Minimum wages in the EU

As the EU economy advanced its recovery following the pandemic, the high rate of inflation throughout 2022 meant that wage setting actors made their decisions under a cloud of uncertainty. While nominal increases in statutory minimum wages reached an all-time high, minimum wage workers in most countries saw their purchasing power decline or just about compensated at the beginning of 2023, based on preliminary harmonised inflation figures. With inflation expected to persist, a further depreciation of minimum wages in real terms can be expected in most Member States, as only a few foresee additional increases in 2023.

Tato zpráva je vypracována v rámci tříletého pilotního projektu (2021–2023) nazvaného „Úloha minimální mzdy při vytváření univerzální záruky práce“, jehož realizací pověřila nadaci Eurofound Evropská komise. Zaměřuje se na modul 3 tohoto projektu, který zkoumá minimální mzdy a jiné formy odměn osob samostatně výdělečně činných. Z důvodu náročných podmínek, s nimiž se určité skupiny osob samostatně výdělečně činných potýkají, některé členské státy zavedly nebo projednávají návrhy určitých zákonných forem minimální mzdy pro vybrané kategorie osob samostatně výdělečně činných.

Minimum wages have risen significantly in 2022, as the EU Member States leave behind the cautious mood of the pandemic. However, rising inflation is eating up these wage increases, and only flexibility in the regular minimum wage setting processes may avoid generalised losses in purchasing power among minimum wage earners. On 6 June 2022, the Council of the EU and the European Parliament reached a political agreement on the Directive on adequate minimum wages proposed by the Commission in October 2020. Once formally approved, EU Member States will have to transpose it into national law within two years.

Po opatrném procesu stanovování minimální mzdy na rok 2021 se nominální sazby pro rok 2022 výrazně zvýšily, neboť se zmírnily negativní důsledky pandemie a ekonomiky a trhy práce se zlepšily. V této souvislosti své sazby zvýšilo 20 z 21 členských států EU se zákonnou minimální mzdou. Výrazný růst byl patrný v členských státech střední a východní Evropy, a to v porovnání s původními patnácti členskými státy, zatímco k největšímu nárůstu došlo v Německu. Při zohlednění inflace se však minimální mzda v reálném vyjádření zvýšila pouze v šesti členských státech.

The first overview of minimum wage setting for 2022 shows that, while some negotiations are still ongoing, virtually all EU Member States have increased their nominal statutory rates. Compared to last year, when most countries settled for cautious increases against a background of deep uncertainty caused by the pandemic, growth in statutory rates for 2022 was stronger, reflecting an easing of the situation. This was especially the case in central and eastern European countries, where some increases were in double digits. Nevertheless, inflation is back in the picture and should be monitored in the coming months to get an insight into how the increases in nominal minimum wage rates translate into actual changes in the purchasing power of minimum wage earners.

While the number of employees earning the minimum wage has increased across Europe over the last decade, spurred by significant minimum wage hikes, a clear gender divide emerges, with minimum wage earners more likely to be women. Minimum wage earners are also more likely to live in materially deprived households.  

Tato zpráva shrnuje, jak byly výše minimálních mezd pro rok 2021 stanoveny v průběhu roku 2020, tedy v roce, který byl poznamenán pandemií COVID-19. Posuzuje obtíže, kterým čelili vnitrostátní činitelé s rozhodovací pravomocí a jak při rozhodování o minimální mzdě reagovali na výzvy spojené s hospodářskými a sociálními důsledky pandemie. Mapuje rozsah, v jakém byla minimální mzda zahrnuta v podpůrných opatřeních souvisejících s pandemií COVID-19.

Decision-makers approached minimum wage setting for 2021 cautiously due to the economic uncertainty caused by the pandemic. Despite this, nominal statutory minimum wages rose in most Member States and the UK, although at lower rates than in recent years.

​​​​​​​Despite the unusually tough economic and labour market conditions, most EU Member States made nominal and real increases to their minimum wages in 2020. This is what a first overview of recent minimum wage developments reveals. Some countries lived up to earlier promises or pre-agreements, while other countries strayed somewhat off their original path but still maintained the overall trend of increasing minimum wages in line with other wages. Although most countries were cautious in the level of increase granted, low inflation rates meant that the value of minimum wages still went up beyond rises in consumer prices. For the time being, at least, it can be concluded that the policy response in the context of the COVID-19 pandemic is distinct from the approach taken during the global financial crisis, when a greater number of countries moved quickly to freeze nominal minimum wages.

Minimum wages, one of the cornerstone issues for Ursula von der Leyen’s Commission, were a hot topic in the EU at the beginning of the year. Then the COVID-19 public health crisis struck. Now, with an economic crisis and recession looming, the question is not only what impact the crisis has had on minimum wage earners, but also what is the impact on the debate itself. How can the European Commission and Member States ensure minimum wages that are fair and provide a decent standard of living during and following a ‘black swan’ such as the Coronacrisis?