New EU Directive for Adequate Minimum Wages

Sept 30, 2022 Benn-Ibler Rechtsanwälte

The European Union is striving to improve working and living conditions for workers by creating a framework to ensure adequate minimum wages in the future without establishing a standard European minimum wage. In June 2022, the European Parliament and the Council reached a preliminary agreement, and now on 14 September 2022, the Parliament voted in favour of introducing the new provisions for adequate minimum wages within the EU. The directive will apply to all workers in the EU who have an employment contract or employment relationship.

The EU Parliament press release states that the Council will formally approve the agreement in September of this year. Member states will then have two years to incorporate the directive into their national laws. 21 of the 27 EU states already have a statutory minimum wage. Among them, the highest minimum wages are paid in Germany, Ireland, and Luxembourg. In 6 EU countries, including Austria, wages are determined through collective bargaining.

The directive is not intended to be a uniform solution on a single European minimum wage. Rather, the different traditions of member countries and their individual starting points are to be taken into account, collective bargaining will be strengthened, and the role of the social partners are taken into account. Thus, member states will continue to be responsible for setting a minimum wage. However, they are required to ensure that minimum wages enable workers to have a decent standard of living. Wage levels and cost of living in the respective countries must be taken into account.

In addition, member states are to strengthen collective bargaining, which can make a significant contribution to setting appropriate minimum wages at both sectoral and cross-industry levels. If fewer than 80% of workers in an EU country are covered by collective agreements, member states are obliged to draw up action plans for wage increases. In addition, member countries are obliged to monitor enforcement of legally defined minimum wages and to create easier access to information on such minimum wages.

European Parliament, Press Release (14 September 2022)