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Minimum wage in the EU [Policy Podcast]

Written by Marie Lecerf,

© Andrey Popov / Adobe Stock

In 2020, most European Union (EU) Member States have a statutory minimum wage (21 of 27), while six others have wage levels determined though collective bargaining. Expressed in euros, monthly minimum wages vary widely across the EU ranging from €312 in Bulgaria to €2 142 in Luxembourg (July 2020). The disparities are significantly smaller when price level differences are eliminated. Expressed in purchasing power standard, the minimum wage ranges from PPS 547 in Latvia to PPS 1 634 in Luxembourg.

The question of setting a minimum wage is one of the most analysed and debated topics in economics. Over recent years and in the context of the economic and social crisis engendered by the Covid‑19 outbreak, the creation of a European minimum wage is increasingly considered as a useful instrument to ensure fair wages and social inclusion.

In November 2017, the EU institutions jointly proclaimed the European Pillar of Social Rights, setting out the European Union’s commitment to fair wages for workers. Since then, the European Commission has shown its willingness to address this issue. In particular, Commission President Ursula von der Leyen stated in her political guidelines that she will propose a legal instrument to ensure that every worker in the Union has a fair minimum wage. Such minimum wages should be set according to national traditions, through collective agreements or legal provisions.

On 14 January 2020, the Commission launched the first phase of consultation with social partners on fair minimum wages for workers in the EU, to gather social partners’ views on the possible direction of EU action. Based on the replies received, the Commission concluded that there is a need for EU action. The second phase of consultation was launched on 3 June 2020; with a deadline of 4 September 2020 for social partners to provide their opinion. A Commission proposal is expected by the end of 2020.

The European Trade Union Confederation welcomed the European Commission’s initiative and called for the Commission to propose a directive. Conversely, employers’ organisations believe wage-setting should be left to social partners at national level. In their view, if the Commission wished to act, only an EU Council recommendation would be acceptable.

The European Parliament has often debated the issue of low income and minimum income over the last decade, advocating a more inclusive economy.

Read the complete briefing on ‘Minimum wage in the EU‘ in the Think Tank pages of the European Parliament.

Listen to policy podcast ‘Minimum wage in the EU’ on YouTube.

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