Analysis of minimum wage regimes across Europe

Index

1. Definition of a "minimum wage"

2. How many countries do have a minimum wage regime across Europe?

3. How high are minimum wages across Europe?

4. Is there a trend towards the minimum wage across Europe?

5. The importance of minimum wages across Europe/ To how many people does a minimum wage apply across Europe?

6. Is the eastern European expansion of the EU a reason for the introduction of minimum wages across Europe?

7. Is a minimum wage regime favourable in economic and social terms?

8. Is there a legal right to gain a sufficient remuneration - a minimum wage?

9. How could a European perspective of a minimum wage regime look like?

10. Are there alternatives to a minimum wage?

Further reading:

1. Definition ofa "minimum wage"

The following definition of "minimum wage" is used for this analysis:

"the lowest level of remuneration permitted [...] which in each country has the force of law and which is enforceable under threat of penal or other appropriate sanctions. Minimum wages fixed by collective agreements made binding by public authorities are included in this definition"^[1]

The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country.

2. How many countries do have a minimum wage regime across Europe?

In January 2010, 20 of the EU's 27 Member States and two candidate countries (Croatia, Turkey) had national legislation setting a minimum wage by statute or by national intersectoral agreement.

Number of minimum wage regimes across the European

Union

- Minimum wage regime
- No minimum wage regime

The Member States of the European Union with a minimum wage regime are: Belgium, Bulgaria, the Czech Republic, Estonia, Ireland, Greece, Spain, France, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, and the United Kingdom.

The countries in European Union, which have currently no minimum wage regime are: Austria, Cyprus, Denmark, Finland, Germany, Italy andSweden.^[2]

illustration not visible in this excerpt

The description No statutory minimum wage does not necessarily mean that in these countries no minimum wage regime at all exists. Germany and Cyprus have statutory minimum wages that do not apply to all or the large majority of employees but are restricted to specific groups which are defined e.g. by sectors or by professions. In Denmark, Italy, Austria, Finland and Sweden, wages are either determined by negotiations between the social partners, at company level or at the level of individual contracts. Typically, sectoral level agreements are widely applied and have erga omnes applicability, thus constituting de facto minimum wages. Nevertheless, in these countries there is no lowest level of remuneration which is enforceable under threat of penal or other appropriate sanctions.

3. How high are minimum wages across Europe?

The basic national minimum wages are fixed at an hourly, weekly or monthly rate. For countries where the national minimum wage is not set monthly (e.g. hourly or weekly) the rates are converted into monthly rates. Monthly minimum wages varied widely, from 123 EUR in Bulgaria to 1 683 EUR in^[3]

Luxembourg. When adjusted for differences in purchasing power, the disparities between the Member States are reduced from a range of one to 14 (in EUR) to a range of one to six in purchasing power standard (PPS)^[4]. At the opposite ends of the scale were again Luxembourg (1413 PPS per month) and Bulgaria (244 PPS). The following data is from January 2010.

illustration not visible in this excerpt ^{[5] [6]}

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^[1] ILO: Minimum wages: Wage-fixing machinery, application and supervision, Report III (Part 4B) (General Survey), International Labour Conference, 79th Session, Geneva, 1992.

^[2] Eurostat: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Minimum_wage_statistics#Further_Eurostat information

^[3] Eurostat: Minimum wages 2010 in the European Union, ,EFTA and Candidate Countries http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Minimum_wages_in_the_EU,_EFTA _and_Candidate_Countries.PNG&filetimestamp=20100720100501

^[4] The purchasing power standard, abbreviated as PPS, used by Eurostat, is an artificial currency unit. Theoretically, one PPS can buy the same amount of goods and services in each country.

^[5] Eurostat: Minimum wages in EU Member States, Croatia, Turkey and the USA, January 2010, in EUR http://epp.eurostat.ec.europa.eu/statistics_explained/images/1/1d/Minimum_wages_in_EU_Member_States %2C_Croatia%2C_Turkey_and_the_USA%2C_January_2010%2C_in_EUR.PNG

^[6] Eurostat: Minimum wages in EU Member States, Croatia, Turkey and the USA, January 2010, in PPS http://epp.eurostat.ec.europa.eu/statistics_explained/images/6/60/Minimum_wages_in_EU_Member_States %2C_Croatia%2C_Turkey