Adequate minimum wages for workers in the EU

This marks an important step for a strong social Europe and contributes to turning the European Pillar of Social Rights into a tangible reality for people across the EU.

The Directive has already started to produce positive effects even before the end of its transposition period, prompting debates at national level on the adequacy of minimum wages. As a result, over the past two years, statutory minimum wages have increased significantly in most Member States, compensating the impact of high inflation on the purchasing power of low-wage earners.

The new rules create a framework to improve the adequacy of minimum wages in countries with statutory minimum wages. They also require all Member States to promote collective bargaining on wage-setting and enhance the effective access of workers to wages agreed in collective agreements.

The new rules fully respect the competences of Member States, as well the autonomy of social partners and their contractual freedom. The Directive does not oblige Member States to introduce statutory minimum wages, nor does it set a common minimum wage level across the EU.

In particular, the Directive on adequate minimum wages includes:

• A framework for setting and updating statutory minimum wages: Member States with statutory minimum wages are required to have a sound governance framework in place to set and update them. This should include clear criteria, indicative reference values to guide the assessment of their adequacy, and measures to effectively involve social partners in their setting and updating. Statutory minimum wages will need to be updated at least every two years (or every four years for countries with an automatic indexation mechanism).
• Promoting and facilitating collective bargaining on wages: All Member States should take measures for this purpose, such as promoting the capacity-building of social partners to engage in collective bargaining on wage-setting. In addition, Member States where the collective bargaining coverage rate is below 80% need an action plan to promote collective bargaining.

• Improved monitoring and enforcement of minimum wage protection: All Member States must collect data on minimum wage coverage and adequacy and report to the Commission every two years. They should also ensure that workers, where their rights are not respected, have access to effective, timely and impartial dispute resolution mechanisms, and are protected from any adverse consequences resulting from their complaints.

   

Next steps

Member States are required to incorporate the Directive into their national law by today. As a next step, the Commission will assess whether the Directive has been incorporated into national law in a complete and correct way by each Member State, and take action if and when necessary.

Background

The right to adequate minimum wages is embedded in Principle 6 of the European Pillar of Social Rights, jointly proclaimed by the European Parliament, the Council on behalf of all Member States, and the Commission in Gothenburg in November 2017. The Directive on adequate minimum wages is one of the key actions of the European Pillar of Social Rights Action Plan to further implement the Pillar principles.

The Commission proposed a Directive on adequate minimum wages on 28 October 2020, following a two-stage consultation of social partners carried out in accordance with Article 154 Treaty on the Functioning of the EU (TFEU). On 7 June 2022, the European Parliament and EU Member States reached a political agreement on the Directive, and on 4 October 2022, it was formally adopted.