Minimum Wages, Poverty and Social Exclusion

European Directive on Minimum Wages

The Directive on Adequate Minimum Wages is part of the EU’s commitment to improving the living and working conditions of people in the EU, according to the European Pillar of Social Rights. The EU Directive aims to improve the living and working conditions of all workers in the EU and to promote economic and social progress, improving workers’ effective access to the protection guaranteed by the minimum wage.

The Directive establishes new EU rules on:

1) Procedures to set and update the adequacy of statutory minimum wages

Member states with statutory minimum wages are requested to put in place a 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). The directive does not prescribe a specific minimum wage level that member states have to reach, and setting the minimum wage will still be up to individual Member States. For the purpose of assessing the adequacy of minimum wages, the Directive proposes that Member States use the reference values of 60% of the gross median wage or 50% of the gross average wage.

 2) 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. Member States with a collective bargaining coverage below 80% 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.

3) Effective access to minimum wage protection for those workers who are entitled to a minimum wage under national law

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
  • developing the capability of enforcement authorities to take action against non-compliant employers
Timeline

  • On 4 October 2022, the European Council gives its final green light and adopts the Directive on Adequate Minimum Wages. Member States have two years to transpose the Directive into national law.
  • On 14 September 2022, the European Parliament adopted a legislative resolution on the proposal for a directive of the European Parliament and of the Council on adequate minimum wages in the European Union.
  • On 7 June 2022, the European Council and European Parliament reach provisional agreement on draft directive on adequate minimum wages. Since early January 2022, eight rounds of negotiations between the Council and the European Parliament took place.
  • On 6 December 2021, the European Council published its agreement on Commission proposal for Minimum Wages regulations
  • On 11 November 2021, EMPL Committee vote in favour of Draft Report on the Commission proposal on a Directive for adequate minimum wages
  • On 28 October 2020, the Commission published its proposal for EU rules on adequate minimum wages which was welcomed by MEPs. Law should ensure employers do not deduct the costs for carrying out work, like accommodation or equipment, from minimum wages.
  • ETUC recommendations for changes to Directive: Document considers both statutory minimum wages in tandem with strengthened collective bargaining processes
  • ETUC Myths Debunked: document outlines the myths and realities of the Directive
  • Key legislative documents on minimum wages

Eurofound Reports on Minimum Wages

  • 2025: The report presents the minimum wage rates for 2025 and how they were set and uprated during 2024. It includes information on countries with and without national minimum wages. In addition, it provides the first comparative overview of how Member States have transposed the Minimum Wage Directive and presents new estimates of the proportion of minimum wage earners and their ability to afford housing. It also summarises research on minimum wages published during 2024.
  • 2024: It investigates the extent to which minimum wage earners were affected by the cost-of-living crisis and shows how minimum wage workers are distributed across households over the entire income distribution. It provides some initial insights into Member States’ activities around the transposition of the directive, and an overview of the latest minimum wage research related to the EU27 and Norway.
  • 2023: The report stresses that while inflation led to hefty increases in nominal wage rates in many countries, it was in many cases not enough to maintain workers’ purchasing power. The report shows that, overall, minimum wage earners in nearly all countries saw their purchasing power rising, the gap between their wages and average wages narrowing, and to some degree growth exceeding labour productivity development. It argues that the early impacts of the EU directive on adequate minimum wages are noticeable, with more countries electing to use the international ‘indicative reference values’ mentioned in the directive when determining their targets for new levels. For the first time, the report presents an in-depth insight into net minimum wages for single adults, through the EUROMOD tax–benefit microsimulation model, while presenting the latest research findings on minimum wages, published during 2022.
  • 2022: The report shows that 20 of the 21 EU Member States with statutory minimum wages raised their rates. Substantial growth was apparent in the central and eastern European Member States compared with the pre-enlargement Member States, while the largest increase occurred in Germany. When inflation is taken into account, however, the minimum wage increased in real terms in only six Member States.
  • 2021: Summarises how minimum wage rates for 2021 were set during 2020 – the year marked by the COVID-19 pandemic. Reviews the difficulties for national decision-makers and how they reacted to the challenges of the economic and social fall-out of the pandemic when making decisions regarding the minimum wage. Maps the extent to which minimum wages were referred to in COVID-19-related support measures. Discusses advances made on the EU initiative on adequate minimum wages and maps the reactions of the EU-level social partners and national decision-makers. The report is accompanied by two complementary working papers: one providing an analysis of developments for low-paid employees and minimum wage workers over the past decade; the other summarising the most recent research on minimum wages in EU countries, Norway and the UK.
  • 2020: The report summarises the key developments during 2019 and early 2020 around the EU initiative on fair wages and puts the national debates on setting the rates for 2020 and beyond in this context. The report features how minimum wages were set and the role of social partners. It discusses developments in statutory minimum wages and presents data on minimum wage rates in collective agreements related to 10 low-paid jobs for countries without statutory minimum wages. The report also includes a section on the regional dimension of minimum wages and presents the latest research into the effects of minimum wage changes on wages, employment, in-work poverty, prices and profits.
  • 2019: The report covers developments in statutory minimum wages in 2018–2019 in the EU and Norway. It looks at the level of minimum wages, how they were set and how they have developed over time in nominal and real terms. It also covers major debates in relation to setting minimum wage levels. While the report focuses on the net remuneration of those receiving the minimum wage, it also documents minimum rates from selected collective agreements in countries without statutory minimum wages as well as minimum wage coverage rates of workers by gender.

Data collection and reporting

Member states should monitor the coverage and adequacy of minimum wages. In addition, they will be asked to report every two years to the Commission on the:

  • rate of collective bargaining coverage
  • level of the statutory minimum wage
  • share of workers covered by the statutory minimum wage

Article 2 states that the new Directive will apply to all workers within the EU with an employment contract.

Equal labour conditions for digital platform workers:

  • Legislative framework on minimum working conditions should apply to all workers, including atypical or non-standard workers in the digital economy, who often work in precarious conditions. They should be covered by labour laws and social security provisions and should be able to engage in collective bargaining.
  • On 14 October 2024, the Council adopted new rules for platform work. Following the adoption, member states have two years to incorporate the provisions of the directive into their national legislation.
  • On 8 February 2024, the Council and the Parliament reached a provisional agreement on platform work, which was approved by employment and social affairs ministers at the Council meeting on 11 March 2024.
  • On 12 June 2023, ministers for employment and social affairs agreed on the Council’s general approach for a proposed directive to improve working conditions for platform workers. The proposal introduces two key improvements: it helps determine the correct employment status of people working for digital platforms and establishes the first EU rules on the use of artificial intelligence in the workplace.

Women more at risk of poverty and social exclusion:

A Strong Social Europe: