EU Parliament approves Minimum Wage Directive

An overwhelming majority of European lawmakers voted in favour of adopting the EU’s new minimum wage directive aiming to lift minimum wages in member states and strengthen collective bargaining.

505 members of Parliament voted in favour with only 92 votes against and 44 abstentions.

“People are really struggling to make ends meet. We have no time to waste, work must pay again,” member of Parliament and co-rapporteur of the directive Agnes Jongerius said.

The EU Council is expected to formally adopt the directive later this month, which would then give member states 2 years to implement it in national law. The directive has been criticised by Denmark and Sweden, two countries that use a very light-touch labour market regulation based on collective bargaining instead of statutory minimum wages.

However, the directive will not force countries to implement a statutory minimum wage if they do not have one, which is the case for six member states. The member states that have a statutory minimum wage will have to ensure that it is “adequate”.

The adequacy should regularly be tested so the minimum wage can be reconsidered if circumstances change, for example, due to inflation. For the purpose of assessing the adequacy of minimum wages, the directive proposes that member states use the reference values of 60% of the gross median wage or 50% of the gross average wage.

These thresholds are higher than the minimum wage in most EU member states, meaning that minimum wages might be increased in the coming years. Mounir Satouri, Green MEP, said that “thanks to this directive, 25 million workers will see their salary increase by 20%,” and that this would also erode some of the gender pay gap between men and women in Europe.

However, it is important to note that the EU cannot force member states to apply higher minimum wages right away. Instead, it provides guidelines for what an adequate minimum wage should be.

Moreover, the directive requires member states to draw up national action plans to increase the collective bargaining coverage in the workforce if their collective bargaining coverage is below 80%.

“Collective bargaining is the best way to get to fair and just wages,” Dennis Radtke, member of Parliament for the centre-right EPP said in a statement.

Collective bargaining is considerably lower than 80% in most EU states, meaning that most of the member states will now have to find ways to increase their collective bargaining coverage, which also means strengthening trade unions.

The directive also obliges member states to introduce control mechanisms to ensure that workers can effectively access statutory minimum wages and to ensure that workers have the right to collectively bargain.

[Edited by Nathalie Weatherald]

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