EU strikes landmark deal on minimum wages 

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The EU Parliament and European Council have agreed on rules to set adequate minimum wages, as national law or collective agreements provide.

According to the European Parliament, the new legislation will apply to all EU workers who have employment contracts or employment relationships.

EU countries in which the minimum wage is protected exclusively via collective agreements will not be obliged to introduce it or make these agreements universally applicable.

Out of the EU, 27, 21 countries have a statutory minimum wage, while in the other six (Austria, Cyprus, Denmark, Finland, Italy and Sweden), wage levels are determined through collective bargaining.

Monthly minimum wages vary widely across the EU, ranging from €332 in Bulgaria to €2,202 in Luxembourg.

Adequate wages

According to the agreement, member states have to assess whether their existing statutory minimum wages (i.e. the lowest wage permitted by law) are adequate to ensure a decent standard of living, considering their 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.

Countries may also apply indicative reference values commonly used internationally, such as 60% of the gross median wage and 50% of the gross average wage.

Variations to the minimum wage will have to be non-discriminatory, proportionate and have a legitimate objective, such as the recovery of overstated amounts paid or deductions ordered by a judicial or administrative authority.

Collective bargaining

EU negotiators agreed that EU countries have to strengthen sectoral and cross-industry collective bargaining as an essential factor for protecting workers by providing them with a minimum wage.

Member states where a collective agreement protects less than 80% of the workforce will have to create an action plan to increase this coverage.

To design the best strategy for this purpose, they should involve social partners, inform the Commission of the adopted measures, and make the plan public.

Monitoring 

EU countries are obligated to establish 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.

National authorities must ensure the right to redress for workers whose rights have been infringed.

Authorities must also take the necessary measures to protect workers and trade union representatives.

Next steps

The provisional political agreement reached by the EP negotiating team has to be approved first by the Employment and Social Affairs Committee, followed by a plenary vote.

The Council also has to approve the deal.

After the deal was struck, co-rapporteur Dennis Radtke (EPP, DE) said: “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 cheques.”

Co-rapporteur Agnes Jongerius (S&D, NL) noted: “We reduce wage inequalities and 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.”

Dragos Pîslaru (Renew, RO), Chair of the Employment and Social Affairs Committee, said that “the directive opens new opportunities for European citizens to avoid in-work poverty and gain access to social dialogue.”