Economy

Fair minimum wages: Action for decent living conditions in the EU

Published

2 years ago

August 22, 2023

Parliament approved new rules to ensure minimum wages provide for a decent standard of living in the EU. Parliament has been calling for EU measures to secure a decent income for all workers for a number of years. 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.

In September 2022, MEPs adopted new rules to improve the adequacy of minimum wages. They expect this 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?

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

Will all EU countries have the same minimum wage?

No. Each country will set the level of the minimum wage based on socio-economic conditions, purchasing power, productivity levels and national developments.

Countries in which salaries are set exclusively through collective agreements - see below - 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.

The lowest minimum wage in EU is in Bulgaria with €332.34 and the highest in Luxembourg with €2,256.9.

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. .