Adequate minimum wages in the EU
The EU wants to improve people's working and living conditions by establishing a framework for adequate minimum wages in Europe.
The EU has established new EU rules that promote adequate statutory minimum wages in Europe and help to achieve improve working and living conditions for employees in Europe.
The final text of the directive on adequate minimum wages was adopted by the Council on 4 October 2022.
How can EU rules on minimum wages be beneficial?
Across the EU, member states differ widely in terms of the coverage of workers by collective agreements and the level of minimum wages. This is in part due to the very different labour market models and different income levels in the member states.
The new directive on adequate minimum wages aims to help to achieve decent working and living conditions for employees in Europe.
Fair working conditions
Workers have the right to fair wages that provide for a decent standard of living. This is outlined under principle 6 of the European Pillar of Social Rights, in Chapter 2, which covers fair working conditions.
The European Pillar of Social Rights is a joint proclamation by the heads of the EU institutions, committing to implementing 20 principles in the area of social policy.
Social dialogue and involvement of workers
Workers – or their representatives – have the right to be informed and consulted in good time on matters relevant to them. This is principle 8 of the European Pillar of Social Rights, also under Chapter 2.
How the new EU rules ensure better and more effective minimum wage protection
The directive established new EU rules on:
- procedures to set and update the adequacy of statutory minimum wages
- the promotion of collective bargaining on wage setting
- the effective access to minimum wage protection for those workers who are entitled to a minimum wage under national law
Adequacy of statutory minimum wages
Member states with statutory minimum wages are requested to put in place a framework to set and update these minimum wages according to a set of clear criteria.
Updates to the statutory minimum wage will take place at least every two years (or no later than every four years for countries which use an automatic indexation mechanism).
However, the directive does not prescribe a specific minimum wage level that member states have to reach.
Promotion of collective bargaining on wage setting
Strengthening collective bargaining is a way of combating in-work poverty and improving working conditions. It has been noted that countries with high collective bargaining coverage tend to have a smaller share of low-wage workers and higher minimum wages than those with low collective bargaining coverage.
One of the goals of the directive is to increase the number of workers who are covered by collective bargaining on wage setting. To reach that objective, countries should promote the capacity of social partners to engage in collective bargaining.
Member states with a collective bargaining coverage below 80% should establish an action plan to promote collective bargaining. The action plan should set out a clear timeline and specific measures to progressively increase the rate of collective bargaining coverage.
What is collective bargaining?
Collective bargaining is the process whereby working people, through their representatives, negotiate contracts with their employers or employer organisations to determine their terms of employment, including:
- pay and benefits
- hours and leave
- job health and safety policies
Effective access to minimum wage protection
The text stipulates that member states will take measures to enhances workers' effective access to statutory minimum wage protection. Measures to this end include:
- controls by labour inspectorates
- easily accessible information on minimum wage protection
- developing the capability of enforcement authorities to take action against non-compliant employers
Data collection and reporting
Member states should monitor the coverage and adequacy of minimum wages. In addition, they will be asked to report every two years to the Commission on the:
- rate of collective bargaining coverage
- level of the statutory minimum wage
- share of workers covered by the statutory minimum wage
Member states where minimum wage protection is provided exclusively by collective agreements shall report on the lowest pay rates set by those collective agreements and on the wages of those not covered by them. The Commission will analyse this data and report to the Council and the European Parliament.
In the Council
The European Commission put forward its proposal on a directive on adequate minimum wages in the EU to the two co-legislators, the Council and the European Parliament, in October 2020.
In the Council, the file was examined the Working Party on Social Questions, which deals with all legislative work related to employment and social policy.
Proposal for a directive on adequate minimum wages
During the German presidency, the presidency and the Commission provided information on the proposal for a directive on adequate minimum wages in the European Union. There was a brief discussion of the directive during the employment and social Council meeting in December 2020.
Progress report on the directive on adequate minimum wages
The Portuguese presidency informed ministers about the state of play of the directive on adequate minimum wages. Ministers also had the opportunity to exchange views on improvements to and critical elements of the proposal.
Discussions focused on the following points:
- introducing the term 'promoting' and replacing the word 'setting'
- member states’ concerns that this directive would create individual rights for workers
- specific rules for seafarers (covered by the Maritime Labour Convention)
- minimum wage protection by collective bargaining versus protection by statutory minimum wages
These discussions laid down a possible way forward for further negotiations with a view to reaching an agreement.
Council adopts its position (general approach)
The work of the Slovenian presidency built on the good progress made under its trio partners, Germany and Portugal, as set out in the progress report of the Portuguese presidency.
The Slovenian presidency presented to the Working Party on Social Questions four successive compromise proposals, which were discussed during six full working party meeting days and in many bilateral discussions at all levels.
Discussions focused on the following points:
- safeguarding the competence of member states for setting minimum wages
- delegations’ concerns regarding different national labour models and systems of wage setting
- different approaches to achieving adequacy
- the emphasis placed on the promotion of adequacy and collective bargaining
- pursuing the objective of not only fair minimum wages but also decent minimum wages
- preference for member states’ being able to choose the indicative reference values freely
- possibility of an obligation to report not annually, but every two years
- information for workers
Work focused on finding compromise solutions to concerns and striking a balance in the text while retaining the member states’ support and keeping the text appropriately streamlined.
In Coreper on 24 November 2021, a broad majority of delegations supported the work done by the presidency.
During the employment and social policy Council meeting in December, the Council reached a general approach on an EU law on adequate minimum wages in the EU. Ministers underlined that while the text represented a fragile balance between member states’ positions, it did reflect the centre of gravity of those positions.
Council and European Parliament reach provisional agreement on new EU law
In June 2022, the Council reached a provisional agreement on the directive on minimum wages which sets a procedural framework to promote adequate minimum wages across the EU and, specifically, to:
- promote collective bargaining on wage setting
- promote adequate levels of statutory minimum wages
- improve the effective access to minimum wage protection of all workers
The agreement reached has was confirmed by Coreper and followed by a formal vote in both the Council and the European Parliament.
Council adopts final text of the directive
The Council adopted the directive on adequate minimum wages on 4 October 2022.
Member states have two years to transpose the directive into national law.
The EU's social dimension
The directive on adequate minimum wages is part of the EU's commitment to improving the living and working conditions of people in the EU.
In May 2021, EU leaders agreed to continue deepening the implementation of the European Pillar of Social Rights at EU and national level.
Work on EU legislation on platform work or gender balance in corporate boards is also part of the EU's commitment towards a stronger social Europe.
Advancing a stronger Social Europe (infographic)
Last review: 4 February 2025