Deal reached on new rules for adequate minimum wages in the EU

Deal reached yesterday (6 June 2022) on new rules for adequate minimum wages in the EU. The minimum wage should be adequate to ensure a decent standard of living

With a deal struck on Monday 6 June 2022, Parliament and Council negotiators agreed on EU rules to set adequate minimum wages, as provided by national law and/or collective agreements. The new legislation will apply to all EU workers who have an employment contract or employment relationship.

The EU countries in which the minimum wage is protected exclusively via collective agreements will not be obliged to introduce it nor to make these agreements universally applicable.

Adequate wages in the EU

According to the agreement, member states will have to assess whether their existing statutory minimum wages (i.e. the lowest wage permitted by law) are adequate to ensure a decent standard of living, taking into account their own socio-economic conditions, purchasing power or the long-term national productivity levels and developments.

For the adequacy assessment, EU countries may establish a basket of goods and services at real prices. Member states may also apply indicative reference values commonly used internationally, such as 60% of the gross median wage and 50% of the gross average wage.

Deductions from or variations to the minimum wage will have to be non-discriminatory, proportionate and have a legitimate objective, such as the recovery of overstated amounts paid or deductions ordered by a judicial or administrative authority.

Collective bargaining

EU negotiators agreed that EU countries will have to strengthen sectorial and cross-industry collective bargaining as an essential factor for protecting workers by providing them with a minimum wage. Member states in which less than 80% of the workforce is protected by a collective agreement will have to create an action plan to progressively increase this coverage.

To design the best strategy for this purpose, they should involve social partners and inform the Commission of the adopted measures and make the plan public.

The agreed text introduces the obligation for EU countries to set up an enforcement system, including reliable monitoring, controls and field inspections, to ensure compliance and address abusive sub-contracting, bogus self-employment, non-recorded overtime or increased work intensity.

National authorities will have to ensure the right to redress for workers whose rights have been infringed. Authorities must also take the necessary measures to protect workers and trade union representatives.

Next steps

The provisional political agreement reached by the EP negotiating team will now have to be approved first by the Employment and Social Affairs Committee, followed by a plenary vote.

The Council also has to approve the deal.

Background

In the EU, 21 out of 27 countries have a statutory minimum wage, while in the other six (Austria, Cyprus, Denmark, Finland, Italy and Sweden) wage levels are determined through collective bargaining. Expressed in euro, monthly minimum wages vary widely across the EU, ranging from €332 in Bulgaria to €2 202 in Luxembourg (2021 data from Eurostat).