EU Decided on Minimum Wage

Council and Parliament of the EU adopted the European Directive which sets the rules for determining the minimum wage and which provides for the extension of collective bargaining coverage to 80%.

Minimum wage is currently foreseen in 21 EU countries.  It will always be up to the member states to decide whether it exists and is worth. But the EU now decided 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%.

10 October 2022

Last 4 October, the Council of the EU gave final green light to a directive that will promote the adequacy of statutory minimum wages and thus help to achieve decent working and living conditions for employees in Europe.

The directive establishes procedures for the adequacy of statutory minimum wages, promotes collective bargaining on wage setting and enhances the effective access to minimum wage protection for those workers who are entitled to a minimum wage under national law.

• Adequacy of statutory minimum wages: Member states with statutory minimum wages are requested to put in place a procedural framework to set and update these minimum wages according to a set of clear criteria. Updates to the statutory minimum wage will take place at least every two years (or no later than every four years for countries which use an automatic indexation mechanism). However, the directive does not prescribe a specific minimum wage level that member states have to reach.
• Promotion of collective bargaining on wage setting: One of the goals of the directive is to increase the number of workers who are covered by collective bargaining on wage setting. To reach that objective, countries should promote the capacity of social partners to engage in collective bargaining. Where the collective bargaining coverage rate is, for instance, below a threshold of 80%, member states should establish an action plan to promote collective bargaining. The action plan should set out a clear timeline and specific measures to progressively increase the rate of collective bargaining coverage.
• Effective access to minimum wage protection: The text stipulates that member states will take measures to enhances workers’ effective access to statutory minimum wage protection. Measures to this end include controls by labour inspectorates, easily accessible information on minimum wage protection and developing the capability of enforcement authorities to take action against non-compliant employers.

The decision comes after a two-year legislative process.

The directive will enter into force on the twentieth day following its publication in the official journal. Member states have two years to transpose the directive into national law.

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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