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Cost of living among EU minimum-wage criteria

The European Parliament and EU member states have reached agreement on implementing a directive that is aimed at improving minimum-wage protection for workers across the EU.

The new rules, however, will not set a common level for minimum wages across the EU, nor will they force states to introduce a statutory minimum wage.

The European Commission has welcomed the agreement on the directive, which it proposed in October 2020.

Regular updates

The measure sets up a framework for setting and updating statutory minimum wages, for the 21 countries that have such laws in place.

Under the directive, countries must have clear criteria for setting their minimum wage – including the cost of living, and the level and growth rate of wages.

Member states must also update their minimum-wage rates in a “regular and timely” manner, while consultative bodies must also be established.

Countries must also ensure that variations and deductions of statutory minimum wages respect the principles of non-discrimination and proportionality.

Member states will have to collect data on minimum-wage coverage, and ensure that workers can access dispute resolution, and that they have a right to redress.

Collective bargaining

The commission says that countries with high collective-bargaining coverage tend to have a lower share of low-wage workers, lower wage inequality, and higher wages.

The directive asks member states where such coverage is less than 80% to establish an action plan to improve it. In six EU member states, minimum-wage protection is provided solely through collective agreement.

The deal is now subject to formal approval by MEPs and the EU Council. Once published in the EU’s official journal, the directive will enter into force 20 days after publication, and states will then have two years to put it into national law.