Minimum wages soar across Europe in bid to curb social inequality

Minimum wage

EU minimum wage legislation can help drive much needed momentum for social policy reform, writes Oliver Röpke. [JT/Flickr]

Minimum wages increased in most EU countries last year in an effort to redress social dumping, a new research has found.

According to a new report, published by Eurofound, the European Foundation for the improvement of living and working conditions, there was a boost in the level of minimum wages in 2016.

For a long while the idea of a European minimum wage was something that took the backseat in EU policy. Now it is taking centre stage. To combat inequality and poverty, the European Commission has pushed all member states to introduce minimum wages for their workers.

“There should be a minimum salary in each country of the European Union,” Jean-Claude Juncker told a conference on social rights in Brussels last month, adding that those seeking work should also have a guaranteed minimum level of income.

However, out of the 28 member states, just 22 use the scheme. In Austria, Denmark, Finland, Italy and Sweden, the level of the minimum wage is set in sectoral collective agreements.

Within the last year, the increase in minimum wages accelerated, with the largest gains in the newer EU member states.

Despite general convergence between the 22 EU countries using the scheme the differences remain stark, according to Eurofound. A worker on the minimum wage earns €1,999 per month in Luxembourg, compared to just €235 in Bulgaria.

Romania, Hungary and the Czech Republic recorded the highest increases, continuing a seven year trend of consistent growth in these countries, albeit starting from very low levels.

The benefits of a return to economic growth are clear for low-wage workers in most member states, and only Greece recorded a lower minimum wage in 2017 than 2010.

Also other factors such as living standards and costs vary across the EU, as do levels of unemployment.

Juncker explained last month that a European minimum wage is important in the fight against social dumping.

Juncker reiterates support for 'minimum salary' in each EU nation

The European Commission wants all EU member states to introduce minimum wages for their workers and unemployed, the President of the EU executive said on Monday (23 January), in an effort to combat growing social inequality and poverty.

Social dumping involves undercutting a country’s social system to reduce the cost of labour. In many instances this means moving production to lower wage countries, but can also involve employing posted workers under the conditions of their home country or migrants who are prepared to work for lower salaries.

MEPs warmed to the idea of a minimum wage pegged at 60% of the median income in a resolution on social dumping last year.

There is a trend towards a gradual merging of minimum wage levels in Europe. Recently there has been a return to more collaboration in determining minimum wages in a number of member states with the input of socials partners and expert committees. Yet, there is still a long way to go.

Although the Commission has restricted control over social policy, it is ready to confront social and economic injustices across the 28 nation bloc.

The executive will present its reform proposals in the coming weeks, before a summit in Rome on 25 March to celebrate the 60th anniversary of the Treaty of Rome, which laid the foundations of today’s European Union.

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