EU states, MEPs clinch deal on adequate minimum wage law

MEPs and negotiators for the EU member states have reached a provisional deal for a European directive that will guarantee adequate minimum wages in the EU.

Member states with statutory minimum wages will be requested to put in place a procedural framework that updates minimum wages according to a set of clear criteria.

Malta last updated its minimum wage in 2017, with a gradual increase that was spread over three years. But it also increases the minimum wage automatically every year through the Cost of Living Adjustment (COLA), a weekly wage increment brokered with the social partners, that is based on retail price index increases.

Now the Council and the European Parliament agreed that updates to the statutory minimum wages will take place at least every two years, or at most every four years for those countries that use an automatic indexation mechanism.

The social partners will have to be involved in the procedures for setting and updating statutory minimum wages.

Member states have two years to transpose the directive into national law.

Member states will also have to assess whether their existing statutory minimum wages 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. They then can apply indicative reference values commonly used internationally, such as 60% of the gross median wage and 50% of the gross average wage.

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.

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.

The deal will be sent back to the EP’s Employment and Social Affairs Committee, for a first vote, and then for a plenary vote. The Council also has to approve the deal.

“With the agreement on minimum wages, we are writing socio-political history in Europe. For the first time, EU legislation will contribute directly to ensuring that workers are getting fairer, better pay checks,” said EPP co-rapporteur Dennis Radtke.

S&D co-rapporter Agnes Jongerius said the law would push for higher wages for Europe’s lowest paid workers. “They should be able to buy new clothes, join a sports team, or go on a well-deserved holiday. In short, they should have a decent standard of living”.

In the EU, 21 out of 27 countries have a statutory minimum wage while 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.