The term ‘minimum wage’ refers to the regulatory restriction on the lowest rate payable by employers to workers. Statutory minimum wages are regulated by formal laws or statutes. Collectively agreed minimum wages are stipulated within collective agreements between trade unions and employers.
Most EU Member States have a statutory minimum wage. But its level, adjustment mechanisms and coverage vary.
Eurofound’s e-survey on Living, working and COVID-19 shows that nearly half of households are struggling to make ends meet.
Eurofound provides regular updates on pay in the EU, including an annual study on how minimum wage rates have developed across the EU (as well as Norway and the UK), reviewing how national governments and social partners engage in setting new rates. It also looks at the concept of a living wage, aimed at guaranteeing workers and their families a decent level of living and social participation in response to the inadequacy of income for many working households reliant on existing statutory minimum wage rates.
The annual review on minimum wages for 2023 summarises how minimum wage rates were set during 2022.
In an earlier study on pay in Europe in the 21st century , Eurofound explored the implications of a hypothetical scenario of a minimum wage coordinated at EU level and set at 60% of the median national wage.
COVID-19 is likely to impact the ongoing minimum wage debate, as many workers delivering essential services during the pandemic are at the bottom of the pay ladder, like workers in retail, food-supply chains or care roles. Others low-wage workers, like workers in the accommodation and food sector, or in leisure and entertainment services, have been the first affected by unemployment. With unemployment on the rise, it will be important to see how minimum wages can contribute to the policy mix governments and social partners are currently applying to cushion the economic and social impacts. Eurofound’s e-survey on Living, working and COVID-19 shows that nearly half of households are already struggling to make ends meet. Minimum wages could play a policy role in stabilising incomes.
Most EU countries have a statutory minimum wage. A related but distinct concept is that of a living wage, which is a wage designed to secure a basic but acceptable standard of living for its earner (and, in some cases, household dependents). The living wage rate is based on a detailed, regularly updated costing of the basic services and goods required for such a standard of living and is intended in part to reflect the inadequacy of prevailing statutory minima for that end. Living wage campaigns are generally voluntary and rely on coalitions of interest groups, trade unions and employers working together. These campaigns can take on an advocacy role (Ireland) as well as an accreditation role (UK) where organisations are formally accredited as living wage employers. In line with the fair wage provisions set out in the Social Pillar, Eurofound research aims to provide policymakers with a practical guide to the living wage concept.
Most EU Member States have a statutory national minimum wage in place, although its level, adjustment mechanisms and coverage vary. Austria, Denmark, Finland, Italy and Sweden have minimum wages set within collective agreements, while Cyprus has statutory rates for different occupations.
The EU institutions jointly proclaimed the European Pillar of Social Rights in November 2017, setting out the EU’s commitment to fair wages for workers. This includes ensuring adequate wages for workers to allow them and their families to have a decent standard of living, safeguarding the ability of the low-skilled and young workers to find employment, while also making work financially attractive.
The new European Commission, which took office in December 2019, reiterated this commitment, putting a reform initiative for an EU minimum wage on the agenda. The Commission’s vision for a strong social Europe prepares the way for an Action Plan to implement the Social Pillar. On 28 October 2020, the Commission put forward a proposal for an EU Directive on adequate minimum wages. This was followed by a political agreement between the European Parliament and the Member States on 7 June 2022. The Minimum Wages Directive was adopted in October 2022. The aim is that by 2024 all workers in the EU should earn a fair and adequate wage, no matter where they live.
Eurofound’s work on minimum wages links in with the Commission’s 2019–2024 priority on an economy that works for people.
Following a request from the European Parliament and decision from the European Commission, Eurofound is carrying out a pilot project on the 'Role of the minimum wage in establishing the Universal Labour Guarantee' in the EU, running from 2021 to 2023. The purpose of this pilot project is to provide data and research evidence that will feed into the monitoring of the European Commission’s initiative on adequate minimum wages. The main objectives will be examined in three distinct modules:
