Council adopts EU law on adequate minimum wages

The Council of the EU today (4 October 2022) gave its final green light to a directive that will promote the adequacy of statutory minimum wages and thus help to achieve decent working and living conditions for employees in Europe.

The directive establishes procedures for the adequacy of statutory minimum wages, promotes collective bargaining on wage setting and enhances the effective access to minimum wage protection for those workers who are entitled to a minimum wage under national law.

Adequacy of statutory minimum wages: Member states with statutory minimum wages are requested to put in place a procedural framework to set and update these minimum wages according to a set of clear criteria. Updates to the statutory minimum wage will take place at least every two years (or no later than every four years for countries which use an automatic indexation mechanism).

However, the directive does not prescribe a specific minimum wage level that member states have to reach.

Promotion of collective bargaining on wage setting

One of the goals of the directive is to increase the number of workers who are covered by collective bargaining on wage setting. To reach that objective, countries should promote the capacity of social partners to engage in collective bargaining. Where the collective bargaining coverage rate is, for instance, below a threshold of 80%, member states should establish an action plan to promote collective bargaining.

The action plan should set out a clear timeline and specific measures to progressively increase the rate of collective bargaining coverage.

Effective access to minimum wage protection

The text stipulates that member states will take measures to enhances workers’ effective access to statutory minimum wage protection. Measures to this end include controls by labour inspectorates, easily accessible information on minimum wage protection and developing the capability of enforcement authorities to take action against non-compliant employers.

Background and next steps

The European Commission proposal was put forward to the two co-legislators – the Council of the EU and the European Parliament – on 28 October 2020. The Council agreed its position on 6 December 2021; the Parliament adopted its negotiating mandate on 25 November 2021. On 7 June, after eight negotiating rounds, Council negotiators and the European Parliament reached an agreement on a common position.

The directive will enter into force on the twentieth day following its publication in the official journal. Member states have two years to transpose the directive into national law.