Minimum wage

10 nóvember 2021

Image of young female worker in a café

The term ‘minimum wages’ refers to various regulatory restrictions of the lowest rate payable by employers to workers. Statutory minimum wages are regulated by formal laws or statutes. Collectively agreed minima are stipulated within collective agreements between trade unions and employers.

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The term ‘minimum wages’ refers to various regulatory restrictions of the lowest rate payable by employers to workers. Statutory minimum wages are regulated by formal laws or statutes. Collectively agreed minima are stipulated within collective agreements between trade unions and employers.

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Recent updates

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EU context

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Minimum wages infographic
Infographic

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, following two rounds of consultations with the social partners in February and June. 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. 

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European Industrial Relations Dictionary

Research

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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.Read more

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.

Pay developments

The annual review on minimum wages for 2021 summarises how minimum wage rates were set during 2020 – the year marked by the COVID-19 pandemic. It reviews the difficulties faced by national decision-makers and how they reacted to the challenges of the economic and social fall-out of the pandemic when making decisions regarding the minimum wage. It maps the extent to which minimum wages were referred to in COVID-19-related support measures. It discusses advances made on the EU initiative on adequate minimum wages and maps the reactions of the EU-level social partners and national decision-makers. 

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.

Impact of COVID-19 for low-wage earners

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.

Minimum wage versus living wage

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.

Pilot project on minimum wage changes

At the request of the European Parliament and Commission, Eurofound will carry out a pilot project on minimum wage changes in the EU from 2021 to 2023. For more information, see section on ‘Ongoing work’ below.
 

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Key messages

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  • Women are overrepresented among minimum wage earners in nearly all Member States, irrespective of how minimum wage earners are defined.
  • One in 10 workers in the EU earned around the minimum wage (+/- 10%) in 2017. 
  • In 2019, many EU countries were debating a further substantial increase to minimum wages beyond 2020, partially in relation to a relative target, partially in absolute terms. 
  • Statutory minimum wages have become fairer as compared to other workers’ wages since the beginning of the millennium, when comparing statutory minimum wages to the median wages of all workers.
  • Despite the upward trend, minimum wages in the majority of countries remain below 60% or even below 50% of median wages. This is particularly true in the central and eastern EU Member States, which were starting from very low relative levels at the beginning of the millennium and continue to have targets of around or below 50% in their minimum wage regulations.
  • Overall, 7 out of 10 minimum wage workers report at least some difficulty in making ends meet, compared with less than 5 out of 10 other workers; however, these figures vary greatly across countries. For example, less than 10% of minimum wage workers find it difficult to very difficult in Denmark, Finland, Germany and Sweden; compared to 50% to 60% in Bulgaria, Croatia and Cyprus and 80% in Greece.
  • Governments across Europe are reacting with income stabilisation measures for those affected by the COVID-19 crisis. Minimum wages can have a role to play in the policy mix to stabilise incomes and thus help counteract a downward spiral into recession or depression. 
  • Eurofound’s EU PolicyWatch database also shows that governments have often referred to the statutory minimum wage when determining upper or lower thresholds for the level of income support benefits, such as those for short-time work.  
  • Particularly sectors and occupations with larger shares of minimum wage workers are strongly affected by the COVID-19 pandemic: Workers in agriculture (15% minimum wage workers in the sector and around 20% for some agricultural jobs), retail (13%) or cleaners and helpers (25%) are among those who keep a society going during times of social distancing and lockdown. 
  • Other sectors and occupations with larger shares of minimum wage workers – particularly those in accommodation and hospitality (16%), arts, entertainment, recreation or working in domestic households (14%) or personal services workers (16%) – were among those feeling the effects of the public health measures immediately at the onset of COVID-19.
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Publications & data

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The sections below provide access to a range of publications, data and ongoing work on this topic. 

  • Publications (148)
  • Data
  • Ongoing work

Ongoing work

Research continues in this topic on a variety of themes, which are outlined below with links to forthcoming titles. 

Pilot project on minimum wages

Following a request from the European Parliament and decision from the European Commission, Eurofound will carry out a pilot project on minimum wages in the EU 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:

  • Module 1: Enforcement of minimum wages and compliance – providing a measurement of compliance with minimum wage regulation and discussing the methodological and policy issues related to this measurement
  • Module 2: A database on minimum wage rates applicable to low-paid jobs – building a database on minimum wages in collective agreements
  • Module 3: Minimum tariffs in collective agreements – to verify the presence of minimum tariffs for self-employed in collective agreements