Industrial relations and social dialogue
Minimum wages in 2023: Annual review
Published:
29 June 2023
Research report
Abstract
The 2023 annual review of minimum wages was prepared in the context of unprecedented inflation across Europe. While this led to hefty increases in nominal wage rates in many countries, it was in many cases not enough to maintain workers’ purchasing power. Based on developments over the last decade, this report shows that, overall, minimum wage earners in nearly all countries saw their purchasing power rising, the gap between their wages and average wages narrowing, and to some degree growth exceeding labour productivity development. Despite the short-term losses in real terms, these longer-term gains did not disappear in 2023. Even in the context of rising inflation, the processes of wage setting did not change substantially. But the early impacts of the EU directive on adequate minimum wages are noticeable, with more countries electing to use the international ‘indicative reference values’ mentioned in the directive – 50% of the average or 60% of the median wage – when determining their targets for new levels. This year’s report presents, for the first time, an in-depth insight into net minimum wages for single adults, through the EUROMOD tax–benefit microsimulation model, while presenting the latest research findings on minimum wages, published during 2022.
Key findings
Minimum wage earners in most EU countries have benefited in various ways from increases in statutory minimum wages over the past decade – their purchasing power increasing in real terms and gross wages growing more than average wages, often at rates exceeding labour productivity. Those from the central and eastern European countries enjoyed the largest real gross and net wage increases in the decade – albeit starting from very low absolute levels.
The recent losses in real minimum wages occurring in several countries have not eroded the long-term gains in purchasing power of minimum wage workers that have taken place since 2013. The median nominal increase across Member States was almost 11%, compared with 5% in 2022.
Owing to high inflation rates across the EU, these large nominal increases did not result in significant gains in purchasing power among minimum wages earners, except in a few countries (mainly Germany and Belgium). In this inflationary environment, it is especially important that the purchasing power of statutory minimum wages take into account the cost of living.
The average employee tax rate (personal income tax and social insurance contributions) on gross minimum wage for a single earner without children ranged from 6% in Spain to 40% in Romania. The most substantial change in minimum wage regulations was the introduction of a monthly statutory minimum wage in Cyprus.
The impact of the EU directive on national minimum wage setting has been limited so far, as the transposition phase has only just started. One early impact is that the reference values set out in the directive (50% of average and 60% of median wages) are increasingly applied in draft laws or targets (Belgium, Bulgaria, Ireland, Slovakia, Spain), used for actual increases (Croatia, Germany), or drawn on for trade union demands (Czechia, Greece, the Netherlands).
The report contains the following lists of tables and figures.
List of tables
Table 1: Gross nominal statutory minimum wages, 22 EU Member States, 2022 and 2023
Table 2: Change in monthly minimum wages in collective agreements for 10 low-paid jobs, in nominal terms, 1 January 2022 to 1 January 2023 (%)
Table 3: Processes of consultation and negotiation without formal agreement
Table 4: Minimum wage legislation and inflation
Table 5: Rule-based mechanisms to uprate minimum wage rates
Table 6: Overview of (debated) changes to social security contributions and income tax thresholds
Table 7: Overview of latest research on minimum wages in the EU
Table A1: Role of inflation in minimum wage setting: mentions in legislation and use in formulas (in the 22 EU Member States having a statutory minimum wage)
Table A2: Collectively agreed average monthly wages (national currency) in 10 low-paid jobs, January 2023
Table A3: Sources for the nominal collectively agreed wage change
List of figures
Figure 1: Gross hourly nominal minimum wages, 22 EU Member States, January 2023 (€)
Figure 2: Monthly changes in inflation, by category, EU27, January 2021–January 2023 (index, Jan 2021 = 100)
Figure 3: Recent inflation, EU27, January 2022 to January 2023 (%)
Figure 4: Rate of change in gross statutory minimum wage, 21 EU Member States, January 2022 to January 2023 (%)
Figure 5: Collectively agreed average and median monthly wages in 10 low-paid jobs, January 2023 (€)
Figure 6: Change in average monthly minimum wages set in collective agreements for 10 low-paid jobs, in nominal and real terms, 1 January 2022 to 1 January 2023 (%)
Figure 7: Changes in statutory minimum wages and negotiated minimum wages, 25 EU Member States, 2012–2023 (index, 2012 = 100)
Figure 8: A comparison of statutory minimum, negotiated and average wages and productivity, in real terms, 25 EU Member States, 2012–2023 (index, 2012 = 100)
Figure 9: Net monthly minimum wages, PIT and employee SIC for a single minimum wage earner, 21 EU Member States, 2022 (€)
Figure 10: Average PIT, employee SIC and social benefits as a percentage of gross minimum wage for a single person, 21 EU Member States, 2022
Figure 11: Share of gross minimum wage left for a single earner, 21 EU Member States (%)
Figure 12: Ten-year change in the proportion of net wage/disposable income to gross wage for minimum wage earners, 21 EU Member States, 2012–2022 (%)
Figure 13: Ten-year change in the real gross and real net minimum wages and real disposable income of minimum wage earners, 21 EU Member States, 2012–2022
Figure 14: Average tax wedge and composition of tax wedge for a single minimum wage earner, 21 EU Member States, 2022 (%)
Figure 15: Changes in the tax wedge for minimum wage earners, 21 EU Member States, 2012–2017 and 2017–2022 (%)
Figure 16: Overview of the process of minimum wage setting for 2023
Figure 17: Statutory minimum wage level as a percentage of the average wage, 20 Member States, 2021
- Number of pages
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80
- Reference nº
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EF23019
- ISBN
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978-92-897-2331-2
- Catalogue nº
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TJ-03-23-190-EN-N
- DOI
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10.2806/950879
- Permalink
Cite this publication
Eurofound (2023), Minimum wages in 2023: Annual review, Minimum wages in the EU series, Publications Office of the European Union, Luxembourg.
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