EMCC European Monitoring Centre on Change

The evolution of wages and wage inequality are highly debated topics among European academics and policymakers in recent years. Concerns emerged already before the crisis due to wage growth below productivity levels and widening pay differentials across the workforce, and they have been aggravated from the onset of the Great Recession following wage falls in some European countries severely hit by the crisis and the generally sluggish recovery of wages across European countries. 

Analysis of the most recent micro-data from the EU-SILC survey, referring to data for 2015, shows a reversal of negative trends in many countries, since wages grew and wage inequality fell in a majority of EU Member States. Germany, which is not one of the countries where wages rose most in 2015, registered the largest reduction of wage inequality among all EU countries. Our analysis shows that this was the result of the new German minimum wage policy introduced in 2015, which strongly lifted the wages of the lowest-paid employees, particularly those employees who were lower-skilled, younger or working in services. 

• Blog: Germany’s minimum wage has reduced wage inequality and related working paper covering a more detailed analysis of these data.