This is a guest post by Molly O’Casey, foreign law intern in the Global Legal Research Directorate, Law Library of Congress. Molly has recently graduated from a dual law degree (civil law/common law) program between University College Dublin, in Ireland, and Université Paris II Pantheon-Assas, in France.
According to statistics published by Eurostat, the European Union (EU)’s statistical office, 122.3 million people within the EU population are at risk of poverty or social exclusion, an increase of 24.5% compared to 2013. There has been a commensurate rise in non-standard forms of employment and low-paying jobs, growing numbers of working poor, and worsening social inequality. In 2014, the disposable income of 17.2% of the EU’s population was below their national at-risk-of-poverty threshold.
Income-related law is not harmonized across the EU. The European Commission’s recent legal action against France and Germany’s imposition of national minimum wage legislation on the international transport sector demonstrates the legal complexities caused by this lack of harmonized law. A European minimum wage has been suggested as one solution to these social and structural difficulties.
Political and Economic Philosophies
As the minimum wage is a major socio-political issue, it can be a challenge to divorce the political from the factual. During the 1980s, the consensus was that minimum wages had a negative impact on employment. Ten years later, studies had found the negative effects were small or non-existent. As the empirical evidence is inconclusive in determining the desirability of a minimum wage, individual opinion tends to be based on political and economic philosophies. (Vaughan-Whitehead 2010)
The main competing theories are neoclassical labor market theories and Keynesian theories. Neoclassical labor market theories historically framed the opposition to the minimum wage. They held that a minimum wage would lead to higher levels of unemployment, because low-skilled and young workers would be too costly for employers to hire and the more attractive salaries would lead to high numbers of job-seekers. Keynesian theory on the other hand suggests, that the high minimum wages increase pressure to raise other wages and would result in a more egalitarian wage structure.
A National Issue?