One of the most important and hotly debated legislative proposals during this mandate for the European Parliament is coming to an end.

Following the proposal for a "Directive on adequate minimum wages in the European Union", published on October 2020, the EU Council and the European Parliament reached an agreement, aiming to ensure that minimum wages in all EU countries guarantee decent living standards for workers.

The new legislation will apply to all EU workers who have an employment contract or employment relationship, while for the EU countries in which the minimum wage is protected exclusively via collective agreements, it is not mandatory to introduce it nor to make these agreements universally applicable.

At the time of writing, in the EU, 21 out of 27 countries have a statutory minimum wage, while in the other six (Austria, Cyprus, Denmark, Finland, Italy and Sweden) wage levels are determined through collective bargaining and the differences between EU countries are still considerable: the minimum wages range from EUR 332 per month in Bulgaria to more than EUR 2000 in Luxembourg (you can find an interactive map on minimum statutory pay here).

The objective of the European Union is not to standardise national systems with the introduction of a single minimum wage for all states but, rather, to identify guidelines that define appropriate fair wages without prejudice to the specificity and autonomy of each member State.

According to the deal, member States will have to assess whether their existing statutory minimum wages (i.e. the lowest wage permitted by law) are adequate to ensure a decent standard of living, taking into account their own socio-economic conditions, purchasing power or the long-term national productivity levels and developments.

Dragos Pîslaru, Chair of the Employment and Social Affairs Committee concluded that “The directive opens new opportunities for European citizens to avoid in-work poverty and gain access to social dialogue. It creates transparent and appropriate procedures as well as common enforcement measures at EU level while also balancing national particularities”.

European Commission President, Ursula von der Leyen, said that "In our political guidelines we promised a law to guarantee fair minimum wages in the EU. With today's political agreement on our proposal on fair minimum wages, we complete our task. The new rules will protect the dignity of work and make sure that work pays”.

The provisional political agreement will now have to be approved first by the Employment and Social Affairs Committee, followed by a plenary vote, and then by the Council.

It will then be up to the member states to transpose it.

Business Europe Director General, Markus J. Beyrer, commented that "We remain critical of an EU directive on minimum wages and collective bargaining, but we acknowledge that the Council has insisted throughout the negotiations on a better recognition and respect of national and social partner competences. By setting rules on minimum wages, the EU is entering unchartered waters and acting at the very limit of its competences. Avoiding a wage-price spiral is essential in the present context marked by already high inflation. Public authorities must avoid politically motivated minimum wage increases and respect the autonomy of social partners when implementing this new directive.”