Minimum wages on the rise as Europe moves to curb social dumping

The growth in the level of minimum wages accelerated in the period between January 2016 and January 2017, with the largest increases in newer EU Member States. This continues a trend of slow convergence between minimum wage levels in Europe - however there is still a long way to go, with minimum wage workers in Luxembourg making eight and a half times as much as minimum wage workers in Bulgaria. This is according to the latest findings on statutory minimum wages in the EU from Eurofound’s European Observatory of Working Life.

An end to social dumping - the employment of cheaper labour, sometimes involving migrants or moving production to lower-wage countries - and the protection of low-wage workers is a priority for the European Commission, with European Commission President Jean-Claude Juncker reemphasising the importance of this in a landmark speech in January this year. Eurofound's new article provides information on statutory minimum wage levels, how the minimum wage has been determined for the year 2017, and minimum wage coverage across the EU.

The article shows that a statutory minimum wage is in operation in 22 out of 28 EU countries, with most countries without a statutory wage applying a de facto minimum wage via sectorial collective agreements. Over the past 12 months Romania, Hungary and the Czech Republic recorded the highest increases in the minimum wage, which continues a seven year trend of consistent growth of the minimum wage in these countries, albeit from very low levels.

Despite this general convergence the differences remain stark, with a minimum wage worker earning €1,999 per month in Luxembourg, compared to €235 in Bulgaria. The benefits of a return to economic growth can be seen for low-wage workers in most Member States, and only Greece recorded a lower minimum wage in 2017 than 2010. 

There has also been a return to a more collaborative approach in determining minimum wages in a number of Member States, with the input of social partners and expert committees. Social partners have been involved in the negotiation of the minimum wage in Austria, however the government has stated that it may implement a minimum wage by legal means if a minimum wage of €1,500 is not agreed upon by mid-2017. Germany and Ireland for the first time used the expert committee for the 2017 minimum wage levels, with Romania planning to also adopt this practice in the future.

Minimum wage workers in most countries have felt the difference to their pockets, as the real term change to wages have increased in relation to prices in the majority of countries compared to 2010, with the particular exception of Greece where workers are still significantly worse off.

Click here to read the article in full.