European Parliament hosts international conference on Wage Union

Meeting in a conference called “Equal Pay for Equal Work”, economists, professors, experts, Members of the European Parliament and trade union leaders discussed such issues as the income gap in the EU, the problems of competitiveness, the benefits and drawbacks of labour mobility as well as how the demographic crisis affects the labour market.

The Wage Union is a common European interest

Organized in the European Parliament, the 3-panel conference was hosted by MEP Zoltán Balczó, who stated in his opening remarks that

“the elimination of wage inequalities is a common European interest”.

Noting that the single market had already levelled the prices in the EU, he said the “price union has been implemented” but the wage gap between the western and the eastern countries was still enormous. As he put it, this is what drives the westward migration of workers, which causes a “demographic loss” for the “sending countries”, leading to labour shortage, social security risks and a loss of income for the national budgets while families are torn apart and the recipient countries suffer from the consequent social tensions, too. The MEP said the only way for eliminating the wage inequalities was to improve the economic performance of the CEE countries so that their increasingly competitive enterprises could pay higher wages. He stated that the EU’s policies must promote this agenda.

Economist Péter Róna noted how strange it was that the EU did not even attempt to create the conditions for a micro-economic integration. In his view, the EU’s current institutions are unable to truly address convergence issues. In order to remedy this problem, he suggested to appoint a European Commissioner for the area. He also talked about how the EU had limited the Member States’ options of fiscal policy to address the inequalities. Referring to the Eurozone, he pointed out how unfit the common monetary policy was, considering the fact that the Eurozone countries were hardly at the same level. He criticized the EU for having convinced CEE countries that their due place was in the bottom third in terms of added value and their only competitive asset was their cheap labour. Another issue he addressed was the elimination of offshore transactions which, in his opinion, could be stopped within weeks if there was a real will to do so.

The taxation of offshore incomes could lay the financial foundations for a true integration policy.

French MP Frédéric Petit suggested that the principle of “Equal pay for equal work” could be complemented with “same living standards at the same place”. Explaining his suggestion, he said that there were big differences within each Member State and not just in the EU as a whole. He stated that labour mobility was vital for the European Union. He suggested that the EU’s promotion of labour mobility should not be aiming for a low-paid Eastern European labour force. He also emphasized it was important to talk about fairer wages rather than equal ones. He added however, that Western and Eastern Europe have converged a lot in the past 30 years.

MP Márton Gyöngyösi, the representative of the Citizens’ Committee for a European Wage Union noted that the EU had been able to create peace and prosperity among nations that used to wage wars on each other. The Union also promised stability and prosperity for CEE countries, but this promise was not kept, he said.

The CEE region’s national governments keep offering a flexible labour code and cheap labour force to attract foreign capital in their countries.

Mr Gyöngyösi informed the participants that PM Viktor Orbán, in his meetings abroad, typically suggested Hungary’s skilled and cheap labour force as the country’s key attraction for foreign corporations. Explaining that CEE countries kept trying to undercut each other in terms of cheap labour, he said it was a downward spiral that blocked the economic development of the region. As a result, many people go to work abroad.

In addition to the immigration wave into the EU, the community has to cope with an internal migration which always goes in one direction, he asserted. In Mr Gyöngyösi’s view, there would be no problem with internal migration if it was a two-way process, for example, if the highly-skilled German labour force appeared in the East, too. He noted that low wages had grave consequences: lower real incomes, lower capitalization and savings and, on the other hand, increasing dependency. The MP suggested that the EU should reform its cohesion policy. The EU’s cohesion funds should be spent on education, innovation, research & development and healthcare. He added that the EU must implement a wage union otherwise it was going to fall apart. “You can’t have a supposedly solidaristic Union as long as such social inequalities are allowed,” he concluded.