17 September 2020

Social Europe: The European minimum wage will come—but how?

The commission’s objective is to develop common European standards on all these points. In view of the great differences across Europe, however, the commission is explicitly not seeking to introduce a single European minimum wage, nor to harmonise existing minimum-wage regimes. [...]

Accordingly, a minimum wage is considered adequate when it is at least 60 per cent of the national median. By analogy with poverty research, a minimum wage of 60 per cent of the median wage is the wage that enables a single full-time worker to avoid a life in poverty, regardless of living and household circumstances, without relying on state transfers. [...]

The European standard for the adequacy of minimum wages would then become surpassing both thresholds—60 per cent of the median wage and 50 per cent of the average. Figure 2 shows by how much the minimum wage in various countries would have to rise to reach the respective floors. Application of the double, 60-50 threshold would lead to an increase—sometimes considerable—in the minimum wage in all EU countries with a statutory minimum, except Slovenia and France. In 12 countries the median threshold and in six the mean would have the greater impact; in four the outcome would be the same. The double 60-50 threshold would thus contribute to a general upward convergence of minimum wages across Europe.

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