At a glance
- On 14 September an overwhelming majority of the European Parliament voted in favour of adopting the EU’s new minimum wage directive aiming to lift minimum wages in member states and strengthen collective bargaining.
On 14 September an overwhelming majority of the European Parliament voted in favour of adopting the EU’s new minimum wage directive aiming to lift minimum wages in member states and strengthen collective bargaining.
The EU Council is expected to formally adopt the directive later this month, following which member states will have 2 years to implement it in national law.
However, the Directive will not require countries to implement a statutory minimum wage if they do not have one, which is the case for 6 member states (Austria, Cyprus, Denmark, Finland, Sweden and Italy). The EU treaty prevents direct EU intervention on wages in the member states, and that means that the Directive does not set a figure for the minimum wage.
The member states that do have a statutory minimum wage will have to ensure that it is “adequate”.The adequacy should regularly be tested so that the minimum wage can be reconsidered if circumstances change, for example, due to inflation. The assessment of adequacy must be guided by criteria set with the aim of achieving a decent standard of living, of reducing in-work poverty, as well as of promoting social cohesion and upward social convergence, and of reducing the gender pay gap. Member States shall define those criteria in accordance with their national practices either in relevant national legislation, in decisions of the competent bodies or in tripartite agreements. 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. These thresholds are higher than the minimum wage in most EU member states, meaning that minimum wages might be increased in the coming years.
The directive also requires member states to draw up national action plans to increase the collective bargaining coverage in the workforce if their collective bargaining coverage is below 80%. The action plan must set out a clear timeline and concrete measures to increase the rate of collective bargaining coverage progressively, respecting the autonomy of social partners. The action plan must be reviewed regularly and updated if needed, either after consultation with social partners, by agreement with them or as agreed between them following their joint request. It must be reviewed at least every 5 years in any event. The action plan and any update to it must be made public and notified to the Commission.
Collective bargaining is considerably lower than 80% in most EU states, meaning that most of the member states will now have to find ways to increase their collective bargaining coverage.
The directive also obliges member states to introduce control mechanisms to ensure that workers can effectively access statutory minimum wages and to ensure that workers have the right to collectively bargain.
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