Action for fair minimum wages
Members of the European Parliament (MEPs) are set to approve new rules to ensure minimum wages provide for a decent standard of living in the EU.
The European Parliament has been calling for EU measures to secure a decent income for all workers for a number of years. The press release made by the Parliament mentions that In-work poverty in the EU has increased over the past decade and economic downturns, like the one experienced globally during the Covid 19 crisis, show adequate minimum wages have an important role in protecting low-wage workers, as they are more vulnerable.
Following a European Commission proposal for rules to improve the adequacy of minimum wages, Parliament and Council negotiators reached an agreement in June. MEPs will vote on the new rules during the plenary session in Strasbourg in September 2022.
MEPs expect the rules will lead EU countries to achieve real wage growth and avoid competition on labour costs in the single market, as well as help reduce the gender pay gap, as nearly 60% of minimum wage earners in the EU are women.
Find out more about EU measures to safeguard workers’ rights
What does the new EU legislation on minimum wages entail?
It is noted that the EU countries will have to make sure their national statutory minimum wage allows for a decent standard of living. To determine how much that represents, they may use instruments such as:
A national basket of goods and services at real prices, which could include cultural, educational and social activities
Comparison of the minimum wage with reference values commonly used internationally, such as 60% of the gross median wage or 50% of the gross average wage
The comparison of the net minimum wage with the poverty threshold
The purchasing power of minimum wages
Other measures national governments will have to take include:
Promote collective bargaining on wage setting
Update statutory minimum wages at least every two years, or at most every four years for those countries that use an automatic indexation mechanism
Enforce labour inspections to ensure compliance and address abusive working conditions
Ensure that workers have access to dispute resolution and a right to redress
Find out more about the deal reached on new rules for minimum wages.
Will all EU countries have the same minimum wage?
Having the same minimum wage across the continent is in many ways seemed impossible. This is not the pure objective. It is acceptable that each EU member country is free to set the level of the minimum wage based on socio-economic conditions, purchasing power, productivity levels and national developments.
Additionally, EU member countries in which salaries are set exclusively through collective agreements will not be obliged to introduce a statutory minimum wage.
Why is a law on a minimum wage needed at EU level?
The minimum wage is the lowest remuneration that employees should receive for their work. Even though all EU countries have some form of minimum wage, in most member states this remuneration often does not cover all living costs. About seven out of ten minimum wage workers in the EU found it difficult to make ends meet in 2018.
Find out how MEPs want to tackle in-work poverty in the EU
Minimum wages in the EU now
Monthly minimum wages vary widely across the EU in 2022, ranging from €332 in Bulgaria to €2,256 in Luxembourg. One of the major factors for the gap is the difference in the cost of living.
Find out more statistics on minimum wages in EU countries
There are two forms of minimum wage in EU countries:
Statutory minimum wages: regulated by statutes or formal laws. Most member states have such rules.
Collectively agreed minimum wages: in six EU countries - Austria, Cyprus, Denmark, Finland, Italy, and Sweden - wages are determined through collective agreements between trade unions and employers, including in certain cases minimum wages. .
This post contains primarily the press release made by the European Parliament including the article that was first published in 2021 and updated in July 2022 to reflect the negotiated agreement reached between Parliament and the Council.