The economic crisis and austerity policies have put the issue of minimum wages in Europe back on the political agenda. Although wage policy is not an EU competence, the new economic governance resulting from the debt crisis in several EU member states is increasingly intervening in national wage developments. In this context, minimum wages have become an essential component of the EU’s policy of austerity.
Three new publications from the ETUI present a thorough analysis of the state of play of minimum wages in Europe and its implications for social inequality and poverty.
The report “Who earns minimum wages in Europe” by François Rycx and Stephan Kampelmann provides a comprehensive, evidence-based and up-to-date assessment of minimum wages in nine European countries. The authors see two main types of systems: “clean-cut” systems in countries where the minimum wage is decided by a decision of a governmental agency or through collective bargaining at the national level; and “complex” systems where minimum wages are determined at the infra-national level, for instance in sector and regional negotiations. Countries with a complex system are more likely to have a relatively high wage floor compared to the ones with a single wage minimum at national level. The results of the study also show that minimum wage earners in most countries are characterized by lower average age, on average more female employment, lower levels of education and a higher share of temporary work contracts and part-time employment.
In another working paper “Mind the gap: net incomes of minimum wage workers in the EU and the US”, Ive Marx, Sarah Marchal and Brian Nolan looked at 20 European countries and three American states and the role of minimum wages to protect workers against financial poverty. Their research demonstrates that only for single persons and only in certain countries do net income packages at minimum wage level reach or exceed the EU’s at-risk-of-poverty threshold, which is set at 60 per cent of median equivalent household income in each country. Marx et al conclude that there appear to be limits to what minimum wage policies can achieve in the fight against in-work poverty.
The last ETUI publication, the policy brief “Minimum wages in Europe under austerity” by Thorsten Schulten examines developments of minimum wages in Europe in 2011. Observing a general slowdown or freeze of these developments, the author concludes: “Although there is no direct economic link between the current debt problems and the development of minimum wages, a restrictive minimum wage policy has, nonetheless, under pressure from the EU, come to be regarded as a fixed component of the currently prevailing austerity policy.”
François Rycx (Associate Professor at the ULB/DULBEA) and Stephan Kampelmann (Associated researcher ULB/DULBEA)
Ive Marx (CSB, University of Antwerp and IZA), Sarah Marchal (CSB, University of Antwerp) and Brian Nolan (University College Dublin)
Thorsten Schulten (WSI)