Kathleen Ragon Sociology Honors Thesis Gettysburg College April 26th, 2013 The Minimum Wage, Decent Wages, and Time Sovereignty in the European Union

General Question What is the relationship between working time and the minimum wage in the European Union?

Twin Goals: Time and Money Goal 1: minimal material prosperity “All workers have the right to a fair remuneration sufficient for a decent standard of living for themselves and their families.” European Social Charter (1996) Goal 2: time sovereignty “Every worker has the right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave.” Article 31, Charter of Fundamental Rights of the European Union (2000)

Research Questions RQ1: Is the fulfillment of both of these twin goals possible for minimum wage workers?  Minimal material prosperity operationalized as poverty threshold  Time sovereignty operationalized as one full-time job or less per worker in income unit RQ2: Does the ability to meet these goals change over time?

Background 20 EU countries with national statutory minimum wages (Belgium, Bulgaria, Czech Republic, Estonia, France, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland Portugal, Romania, Slovakia, Slovenia, Spain, United Kingdom)

Literature Review 1. Dolado et al. (1996), Machin & Manning (1997), Stewart (2004), Metcalf (2008), Low Pay Commission Report (2012) 2. Machin & Manning (1997), Machin et al.( 2003), Lucifora et al. (2005), Dickens & Manning (2004), Metcalf (2008), Fanti & Gori (2011) 3. Schulten et al. (2005), Schulten & Watt (2007), Schulten (2008), Levin-Waldman (2003), European Commission (2010) 4. Metcalf (2008), Robinson & Wadsworth (2007) Unemployment effects: little to no effect, positive or negative 1 - studies of France, Spain, the Netherlands, and the UK. Inequality and Poverty Effects: mixed results 2 - some studies found a positive impact on low pay and wage dispersion, others nil. - “The honest conclusion is that there remains very considerable uncertainty about the true impact of the NMW.” (Manning & Dickens 2002) Vision of Social Europe: a decent standard of living 3 - EU countries should “have the goal of implementing a framework in which national minimum wages would be protected from erosion and the lowest-paid workers in each European country assured a decent standard of living and their societies a minimum of social cohesion.” (Schulten & Watt 2007) Working Time: employer perspective 4 - almost no studies of working time from the employee perspective

Analytical Framework Marx “Time is the room of human development” (1844:422). “Capital is dead labour which, vampire-like, lives only by sucking living labour, and lives the more, the more labour it sucks…the capitalist appetite for surplus labour appears in the drive for an unlimited extension of the working day” (1867:342, 346) Polanyi Instability as social dislocation.

Analytical Framework EU Policy The EU embeds these ideas in its policy by protecting workers’ time and guaranteeing workers (at least in theory) a ‘decent wage.’ (European Social Charter and the Charter of Fundamental Rights of the European Union) Long hours (+48/week) shown to be detrimental to workers’ health and safety 1 1. (e.g. Schor 1993, Eurofound 2003, Seo 2011, Wirtz & Nachreiner 2010, Working Time Developments 2009, A New Organization of Time over Working Life 2003)

Methods Data collected from USDOS Country Reports on Human Rights Practices, Eurostat, OECD, and ILO databases. Minimum wage levels Poverty thresholds Vacation time Labor laws (standard workweek, etc.)

Methods: Working Units Single worker (one worker earning 100% of the minimum wage) Four Person Family (two adults, each earning 100% of the minimum wage and two children under the age of 14)

Methods – Example Calculation Hours worked weekly to achieve the poverty threshold: Single worker in Belgium (2011) 38 hour standard workweek * 4 weeks/month = 152 hours/month € monthly minimum wage/152 hours/month = €9.31/hour €12, poverty threshold/€9.31 hourly minimum wage = hours per year ( yearly hours – 240 mandatory yearly vacation hours)/46 standard yearly work weeks = hours worked per week

Results RQ1: 3 Groups Group 1: Reasonable (Part-time job) Single Worker: 20 – 30 hours to earn the poverty threshold 4 Person Family: 40 – 60 hours to earn the poverty threshold Feasible fulfillment of the twin goals Group 2: Precarious (Full-time job or slightly less) Single Worker: 30 – 40 hours to earn the poverty threshold 4 Person Family: 60 – 80 hours to earn the poverty threshold Fulfillment of the twin goals with limited time sovereignty Group 3: Unreasonable (> Full-time job) Single Worker: 40+ hours to earn the poverty threshold 4 Person Family: 80+ hours to earn the poverty threshold Fulfillment of the twin goals is unreasonable or impossible

Results Is fulfillment of the twin goals possible? Table 1. Number of 40-hour Workweeks to Achieve Poverty Threshold (2010) CountrySingle WorkerFour Person Family Group 1 France Ireland Belgium Poland Greece Romania Netherlands Portugal Hungary Malta Group 2 Lithuania Spain Latvia* Luxembourg United Kingdom Slovenia Slovakia Estonia^ Group 3 Czech Republic Bulgaria *Latvia falls into Group 1 in the case of a single worker. ^Estonia falls into Group 3 in the case of a four person family.

Results How does this relationship change over time?

Example Group Change

Results: Qualitative Measure of Change Table 2. Poverty Country Groups and Volatility Scores Country Total Group Changes Single Worker Total Group Changes Four Person Family Group 1 France00 Ireland00 Belgium00 Poland00 Greece00 Romania00 Netherlands00 Portugal00 Hungary62 Malta00 Group 2 Lithuania13 Spain24 Latvia14 Luxembourg00 United Kingdom05 Slovenia13 Slovakia04 Estonia24 Group 3 Czech Republic12 Bulgaria43

Results: Volatility Table 3. Volatility Score and Average Hours Worked Weekly for Poverty Threshold ( ) CountrySingle WorkerFour Person Family Group A (Volatility <5% of standard 40-hour workweek) Belgium0.58 (22.14)1.22 (52.24) Romania0.78 (24.34)1.64 (56.85) Luxembourg0.95 (33.28)2.00 (76.53) Portugal1.22 (27.35)2.57 (64.29) Greece1.23 (23.63)2.59 (53.28) Netherlands1.45 (23.84)3.05 (56.02) Malta1.62 (27.38)3.39 (63.90) Ireland1.67 (26.37)3.50 (60.89) France1.84 (18.71)3.86 (47.54) Group B (Volatility 5-10%) United Kingdom2.06 (35.53)4.31 (79.93) Slovakia2.19 (34.35)4.59 (75.80) Spain2.26 (31.75)4.74 (73.74) Slovenia2.36 (33.63)4.95 (74.28) Poland2.48 (25.15)5.22 (56.49) Estonia3.27 (35.41)6.86 (78.03) Lithuania3.74 (30.72)7.85 (71.12) Group C (Volatility >10%) Latvia4.09 (35.37)8.58 (77.95) Hungary4.19 (30.11)9.23 (63.76) Czech Republic5.06 (38.48)10.62 (87.20) Bulgaria7.71 (42.34)16.20 (92.58)

Results: Poverty Groups vs. Volatility Groups Table 5. Poverty Country Groups and Volatility Scores Country Volatility Group Single Worker Volatility Group Four Person Family Poverty Group 1 FranceAA IrelandAA BelgiumAA PolandBB GreeceAA RomaniaAA NetherlandsAA PortugalAA HungaryCC MaltaAA Poverty Group 2 LithuaniaBB SpainBB LatviaCC LuxembourgAA United KingdomBB SloveniaBB SlovakiaBB EstoniaBB Poverty Group 3 Czech RepublicCC BulgariaCC

Take-aways There is considerable variability in the ability of minimum wage workers in the EU to meet the twin goals of minimal material prosperity and time sovereignty. Especially in those countries where achievement of the twin goals is already precarious or unreasonable, the ability of minimum wage workers to meet the twin goals is variable over time. Thus, the actual situation in the EU is not internally consistent with its rhetoric of the twin goals of minimal material prosperity and time sovereignty; in some countries minimum wage workers are excluded from the right to have both a decent standard of living and time sovereignty.

Possible Solutions For those countries where achievement of the poverty threshold (and thus the twin goals) is precarious or unreasonable, increase the minimum wage to a level that allows minimum wage workers to reasonably earn the poverty threshold. For those countries with high volatility, re-evaluate the method for uprating the minimum wage. Follow the example of France where the value of the minimum wage is pegged to inflation.

Research from the Future This is a theoretical study, so in practice, how does this affect minimum wage workers? Who composes the group “minimum wage workers”? Does this preponderantly affect women, migrant workers, etc.? Comparison of the amount of hours for each country to its relative ‘market freeness’ measure - do countries with freer markets also have higher necessary hours? How do minimum wage workers in countries where the minimum wage is collectively bargained compare to countries with national statutory minimum wages? How do the amount of hours necessary to earn the poverty threshold in a given country compare to the level of social support/welfare provided in that country?

Conclusion TIME IS IMPORTANT.

Gratitude and Thanks to… Professor Craig Lair Gettysburg College Sociology Department Professor Sandra Gill Professor Emelio Betances Andrew W. Mellon Foundation Gettysburg College Provost’s Office