The Covid-19 crisis has shown the need for fair minimum wages in the European Union. Many of the pandemic’s frontline workers earn only minimum wages, such as carers, healthcare workers, childcare workers and cleaners. Nearly 60 percent of minimum wage earners in the EU are women.

The need for a fair minimum wage

The minimum wage is the lowest remuneration that employers must pay their employees for their work. Even though all EU countries have some practice of minimum wage, in most member states this remuneration often does not cover all living costs. About seven out of ten minimum wage workers in the EU found it difficult to make ends meet in 2018.

Minimum wages in the EU

Monthly minimum wages vary widely across the EU in 2020, ranging from €312 in Bulgaria to €2,142 in Luxembourg. One of the major factors for the wide range is the difference in the costs of living in EU countries.

There are two forms of minimum wages in EU countries:

Statutory minimum wages: they are regulated by statutes or formal laws. Most member states have such rules.
Collectively agreed minimum wages: in six EU countries, wages are determined through collective agreements between trade unions and employers, including in certain cases minimum wages: Austria, Cyprus, Denmark, Finland, Italy, and Sweden.

What Parliament does for fair minimum wages in the EU

The European Parliament, the Council and the Commission proclaimed the European Pillar of Social Rights in November 2017, setting out the EU's commitment to fair wages.

In October 2019, the Parliament adopted a resolution, calling on the Commission to propose a legal instrument for fair minimum wages in the EU.

In a report adopted in December 2020, Parliament underlined that the directive on fair wages should contribute to eliminating in-work poverty and promote collective bargaining.

In 2020, the Commission published a proposal for a directive to improve the adequacy of minimum wages in the EU. It is meant to not only protect workers in the EU, but also help to close the gender pay gap, strengthen incentives to work and create a level playing field in the Single Market.

The proposal takes into account national competences and social partners’ contractual freedom and does not set the level of minimum wages.

The directive wants to promote collective bargaining on wages in all EU countries. For countries with statutory minimum wages, it aims to ensure that the minimum wages are set at adequate levels, while taking into account socio-economic conditions as well as regional and sectoral differences.

Parliament’s employment committee is working on the Commission’s proposal and is expected to vote on it in September 2021, followed by a vote by all MEPs.

Ref.: 20210628STO07263
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