Steel Community in 1952 as a tool to survive the trauma of two world wars and to face the economic reconstruction of Europe, and through the European Economic Community created in 1958, one of the main reasons for the existence of the European Union is to promote the economic integration of the European states. This economic integration has been strengthened by the creation of a single currency, the euro, which came into circulation on 1 January, 2002.

This fact is especially relevant when analysing the evolution of the labour market in the European Union. Most Member States decided to transfer their competences in monetary policy to the European domain, while fiscal policy remains in the hands of the states, with certain exceptions such as VAT, labour market policy or social protection systems. To that, another element must be added: the baseline disparity between states and their economic starting points with the ensuing internal economic imbalances, while adding to that a common monetary policy that has inevitably benefited some states more than others. This has all meant constraint for economic convergence. The large sums in the form of transfers and investments that the European institutions have destined to reduce these territorial imbalances, financed by the contributions of the more affluent economies, have not been sufficient to guarantee effective economic convergence.

Regarding the concept of work, we must begin with the premise that work is the premier social policy. Work is a right and a duty that must, on one hand, give people the economic conditions to develop their life projects with dignity, and on the other, it is a central axis in the definition of individuals themselves. Work must therefore be an essential element in the fight against poverty, and consequently in the generation of social cohesion, but also with regards to personal empowerment of the individual.

1. Setting the minimum wage at around 60% of the average wage in each country

Given all the above, what can the European Union do about it? First of all, we must learn from the mistakes of the extrication from of the last economic crisis, the Great Recession of 2008, in which the above-mentioned imbalances became extremely evident and which led to the austerity recipe being linked to a recipe with a direct impact on the labour market. Veiled under the myth of labour market flexibility, the path to regaining competitiveness for the southern Europeans—those that suffered the greatest impact from the crisis, along with Ireland—was through what is known as internal devaluation. The fact that it was impossible to apply monetary policy individually by devaluing the currency to promote competitiveness, even at the cost of impoverishment in comparison to other countries, led to devaluation being made by reducing labour costs, i.e. reducing the purchasing power of the working classes. Take Catalonia for example, where the purchasing power of Catalan workers in 2019 was still 6.5% lower than in 2008.

This led to a widespread but especially intense growth in precariousness in southern Europe. Those countries started out from a situation with much less resilient economies. As a consequence, the phenomenon of the working poor appeared, that is, those who despite having a job, do not earn enough to breach the poverty threshold.

In order to act against these situations, the Council of Europe notably recommended through the European Social Charter that a minimum wage at around 60% of a country’s average wage should be set. This basis, although but a recommendation, would see the minimum wage in Catalonia at around 1,447 euros per month gross. The competence for setting this is at present the central administration’s and although there have been increases of the minimum wage in recent years to 1,108 euros per month gross, this figure, this figure is still far from the recommended goal.

European minimum wage per country
European minimum wage by country

2. Ending the gender wage gap

Another factor of imbalance is the gender wage gap. According to Eurostat and Idescat[1] data, the hourly wage gap between men and women in the European Union stood at 14.1% in the EU, 11.9% in Spain and 13.3% in Catalonia. However, if we take into account the difference in hours worked, as well as the impact of part-time work, the gap in Catalonia increases to 23.4% and in Spain to 23%, according to the INE[2]. Finally, it should be borne in mind that this effect is multiplied when we come to pensions, in which according to Eurostat data for 2017, the gender gap was a scandalous 35.7% in the EU. In this regard, setting minimums through legislation against gender discrimination, ensuring parity in positions of responsibility in companies and institutions, and promoting gender balance in those economic sectors with better wages, especially those in the science, technology and industrial sectors, and including minimums for care-related leave, with regulation on social protection systems, are all elements where the road ahead is virtually endless.

3. Regularization of workers from other countries: improving working conditions

Third, several studies clearly determine how the future of the European Union necessarily depends on encouraging the arrival of young people from other countries. The European Union’s policy on borders, immigration and citizenship rights is unacceptable from a human rights point of view, but also senseless in the social and labour sphere. According to a recent study carried out by professors Joan Monràs of Pompeu Fabra University, Javier Vázquez Grenno of the University of Barcelona, with the assistance of Ferran Elias, a data scientist at Ocado Technology, the regularization in 2004 of 600,000 people in an irregular administrative situation had a positive impact of 24 billion euros on the public coffers. According to the study, regularizing the administrative situation of our fellow denizens who have not had their situations recognized also has a positive impact on the working conditions of other employees, as it levels the playing field in the labour market.

4. Guaranteeing labour rights of all workers

Fourth, the new digital economy has, along with its many positive impacts on our society, opened debates on working conditions, and has been accompanied by the emergence of the so-called gig economy. The gig economy is based on the extreme flexibility of workers who are hired for sporadic, one-off jobs and in which digital intermediaries take control of supply and demand, in detriment of producers, of product quality for the consumer and, as referred to at the beginning of this paragraph, the rights of workers. Several court rulings in Member States have determined that workers of companies such as Uber or Glovo are in fact employees because the control of the means of production is the responsibility of the contracting party. In this regard, internal oversight coordination by the European Union to prevent the use of loopholes that some of these companies take advantage of, assurance of labour rights, and the control of market power are areas in which European legislation should determine common minima.

Digital workers
Digital workers

5. Encouraging active employment policies and continuing education

And last but not least, it is necessary to mention the active employment policies and lifelong learning of both unemployed and working people. The Next Generation EU funds show that the future, and in fact the present, will be based on two driving forces that will propel the rest of the economy: digital transformation, as mentioned in the previous paragraph, and ecological transition. In the coming years, the field of digital transformation in particular will likely bring about disruptive change in the labour market and lead to turmoil in labour supply and demand. That is why it is necessary to put the so-called reskilling at the centre of lifelong learning, that is, to add a technological mantle for workers that allows them to adapt to future, and some present, requirements of the labour market. Otherwise, the wreckage will be dramatic.

In conclusion, the process of European construction and integration, of an eminently economic character and with seriously contrasting limitations at the political level, together with the huge internal differences at the level of economic and social structures and in relation to the systems of social protection, has generated terribly disparate situations in the labour market. Take one example: according to December 2020 Eurostat figures, youth unemployment stood in Spain at 40.7%, while in Italy it was 29.7%, and a meagre 6.1% in Germany. Such situations, enormously aggravated by an uneven impact of the economic and social crisis situation resulting from the pandemic, with much stronger impacts in the countries most dependent on tourism, makes it our duty to take advantage of the European funds linked to Next Generation EU in order to make the changes in the underlying economic and social structures that will lead to greater convergence in economic and social issues within the European Union.


Jordi Castellana

Secretary for Labour and Economic Policy at Esquerra Republicana

[1]     The Institut d’Estadística de Catalunya or Idescat is the Statistical Institute of Catalonia

[2]     The Instituto Nacional de Estadística or INE is Spain’s Office for National Statistics