Eastern Europe is fast filling huge gap in minimum wages

The debate on the need to establish a minimum salary at an EU level is facing up to the differences member states have on the issue

In September 2017, there was an intense debate in the European Parliament on the need to establish a minimum salary for all EU countries. The measure has been subject to disagreements between businesses, trade unions and politicians. The European Trade Union Confederation also started a campaign in February 2017 to increase the minimum salary at a European level. The project centred on establishing a minimum salary of up to 60 percent of the European average income through a resolution on social dumping. The Social Affairs Commissioner, Marianne Thyssen, proposed that each EU country establish a minimum salary – instead of introducing a common one for the EU in its entirety (currently Austria, Cyprus, Denmark, Finland, Italy and Sweden have not established a minimum salary or wage).

Beyond the strictly political realm, it holds true that economic recovery is leading to a sustained increase in minimum salaries across EU countries. A study carried out by Eurofound showed that the growth in the (nominal) average salary for employees has accelerated in the last few years, following a gradual rebound from the economic crisis.

The EU countries recording the largest minimum salary increases are in Eastern Europe, whose minimum salaries are a good deal lower than those in the rest of the EU, usually less than €500 a month. Bulgaria and Romania have the lowest monthly minimum salary in the EU: €235 and €322 respectively. These are the countries that have seen the largest growth in the minimum salary, including an increase of 38 percent in Romania. But there are still large differences between the member states of the EU. The majority of the new member states have considerably lower minimum salaries (generally speaking, less than €500 a month) than the other states, where minimum salaries are higher than €1,000 a month. The highest level in the EU – in Luxembourg (€1,999 a month) – is 8.5 times the Bulgarian rate. Within this group, the country where the minimum salary has increased the most is Spain (up to 8 percent).

The real increases in the minimum salary

When examining a longer period of time, the change in the legal minimum salary must be considered in the context of rising prices. Between 2010 and 2017, Bulgaria, Romania, Hungary and Estonia saw the largest increases in the minimum salary: these ranged from 23 percent in Estonia to 84 percent in Bulgaria. However, the real rates of increase are considerably lower than the nominal rates. In Western Europe, Luxembourg recorded the largest increase in real terms (of almost 5 percent). In four countries, however, the minimum salaries shrunk in real terms: the Netherlands (-0.7 percent), Malta (-1.4 percent), Belgium (-4.3 percent) and Greece (-24 percent). In general, the minimum salary in real terms is growing faster in the new member states than in the old ones, which indicates a long-term convergence between these two groups of countries.

Tuesday 06 March 2018

Author/s:

Sergio Cebrián

Source/s:

VoxEurop

Translation by:

Ciaran Lawless | VoxEurop

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