Here’s a proposal for a new law that would undoubtedly save money. Every time a politician or economist moans about the minimum wage being too high, he or she should be required to live on it.
The law, I believe, should be applied retroactively so that it will affect Jean-Claude Trichet. When he was still president of the European Central Bank in 2007, Trichet thundered that “excessive wage regulations” were undermining job creation. “Setting minimum wages at levels which are not in line with productivity reduces the employment chances of less skilled workers and the unemployed,” he added.
Under a clause introduced especially for him, my law would forcibly return Trichet to his adopted hometown of Frankfurt, where he would spend eight years on a building site at the lowest level of pay for a migrant worker in that industry. He would not receive his ECB pension or any ancillary benefits during that time; no cost-of-living adjustments would be made to his income because, as he would surely agree, that would involve “excessive wage regulation”.
As some of the intended victims of my proposal appear unburdened by a sense of humour, I feel obliged to admit it is not serious. On second thoughts, perhaps the politicians and economists in question do have a sense of humour, albeit a very twisted one.
Data published at the beginning of February by that number-crunching agency Eurostat show that monthly minimum wages in the EU range from 138 euros in Bulgaria to 1,800 euros in Luxembourg. In all three of the Baltic states, the minimum wage is less than 300 euros per month; in Romania it is 161 euros. Greece stands at 877 euros; Spain at 748 euros. Even when you realise that these statistics don’t take account of differing price levels, any attempts to portray these salaries as extravagant amount to a sick joke.
By seeking to cut pay, the main EU institutions are exceeding the limits of their power. The Maastricht treaty, which came into effect in 1993, stipulates that the Union will leave questions of remuneration up to its national governments. This provision has been maintained by the Lisbon treaty.
Some unsavoury characters in the Brussels bureaucracy have nonetheless invaded this policy domain by resorting to underhand tactics. Writing for New Europe last week, I noted that Charlie McCreevy, the former European commissioner for the single market, is an acolyte of Margaret Thatcher. In 2005, he was even more extreme than the Iron Lady when he visited Sweden and publicly supported the Latvian construction company Laval over its demands that its operations in Sweden shouldn’t have to respect that country’s pay and working conditions. The following year McCreevy whinged about how a minimum wage in Germany’s postal sector of 9.80 euros an hour hampered competition.
He was not acting in isolation. A series of rulings by the European Court of Justice – including one in a case involving Laval - have provided some kind of legal cover for attempts to weaken social protections across the Union.
Still, the assault on wage levels illustrates why political promises must always be treated with suspicion. When Ireland was pressurised into holding a second referendum on the Lisbon treaty in 2009 (having rejected it in 2008), the “Yes” brigade swore that the country’s minimum wage was not at risk. The pledge was quietly forgotten about in 2010. As Dublin froze in a harsh winter its government slashed pay for the least well-off. Who told it to do so? Ireland’s puppetmasters in the ECB, the European Commission and the International Monetary Fund.
True, the new Irish government that came into office a few months later subsequently restored the minimum wage (one of the few election pledges it actually honoured). Yet the EU and IMF have succeeded in driving down basic salaries elsewhere, most recently in Greece.
It is fiendishly clever for right-wing ideologues to exploit whatever opportunity arises to decrease wage levels for average workers. By doing so, they distract attention away from the real excesses in the economy: how a relatively small elite possess more than any human being could ever need. The result of this distraction is that policy makers reduce the minimum wages on which cleaners, restaurant staff and people in other low-paid categories depend, instead of setting maximum wages for the wealthy parasites in the boardrooms of hedge funds and corporations.
Surveys by the investment bank Merrill Lynch (itself a parasite) repeatedly show that the rich are getting richer. According to its latest findings, the number of “high net worth individuals” (a HNWI is essentially a fancy term for millionaire) in Europe rose by 6.3% in 2010. In total, there are 3.1 million HNWIs on this continent (including Russia). Their total net wealth comes to an astronomical 10.2 trillion dollars.
Among the wealthiest people in the EU are Amancio Ortega from Spain (he of Zara fashion fame) with assets worth a cool 31 billion dollars, Frenchman Bernard Arnault (head of luxury goods firm Louis Vuitton Moet Hennessy; value: 41 billion dollars), the German chief of Aldi supermarkets Karl Albrecht (value: 26 billion dollars), the Swede behind the trendy threads of H&M Stefan Persson (value: 25 billion dollars) and Frenchwoman Liliane Bettencourt of L’Oreal (value: 24 billion dollars).
Between them, this quintet sell handbags, cardigans, perfume and biscuits for a living. How does that make them entitled to such fortunes?
●First published by New Europe, 19-25 February 2012.