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Conference, European Parliament, Brussels 27/11/2017

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OBJECTIVESCOOPERATION FOR A MORE SOLIDARISTIC EUROPEOn March 14, 2017 representatives of eight EU Member States (Hungary, Estonia, Latvia, Poland, Slovakia, Romania, Croatia, Bulgaria) met in Budapest to launch a European Citizens’ Initiative aiming to incorporate the right of “Equal pay for equal work” into the EU Treaties.

On May 22, 2017 the European Commission registered and approved the European Citizens’ Initiative, so the project has now entered its second phase where the participants need to collect at least one million statements of support from at least seven EU Member States within a year. After the successful closure of the collection process, the Commission will put the issue on the agenda and the organizers will get the opportunity to present their initiative in a public hearing in the European Parliament. The founders consider the adoption of the “Equal pay for equal work” principle into the EU Treaties as the first step of a long and now institutionalized process.

After identifying the goal in general, the European Union may take such concrete and perceptible steps as, for example, assigning an official to the project, reforming the cohesion policies or introducing the appropriate indicators and standards in order to promote the convergence of Central Eastern European countries and to reduce the wage gaps existing between the EU’s core and periphery, east and west, north and south so that the signifi-cant worker migration and the consequent labour shortages could be mitigated. The reduction of wage inequalities will also close gaps in terms of living standards and welfare, accelerate the integration of these states and improve their competitiveness.

Pay rises

Consumption

Higherproduction;investment

Higherproductivity,

company profit

More jobs,tech development

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WAGE UNION OR SOCIAL UNION?In recent months, the EU has seen several initiatives that are partially in line with the goals of the Wage Union project.

For example, the European Trade Union Confederation’s (ETUC) “Europe needs a payrise” campaign has identified similar goals which are widely considered as a foundation for the social pillar concept adopted by the Gothenburg Summit. However, what ETUC’s initiative fails to take into consideration is the differences arising from the geographical location and varying economic development of certain EU Member States.

As a quasi precursor to the Proclamation of the European Pillar of Social Rights adopted in Gothenburg on November 17, 2017, European Commission President Jean-Claude Juncker and French President Emmanuel Macron have both made several references to the right of “equal pay for equal work”. Although the proclamation is indeed an important step, it still cannot replace the wage union project as it fails to address geographically determined wage gaps, which are a fundamental issue for the Wage Union.

Another key initiative, “A Europe of equals” action plan was adopted on November 20, 2017. Focusing on eliminating the gender pay gap, it sets a goal of paramount importance but it also fails to address such major issues as internal migration and geographically determined pay inequalities.

In conclusion, we can establish that even though the goals of the European Pillar of Social Rights are in line with the purpose of the Wage Union, the Proclamation cannot replace the European Citizens’ Initiative. Despite being an impor-tant step towards the common goals, the Social Pillar does not offer a solution to internal migration, labour shortages or wage and welfare gaps.

“It is nothing less than to fulfill the EU’s most fundamental promise, i.e., to create a community of destiny from Europe’s nations. If wage inequalities remain and stabilize at their current level, the European Union will simply lose its purpose. The true test of such purpose does not lie in GDP growth but in real wages. The peace of nations and social groups may turn into confrontation and, eventually, open conflict, and the signs of this process are already visible.” − Péter Róna

DenmarkLuxembourg

SwedenFinlandIreland

GermanyFrance

NetherlandsUnited Kingdom

AustriaBelgium

ItalySpain

CyprusSloveniaEstoniaGreece

Czech RepublicPortugalCroatiaPoland

SlovakiaLatvia

LithuaniaHungaryRomaniaBulgaria

500 1000 1500 2000 2500 3000 35000

Average: € 1 762

3 270 3 159 2 713 2 509 2 479 2 270 2 225 2 155 1 980 1 934 1 920 1 758 1 749 1 658 1 051 961 917 870 846 800 748 722 674 667 657 517423

Average net monthly income,EU 28, 2016 (€)

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“EQUAL WAGES FOR EQUAL WORK!” CONFERENCEBRUSSELS, NOVEMBER 27, 2017Hosted by MEP Zoltán Balczó, a conference titled “Equal pay for equal work” was held in the European Parliament on the Citizens’ Initiative for a Wage Union on November 27, 2017.

In his opening speech, Zoltán Balczó stated that “although the price union has been implemented, the persistent wage gap causes emigration, labour shortages and social security risks in the Eastern European member states, with families being torn apart and tensions rising in the western countries due to the immigration wave.”

The conference was attended by economists, professors, business analysts, regional experts and representatives of trade unions to discuss the reasons and consequences of the enormous wage gap affecting EU Member States. The list of speakers included Professor Péter Róna of Oxford University, Monika Ladmanova, senior advisor of the European Commissioner for Justice, Consumers and Gender Equality, Frédéric Petit, Member of the National Assembly of France, Paolo Marcos, representative of Union Solidarity International, Liene Dobele, Ernst&Young director, Tamás Meszerics, Member of the European Parliament, Przemyslaw Worek, representative of Poland’s Solidarity80 trade union, Zbigniew Krysiak, director of Schuman Thought Institute and, last but not least, MP Márton Gyöngyösi, representative of the Citizens’ Committee for a European Wage Union.

The participants agreed that the enormous wage gap causes a westward migration of valuable workers, which under-mines the position of the eastern region, blocks the development of the European Union and ultimately poses a risk to the EU’s survival as a whole. The only way to remedy this discrepancy is to ensure that the European community sets the elimination of wage inequalities as its fundamental principle which is then implemented in the foreseeable future. None of the post-Communist countries managed to raise wages to the level of productivity, the gap is in fact dramatic in each of these states. Furthermore, similar trends are demonstrated in the United Kingdom, Spain and Portugal as well.

“The long-term survival of the European Union depends on whether we can eliminate the wage gap currently existing among the Member States.”

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Hourly labour costs (EZ=100, 2011)Hourly real labour productivity (EZ=100, 2011)

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THE ISSUES OF THE PANEL DISCUSSION

In his opening remarks, moderator István Teplán stated that although the EU’s wage gap was not a central issue at the time when the initiative was launched, it had indeed become a key topic in the EU’s political discourse.

Péter Róna noted that, contrary to the original expectations, the new member states joining the EU as part of the eastern enlargement process in the early 2000s have not been able to catch up with the West. In fact, the gap has just opened even wider while the EU has failed to address the problem. According to the professor, the EU’s systems exclusively favour the short-term interests of the capital. “Human beings are not capital, ”Professor Róna asserted, explaining that any system that treated human needs unfairly would inevitably harm everyone in the long run as it causes purchasing powers to drop, eventually leading to economic crises. The economist also emphasized that the eastern states’ cheap labour model, which focused on production with low added value, had led to such gaps that were threatening to tear the EU apart.

Frédéric Petit discussed the problems caused by regional differences within member states and the lack of labour mobility. Suggesting that EU initiatives should focus on fair pay rather than equal wages, he said this goal could be achieved by converging capital and labour interests. The French MP called the conference’s attention to the exam-ple of France where trade union culture is highly developed and the representative organizations are strong enough to achieve a consensus between employers and employees.

Criticizing the economic policies of Central European countries, Márton Gyöngyösi said that CEE states had expected EU integration and foreign investments to generate growth but their governments exclusively based their economic policies on offering the cheapest possible labour force, thus putting their countries in a downward competition. In conditions like this, labour mobility within the EU will always function in one direction, the MP asserted. Consequently, as long as people don’t have savings, the government is unable to finance the public institutions and cohesion funds nurture government-controlled corruption, you can’t really expect changes unless the EU affects them, Mr Gyöngyösi stated.

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moderator ISTVÁN TEPLÁN

PÉTER RÓNA, professor, Blackfriars Hall, University of OxfordFRÉDÉRIC PETIT, member of the National Assembly of FranceMÁRTON GYÖNGYÖSI, Member of the Hungarian National Assembly, representative of the European Citizens’ Initiative for a Wage Union

participants

The requirements of the Lisbon TreatyThe relationship among the four freedomsShifts in income distribution between labour and capital

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Opening the session, moderator István Teplán remarked that significant problems were caused by the fact that some trade unions were unable to think outside the box and were often too compliant with the governments. Mr Teplán also emphasized that Europe needed a revival, the foundations of which lied in equality, both in terms of gender and geographical location.

Monika Ladmanova noted that the gender pay gap was a crucial issue. According to the advisor of the European Commission, the fact that women receive 16% less for their work on average means the market is dysfunctional since there is no logical economic reason for such a difference. Discussing the gender-based vertical and horizon-tal differences in employment, she emphasized that the awareness of this problem was still very low even though the EU had clearly established guidelines on the matter.

Paulo Marcos noted that the Wage Union Initiative was a milestone in European discourse. The Portuguese trade unionist pointed out how much the EU’s eastern and southern Member States had in common. They all suffer from the emigration of professionals, which no longer affects physical workers but highly-qualified young college graduates as well. Criticizing the process, he said that large trade unions had significantly weakened. He also emphasized that the workers of the periphery countries spend more time in their workplace than those of the core countries but the difference is not manifested in their incomes and buying power.

Przemsylaw Worek noted that CEE countries had joined the EU in the hope of a better life but the community did not show any interest in solving their problems. The trade unionist said the hope was soon lost but the gap remained, which led to the situation where EU citizens could get €350 for the same work in Poland and €1300 in Germany.

Zbigniew Krysiak explained that certain systemic changes were needed for the implementation of the Wage Union, but the most important requirement was to be solidaristic and cooperative even in a competitive market. He asserted that the economy should focus on the human being, and the capital must be a servant of human welfare. Criticizing the neoliberal economic thought, he contrasted it with the social teachings, responsibility and solidarity of Christianity. As the director of Schuman Thought Institute, he quoted Robert Schuman, who said that Christianity must be the soul of Europe, while its economy must serve the families and the community.

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moderator ISTVÁN TEPLÁN

MONIKA LADMANOVA, advisor, member of the Cabinetof theEuropean Commissioner for Justice, Consumers and Gender EqualityPAOLO MARCOS, representative of Union Solidarity International (USI), PortugalPRZEMYSLAW WOREK, representative of Solidarity80, PolandZBIGNIEW KRYSIAK, professor, Warsaw School of Economics

participants

Second-class workers? The differences between the bargaining powers of workers in the core and periphery countries of the EU

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In his opening remarks for this session, moderator István Teplán noted that the panellists were going to sum up the contents of the discussions so far.

Liene Dobele talked about the effects of technological development and automation on workplaces and the society as a whole. In her view, technological advancement will have a major impact on the so-called blue- and white-collar professions alike, because robots and algorithms will be able to take over more and more functions from people. In addition, some new professions will also appear, and the new conditions will require new regulations as well. In the meantime, it will be increasingly difficult to maintain the balance between work and private life, people want more flexibility.

Tamás Meszerics referred to the Gothenburg Proclamation and said it was an important but insufficient step in terms of wage integration. The MEP expressed his opinion that EU leaders were still focusing on the negative effects of the 2008 economic crisis but time had gone past this kind of thinking. The politician noted that the social tensions within the EU arise from wage inequalities. The Member States must create a convergence at a level where the problem could be efficiently managed. He also warned however, that the problem could not be managed at only national level because CEE governments were often highly interested in maintaining a downward competition in terms of wages and employee rights. It is very important that the minimum wage must not sink below the level of subsistence.

Péter Róna asserted that an economic policy that favoured multinational companies had a distorting effect on the market. He called for uniform indicators to identify such factors as the level of subsistence and minimum wage. Welfare institutions should function based on Christian values rather than neoliberal thoughts, since this is the only way to maintain social cohesion. The economist also noted that women were the guarantee for a healthy society yet the traditionally female roles and professions were not valued by today’s economic approach. It is astounding to see how far the EU got from Robert Schuman’s ideas, the professor concluded.

In his closing remarks, Márton Gyöngyösi pointed out how the conference revealed that the problems were even more complex and significant than we had thought. Since the inequalities are enormous, it is too early to talk about a standard EU minimum wage. Instead, the EU should implement the goals of the Wage Union initiative and enhance free competition by helping small and medium enterprises rather than big multinational companies. The fact that the minimum wage is below the level of subsistence in many places shows that slave societies have been created. He said that the European Citizens’ Initiative was going on its proper way and, under the current circumstances, it was the best institution and framework for conducting a broad dialogue on our future without any political ulterior motives or ideological conflicts.

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moderator ISTVÁN TEPLÁN

LIENE DOBELE, director, EY Europe, Middle East, India and Africa region for Public PolicyTAMÁS MESZERICS, Member of the European ParliamentMÁRTON GYÖNGYÖSI, Member of the Hungarian National Assembly, representative of the European Citizens’ Initiative for a Wage UnionPÉTER RÓNA, professor, Blackfriars Hall, University of Oxford

participants

Social and political consequences of a harmonized wage union: “European Labour Authority” or a recommended best practice code?

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CONCLUSIONS AND PROPOSALSThe Wage Union idea is in line with the Europe concept dreamed of by the founders of the EU. Robert Schuman and his associates were planning for a European Union which is based on Christian values, humanity, solidarity and responsibility. Such an economic policy is still in line with the EU’s core values but Neoliberalism has strayed away from the original goals of the community. All future actions must be based on returning to the real European values.

We must eliminate all employment-related inequalities, regardless if they are based on geographical location, age or gender. We must continue going on the road that began with the Gothenburg Proclamation, and implement the principle of “Equal pay for equal work”, an idea which dates back half a century in the European Union. Beside the existing risks, technological advancement and the increasing automation offer several new opportunities for us, as long as we are able to use them and develop the appropriate regulations.

In order to do so, we must implement a real convergence among the Member States because it was the most important objective and promise of the European Union right from the beginning. The above requires that citizens’ income must not sink below the level of subsistence anywhere in the EU. We must reconsider the EU’s budget since it does not meet social expectations in its current form.

As part of the European Commission, we must set up an office of commissioner for member state convergence, whose job would be to exactly determine what falls within the scope of convergence, analyze and evaluate the affect of EU decisions on convergence, set the appropriate goals and courses of action, measure their implementation and the gap between real wages as well as suggest potential solutions to eliminate the differences.

At present, it is a major problem that periphery countries compete with each other for the mega-projects of multi-national companies, even offering highly preferential treatment for them. Thus small and medium enterprises suffer a disadvantage compared to big companies, which leads to a grave distortion of the market. The European Commissioner for Competition should initiate an EU directive to stipulate a reduction or ban of national subsidies for multinational company projects.

Offshore companies mean a life-threatening leak for Europe’s economy, because the money thus drained from the EU is sorely missing from the national budgets and cuts the resources necessary for convergence. That’s why these monies should be taxed as if they had not left the European Union. The amount thus collected could then be allocated to convergence and the implementation of the Wage Union.

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appendixPANELLISTS OF THE CONFERENCELIENE DOBELE is Director in Ernst & Young Europe, Middle East, India and Africa region for Public Policy, based in Brussels. Previously she has worked as assistant director in EY Riga office managing administration, brand, communication and marketing. She holds MBA from BA School of Business and Finance and BA, Political science from University of Latvia.

MÁRTON GYÖNGYÖSI was born in Hungary. He grew up in mainly Asian countries, in Egypt, Iraq, Afghanistan and India, where his father served as commercial counsellor. He studied economics and political science at University of Dublin, Trinity College and at Friedrich Alexander University in Nuremberg, Germany. He worked in Ireland and Hungary as a tax consultant with KPMG and E&Y, specialized in corporate taxation. He frequently publishes articles in Hungarian daily and weekly magazines. In 2010 became MP and the Deputy-Leader of the Parliamentary Faction of Jobbik as well as the Vice-Chairman of the Foreign Affairs Committee of the National Assembly. In 2014 he was re-elected as MP. He is also currently a member of the Council of Europe

ZBIGNIEW KRYSIAK is an expert of capital and financial markets, having more than 20 years of experience in business practice, mainly in the financial sector. He is adjunct professor at the Warsaw School of Economics, teaching a range of subjects in English and Polish in finance, banking, financial markets and risk management for graduate, postgraduate and MBA students. He is a visiting Professor at the Northeastern Illinois University in Chicago and Pepperdine University in Los Angeles. He has authored about 130 publications and over 70 scien-tific reviews, published in the USA. He is a member of the scientific committees of international finance conferences, participated in the work of the European Banking Industry Committee and was a member of the Mortgage Funding Expert Group of the European Commission. He participated in creating and implementing the real estate price analysis system at the Polish Bank Association. He was awarded the Silver Cross by the President and the Honorary Medal of the Polish Banks Association for his contributions to the development of the banking sector. Director of Schuman Thought Institute

MONIKA LADMANOVA is an Advisor and Member of the Cabinet of the EU Commissioner for Justice, Consumers and Gender Equality, working on the issues of gender equality, antidiscrimination and minorities and corporate responsibility. Monika studied Law at the Charles University in Prague and at the Columbia University in New York. She has extensive experience in non-profit sector and private sector, having worked for the Soros Foundation in Prague for 11 years and for IBM for more than 6 years. In addition, Monika founded several non-governmental, non-partisan initiatives on human rights and gender equality.

PAULO ALEXANDRE GONÇALVES MARCOS was born in Lisbon. He studied Economics, Business Administration and Political Science at the Catholic University Lisbon; Nova University in Lisbon and Harvard University. Since 1992 he is marketing professor at the Catholic Lisbon School of Business and Economics. He started his career in the banking industry working in several functions in various banks, in three continents. He wrote three technical books and articles in leading financial newspapers in Portugal. He is the president of the banking industry managers union, President of the largest non-marxist, non-affiliated Union Confederation in Portugal, President of the Portu-guese banking industry independent unions’ federation and vice president of Madeira´s Social and Economic Council. He speaks and writes in Portuguese, English and French, and has a working understanding of Spanish, Galician and Catalonian.

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TAMÁS MESZERICS earned his MA degree in history and English Studies as well as his PhD degree in con-temporary history at Loránd Eötvös University in Budapest. He was a fellow at the Institute for International Studies at the University of Leeds and at the George Mason University. He became a program coordinator and research assistant at the Central European University and he was a visiting scholar at the Harvard University. His fields of interest are theories of democracy, historical and theoretical studies of intelligence, bureaucracy, bureaucratic politics and their theories, the history of modern Central European countries and behavioural game theory. He was a founding member of the new green party Politics Can Be Different (LMP) and worked as a foreign pol-icy expert for the parliamentary group. In 2014 he was elected as a Member of the European Parliament where he serves as a member of the Committee on Foreign Affairs and substitute member of the Committee on Employment and Social Affairs. FREDERIC PETIT was born in Marseille, has a bachelor degree in mathematics. First he worked on social and urban projects, running a multicultural centre, and then worked in Lithuania and Poland as an engineer. In 2010 he joined the Consolis Group as an adviser in Egypt and remained in the country until 2015, when he moved back to Poland. In 2007 he joined the centrist François Bayrou’s party the Mouvement Démocrate «MoDem». He became the elected representative for his countrymen living in Central Europe. Frederic PETIT’s actions revolve around energy, representation of the French living abroad, education and Europe (including European worker’s mobility). Frédéric Petit speaks 7 languages: French, Polish, German, English, Lithuanian, Russian and Egyptian Arabic.

PÉTER RÓNA was born in Hungary, emigrated to the United States in 1956. He obtained B.A. degree in the history of economic theory from the University of Pennsylvania and law degree from Oxford University. He was the legal advisor to the U.S. Department of Commerce and worked for BJ Schroder Vabk & Trust Co. in the US, as director (1985 - 1991). After returning to Hungary he managed an investment fund. In 2003 he joined the faculty of Eötvös Lóránd University where he taught public international law. He served as a member of the Supervisory Board of the National Bank of Hungary. He teaches economic theory and the philosophical foundations of the social sciences at the Oxford University. He published several articles and is the editor of the series Virtues and Economics published by Springer.

ISTVÁN TEPLÁN is an economic historian, sociologist and educator; educated in Hungary and the USA. He was one of the founders of the Central European University (CEU) and as Executive Vice President he served CEU between 1992 and 2007. He served as the Director General of the Government Centre for Public Administration of Hungary, and was a board member of the European Institute of Public Administration. He was the chief advisor of the State Minister for Environment of Hungary. He was the founding Director General of the Hungarian National Institute for Environment and served as the appointed Envoy for the Budapest Water Summit in 2013. He was a Board member of the Regional Environmental Center for Central and Eastern Europe and he also was a member of the Management Board of the European Environment Agency (EEA). Dr Teplan is a contributor of several articles and papers to international conferences and journals and taught at several universities.

PREZMYSLAV WOREK economist graduated at the University of Economics in Katowice and works as labour inspector of the District Labour Inspectorate in Warsaw. He is a social activist and the Vice-Chairman of Interstate Solidarność Association at the State Labour Inspectorate.

imprintRepresentatives of Wage Union Citizens’ Initiative

Gyöngyösi Márton20/B. Villányi street, H-1113 Budapest