Breakthrough. The negotiators of the Member States and the European Parliament reached an agreement on Tuesday on common rules to guarantee in each country a minimum wage ensuring “a decent standard of living” without necessarily being identical throughout the EU. The text provides binding rules for the 21 countries of the European Union that already have a minimum wage in order to encourage its increase, by imposing greater transparency on how to determine it, but it does not set a European minimum threshold uniform.
It does not require the introduction of a minimum wage in the six countries that do not have one and where income levels are determined by collective bargaining (Austria, Cyprus, Denmark, Finland, Italy, Sweden). Sweden and Denmark, however, warned on Tuesday that they would oppose the text. This should not prevent its adoption, by qualified majority of States, at a future Council meeting.
The 21 States concerned “will have to assess whether their existing legal minimum wage is sufficient to ensure a decent standard of living, taking into account their own socio-economic conditions, purchasing power” via a basket of goods and services at real prices, as well as “national levels of productivity and long-term development”, explains the Parliament in a press release.
States will have room for maneuver
Governments can also apply reference values, such as “60% of the gross median salary” or “50% of the gross average salary”, specifies the agreement, which also provides for an increased increase in controls and inspections. “Through this law, we are reducing pay inequalities and pushing for the lowest paid workers in Europe to benefit from higher wages”, commented Dutch MEP Agnes Jongerius (SD, Social Democrats), co- rapporteur of the text.
The agreement is based on a proposal presented in October 2020 by the European Commission to combat social dumping within the EU and encourage an “upward” convergence of pay levels. The new legislation also intends to strengthen the weight of collective bargaining: States in which less than 80% of the workforce is covered by a collective agreement will be forced to create an action plan to gradually increase this coverage and involve the social partners more in the regular review of the minimum wage.
The EU-27 have historically been very divided on the subject due to the diversity of national pay-fixing systems. Minimum wages vary widely across the EU, ranging from 332 euros in Bulgaria to 2,202 euros in Luxembourg, according to 2021 figures.