Industrial relations and social dialogue
Abstract
After a cautious round of minimum wage setting for 2021, nominal rates rose significantly for 2022 as the negative consequences of the pandemic eased and economies and labour markets improved. In this context, 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.
If present inflation trends continue, minimum wages will barely grow at all in real terms in any country in 2022. Significant losses in the purchasing capacity of minimum wage earners are likely to dominate the picture, unless the issue is addressed by policy changes during the year. The processes for minimum wage setting and related legislation in the EU have remained unchanged, by and large, or were adapted only slightly for 2022.
Key findings
- While minimum wages increased substantially between 1 January 2021 and 1 January 2022 in nominal terms, the real-life impact does not signify a boost to living standards when rising inflation is taken into account. During the same period, minimum wage workers in 15 out of the 21 Member States with a statutory minimum wage saw a decline in their wages in real terms.
- If present inflation trends continue, minimum wages will barely grow in real terms in any country in 2022, and significant losses in the purchasing capacity of minimum wage earners will become a dominant theme unless the issue is addressed by additional uprates or other support measures for low-paid employees during the year. Countries with automatic indexation mechanisms, such as Belgium, France and Luxembourg, were quicker in uprating wages in line with inflation; but additional increases can be also introduced ad hoc, as in Greece.
- The proposed EU directive on adequate minimum wages is already prompting a few Member States to refocus debates on the topic and prepare for change in areas such as setting the criteria for wage setting or raising wages in line with the ‘international reference values’ mentioned in the proposal. Germany, for example, has decided to uprate its minimum wage to €12 per hour, or about 60% of median wages, in October 2022.
- New findings indicate that substantial debates among national actors on how to promote collective bargaining and increase bargaining coverage are taking place in only Denmark, Latvia and Norway. Establishing action plans to promote collective bargaining is an important element of the new EU directive on adequate minimum wages and will be a key requirement for Member States.
- Minimum wages can play a critical role in reducing wage inequality. For example, findings relating to Spain demonstrate that the impact of the 22% increase in the minimum wage in 2019 led to the greatest reduction in wage inequality in the EU27 Member States in the same year. This is likely to have been a result of the minimum wage increase, which counteracted the high level of wage inequality in Spain, a gap that had grown in the year before the hike.
The report contains the following lists of tables and figures.
List of tables
Table 1: Gross statutory minimum wages, 21 EU Member States, 2021 and 2022 compared
Table 2: Change in monthly minimum wages (%) in collective agreements for 10 low-paid jobs, in nominal terms, 1 January 2020–1 January 2022
Table 3: Addressing low pay in collective bargaining in countries without statutory minimum wages
Table 4: Changes to minimum wage regulations in 2021 for 2022
Table 5: Setting of statutory minimum wages for 2022 in countries where the social partners did not reach an agreement
Table 6: Policy debates on changes to mechanisms for minimum wage setting
Table 7: From minimum to living wage policies – new developments in 2021 and early 2022
Table 8: Plans to increase minimum wages to bring them closer to median wages
Table 9: Changes in policies affecting net take-home pay
Table 10: Influence of proposed EU policy on national minimum wage setting
Table 11: Latest research on minimum wages in the EU, published in late 2020 and 2021
Table A1: Monthly equivalised basic pay rates from the largest collective agreements covering 10 low-paid jobs, January 2021 and January 2022 (national currencies)
Table A2: Monthly equivalised basic pay rates from the largest collective agreements covering 10 low-paid jobs, January 2022 (€)
Table A3: Change in monthly minimum wages in collective agreements, in real terms and in national currencies, between 1 January 2021 and 1 January 2022, for 10 low-paid jobs (%)
List of figures
Figure 1: Proportion of EU employees earning close to the minimum wage (%), by sociodemographic and employment characteristics, EU, 2018
Figure 2: Hourly minimum wages (€), 21 EU Member States, 2022
Figure 3: Year-on-year change in inflation rates (%), Member States, 2021 and 2022
Figure 4: Monthly evolution in inflation, by category, EU, January 2020–April 2022
Figure 5: Changes in minimum wages in real terms (%), 21 EU Member States, January 2021–January 2022
Figure 6: Minimum wages in nominal and real terms (€), Belgium, January 2020–May 2022
Figure 7: Collectively agreed average and median monthly wages (€) in 10 low-paid jobs, January 2022
Figure 8: Change in average monthly minimum wages (%) set in collective agreements for 10 low-paid jobs, in nominal and real terms, 1 January 2020–1 January 2022
Figure 9: Minimum wage setting for 2022 and the role of the social partners
Figure 10: Evolution of average wages by wage quintile, Spain, 2009–2019
Figure 11: Relative change in average wages (%) by wage decile, Spain, 2018 and 2019
Figure 12: Relative change in wage inequality (%), EU Member States, 2018 and 2019
Figure 13: Relative change in average wages (%) by employees’ sociodemographic and employment characteristics, Spain, 2018 and 2019
Figure 14: Relative change in average wages by wage decile, and change in wage inequality, Spain, 2019 (%)
Figure A1: Changes in minimum wages in real terms, selected EU Member States by group, January 2020 to January 2022
- Number of pages
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76
- Reference nº
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EF22040EN
- ISBN
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978-92-897-2266-7
- Catalogue nº
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TJ-AS-22-001-EN-N
- DOI
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10.2806/754979
- Permalink
Listen to our Eurofound Talks podcast on minimum wages
In episode 7 of our Eurofound Talks podcast series, we speak with Senior Research Manager Christine Aumayr-Pintar on the importance of minimum wages in the EU, different processes in place, the latest EU developments in ensuring adequate minimum wages, and the growing issue of inflation for low-wage earners.
Cite this publication
Eurofound (2022), Minimum wages in 2022: Annual review, Minimum wages in the EU series, Publications Office of the European Union, Luxembourg
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