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Trade Union Describes as "Speculation" to Say that Countries without Minimum Working Wage Have Higher Incomes

Trade Union Describes as "Speculation" to Say that Countries without Minimum Working Wage Have Higher Incomes

Trade Union Describes as "Speculation" to Say that Countries without Minimum Working Wage Have Higher Incomes

Sofia, May 19 (BTA) - The Confederation of Independent Trade Unions in Bulgaria (CITUB) notes it is "a speculation" to say that countries without minimum working wage have higher incomes. On Friday CITUB released a position reacting to recent calls by the business to scrap the minimum wage.

CITUB says that no country exists in the EU that does not have minimum payment levels of work determined somehow - by law or contract.

CITUB argues that the Association of Industrial Capital in Bulgaria advances "peculiar arguments" in its demand to scrap the minimum wage. The trade union describes as "sheer speculation" the claim that the countries without minimum wage (six in the EU) have higher work incomes and lower unemployment compared to countries with a legally determined minimum wage.

The trade union furnishes Eurostat data showing that countries such as Finland, Italy and Cyprus the unemployment is higher than the EU-average, while the wages in Italy and Cyprus "could impress only Eastern European citizens". Furthermore, in terms of per capita GDP, these countries "are far from the leaders". At the opposite end, Germany, the Netherlands and Belgium have very low unemployment, while Luxembourg and Ireland considerably outpace Denmark and Sweden in terms of per capita income. Even more telling are the purchasing power standard data where the front-runners are Luxembourg, Ireland and the Netherlands.

In most new EU member states, the rate of unemployment is below the EU average and below the rate in Finland, Italy and Cyprus. CITUB notes that it is for totally different reasons that incomes in Eastern Europe lag behind those in the older member states. However, Slovenia can be used as an example as a country with the highest minimum wage, 790 euro, among the newly admitted EU member states, a country with the higher minimum wage/average wage ratio - 52.4 per cent, and a place with the highest incomes in the region and unemployment below the EU average.

CITUB argues that no connection can be made between the presence of a legally determined minimum wage and the welfare of a country. However, a pronounced connection exists between the presence and size of the minimum wage and the reduction of poverty, especially in respect of the working poor and low-paid labour who in Bulgaria are about 650,000, or 27 per cent of the hired labour.

The trade union warns that scrapping the minimum wage in Bulgaria carries a big risk due to the low share of employees with collective employment contracts - 30 per cent by expert estimates.

CITUB notes that the concern is raised yet again that the growth of wages outstrips the growth of labour productivity but no mention is made "who paid the price of the transition to a market economy". The trade union says that when international comparisons are drawn about incomes and welfare, the best data to use are those for purchasing power parity. At this background, Bulgaria's labour productivity is 45 per cent of the average of the EU-28, and in terms of wages, 35 per cent, CITUB says. Eurostat data for 2015 show that, taking into account the different price levels in EU member states, Bulgaria's labour productivity in GDP per one employee in terms of purchasing power standard is 2.9 times lower than that in Belgium, while the minimum wage in terms of purchasing power standard is 3.1 times lower. The comparison with the Netherlands are 2.5 times and three times, respectively.

Source: Sofia