Minimum wage in Europe. The EU Parliament approves the compromise

Today the European Parliament voted by a large majority a new European Directive which sets the rules for determining the minimum wage and which provides for the extension of collective bargaining coverage to 80%.

The minimum wage is currently foreseen in 21 EU countries and it will always be up to the Countries to decide whether it exists and is worth. But the EU now wants some common rules to be followed to set its value (which can vary from country to country) and update it over time. The Directive therefore leaves the EU countries free but obliges them to introduce, with the social partners, a minimum collective bargaining of 80%.

Strasboug, 14 September 2022

In recent decades, low wages have not kept up with other wages in many Member States. Structural trends reshaping labour markets such as globalisation, digitalisation and the rise in non-standard forms of work, especially in the service sector, have led to an increased job polarisation resulting in turn in an increasing share of low-paid and low-skilled occupations, and have contributed to an erosion of traditional collective bargaining structures. This has led to more in-work poverty and wage inequality.

The role of minimum wages becomes even more important during economic downturns. The Covid-19 crisis has particularly hit sectors with a higher share of low-wage workers such as retail and tourism and has had a stronger impact on the disadvantaged groups of the population. Ensuring workers in the Union have access to employment opportunities, and to adequate minimum wages is essential to support a sustainable and inclusive economic recovery.

Minimum wage protection can be provided by collective agreements (as is the case in 6 Member States) or by statutory minimum wages set by law (as is the case in 21 Member States). When set at adequate levels, minimum wage protection ensures a decent living for workers, helps sustain domestic demand, strengthens incentives to work, and reduces in-work poverty and inequality at the lower end of the wage distribution.

Minimum wage protection also supports gender equality, since more women than men earn wages at or around the minimum wage. However, many workers are currently not protected by adequate minimum wages in the EU. In the majority of Member States with national statutory minimum wages, minimum wages are too low vis-à-vis other wages or to provide a decent living, even if they have increased in recent years.

National statutory minimum wages3 are lower than 60% of the gross median wage and/or 50% of the gross average wage in almost all Member States4. In 2018, the statutory minimum wage did not provide sufficient income for a single minimum-wage earner to reach the at-risk-of-poverty threshold in nine Member States. In addition, specific groups of workers are excluded from the protection of national statutory minimum wages. Member States with a high collective bargaining coverage tend to have a low share of low-wage workers and high minimum wages. However, also in Member States relying exclusively on collective bargaining, some workers do not have access to minimum wage protection. The share of workers not covered is between 10% and 20% in four countries, and 55% in one country.

The currently minimum wages in Europe

21 EU countries have a minimum wage, while Austria, Cyprus, Denmark, Finland, Italy and Sweden have no minimum wages.

Outside the EU, the minimum wages are the USA, Turkey, Serbia, Albania, Montenegro and North Macedonia.

In July 2022, minimum wages in EU Member States ranged from € 363 per month in Bulgaria to € 2 313 per month in Luxembourg. And the ceiling of 1,000 euros is not exceeded in 13 countries (including the East, the Baltics, Greece, Portugal) and remains between 1,000 and 1,500 in Slovenia and Spain.

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