Employment, Social Affairs & Inclusion

Adequate minimum wages in the EU

Ensuring that workers in the Union earn adequate minimum wages is essential to guarantee adequate working and living conditions, as well as to build fair and resilient economies and societies as set out by Principle 6 of the European Pillar of Social Rights.

Better working and living conditions, including through adequate minimum wages, benefit both workers and businesses in the Union. Adequate minimum wages contribute to ensuring fair competition, to stimulating productivity improvements and to promoting economic and social progress. They can also help reduce the gender pay gap, since more women than men earn a minimum wage.

The role of minimum wages becomes even more important during economic downturns. Ensuring a decent living for workers and reducing in-work poverty is important during a crisis and also essential for a sustainable and inclusive economic recovery.

Commission proposal on a framework for minimum wages

In the majority of Member States, the adequacy of minimum wage is insufficient and/or there are gaps in the coverage of minimum wage protection, even though minimum wage protection exists in all EU Member States, either by legislative provisions (“statutory minimum wages”) and/or by collective agreements.

In light of this, the European Commission adopted a proposal for a Directive on adequate minimum wages on 28 October 2020. The proposal seeks to establish a framework to improve the adequacy of minimum wages and to increase the access of workers to minimum wage protection.

In all Member States, the Commission proposal aims at promoting collective bargaining on wages and improving the enforcement and monitoring of the minimum wage protection established in each country.

In Member States with statutory minimum wages, the proposal also aims at

  • putting in place the conditions for statutory minimum wages to be set at adequate levels: clear and stable criteria for minimum wage setting, indicative reference values to guide the assessment of adequacy, regular and timely updates of minimum wages, and the establishment of consultative bodies to advise the competent authorities
  • limiting to a minimum the use of minimum wage variations and deductions
  • ensuring the effective involvement of social partners in statutory minimum wage setting and updating.

The proposed Directive would introduce annual reporting by Member States on its minimum wage protection data to the Commission. 

The Commission's proposal fully respects the subsidiarity principle: it foresees a framework for minimum standards, respecting and reflecting Member States' competences and social partners' autonomy and contractual freedom in the field of wages. It would not oblige Member States relying on collective agreements to introduce statutory minimum wages, nor would it establish the level of pay or set a harmonised minimum wage.

The proposal is based on Article 153 (1) (b) of the Treaty on the Functioning of the EU (TFEU) on working conditions. The Directive will have to be adopted by the European Parliament and the Council before being transposed into national law. Once adopted, Member States will have two years to transpose the Directive.

Stakeholder consultation

The Commission consulted social partners in accordance with Article 154 of the Treaty on the Functioning of the EU (TFEU). In parallel, the Commission also performed targeted consultations with Member States through the Council Advisory Committees, and with the European Economic and Social Committee.

Analytical work

The Commission supported the proposal with analytical work, namely an impact assessment (accompanied by an executive summary).

Background

President von der Leyen promised to present a legal instrument to ensure that the workers in our Union have a fair minimum wage at the start of her mandate and repeated her pledge in her first State of the Union address, in September 2020.

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