Tuesday, 05 July 2022 14:12

EU directive proposal about minimum wage

With the economic downturn of the Covid crisis, hitting sectors with a higher share of low-wage workers, and recently the record-high inflation due to the war in Ukraine, the European Union has been urged to find a compromise to ensure that minimum wages are set at an adequate level, and workers can earn a decent living.

This project was already drafted for several years. In 2017, the proclamation of the European Pillar of Social Rights and its principle calling for adequate minimum wages as well as for transparent and predictable wage setting to be put in place served as the basis for the two-stage consultation of the social partners on how to ensure adequate minimum wages for workers in the Union. Finally, on the 7th of June 2022 was reached a provisional political agreement on the draft directive on adequate minimum wages in the EU.

Having a convergence across the Member States about adequate wages contribute, from an economic perspective to a prosperity in social market economy and to a sustainable and inclusive economic recovery, while from a social perspective, support social progress and gender equality since more women than man earns wages at or around the minimum wage.


The minimum wage protection exists in all Member States, but it is applied differently from one to another.
As a matter of fact, for twenty-one States, there is a legal protection on statutory minimum wages coupled with collective agreements. Therefore, in Spain the minimum wage is EUR 1000 and was increased after an agreement with the coalition government partners and two of the country’s main trade union organizations.

For the six other Member States, the protection is provided exclusively through collective agreements. Hence, in Austria collective agreements are negotiated by trade unions and the Chamber of Commerce. As regard Italy, the worker’s wages in the private sector are established by collective agreements between trade unions and companies. Upon request, judges can also fix a minimum wage, binding only on the parties to an individual contract of employment. As for the public sector the Aran (Agenzia per la rappresentanza negoziale delle pubbliche amministrazioni) represents public administration’s employers in negotiating activities.

In practice, however, many workers are currently not protected by adequate minimum wages especially in Member States relying exclusively on collective bargaining. In the majority of Member States with national statutory minimum wages, minimum wages are too low vis-à-vis other wages or to provide a decent living, even if they have increased in recent years. Thus, in 2018, the statutory minimum wage did not provide sufficient income for a single minimum-wage earner to reach the at-risk-of-poverty threshold in 1/3 of Member States. This is partly because not all Member-States use an automatic wage indexation based on fluctuations in the prices of consumer goods or use it only to some sectors. In addition, specific groups of workers are excluded from the protection of national statutory minimum wages.


The right to adequate minimum wage is integrated into the principle 6 of the European Pillar of Social Rights, proclaimed by the European Union in 2017, stating that “Workers have the right to fair wages that provide for a decent standard of living. Adequate minimum wages shall be ensured […] In-work poverty shall be prevented. Wages shall be set in a transparent and predictable way […] according to national practices and respecting the autonomy of the social partners.”

Based on this pillar, the Commission proposed a Directive on adequate minimum wages, based on the Article 153 (1) (b) of the TFEU on working conditions, coupled with the article 31(1) of the Charter of Fundamental Rights of the EU stating that “Every worker has the right to working conditions which respect his or her health, safety and dignity”. Those two legal provisions allow the Union, according to the principle of subsidiarity, to support and complement the action of Member States on working conditions, since there are “large differences in standards for accessing an adequate minimum wage” creating “important discrepancies in the Single Market” argued the Commission.


From the substance of the proposed Directive, 6 points should be enforced by Member States.

1. Member States shall promote the collective bargaining on wage-setting by promoting the building and strengthening of the capacity of the social partners to engage in collective bargaining and to encourage negotiation on wages among social partners. Moreover, where collective bargaining coverage is below a threshold of 70%, provide for a framework of enabling conditions for collective bargaining and encourage it (article 4);

2. The 21 Member States with statutory minimum wages are requested to put in place a procedural framework to set an update, negotiated between the state and the social partners, about statutory minimum wage taking at least every two years or at most every four years for states using an automatic indexation mechanism (article 5);

3. if they may allow different rates of statutory minimum wage for specific groups of workers, these variations have to be kept to a minimum and not be discriminatory, unproportionate and objectively and reasonably justified by a legitimate aim (article 6);

4. Then, Member States shall ensure that the social partners are involved in a timely and effective manner in statutory minimum wage setting and updated notably concerning the determination of statutory minimum wage levels or the establishment of variations and deductions in statutory minimum wages (article 7);

5. The Member States shall enhance an effective access of workers to statutory minimum wage protection by strengthening the controls and field inspections conducted by labour inspectorates - including reliable monitoring, controls and fields inspections to address abusive subcontracting, bogus self-employment and non-recorded overtime – (article 8) and by assuring that the information on statutory minimum wages is easily accessible (article 10a);

6. Finally, they shall ensure that workers have access to effective and impartial dispute resolution and a right to redress in the case of infringements of their rights relating to statutory minimum wages or minimum wage protection provided by collective agreement. Plus, they shall take the necessary measures to protect workers from any adverse treatment by the employer and from any adverse consequences resulting from a complaint or a proceeding concerning the rights relating to statutory minimum wages or minimum wage protection provided by collective agreements (article 11).

In that respect, the agreement reached the 7th of June will have to be confirmed by Coreper. This endorsement will be followed by a formal vote in both the Council and the European Parliament. Member States and the social partners will then have two years after the adoption of the Directive to transpose it and communicate to the Commission the national execution measures.

Published in EXP Legal

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