Abstract
When the European Commission presented its draft directive on adequate minimum wages in November 2020, it was not the beginning, but a first milestone in the debate on a European minimum wage. Already in the early 1990s there were proposals for European regulation of the various minimum wages in the Member States, which were taken up and further developed in the 2000s. They are also reflected in the Commission's draft directive. Important reference points in the debate were the work of Thorsten Schulten, 1 who, together with Irene Dingeldey and Damian Grimshaw, has now published the volume Minimum Wage Regimes. Statutory Regulation, Collective Bargaining and Adequate Levels. The timing of publication is perfect because it not only coincides with the negotiations about the Directive at European level, but also focuses on the interrelations and mutual influence of collective bargaining systems and minimum wage regimes. With this focus, the volume fills a research gap and, at the same time, intervenes in a controversial political debate about how the state guarantee of a minimum wage is related to collective bargaining autonomy and established collective bargaining systems in the Member States.
The volume by Dingeldey, Grimshaw and Schulten is a contribution to this debate. It presents a systematic analysis and comparison of minimum wage regimes and their relations with existing collective bargaining systems in Europe and selected developing countries. From a comparative institutionalist and political economy theory perspective, the authors of the volume pose two questions: ‘1) how does minimum wage setting interact with collective bargaining at the country and sectoral level, and 2) how do different types of institutional interaction shape trends in the value of minimum wages?’ (p. 2). In order to answer these questions, in the introductory chapter the authors develop an analytical scheme that forms the basis of the individual country analyses, on which Grimshaw and Bosch’s (2013) typology of statutory minimum wage regimes is updated and supplemented (pp. 8 and 264 ff). The central variables are the bargaining coverage rate and the level of the minimum wage in relation to the median wage. Four ideal types are developed from this. The country analyses are, accordingly, structured to present the minimum wage regime’s national or regional characteristics and their interaction with collective bargaining at industry and firm level. Beyond these broad guiding questions, however, the individual country and regional analyses do not follow a standard structure and therefore differ in their design and reader guidance. In total, four regions (Southern Europe, Central and Eastern Europe, Scandinavia, Latin America) and four countries (Indonesia, Germany, France, the Netherlands) are examined in more detail, as well as one sector (textile and garment industry) in five developing countries (Bangladesh, Cambodia, Pakistan, South Africa, Vietnam). The analytical focus is largely on the EU, however, which makes it difficult to understand why developing countries were included at all, especially as no justification is provided in the case selection (p. 3). As a result, the studies of the developing countries somehow ‘hang in the air’, especially in comparison to the European case studies. The editors admit this themselves in the Conclusion, emphasising that minimum wage regimes in most developing countries, given the large informal sectors and lack of state resources, face the problem of enforceability and coverage, which is why there is little comparability (p. 275).
The country analyses are preceded by an instructive chapter by Rubery, Johnson and Grimshaw on the multiple functions of wages in capitalism, in which the role of the minimum wage is described in terms of ‘effective mechanisms to prevent sweating and extreme exploitation and […] serve to correct for differential bargaining power between employers and employees’ (p. 32). This function of the minimum wage becomes particularly important where collective bargaining is increasingly eroding or has never been able to develop fully. If one understands collective bargaining between trade unions and employers’ associations in capitalist societies as the central institution for the realisation of private exchange justice in the labour market, 2 then the minimum wage represents a compensatory instrument for dysfunctional collective bargaining structures. Even though Rubery, Johnson and Grimshaw stress that a minimum wage should be interpreted as merely ‘supportive of and far from a substitute for collective bargaining’, one might think that the minimum wage is of great social importance especially where collective bargaining is in crisis.
The volume’s empirical findings cannot confirm this thesis, however. Rather, after reading the nine country and regional chapters, it becomes clear that a causal relationship between the weakness of collective bargaining and the function, level and configuration of statutory minimum wage regimes cannot be established easily. A central finding of the book is that the existence and effectiveness of a minimum wage and its specific configuration are fundamentally influenced by national circumstances and exhibit a high degree of historical path dependency. As a result, the interaction between the statutory minimum wage and the respective collective bargaining structures varies from country to country and is often much more complex.
The Greek minimum wage regime, which was subjected to considerable change during the Eurocrisis in 2008/2009, is a case in point. As Oscar Molina describes in his regional analysis of Southern Europe in Chapter 4, both the minimum wage and the collective bargaining system were subject to state intervention. While there was previously a ‘close interaction’ between collective bargaining and the minimum wage, as its level was negotiated by the collective bargaining parties, state intervention destroyed this link. While collective bargaining structures were exposed to strong decentralisation efforts as a result of crisis policies, the minimum wage was frozen and its regulation was taken away from the collective bargaining parties. The ‘strong role for the state in determining the minimum wage value’ (p. 266), combined with severely weakened trade unions and dramatically reduced collective bargaining coverage, led the editors to typologise Greece as an ‘isolated minimum wage regime’ in which collective bargaining is only of limited importance, while most workers are covered only by the statutory minimum wage, which does not offer ‘adequate protection’ (p. 267).
Another counter-example to the above thesis of minimum wages substituting weak collective bargaining arrangements is offered by the French minimum wage regime, to which Delahaie’s and Vincent’s exciting Chapter 8 is dedicated. France has both high collective bargaining coverage and a high minimum wage, making the relationship between the minimum wage and collective bargaining particularly important for industrial relations. As the authors point out, there is a ‘strong "close interaction" between the uprating of the SMIC and the dynamics of collective bargaining at sector level’ (p. 174). Thus, the French minimum wage is subject to an annual indexation mechanism that considers both the evolution of consumer prices and the average evolution of real hourly wages. This makes the SMIC an ‘integral part of wage dynamics in France’ (p. 184), because the collective bargaining parties are guided by the annual increase in the minimum wage and adjust their basic wage rates accordingly.
The French example also illustrates a weakness of the volume, however, which arises primarily from the institutionalist theoretical perspective. Thus, Delahaie and Vincent emphasise that the SMIC has its roots in the class struggles of the 1970s and that, at the same time, it has been exposed to considerable political attacks in recent years. The increased influence of an ‘expert group on the SMIC committee’ (p. 164) and the dominance of a neoclassical interpretation of the minimum wage as a price factor mean that, since 2012, only minor adjustments of the minimum wage have taken place without an ‘additional boost’. At the same time, because of various legislative changes, collective bargaining has become more decentralised. In the various chapters and also in the conception of the volume as a whole, however, the state remains the unknown third party, which exerts influence on collective bargaining and the minimum wage, but whose policy remains largely undefined. Here it would have helped the volume to include the social balance of power more fully in the analysis. Minimum wage and bargaining structures do not exist independently of the social balance of power, even if they exhibit relative autonomy or historical path dependency. As illustrated by the French minimum wage regime, this means that the introduction of the SMIC in its special configuration as a living wage is to be understood as the condensed result of social struggles around the year 1968. At the same time, the above-mentioned developments – the operationalisation of collective bargaining and state attacks on the minimum wage – point to a significant shift in the social balance of power, which is condensed in the state and state policy. 3 Although in the introduction to the volume the minimum wage is understood as ‘highly contested and depend[ent] on the influence, strategy and power resources of different social actors’ (p. 3), the overall conception focuses primarily on the functions and interplay of institutions and not on the analysis of social power relations. In their conclusion the editors fail to recognise that the social strength of the organised labour movement and its power resources are an essential determinant of whether (legal or collective) protection against overexploitation or even an instrument for securing basic needs exists and how effectively it is designed.
Nevertheless, Dingeldey, Grimshaw and Schulten make an important contribution to the current debate on minimum wages and their interplay with collective bargaining. The book succeeds in showing that minimum wage regimes are closely interwoven with specific national institutions and traditions of industrial relations and embedded in a complex political economy. At the same time, the volume provides new impulses for the theoretical understanding of the role of the minimum wage in industrial relations. The ideal types of institutional interaction provide an excellent typology for distinguishing and assessing minimum wage regimes and offers an important impetus for further research in this area. At the same time, the volume provides an important source of information for policy-makers on how to adjust the parameters of minimum wage systems in order to ensure effective minimum wage policies which ‘in concert with collective bargaining, are vital to protect the most vulnerable workers, ensure real wage growth and contribute to global social justice’ (p. 279). Thus, the volume is also – and especially – relevant to the current debate on common standards for an appropriate minimum wage in Europe. In short, the volume belongs – despite its very high price – in the bookcase of anyone interested in industrial relations.
