Minimum wages pilot project
Following a request from the European Parliament and decision from the European Commission, Eurofound is carrying out a pilot project on the 'Role of the minimum wage in establishing the Universal Labour Guarantee' in the EU from 2021 to 2023. The purpose of this pilot project is to provide data and research evidence that will feed into the monitoring of the Commission’s initiative on adequate minimum wages. The main objectives will be examined in three distinct modules:
- Module 1: Enforcement of minimum wages and compliance – providing a measurement of compliance with minimum wage regulation and discussing the methodological and policy issues related to this measurement
- Module 2: Database on minimum wage rates applicable to low-paid jobs – building a database on minimum wages in collective agreements
- Module 3: Minimum tariffs in collective agreements – to verify the presence of minimum tariffs for self-employed in collective agreements
Two expert groups were set up to support the work on this pilot project over its full duration. These groups bring together EU wide expertise in the field of monitoring compliance with minimum wages (Module 1) or collective bargaining/collective agreements (Module 2 and Module 3). The groups are composed of experts from trade unions, employer organisation and governments nominated by Eurofound’s Management Board, practitioners managing national data registers of collective agreements, academic experts and experts from the International Labour Organization (ILO), the Organisation for Economic Co-operation and Development (OECD), the Joint Research Centre (JRC) and the European Commission.
Description of each module
Module 1 deals with monitoring the enforcement of and compliance with minimum wages. Enforcement is a significant issue overall and especially when considering labour and social regulations. Compliance with minimum wage regulation is important to guarantee workers’ rights and protections, as well as a level playing field for business and fair competition.
Module 1 of the pilot project consists of three interlinked work packages, to be carried out between 2021 and 2023.
- Work package 1 - Approaches to estimating the magnitude of non-compliance: The first work package started in mid-2021 and investigates what is (already) known about the degree of non-compliance with statutory and collectively agreed minimum wages in the EU Member States. It identifies national sources and methods used to estimate the extent of non-compliance with minimum wage regulations and discusses the challenges involved in obtaining reliable estimates. Beyond the national approaches, it provides a methodological discussion of the problems to quantify non-compliance and investigate the feasibility of using EU wide (harmonised) data sources – to estimate the magnitude of non-compliance with minimum wage regulations. Subject to feasibility and caveats, estimates of the magnitude of non-compliance are made.
- Work package 2 - Mapping the enforcement institutions, policies and practices: The second work package started at the end of 2021 and investigates the sets of tools, institutions and regulations which Member States currently use to monitor, enforce and promote compliance with minimum wage regulations. It investigates the main control institutions, their capacity and resources, the role of social partners in monitoring compliance, the coordination among different actors, as well as the types of strategies and measures applied, including sanctions. These policies and practices must be seen in the context of the legislation or other forms of regulation of minimum wages and the enforcement institutions. This work package draws on the Network of Eurofound Correspondents (NEC) and their interviews with relevant national actors.
- Work package 3 - Policy analysis for selected sectors: The third work package, launched in mid-2022, will conclude the qualitative research. It will build on the findings of the first and second work packages and will seek to investigate in depth the drivers and hindrance factors of non-compliance, which policy measures appear to be working well in which context, the reasons why or why not, and if some policy measures could be transferred to other countries and under what circumstances. It would also seek to learn in more general terms from policy measures on non-compliance in other areas. To be more specific, the policy analysis will focus on selected sectors only, across some selected countries.
The final integrated report comprising all three areas will be published around the third quarter of 2023.
In the second module, the creation of a database of collectively agreed minimum wage related to low- and medium-paid jobs and sectors are conceptualised and piloted.
- Work on this module started in 2021 with the development of a concept note. The note outlines how a set of low- to medium-paid jobs or sectors can be selected and how a representative sample of collective agreements related to these jobs or sectors can be drawn. Based on the availability and accessibility of national registers of collective agreements, it proposes country-specific sampling approaches. It also describes which parameters will be included in the data collection.
- In parallel to the conceptual work, during 2021 the project team liaised with national registers and data providers of collective agreements to establish the scope and accessibility of their databases and seek their cooperation.
- In 2022, Eurofound started to develop the online database infrastructure, which allows the coding of pay rates contained in collective agreements between 2015 and 2020, as well as all other relevant information.
- In mid-2022, the database and concept are tested in a set of eight Member States with different wage bargaining contexts: Austria, Bulgaria, Denmark, Italy, Germany, Spain, Slovakia and Sweden.
- Following discussions with the expert committee, it is planned to extend the data collection to all Member States, in as far as feasible, and to more jobs and/or sectors.
- Country specificities and other metadata will be documented alongside the coding and a set of indicators on developments in collectively agreed minimum wage rates will be derived.
A consolidated final report will be published at the end of 2023.
The third module commenced in 2021, seeking to map national/sectoral approaches to regulating minimum wages or other forms of pay (wage rates, tariffs, fees, prices) of the self-employed, in order to understand how they can be fixed for specific jobs or professions within sectors having a high level of freelancers/vulnerable and concealed self-employed.
The main research questions of this module are the following:
- Is it legally possible for self-employed to join trade unions or to be represented by other forms of employee representation at national level?
- Are there concrete examples of trade unions or other forms of employee representation for self-employed at national level?
- Are there collective negotiations and agreements for self-employed at national level?
- Are there statutes and/or rules and regulations on minimum wages and other forms of pay (for example, wage rates, tariffs, fees, prices) for self-employed?
- Are there collective negotiations and/or agreements on minimum wages and other forms of pay for self-employed (for example, wage rates, tariffs, fees, prices)?
A report for this module was completed in mid-2022.
Eurofound research on minimum wages
Eurofound has long-standing research expertise in the area of minimum wages, including a publication series that reports on developments in minimum wage rates across the EU, looking at how minimum wage rates are set and how they have developed over time in nominal and real terms. The series explores where there are statutory minimum wages or collectively agreed minimum wages in the Member States, as well as minimum wage coverage rates by gender.