The paradox between the European Pillar of Social Rights and EU economic governance: Spanish reforms to wage-setting institutions and the working poor

Abstract

The European Pillar of Social Rights (EPSR) was announced as a new platform for advancing social policy in the European Union. Among the principles and rights enshrined in the EPSR, the Commission has included the right of workers to be paid fair wages. However, in the context of EU Economic Governance, the EU countryspecific recommendations steer national wage-setting institutions in the opposite direction. The outcomes sought by EU Economic Governance and the EPSR thus produce a paradox. This paper presents the Spanish case as an example of this paradox. More specifically, it assesses the reforms the Spanish Government made to minimum wage rules and the collective bargaining system during the financial crisis. In the end, all those reforms have led to wage stagnation and devaluation, causing an increasing number of working poor.