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European Economic, Employment and Social Policy

Minimum wages in Europe: new debates against the background of economic crisis

Thorsten Schulten (WSI-HBS)

Publication date : 2009

Number of pages : 7

Author(s) :

Thorsten Schulten (WSI-HBS)

The minimum wage is a standard and generally accepted tool of labour market regulation in most European countries. Since the start of the new millennium, the real value of minimum wages has substantially increased, acting in many cases as a spur to general wage developments. The year 2008 marked a break in this trend, however, and the real value of the minimum wage once again displayed a downward trend. Increasingly the idea of a European minimum wage policy - a European standard for the relative value of national minima, whether statutory or collectively agreed – is under discussion. Against the background of the severe crisis of the world economy, pressure will grow on minimum wages – and wages generally – across Europe. There is a serious danger that, with real or even nominally falling minimum wages, the ‘wage anchor’ underpinning the price system will come adrift, raising the threat of deflation as happened in the 1930s. Instead appropriate increases in minimum wages are recommended to underpin demand and contribute to price-level and more general economic stabilisation.

Collection: 2/2009
ETUI, Brussels, ISSN 2031-8782 (pdf)