Wide variations in minimum wage among EU Member States

Figure 1: Minimum wages in 20 EU Member States, 2007 (€)

Note: A total of 20 of the 27 EU Member States have a national minimum wage.

Source: Eurostat, 2007

Minimum wages in 20 EU Member States, 2007 (€)

Of course, the cost of living also differs between those countries; therefore, the differences in the monthly minimum wage decrease when the wages are expressed in purchasing power standards (PPS). While the countries’ rankings remain almost unchanged, the minimum wage in PPS still varies between 204 PPS in Romania and 1,503 PPS in Luxembourg, which corresponds to a differential factor of about 1:7.

Minimum wage and average monthly earnings

The EU is made up of both poorer and richer countries (EU0703019D). Therefore, the overall level of monthly minimum wages – even those in PPS – may be regarded as a less significant indicator than the relation of the minimum wage to the average gross monthly earnings in industry and in the services sector of each country. This indicator shows how far the process of ‘decommodification’ or instituting of social welfare entitlements has advanced in the different countries and the strength of the institutional framework in combating an increase of relative poverty among the working population.

The latest available data, from 2005, show that differences between the countries seem to converge on the basis of this indicator. The minimum wage in relation to average gross monthly pay varies from about 33%–35% in Romania, Estonia, Latvia, Poland and Slovakia to above 49% in Bulgaria, Malta, Luxembourg and Ireland (Figure 2).

Figure 2: Minimum wage as a proportion of average gross monthly earnings in industry and services sector, 2005 (%)

Note: Data are available for 17 EU Member States.

Source: Eurostat, 2007

Minimum wage as a proportion of average gross monthly earnings in industry and services sector, 2005 (%)

Proportion of full-time employees earning minimum wage

Considerable differences also arise between the EU countries in relation to the percentage of full-time employees earning the minimum wage. This proportion ranges from below 3% in Spain, Malta, Slovakia, the United Kingdom, the Czech Republic, the Netherlands, Slovenia and Poland to 16% or more in Bulgaria and France (Figure 3).

Figure 3: Proportion of full-time employees earning minimum wage, 2005 (%)

Note: Data value shown for all (total) employees in each country, including men and women. Data are available for 18 Member States.

Source: Eurostat, 2007

Proportion of full-time employees earning minimum wage, 2005 (%)

It might be expected that the higher the minimum wage level is in relation to average earnings, the more employees are affected by it. Interestingly, the statistics show that the relation between the minimum wage and average earnings only slightly affects the proportion of full-time employees falling under the national thresholds. For example, Ireland has a minimum wage of 52% of average earnings but less than 4% of full-time employees rely on the minimum wage. Conversely, 10% of full-time workers do so in Romania despite the fact that the minimum wage level is only around 33% of average earnings in this country. This may be explained by a more uneven distribution of earnings in Romania in comparison to Ireland.

Where data are available, it can be shown that in all countries except Malta and Hungary the proportion of women earning the minimum wage is higher than that of men (Figure 3). Whether this relates to differences in the qualifications structure between the sexes or to pay discrimination of women cannot be determined on the basis of these statistics.

Rainer Trinczek, Technical University Munich