National minimum wages in the EU: policy-driven growth, continued convergence and increased proximity to negotiated wages

Most of the 22 Member States with a national minimum wage increased them significantly over the last year (Figure 1). As explored in Eurofound’s forthcoming annual review of the minimum wage, the rate of change between January 2025 and January 2026 was largest in central and eastern European countries: Slovenia (16%); Bulgaria, Slovakia, Lithuania and Hungary (11–12%); Croatia and Czechia (around 8%); and Romania by 7% (adopted in July 2026). The hikes were more moderate in most western European countries: only Germany, Greece and Portugal registered increases above 5%.

The magnitude of these reported hikes to the nominal rates set by countries was broadly similar to that of the previous year. Since inflation was much more contained at the beginning of 2026 when those increases were decided, rising price levels did not play a major role in the decisions to hike minimum wages. Instead, the Minimum Wage Directive emerged as a driver in many cases: a growing number of Member States are using the indicative reference values mentioned by the directive to link their uprates to a certain value for their nominal rates (expressed as a share of average/median wages). As a result, the purchasing power of national minimum wages improved across virtually all countries between January 2025 and January 2026, again mainly in most central and eastern European countries (and Germany), while the gains were of a smaller magnitude across the remaining countries.

Nevertheless, the shocks to price levels in March 2026 resulting from the closure of the Strait of Hormuz and other global imbalances have altered this picture. Using the most up-to-date inflation data in May 2026, a more nuanced picture emerges. It shows that these generalised gains in purchasing power among minimum wage earners have already been eroded to varying degrees across EU countries. In fact, falls in purchasing power between January 2025 and May 2026 have been registered in several countries (Malta, Luxembourg, Spain, France, Netherlands, Poland, Portugal, Latvia and Ireland). Uncertainty about inflation levels and policy action remains high: an automatic indexation mechanism has already been triggered in Belgium in April 2026, and it remains to be seen whether new policy interventions to adjust the national minimum wage in line with growing inflation levels will emerge across Member States, as happened during the cost-of-living crisis between 2021 and 2024.

This year’s developments are consistent with the general improvement in minimum wages which has been ongoing for most of the past decade. This is due to an enhanced policy focus that has led to minimum wage floors growing above average wages in most countries.

Governments have adopted bolder approaches to minimum wage setting, as illustrated for instance by the very large hikes in Slovenia in 2011, Spain in 2019 and also in Germany in 2022 following the introduction of a statutory rate there in 2015. This change in policy tone towards minimum wage setting is underpinned by the adoption of the EU’s Minimum Wage Directive in 2022.

Although the growth in minimum wage rates is significant in many countries, a clear regional divide again exists: countries in central and eastern Europe, which started from significantly lower levels, have registered a notable upward convergence. Between 2016 and 2026, rates in real terms more than doubled in Romania and Lithuania; they increased by well over 50% in Croatia, Bulgaria, Poland and Hungary, and by almost 50% in Slovakia, Slovenia and Czechia (Figure 2). This means the nominal rates set by governments have doubled or tripled over the last decade in most countries in central and eastern Europe.

Progress is generally more modest in the older Member States, where the growth in minimum wage rates in real terms has largely been below 10%, and only above 20% in Ireland, Germany and Greece, and around 40% in Spain and Portugal. Nevertheless, it is significant that gains in purchasing power have occurred in all countries except France.

While minimum wage rates in most central and eastern European countries are still below those of older Member States, their remarkable growth over the last decade means that regional disparities have narrowed considerably. This has led to some significant changes in the relative position occupied by Member States when ranking them based on the level of their minimum wage rates. Figure 3 ranks countries according to nominal rates in euro. Lithuania moved from the third-lowest rate in 2016 to ninth highest out of 22 countries in 2026, while Poland also climbed and currently occupies the 10th position. Germany moved from sixth to third place in terms of highest minimum wage. In contrast, Greece and Malta moved down significantly and currently occupy the 14th and 15th positions, respectively, out of the 22 Member States with a national minimum wage.

A fundamental cornerstone of the European Social Model, collective bargaining between social partners has shaped working conditions and wages across the EU for decades. However, as discussed above, national minimum wages have increasingly come to play an important role in setting wage floors. Following the 2008 financial crisis, trade unions and other social actors launched campaigns for more substantial national minimum wage increases (e.g. ETUC, undated). The COVID-19 crisis further accelerated this trend, prompting the EU to place greater emphasis on ensuring adequate minimum wages, culminating in the Minimum Wage Directive in 2022. This development partly reflects concerns that traditional collective bargaining structures have weakened over recent decades (Picot, 2023).

The recent rise in national minimum wage levels has led analysts to warn that they may undermine the negotiating power of social partners, particularly in setting effective wage floors for low-paid workers (Kahancová and Kirov, 2021). Of course, the interaction between minimum wages and collective bargaining can take various forms and depends on several factors, including the extent of social partner involvement in setting national minimum wages (Grimshaw and Bosch, 2013; Grimshaw, Dingeldey and Schulten, 2021). A critical factor, however, is how closely the national minimum wage approaches collectively agreed wage floors.

Eurofound collects data on collectively agreed wage floors in low-paid sectors across all EU Member States. These data can be used to get an empirical impression of how much national minimum wages have come closer to collectively agreed wage floors across these low-paid sectors (see Eurofound (2024) for more details on the methodology and the dataset sample). Figure 4 shows the average annual growth rate of collectively agreed wage floors in the dataset in relation to the increase in national minimum wages. It confirms that national minimum wages are generally catching up: in every year from 2016 to 2025, the proportion of collectively agreed wage floors – whose annual growth lagged behind that of the national minimum wage – was larger than the proportion whose growth outpaced it. This has resulted in the gap between collectively agreed wage floors and the national minimum wage shrinking from 7.9% in 2015 to 3.6% in 2025 (calculated as the median distance between both, based on nominal, monthly wage rates).

The more the national minimum wage catches up with collectively agreed wage floors, the bigger its role becomes. This means that low-wage workers are increasingly reliant on national minimum wage setting institutions to provide adequate wage protection, and are thus potentially exposed to political trends. It is therefore critical that collective bargaining is actively promoted in countries where coverage is low: the Minimum Wage Directive stipulates that countries with less than 80% of employees covered by collective bargaining must put in place action plans to promote it. A number of Member States have already published such plans. In light of the data presented here and the popularity of national minimum wage policy, it is critical that collective bargaining institutions continue to be actively strengthened, and that national measures taken to promote them are monitored for effectiveness.

National minimum wages have once again grown significantly across most Member States with such policies over the last year. Moreover, these hikes to nominal rates resulted in purchasing power gains among minimum wage earners across virtually all countries. These developments add to the major progress observed in minimum wage levels over the last decade, although this has been specially the case in central and eastern European countries. Rapidly increasing national minimum wages may also affect collective wage bargaining, as wage floors in many low-paid sectors are growing less than the national minimum wage. Against this background, reinforcing collective bargaining is more critical than ever to support social partners in protecting the working conditions of the lowest-paid employees.

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