Published on 13th April 2023
Ensuring that workers receive adequate and fair wages is high on the political agenda and enshrined in the European Pillar of Social Rights. But with EU inflation reaching 9.2% in December 2022 and the cost of living rising across the EU bloc, the past year has seen increasing pressure on Europeans’ purchasing power.
The European Commission’s most recent report on Labour Market and Wage developments highlights that despite rising inflation, wage growth has, to date, remained moderate. This fall in real wages can lead to social risks, particularly for low-wage earners, and has prompted renewed discussion on the living wage in some markets and an increase in the statutory minimum wage in others.
The EU Directive on adequate minimum wages, adopted in 2022 and to be transposed by 2024, provides a framework for setting and adapting minimum wages in the EU. It is complemented by the EU Council initiative for a Recommendation on adequate minimum income adopted at the start of the year.
One sector that already offers adequate and fair wages while also ensuring social protection is the agency work industry. 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, with the EU Directive on temporary agency work determining that an agency worker’s pay must be at least equal to that of a comparable worker at the user company. Sectoral social partners in the EU Member States can enter into negotiations and sign collective labour agreements to determine pay and working conditions. These collective labour agreements must ensure an overall level of protection for agency workers. Agency workers furthermore benefit from equal treatment, thus preventing discrimination based on race, ethnic origin, religion, beliefs, disabilities, age or sexual orientation.
Our own WEC analysis shows that not only are these laws in place in all EU countries plus Norway and the UK, but in some European countries, sectoral social partners have chosen to complement them through the use of bipartite funds offering entitlements including end-of-year bonuses, training, health insurance and sectoral pension funds.
Europe’s agency work industry is a socially responsible employer, fully committed to ensuring appropriate and fair pay for agency workers. Indeed, in periods of talent scarcity, the sector is only able to attract talent and serve its clients if wages are at or above market value. Plus, the industry has an interest in maintaining fair wages as its fees are based upon them.
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 in which they are working. Examining overall remuneration, compensation and social benefits provided to agency workers, it finds a broad range of voluntary and collective labour agreement-based benefits in place.
In defining what constitutes adequate and fair wages, it makes more sense to define criteria to be met than to set an absolute amount. Wages must reflect economic development and purchasing power, which can differ significantly across the EU due to varying economic and social development levels. In 2022, for example, Romania had a per capita purchasing power 51% below the European average.
Finally, ensuring adequate and fair wages depends not just on a worker’s level of pay or hours worked but also on their personal situation. A student working to earn money in the holidays is not in the same situation as someone whose wage needs to support a number of dependents. For those workers for whom agency work is a primary source of income, the number of hours worked is equally important as the hourly wages. The EU Directive on transparent and predictable working conditions provides particular guidance here and will prove valuable in those countries with flexible labour contract law and working time arrangements where the focus needs to be given to the number of hours worked by a worker.
Europe’s agency work industry is at the forefront of social innovation. It contributes to better levels of pay and benefits compared to other workers in diverse forms of work, and these are mainly well developed in Austria, Belgium, France, Italy, the Netherlands, Spain and Sweden.
The sector, represented by WEC-Europe, is committed to contributing to adequate and fair wages. It believes these should be settled based on the interplay of national equal pay regulation and collective labour agreements while ensuring an overall level of protection.
With better recognition of the positive role that diverse forms of work play in providing access to work and securing income, plus the setting of appropriate and fair wages at the national level, the agency work industry can ensure adequate and fair pay, reinforced by further social benefits based on social dialogue.
First published by ADAPT, March 2023.