Blog post - 29 January 2025 11:00

Substantial rises in national minimum wages for 2025 – linked to the EU directive?

By Christine Aumayr-Pintar and Carlos Vacas‑Soriano

The 22 EU Member States with a national minimum wage have announced their decisions on increases for 2025, except for Spain. Developments bring good news for workers on the minimum wage, who will see their wages increase substantially, beyond current inflation in most countries.

The picture emerging across most countries following the uprates for 2025 is one of gains in purchasing power among minimum wage earners, even though the nominal rate increases are generally lower than in 2024. In setting lower increments, minimum wage setters have responded to falling inflation. But while inflation is playing less of a role, another factor may be coming to bear in minimum wage setting – the Minimum Wage Directive, which has influenced the increases in national minimum wages in several countries.

Significant changes in minimum wages

National minimum wages increased between 1 January 2024 and 1 January 2025 in all countries but Cyprus (Spain will announce its new rate soon).

Figure 1: Nominal changes in national minimum wages, January 2024 to January 2025, and annual inflation, December 2023 to December 2024, EU Member States (%)

Get the data, Download image, Download SVG

* In Spain, the new rate for 2025 is being currently discussed (the current rate is indicated in the label).

Notes: The monthly rates are the basic rates and are not converted for those Member States where more than 12 monthly payments are made per year (Greece, Portugal, Slovenia and Spain). The measure of inflation is based on Eurostat’s Harmonised Index of Consumer Prices (HICP), which can differ from the national consumer price indices that wage setters refer to. It is expressed as annual inflation between December 2023 and December 2024, as data for January 2025 are not yet available.

Sources: Network of Eurofound Correspondents, based on legislation or similar regulations (for minimum wage rates) and Eurostat, HICP monthly data (annual rate of change, euro area annual inflation) [PRC_HICP_MANR]

On the changes to nominal rates across countries, Figure 1 shows:

substantial uprates in most of the central and eastern European Member States, with increases of almost 23% in Romania (resulting from the regular update in January 2025 and an ad hoc intervention in July 2024); 15% in Croatia and Bulgaria; 12% in Lithuania; 10% in Czechia and Poland; 9% in Hungary and Slovakia; and 8% in Estonia
significant increases above 6% in Greece (new rate fixed in April 2024 as per regular practice), Ireland and Portugal; and just below 6% in the Netherlands (resulting from two regular updates, in July 2024 and January 2025) and Latvia
moderate increases just below 4% in Malta, Belgium (a +3.8% hike from April 2024 due to automatic indexation), Germany, Luxembourg, France (a +2% increase from November 2024 due to automatic indexation) and Slovenia. Not shown in the figure is the decision for Spain, where a 4.4% increase proposed by the government is being currently discussed with the social partners (employers have proposed a 3% increase).
no change in Cyprus, since the country’s new statutory minimum wage was first uprated in 2024, and a readjustment is foreseen only every second year.

Inflation’s role in driving up minimum wages is moderating

The hikes in nominal minimum wage rates were generally lower than those of a year earlier: the average increase between January 2024 and January 2025 is above 7%, while that between January 2023 and January 2024 was almost 10%. One of the obvious factors affecting this year’s minimum wage setting is the moderation in inflation across many countries: preliminary figures based on price levels between December 2023 and December 2004 reflect an average inflation rate of 3%, below the almost 4% registered a year ago (between December 2022 and December 2023).

Against this background of somewhat more modest nominal hikes in minimum wages as a result of significantly lower inflation, the general picture across most countries is one of gains in purchasing power among minimum wage earners. Over the past 12 months, national minimum wages have been increased above inflation in all countries except Cyprus and Belgium (where the real wage declined) and Slovenia (where it remained more or less constant); it seems this will also be the case in Spain. In real terms, the rise in minimum wage levels is substantial in most central and eastern European Member States (Romania, Bulgaria, Croatia, Lithuania, Czechia, Poland, Slovakia and Hungary) and Ireland, among the western European Member States.

Minimum Wage Directive seems to have triggered structural-type increases

With the role of price increases in minimum wage setting diminishing, other factors, particularly the new Minimum Wage Directive, may play a role in driving substantial increases to minimum wages from now on. The Minimum Wage Directive stipulates that countries with a statutory minimum wage must ensure that it is ‘adequate’. Article 5 regulates the procedure for setting an adequate minimum wage. Among many other aspects – including actors, frequency, the need for clear criteria to guide the process and the elements these should include – it stipulates in Paragraph 4 that

Member States shall use indicative reference values to guide their assessment of adequacy of statutory minimum wages. To that end, they may use indicative reference values commonly used at international level such as 60% of the gross median wage and 50% of the gross average wage, and/or indicative reference values used at national level.

For the new 2025 rates, structural uprates that are closely linked to the provisions of the directive can be observed, including the following.

In Estonia, the social partners agreed a framework with the government that would ensure that the minimum wage reaches 50% of the average wage by 2027.
In Bulgaria, the government based its decision on the minimum wage rate from 1 January 2025 on legislation from 2023 that stipulates a level of 50% of the average wage.
In Romania, the government is also aiming for 50% of the average wage (the new nominal rate in January 2025 reaching 47%), as established in the new minimum wage legislation that followed tripartite consultation.
In Czechia, minimum wage setters set a target for the nominal rate to reach 47% of the average wage by 2029.
In Slovakia, already in 2019, the minimum wage had been linked to 60% of the average wage, but this was reduced to 57% in 2020 in the context of the COVID-19 pandemic. This move was reversed in October 2024, when the parliament approved a bill setting the minimum wage at a rate of at least 60% of the average wage (of the previous two years), unless the social partners agreed on a higher rate. However, the government decision to increase the minimum wage from €750 to €816 from 1 January 2025 fell short of the 60% rate, and it is expected the next update in 2026 will accomplish that goal.
In Ireland, the minimum wage for January 2025 was set in line with the target of reaching 60% of the median wage by 2026.
In Spain, in 2020, the government mandated an ad hoc advisory commission to bring the minimum wage level to 60% of the average (net) wage by 2023, and the most recent uprate in January 2025 aims to maintain it at that same level.
In Malta, a four-year plan to increase the national minimum wage is in its second year of implementation, based on a tripartite agreement from 2023 and recommendations made by the country’s Low Pay Commission.
In Greece, a proposal to introduce a formula-based adjustment mechanism for minimum wages from 2027 onwards is currently under discussion.

Conclusion

Minimum wage earners will see a boost to their pockets in January 2025, as nominal rates have risen above inflation across almost all countries over the last 12 months. With price rises returning to more moderate levels, inflation’s role in driving significant minimum wage hikes has declined, while that of the new Minimum Wage Directive has started to exert itself. The directive’s ‘indicative reference values’ to guide the assessment of the adequacy of minimum wages (50% or 60% of the average or median wage) – while not being mandated by the directive – have become the tool favoured by most countries with a statutory minimum wage when transposing the directive into national law. An increasing number of countries are including such reference values in their legislation, and statutory minimum wage rates are being increased above inflation to catch up with actual wages. The key question is whether these reference values are sufficient to ensure the adequacy of minimum wages across Member States. Eurofound’s annual review of minimum wages 2025 (forthcoming in mid-2025) will include a more detailed look at the question of how wage setters carry out their assessments of the adequacy of rates.

* To facilitate international comparisons, this analysis uses the Harmonised Index of Consumer Prices (HICP). National consumer price indices can differ somewhat from the HICP.