Minimum wages in 2020: Annual review

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Authors

Abstract

This report, as part of an annual series on minimum wages, summarises the key developments during 2019 and early 2020 around the EU initiative on fair wages and puts the national debates on setting the rates for 2020 and beyond in this context. The report features how minimum wages were set and the role of social partners. It discusses developments in statutory minimum wages and presents data on minimum wage rates in collective agreements related to 10 low-paid jobs for countries without statutory minimum wages. The report also includes a section on the regional dimension of minimum wages and presents the latest research into the effects of minimum wage changes on wages, employment, in-work poverty, prices and profits.

Minimum wages in 2020: Annual review

English (2.47 MB - PDF)

Key findings

In 2019, many countries were debating a further substantial increase to minimum wages beyond 2020, partially in relation to a relative target, partially in absolute terms.

Statutory minimum wages have become fairer as compared to other workers’ wages since the beginning of the millennium (when comparing statutory minimum wages to the median wages of all workers).

Despite this upward trend, minimum wages in the majority of countries remain below 60% or even below 50% of median wages. This is particularly true in the central and eastern Member States, which were starting from very low relative levels at the beginning of the millennium and continue to have targets of around or below 50% in their minimum wage regulations.

Overall, 7 out of 10 minimum wage workers report at least some difficulty in making ends meet, as compared to less than 5 out of 10 other workers; however, these figures vary greatly across countries. For example, less than 10% of minimum wage workers find it difficult to very difficult in Denmark, Finland, Germany and Sweden; compared to 50% to 60% in Bulgaria, Croatia and Cyprus and 80% in Greece.

Governments across Europe are reacting with income stabilisation measures for those affected by the COVID-19 crisis. Minimum wages can have a role in the policy mix to stabilise incomes and thus demand to counteract a downward spiral into recession or depression.

Data

Find data on statutory minimum wages in the EU.

List of tables

Table 1: Social partners’ first reactions to the announced initiative on fair wages
Table 2: Overview of main arguments and proposals concerning an EU minimum wage initiative from social partners
Table 3: Gross minimum wages, selected EU Member States and the UK, 2019 and 2020
Table 4: Sub-minimum rates for selected EU Member States and the UK as at 1 January 2020
Table 5: Further statutory minimum wage rates for private sector workers in selected EU Member States
Table 6: Number of collective agreements covering low-paying job categories for countries without statutory minimum wages
Table 7: Minimum wages in collective agreements, applicable in 2019 for selected low-paid jobs
Table 8: Collective agreement coverage in Finland
Table 9: Overview of debates during 2019 on aspects of the minimum wage setting processes
Table 10: Demands for and agreements on targets for future minimum wages to address adequacy in selected EU Member States and the UK
Table 11: Regional statutory minimum wage rates
Table 12: Latest minimum wage research in EU Member States and the UK
Table 13: Overview of recent empirical research in the EU, Norway and the UK on employment impacts of minimum wage increases, 2019
Table 14: Policies influencing in-work poverty
Table A1: Network of Eurofound Correspondents – Members participating in the research

List of figures

Figure 1: Conceptualising adequate minimum wages
Figure 2: Estimated share of employees earning 90% to 110% of the minimum wage, EU Member States, 2017
Figure 3: Proportions of female and male employees, EU level, 2017
Figure 4: Proportion of minimum wage workers per sector, EU level, 2017
Figure 5: Proportion of minimum wage workers per occupation (top 10), EU level, 2017
Figure 6: Hourly minimum wages, selected EU Member States, 2020
Figure 7: Minimum wage developments in real terms, 15 euro area countries, 2015 price levels
Figure 8: Minimum wage developments in real terms, non-euro area, 2015 price levels
Figure 9: Impact of purchasing power on the minimum wage value for selected EU Member States and the UK, as at 1 January 2020
Figure 10: Relative distance between purchasing power of lowest and median minimum wage EU Member States and the UK and highest minimum wage EU Member States and the UK, 2010–2020
Figure 11: Process for determining minimum wage rates for 2020
Figure 12: Number of minimum wage rate updates, EU Member States with statutory minimum wages and the UK, since 2010
Figure 13: Longer-term trend of development of statutory minimum wages relative to median wages of full-time employed workers, selected countries within the EU and the UK, 2000–2018
Figure 14: Proportion of minimum wage workers who find it difficult to make ends meet, EU average
Figure 15: Proportion of minimum wage workers who find it difficult to make ends meet
Figure 16: Making ends meet and minimum wages in relative and absolute terms
Figure 17: Monthly minimum wage as a proportion of the mean value of average monthly earnings by NUTS1 region, reference year 2016
Figure 18: Regional variation of relative monthly minimum wages, by NUTS1 region, 2016
Figure 19: Examples of countries with higher interregional differences in the proportion of minimum wage workers

Number of pages: 86

Reference nº: EF20005

ISBN: 978-92-897-2116-5

Catalogue nº: TJ-AS-20-002-EN-N

DOI: 10.2806/543091

Permalink: eurofound.link/ef20005

Cite this publication
Eurofound (2020), Minimum wages in 2020: Annual review, Minimum wages in the EU series, Publications Office of the European Union, Luxembourg.

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