National minimum wages in the EU…


€3.8 billion to help the most vulnerable in Europe

poverty

Salaires minimums nationaux dans l’UE

3,8 milliards d’euros pour aider les citoyens européens les plus vulnérables

Nationale Mindestlöhne in der EU

3,8 Mrd. EUR bereit, um die Armut zu bekämpfen und den Bedürftigsten in Europa zu helfen

***


Monthly minimum wages in euro varied by 1 to 10 across the EU in January 2015
Variation reduced to 1 to 4 when expressed in PPS

€3.8 billion to help the most vulnerable in Europe

As of 1st January 2015, 221 out of the 28 Member States of the European Union (EU) had national minimum wages2. They ranged from €184 per month in Bulgaria to €1 923 in Luxembourg. However, when adjusted for differences in purchasing power, the disparities between Member States are reduced from a ratio of 1 to 10 in euro to a ratio of 1 to 4 in purchasing power standards (PPS)3.
This information comes from a publication4 issued by Eurostat, the statistical office of the European Union.

From €184 in Bulgaria to €1 923 per month in Luxembourg

For those countries where the national minimum wage is not fixed at a monthly rate (i.e. Germany, Ireland, France, Malta, the United Kingdom and the United States) the level of the minimum wage is converted into a monthly rate according to a standard number of hours worked per month that may differ across countries2.
The 22 EU Member States that have national minimum wages can be divided into three main groups based on the level in euro. In January 2015, ten Member States had minimum wages below €500 per month: Bulgaria (€184), Romania (€218), Lithuania (€300), the Czech Republic (€332), Hungary (€333), Latvia (€360), Slovakia (€380), Estonia (€390), Croatia (€396) and Poland (€410). In five other Member States, minimum wages were between €500 and €1 000 per month: Portugal (€589), Greece (€684), Malta2 (€720), Spain (€757) and Slovenia (€791).

In the remaining seven Member States, minimum wages were well above €1 000 per month: the United Kingdom2 (€1 379), France2 (€1 458), Ireland2 (€1 462), Germany2 (€1 473), Belgium and the Netherlands (both €1 502) and Luxembourg (€1 923). For comparison, the federal minimum wage in the United States2 was just over €1 000 per month (€1 035) in January 2015.

Minimum wages between 40% and 60% of the median earnings

Minimum wages may also be measured in relative terms, i.e. as a proportion of the median gross monthly earnings6. In 2010, minimum wages as a proportion of median gross monthly earnings were below 60% in all Member States for which data are available, being lowest in the Czech Republic and Estonia (both 40%), Spain (41%) and Romania (42%), and highest in Portugal and France (both 60%).
Minimum wages decreased compared with 2008 only in Greece
Compared with 2008, minimum wages in 2015, expressed in national currency5, increased in every Member State having a national minimum wage, except Greece where they dropped by 14% and Ireland where they remained unchanged. The highest increases between 2008 and 2015 were registered in Romania (+95%), Bulgaria (+64%), Slovakia (+58%) and Latvia (+57%).

Gap reduced to 1 to 4 when minimum wages are expressed in PPS

The disparities in minimum wages across the EU States are considerably smaller once price level differences are eliminated: minimum wages in those Member States with relatively lower price levels become relatively higher when expressed in purchasing power standard (PPS)3, and relatively lower in those Member States with higher price levels.
The gap in minimum wage rates between the EU Member States was reduced from a ratio of 1:10 in euro to a ratio of 1:4 in PPS, ranging from 380 PPS per month in Bulgaria to 1 561 PPS in Luxembourg.

In particular, six Member States (the Czech Republic, Croatia, Latvia, Hungary, Poland and Slovakia) moved from the lower group (less than €500 per month) to the medium group (500 PPS to 1 000 PPS per month) when price level differences are eliminated.

1. In 1 January 2015, Belgium, Bulgaria, the Czech Republic, Germany (from 1 January 2015), Estonia, Ireland, Greece, Spain, France, Croatia, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, and the United Kingdom had a national minimum wage as defined in footnote 2.

2. Minimum wage statistics, published bi-annually by Eurostat, refer to monthly national minimum wages applied on 1 January and 1 July each year. The national minimum wage usually applies to all employees, or at least to a large majority of employees in a country. It is fixed at an hourly, weekly or monthly rate, and is enforced by law, often after consultation with social partners, or directly by a national inter-sectorial agreement. Minimum wages are generally presented as monthly wage rates for gross earnings, that is, before the deduction of income tax and social security contributions payable by the employee; these deductions vary from country to country.

For those countries where the national minimum wage is not fixed at a monthly rate

(for example, where minimum wages are specified on an hourly or weekly basis) the level of the minimum wage is converted into a monthly rate according to conversion factors supplied by the countries:
Germany: (hourly rate x 40 hours x 52 weeks) / 12 months. The national minimum wage is €8.50 per hour
Ireland: (hourly rate x 39 hours x 52 weeks) / 12 months. The national minimum wage is €8.65 per hour
France: (hourly rate x 35 hours x 52 weeks) / 12 months. The national minimum wage is €9.61 per hour
Malta: (weekly rate x 52 weeks) / 12 months. The national minimum wage is €166.26 per week
United Kingdom: (hourly rate x mean basic paid hours per week for full-time employees in all sectors x 52.18 weeks) / 12 months. The national minimum wage is £6.50 per hour
United States: (hourly rate x 40 hours x 52 weeks) / 12 months. The national minimum wage is $7.25 per hour
In addition, when the minimum wage is paid for more than 12 months per year (as in Greece, Spain and Portugal, where it is paid for 14 months a year), data have been adjusted to take these payments into account.
Additional information, including country-specific information, is available on the Eurostat website

3. To remove the effect of differences in price levels between the countries, special conversion rates called purchasing power parities (PPPs) are used. PPPs for household final consumption expenditure in each country are used to convert the monthly minimum wages expressed in euro or national currencies to an artificial common unit called the purchasing power standard (PPS). As PPPs for 2014 and 2015 are not yet available, they are replaced by the PPP of the year 2013.

4. Eurostat, Statistics Explained article “Minimum wage statistics” available on Eurostat’s website

5. Data on national minimum wages are submitted to Eurostat in national currency. For the non-euro area countries, minimum wages in national currencies are converted into euro by applying the monthly exchange rate as recorded at the end of the previous month (for example, the rate at the end of December 2014 was used for calculating minimum wages in euro as of 1 January 2015). It should be noted that for those EU Member States outside of the euro area that have minimum wages (Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and the United Kingdom), as well as for the United States, the levels and developments of minimum wages expressed in euro may differ from those expressed in national currency, due to exchange rate effects.

6. Data refer to the gross monthly earnings and cover remuneration in cash paid before any tax deductions and social security contributions payable by wage earners and retained by the employer. They are restricted to gross earnings which are paid in each pay period. They generally refer to NACE Rev. 2 Sections B-S (industry, construction and services, except activities of households as employers and extra-territorial organisations and bodies), and cover full-time employees working in enterprises of all sizes. Data for Lithuania also cover part-time workers converted into full-time equivalents. Data for Greece and Belgium exclude Section O whereas data for Portugal also exclude Sections P and Q (non-market units). Data for Belgium, Germany, Croatia and Romania refer to enterprises with 10 or more employees which tends to over-estimate the median earnings and to consequently under-estimate the “minimum wages to median earnings” ratio. Data from Bulgaria, the Czech Republic, Estonia, Hungary, Poland, Latvia, Slovenia, Croatia and Romania are calculated by Eurostat on the basis of the Structure of Earnings Survey (2010). Data from Germany is an estimation for the year 2015. Median earnings refer to the value that splits the earnings distribution into two parts of equal size: exactly 50% fall below that value, 50% are above it.

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