The proposal to introduce a minimum wage in Italy by the Democratic Party, the 5 Star Movement, Action, the Green-Left Alliance and Più Europa separates politics and experts. For Prime Minister Giorgia Meloni and the centre-right majority, it is better to stick with the status quo, namely collective bargaining, a position on which corporations and unions agree: according to its advocates, this system guarantees more reasonable wages. Supporters of the status quo include Italia Viva: the gross minimum wage of 9 euros proposed by Pd and others would be among the “highest in the world”, according to MP Luigi Marattin. A thesis supported by various institute and media analyzes that such a level would be among the highest (or among the highest) among EU and OECD countries. But how are things really?
Does the EU tell us?
There are 22 Member States in the EU that have a national minimum wage. The five countries where it is absent are Austria, Denmark, Sweden and Finland, in addition to Italy. It was precisely the Scandinavian governments that opposed Brussels’ idea of introducing a mandatory Union-wide minimum wage. In fact, the directive adopted in 2022, in order to guarantee reasonable wages, each member country’s minimum wage (provided however, that it equals at least 60% of the gross median wage) or collective bargaining (an agreement covering at least 80% of the contracts) . On paper, Italy respects the parameter for collective bargaining (although there are doubts about so-called pirated contracts, as described here), and therefore Europe will not have an obligation to impose a minimum wage.
Collective agreements vs minimum wage
Clarifying this, is Meloni right in asserting that collective bargaining works better at guaranteeing decent wages for workers? The first answer can be entrusted to statistics on the working poor, that is, those who do not earn enough to support themselves and/or their families above the (relative) poverty line.
According to the latest Eurostat data, 8.4% of workers in the EU are in this situation in 2022. In Italy, this share is clearly above the EU average: 11.5%. Only Romania, Luxembourg and Spain have higher rates, and all three countries have minimum wages. Other Member States where wage levels are entrusted solely to collective bargaining, such as ours, are all below the EU average. For example, the proportion of the working poor in Finland is only 2.5%. As a result, the European comparison tells us little about which medium between the minimum wage and collective bargaining is more effective in guaranteeing decent wages. At most, he tells us that bargaining reduces working poverty in Italy less than in Austria or Scandinavia. And this is confirmed by data from the latest Eurofound study, the EU’s agency for the improvement of living and working conditions.
According to this survey, looking at the 10 lowest-paying jobs as of January 2023 in the 5 non-minimum EU countries, the lowest median salary is in Italy: in absolute terms, but also in par. ie if you compare it to the cost of living (almost double in Denmark than in Italy). And compared to who earns minimum wage?
According to Eurofound, the median salary of the 10 lowest paid jobs in our country is 1,241 euros gross per month. In absolute terms, we are close to the minimum wage in Spain and Slovenia, but far from France (a little over 1,700 euros per month) and Germany, Belgium, the Netherlands and Ireland (between 1,900 and 2,000) without Luxembourg (around 2,400) . Things are not getting better, but worsening, in terms of purchasing power parity pay: the average wage for the lowest-paid workers in Italy remains the same (1,238 euros per month), but we surpass Spaniards (around 1,300 euros) and Poles (1,249 euros). euros) with respect to their minimum wages, the French and Germans stay at a safe distance (the monthly minimum salary is around 350 and 600 euros more, respectively). Our rankings get even worse if we look at the three lowest-paid jobs in the country, where the average monthly gross salary is just 976 euros (only 8 EU countries do worse at purchasing power parity).
Europe’s highest minimum wage?
Would the introduction of a minimum wage of 9 euros, proposed by a large part of the opposition, suddenly make us the country with the highest minimum wage in Europe? Absolutely not (but also relatively). The reason is easily explained: the statement by Marattin and others, supported by some verification, refers to a comparison between the minimum wage and the median wage for full-time workers in a given country. According to OECD data for 2021, the 9 euros per hour recommended by Pd and M5s, among others, would represent 75% of the average wage in Italy, the highest among OECD countries and the highest among EU countries.
However, this comparison, based on the EU’s method of calculating the minimum wage used in its directive, does not mean that the lowest-paid Italian workers will suddenly become the highest paid (or among the best) in Europe. paid around the world). World). On the contrary, it may be an indication that the wages in our country are not sufficient and that 9 Euros per hour is excessive. Moreover, real wages of Italians have decreased rather than increased in a unique way in the EU over the last 30 years.
What would happen with bringing in at least 9 euros per hour? Let's start with the basic monthly salary, which, as suggested by the opposition, will be around 1,485 euros gross. In absolute terms, and according to the latest Eurostat data on minimum wages, we would rank seventh in the EU for minimum wages (above Spain, but behind Germany and France). We would have won a position (sixth) at PPP, but we will always stay away from the French (about 100 euros more per month) and the Germans (350 euros more). If we include the EU countries in the collective bargaining ranking (where the minimum wage corresponds to the median of the salaries of the 10 lowest-paid categories according to Eurofound), then Italy regresses to tenth place.
Having made it clear that with a minimum wage of 9 euros, we are not going to turn into Luxembourg or Germany in terms of basic wages, we can take one last look at the poor domestic workers. As we said, according to Eurofound, the median salary of the 10 lowest-paid jobs in our country is 1,241 euros per month. These are maids, caretakers, shop assistants, cleaners, waiters, kindergarten teachers, farmers and couriers, among others. With the minimum wage, their gross monthly wage will increase by around €240. We're talking about a 19 percent increase. Excessive rise?
As we have said before, real wages of Italians fell by 2.9% from 1990 to 2020, instead of rising like everywhere else in the rest of the EU. The recent upward trend in inflation did not improve: payroll growth was one of the lowest in the EU, with less than half the rise in prices offset. A dynamic that weighs heavily on the poorest jobs.
According to Eurofound, minimum wages for the 10 lowest-paid categories in Italy increased overall by 3.4% between January 2022 and January 2023 (no adjustments for some), a growth similar to that in other EU countries where this growth has occurred. collective bargaining only. In EU countries with minimum wages, base salary increases have been higher everywhere: a year's growth increased by 6.6% in France, 8% in Spain, and even 22% in Germany. %.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
