Citizens often turn to the European Parliament to ask how the European Union (EU) contributes to setting adequate minimum wages in EU countries.
In the European Union, member countries set their minimum wage individually, while the EU supports and complements their action. Minimum wages differ greatly throughout the EU, with the lowest level in Bulgaria and the highest in Luxembourg.
Minimum wage protection can be provided through collective agreements, statutory minimum wages set by law, or a combination of both. In the EU, 21 countries have a statutory minimum wage, 5 countries (Austria, Denmark, Finland, Italy and Sweden) determine theirs through collective bargaining and Cyprus has statutory rates for different occupations.
Poverty is an important issue for the EU, especially with many people at risk of in-work poverty. In 2022, the EU has adopted new rules that promote adequate minimum wages and help to improve working and living conditions for employees in EU countries.
European pillar of social rights
Wages are one of the 20 principles of the European Pillar of Social Rights, an initiative launched by the Commission in March 2021, which aims to create a more social Europe, to improve labour markets and to strengthen social protection systems. Under this initiative, to help prevent in-work poverty, EU countries should ensure by 2030 an adequate minimum wage to workers.
Towards an EU policy on minimum wages
EU rules on minimum wages can help ensure adequate wages and social security in the context of economic crises, such as those caused by the coronavirus pandemic or Russia’s war in Ukraine.
The European Parliament has long been advocating for general guidelines on minimum wages to prevent poverty in the EU. In 2017, it called on EU countries to introduce adequate minimum income schemes to support citizens and highlighted the issue of in-work poverty due to insufficient wages. In October 2019, Parliament called on the Commission to put forward a legal instrument to ensure fair minimum wages for workers across the EU.
EU law on adequate minimum wages
In October 2020, the Commission responded to these calls by putting forward a proposal for a Minimum Wage Directive. Council and Parliament reached a provisional agreement on the new rules in June 2022. Parliament then formally adopted the legislation in September, followed by the Council in October. EU countries now have two years to implement the new rules.
The new law promotes the adequacy of statutory minimum wages and helps to achieve decent working and living conditions for all workers in the EU. The rules require EU countries to:
- set up adequate minimum wages according to a set of clear criteria, including the cost of living. Each EU country will have to set up a minimum wage by national law and/or collective agreements and update it at least every two years.
- promote collective bargaining for wage-setting.
- give workers effective access to minimum wage protection.
However, the new rules do not set up a specific minimum wage level that all EU countries have to reach. Setting up the amount of minimum wages remains a national competence.
- Minimum wages directive, European Parliament, At A glance, September 2022
- Directive on adequate minimum wages, European Parliament, Briefing, June 2022
- Adequate minimum wages in the EU, European Council
- Fair minimum wages for workers in the European Union, European Parliament, Legislative Train Schedule, September 2022
- Minimum income: more effective support needed to fight poverty and promote employment, European Commission, News, September 2022
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