What are EU member state policies on minimum wage?

EU institutions on Wednesday struck a deal to ensure there is an “adequate minimum wage” in each member state and to strengthen wage negotiations between unions and companies.

Twenty-one of the EU’s 27 member states have a minimum wage that ranged on January 1, 2022 from €332 per month in Bulgaria to €2,257 per month in Luxembourg.

Meanwhile, wage levels in the six other member states — Austria, Cyprus, Denmark, Finland, Italy and Sweden — are determined through collective bargaining.

According to the new EU Directive, the minimum wage will be considered sufficient if it ensures a decent standard of living which member states can calculate by establishing a basket of goods and services at real prices.

Alternatively, they can set the minimum wage at 60% of the gross median salary or 50% of the gross average wage.

The new EU law, which still needs formal approval from the parliament and EU Council, will also force member states in which less than 80% of the workforce is protected by a collective agreement to create an action plan to increase this coverage.

Below we break down some of the individual member states’ policies.

Austria

Collective agreements negotiated by trade unions and the Chamber of Commerce mean that most employees receive a de-facto minimum wage.

The collective agreements are struck on a sectoral basis which means that not everyone receives the same minimum wage although the federal government and social partners agreed in 2017 that the monthly gross minimum wage should not fall under €1,500 for all sectors.

France

The minimum wage in France is currently set at €10.85 gross per hour and €8.85 net and applies to all sectors.

On the basis of 35 work hours per week, the monthly minimum wage corresponds to a gross amount of €1,645.58 and a net amount of €1,302.64.

This takes the yearly minimum wage to €19,747.00 gross and €15,631.75 net.

Italy

Workers’ wages in the private sector are established by collective agreements between trade unions and companies. A total of 888 of them are registered at the National Economic and Labour Council — estimated to cover about 80% of employees — with most reaching about €9 gross per hour.

However, at least 11% of employees that are meant to be protected by a collective agreement do not receive the minimum wage set by the deal.

Germany

The minimum wage in Germany was introduced in 2015. It was then €8.50 per hour and has since risen progressively to reach €9.82 per hour on 1 January 2022. It is now set to increase to €10.45 per hour on 1 July 2022 and rise further to an hourly €12 on 1 October.

This is due to the record-high inflation seen in recent months across the eurozone.

Portugal

The minimum wage was first introduced in Portugal one month after the April 1974 military coup.

Between 2015 and 2022, it went from €505 to €705, an increase of 39.6%.

The current Socialist government has pledged to increase it to €750 euros in 2023.

Spain

On February 9, the Spanish government raised the monthly minimum wage to €1,000.

This increase came after an agreement with the coalition government partners: the left-wing party Unidas Podemos, and two of the country’s main trade union organisations, Comisiones Obreras (CC.OO.) and the Unión General de Trabajadores (UGT).

This may not be the last increase in the minimum wage. The objective of the government is to place the minimum wage at the end of the legislature, in 2023, at the level of 60% of the average wage — around a total of €1,050 ).

According to the study carried out by the CC.OO’s economic bureau, nearly two million workers will benefit from this improvement. In particular, the main beneficiaries are young people and women.