New rules for adequate minimum wages for all workers in the EU

With 505 votes in favor, 92 votes against and 44 abstentions, the European Parliament on Wednesday approved new legislative rules aimed at setting adequate minimum wages in the EU.

The new EU directive, agreed by the Council in June, aims to improve the working and living conditions of all workers in the EU and ensure economic and social progress. The new rules set out some basic standards for the adequacy of legal minimum wages provided for in national legislation or collective labor agreements and ensure better access for workers to legal means of minimum wage protection.

The new directive will apply to all workers who have an employment contract or employment relationship in the EU. EU countries where the minimum wage is already protected exclusively through collective agreements are not required to introduce the new rules into their national law or enforce the universal validity of these agreements

Assessing the Adequacy of Minimum Wages

The determination of the minimum wage remains the competence of the Member States. From now on, however, Member States should ensure that their national minimum wages allow workers to live decently, taking into account the cost of living and the general level of pay. To assess whether the current minimum wages are adequate, Member States may set a basket of basic goods and services in real prices or set it to be 60% of the gross median wage and 50% of the gross average wage.

Support for collective bargaining

Collective bargaining at sectoral and cross-sectoral level is an essential factor in achieving adequate minimum wages and therefore needs to be promoted and strengthened. Member States where less than 80% of employees are covered by collective bargaining should draw up an action plan in cooperation with the social partners to increase this percentage.

Monitoring and right to legal protection

The new directive obliges EU countries to establish an enforcement system, which will include reliable monitoring mechanisms, audits and on-the-spot inspections, to ensure compliance and tackle phenomena such as abusive subcontracting, false self-employment, failure to record overtime and the intensification of work.

Statements

Co-rapporteur Dennis Radtke (EPP, Germany) said after the vote: “Today’s situation demonstrates once again that we need a functioning and strong social partnership in Europe. Politics cannot provide a comprehensive response to all aspects of this crisis.”

Co-rapporteur Agnes Jongerius (Socialists, Netherlands) said: “The costs of living, energy and housing have skyrocketed. Households are really struggling to make ends meet. We have no time to lose, wages for workers must be made adequate again. This directive sets the standards for what constitutes an adequate minimum wage. At the same time, we are boosting collective bargaining so that more workers are better protected.”

Next steps

The Council is expected to formally approve the deal later this month. Member States will then have two years to incorporate the directive into their national legislation.

Relevant information

In July the members of the Employment and Social Affairs Committee expressed their support for the informal agreement reached with the Council on 6 June 2022.

The countries with the highest minimum wages are Luxembourg, Ireland and Germany. Bulgaria, Latvia and Estonia have the lowest minimum wages. In the EU, 21 of the 27 countries have a statutory minimum wage, while in the remaining six (Austria, Cyprus, Denmark, Finland, Italy and Sweden) wage levels are determined through collective bargaining.

Lena Flitzani

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