In November 2017, the EU institutions jointly proclaimed the European Pillar of Social Rights, setting out the EU’s commitment to fair wages for workers (principle 6).

At the start of her mandate as the European Commission President, Ursula von der Leyen promised to present a legal instrument to ensure that the workers in our Union have a fair minimum wage. She repeated her pledge in her first State of the Union address in September 2020.

In October 2020, the Council in its conclusions on ‘Strengthening minimum income protection to combat poverty and social exclusion in the Covid-19 pandemic and beyond' invited Member State and the Commission to work together in order to implement the European Pillar of Social Rights, in particular, its Principle 6.

Following a two-stage consultation with social partners, the Commission published its proposal for a directive on adequate minimum wages in the European Union on 28 October 2020. The proposal does not oblige Member States to set minimum wages by law nor  does it set the level of minimum wages. It seeks to ensure that minimum wages are set at an adequate level, and each worker can earn a decent living in the European Union.

The proposal seeks to create four main obligations for Member States, namely obligations to:

1) promote collective bargaining, in particular on wage setting,

2) respect a number of procedural obligations, if and when Member States set / update statutory minimum wages and assess their adequacy,

3) take measures to enhance effective access to minimum wage protection of workers, who are entitled to a minimum wage under national law, and

4) collect data and report it to the Commission, in order to monitor the coverage and adequacy of minimum wage protection.

Under the relevant legal basis, i.e. Article 153(2) TFEU, in conjunction with point (b) of Article 153(1) thereof, the Parliament and the Council act by qualified majority, in accordance with the ordinary legislative procedure

National parliaments of Sweden, Malta and Denmark submitted reasoned opinions arguing that the proposal fails to comply with the principle of subsidiarity.

On 6 April the EMPL Committee submitted a draft report (rapporteurs Denis Radtke (EPP, Germany) and Agnes Jongerius (S&D, Netherlands). Having received 918 amendments, the EMPL Committee adopted its report on 11 November 2021(37 for, 10 against, 7 abstentions).

On 25 November 2021, the Parliament Plenary adopted the report and confirmed the mandate to enter into interinstitutional negotiations on the basis of the report (443 for, 192 against, 58 abstentions). The report raises the level of ambition significantly, with an increased target of 80% for the collective-bargaining coverage (the Commission proposed 70%); an obligation on Member States to develop a national action plan with concrete measures and a clear timeline to reach this target; a clarification that it is trade unions which are responsible for collective bargaining (the Commission proposed ‘workers’ organisations'); and a new section (under article 4) seeking to ensure full respect for the fundamental rights to join a union and bargain collectively.

On 6 December 2021 the Employment and Social Policy Council (EPSCO) reached a general approach. The legislative text changes its title to emphasise that it is a framework within which national minimum wages evolve. The coverage of collective bargaining is to be indicative, rather than an objective, but Member States without 70% coverage will have to submit an action plan. The criteria for assessing the adequacy of minimum wages are made more flexible and may refer to international or national criteria. The possibilities for variations and deductions from statutory minimum wages have been left to the discretion of Member States, as long as the principles of proportionality and non-discrimination are respected. The conditions for data collection have also been relaxed, with a report to be made on the minimum wage situation every two years (the Commission proposed annually).

Negotiations between the Parliament and Council concluded on 7 June 2022 with a provisional agreement.

On 12 July, the Parliament EMPL Committee approved the provisional agreement by 34 votes to 8 with 2 abstentions.

On 14 September, the Parliament adopted the provisional agreement in plenary by a large majority (505 to 92, 44 abstentions), no amendments were made.

The text affirms that the principle that the minimum wage should ensure a decent standard of living. To assess the adequacy of the existing statutory minimum wages, member states may establish a basket of goods and services at real prices, or set it at 60% of the gross median wage and 50% of the gross average wage.

EU countries that already protect the minimum wage through collective agreements will not be obliged to introduce these rules nor to make these agreements universally applicable.

In countries where collective bargaining covers less than 80% of workers, it will have to be strengthened through an action plan involving social partners. The text also affirms the right to redress for workers, their representatives and trade union members if rules are violated. EU countries will have to set up an enforcement system, including reliable monitoring and control.

The directive will apply to all EU workers who have an employment contract or employment relationship.

The Council formally adopted the directive on 4 October 2022. Denmark and Sweden voted against, Hungary abstained and several explanatory statements were made, specifying how Member States intend to interpret the text (collecting ‘data disaggregated by gender’ understood as ‘by sex’).

The final act was signed on 19 October 2022 and published in the Official Journal on 25 October 2022. Member States have two years to comply with the new rules.

References

• EP Legislative Observatory, Procedure file on adequate minimum wages in the European Union, 2020/0310(COD)
• Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union
• European Commission, Proposal for a directive of the European Parliament and of the Council on adequate minimum wages in the European Union, COM2020 (682)
• European Economic and Social Committee, Adequate minimum wages, opinion, EESC 2020/05731
• European Committee of the Regions, Adequate minimum wages in the European Union, opinion, COR 2020/05859
• European Parliament, Report on the proposal for a directive on the adequate minimum wages in the European Union
• European Parliament, Parliament adopts new rules on adequate minimum wages for all workers in the EU, press release, 14 September 2022
• Council adopts EU law on adequate minimum wages, press release, 4 October 2022

Further readings:

• European Parliament, IPOL, Fair minimum wages for Europe, September 2020
• European Parliament, EPRS, Minimum wage in the EU, At a glance, October 2020
• European Parliament, EPRS, Fair minimum wages in the EU - Pre-legislative synthesis of national, regional and local positions on the European Commission's initiative, European Parliament, October 2020
• European Parliament, EPRS, Adequate minimum wages, Initial Appraisal of a European Commission Impact Assessment, January 2021 
• European Parliament, EPRS, Directive on adequate minimum wages, briefing, 15 June 2022

For further information: Marketa Pape, Members' Research Service, legislative-train@europarl.europa.eu