Impact of national minimum wages on the probability of signing a new collective agreement and the magnitude of increases in negotiated wages

Data visualisation

Impact of national minimum wages on (upper panel) the probability of signing a new collective agreement and (bottom panel) the magnitude of increases in negotiated wages: estimated coefficients

https://a.storyblok.com/f/279033/9687a027b0/ef25054-figure1.png

The estimates are based on a two-stage type II Tobit model, which is estimated in two stages. The blue dots represents the point estimate coefficient of the effect of inflation, national minimum wage and the unemployment rate on the probability of signing a new collective agreement (upper panel) and on collectively agreed wages (bottom panel), while the dotted lines represent the confidence interval. If the confidence line does not cross the zero line, an estimate is statistically significantly different from zero with a 95% confidence level. Estimates from a probit model corresponding to the agreement equation with duration and non-compliance dummies, different types of fixed effects (collective agreement, country and month) and a time trend. Confidence intervals (95%) were computed using robust standard errors.

Source: Eurofound 2025

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Article

23 June 2025

Minimum wages have a significant effect on negotiated and actual wages

In recent years, national minimum wages have risen sharply across EU countries, making their influence on collective wage bargaining and general wage developments increasingly relevant. The findings show that national minimum wages have a positive impact on raising negotiated wage levels. However, careful policy design is required to avoid the crowding-out of collective bargaining, especially in low-paid sectors. Minimum wages also play a key role in improving wage levels among the lowest-paid employees, although spillover effects occur across the wider wage distribution.