Regulating for fair remuneration: a tricky balancing act

In striving for fair and decent work, the issue of remuneration is critical to solve. Yet, the notion is complex, whether you strictly look at pay or consider broader benefits such as training or social protection. Add to that the intricacies of European, national and sectoral agreements, and you get a complex puzzle! On 29 June, WEC-Europe, its trade union social partner UNI-Europa and the European Commission tried to crack it on.

Published on 30th June 2023

With inflation reaching a concerning level and the cost of living rising across the European Union, we are witnessing increasing pressure on Europeans’ purchasing power and concerns about workers’ wage levels. As Denis Pennel, Managing Director of the World Employment Confederation-Europe, pointed out, the discussion organised by WEC-Europe on 29 June around ensuring adequate and fair wages could not be more timely.

During the one-hour webinar, EU stakeholders discussed the current regulatory framework around remuneration and whether this was still fit to guarantee fair and decent work. As Denis Pennel remarked, the recent annual conference of the International Labour Organisation made social justice a high stake in shaping the future of work.

The agency work sector has certainly always strived for fair remuneration. As Menno Bart, a WEC-Europe’s Executive Committee member, explained, Europe’s agency work industry is a socially responsible employer. WEC research shows that the principle of equal pay and equal treatment are set by law, collective labour agreements, or a combination of both across all 27 EU member states and in Norway and the United Kingdom. Research across 17 countries by WEC corporate member, Adecco, finds that its agency workers earn on average 2.5 times the minimum wage of the country where they work.

What is “remuneration”?

Menno Bart also stressed that keeping some flexibility in the regulatory frameworks was important. For some workers, agency work is their primary source of revenue, but for others, like students, it is only a side income. The notion of ‘living wages’ may thus be considered differently, and such debates should be avoided. In defining what constitutes adequate and fair wages, it makes more sense to define criteria to be met than to set an absolute amount.

Yet, remuneration goes beyond pay. Compensation and social benefits provided to agency workers should also be considered. There too, the agency work sector has acted proactively, putting a broad range of voluntary and collective labour agreement-based benefits in place. Dimitris Theodorakis, Director at UNI-Europa, the European trade union confederation representing agency workers, reminded of all the additional rights for workers gained through effective social dialogue at the European and national levels. He then insisted on the need to ensure the sustainability of those rights. He said that a clear objective of the EU Sectoral Social Dialogue in the Agency Work sector is to keep improving the situation for agency workers, adding that the recent recommendations by WEC-Europe in its strategic issue paper on adequate and fair wages constituted a good starting point.

Balancing regulatory frameworks and autonomy of social partners

Social dialogue is indeed a vital piece in the intricate legal framework around fair remuneration, said Adam Pokorny, Head of the Unit on Labour Law at the European Commission’s Employment department. He shared that the Commission hopes to see this being further reinforced, moving forward, with more ability given to social partners to negotiate agreements that will be implemented as EU directives.

But this balancing act between EU legislation, national regulation and collective labour agreements –at the multiple levels they are concluded – makes the discussion around fair remuneration quite complex. The webinar also largely addressed the recent Time Partner case where a German agency worker has challenged the lower salary received compared to permanent staff in the same undertaking. The debate revolves around whether the agency worker benefited from an overall similar level of protection because of being employed under an open-ended contract; meaning she was getting paid between assignments. That derogation from the equal pay principle had been negotiated through a collective labour agreement, as allowed under the EU Directive on Temporary Agency Work. The EU Court of Justice and the German Federal Labour Court have both issued their judgements on the case, but the German Court’s detailed reasoning is not yet available. The sector closely monitors this case as it could affect other European countries.

As Sonja van Lieshout, chair of WEC-Europe’s Sectoral Social Dialogue Committee, concluded, the debate is far from over but the discussion has certainly reinstated the strong commitment from social partners in the agency work sector to collaborate further on advancing workers’ rights.

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