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Minimum wage statistics

From Statistics Explained

Data from January 2014. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: July 2014.
Map 1: Minimum wages, 1 January 2014
(EUR per month) - Source: Eurostat (earn_mw_cur)
Figure 1: Minimum wages, January 2014 (1)
(EUR per month) - Source: Eurostat (earn_mw_cur)
Figure 2: Minimum wages, January 2014 (1)
(PPS per month) - Source: Eurostat (earn_mw_cur)
Figure 3: Minimum wages as proportion of the mean value of average gross monthly earnings, 2012 (1)
(%) - Source: Eurostat (earn_mw_avgr2)
Figure 4: Proportion of employees earning less than 105 % of the monthly minimum wage, October 2010 (1)
(%) - Source: Eurostat (earn_mw_avgr2)Source: Eurostat, Structure of Earnings Survey 2010 and Minimum wages; special calculation made for the purpose of this publication; data are not available in Eurostat's online database

This article illustrates how minimum wage levels — established by national legislation or directly by national intersectoral agreement — vary considerably across European Union (EU) Member States; it also provides a comparison with the situation in Turkey and the United States.

Minimum wage statistics, as published by Eurostat, refer to monthly national minimum wages. The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country under consideration. Minimum wages are 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. The national minimum wage is enforced by law, often after consultation with social partners, or directly by national intersectoral agreement.

National minimum wages are published by Eurostat bi-annually. They reflect the situation on 1 January and 1 July of each year. As a consequence, modifications to minimum wages introduced between these two dates are only shown for the following bi-annual release of data.

Main statistical findings

In July 2013, 21 of the EU’s 28 Member States (all except Denmark, Germany, Italy, Cyprus, Austria, Finland and Sweden) had national legislation setting a minimum wage by statute or by national intersectoral agreement.

Variation of statutory minimum wages

In January 2014 minimum wages in EU Member States ranged from EUR 174 to EUR 1 921 per month

Monthly minimum wages varied widely, from EUR 174 in Bulgaria to EUR 1 921 in Luxembourg as of 1 January 2014. When adjusted for price differentials across countries, the disparities between the EU Member States were reduced from a ratio of 1:11 (in euro terms, see Figure 1) to a range of 1:5 in purchasing power standard (PPS) terms (see Figure 2). Monthly minimum wages, taking account of price differences between the Member States, ranged from a low of 345 PPS in Romania to a high of 1 576 PPS in Luxembourg.

Figure 1 shows the gross minimum monthly wage levels expressed in euro for EU Member States, Turkey and the United States in January 2014. The countries are divided into three groups based on the level of their minimum wages. The first group includes 11 countries whose minimum wages are lower than EUR 500 a month: Bulgaria, Romania, Latvia, Lithuania, the Czech Republic, Estonia, Hungary, Slovakia, Poland and Croatia, as well as Turkey.

The second group comprises five EU Member States (Portugal, Greece, Malta, Spain and Slovenia) and the United States, each with an intermediate level of minimum wages, ranging from EUR 500 to EUR 1 000 a month.

The final group comprises six EU Member States (the United Kingdom, France, Ireland, the Netherlands, Belgium and Luxembourg) where minimum wages were above EUR 1 000 per month.

It should be noted that for those EU Member States outside of the euro area that have minimum wages (Bulgaria, the Czech Republic, Croatia, Latvia, Lithuania, Hungary, Poland, Romania and the United Kingdom), as well as for Turkey and the United States, the levels and ranking of minimum wages expressed in euro terms are affected by exchange rates.

Part-time employees

Among the 23 countries (21 Member States + the United States and Turkey) with a minimum wage, 18 countries namely: Belgium, Bulgaria, Czech Republic, Estonia, Ireland, Spain, France, Lithuania, Luxembourg, Hungary, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, the United Kingdom and United States have a minimum wage applicable to part-time employees.

In all the latter countries except Hungary, part timers are paid under the same conditions, pro rata of the number of hours worked, as full-timers. In Hungary, there is a specific hourly rate for part-timers (1.97 EUR).

So far, no country has introduced a minimum threshold of hours to be paid under the minimum rate.

Minimum wages expressed in purchasing power standards

The gap between countries is considerably smaller when price level differences are taken into account

Figure 2 compares gross minimum wages taking into account differences in price levels across countries by applying purchasing power parities (PPPs for household final consumption expenditure. As one would expect, adjusting for differences in price levels reduces the variation between countries: the countries in Group 1 with relatively low minimum wages in euro terms tend to report lower price levels and therefore relatively higher minimum wages when expressed in PPS terms. On the other hand, countries in Group 3 with relatively high minimum wages in euro terms tend to have higher price levels, and their minimum wages in PPS terms are generally relatively lower. This adjustment for price levels — when looking at minimum wages expressed in PPS terms — has the effect of partly smoothing the defined breaks between the three different groups of countries that were identified when ranked in euro terms.

Comparing the ranking of gross monthly minimum wages in euro terms with those in PPS terms for 1 January 2014, there were relatively small movements: the biggest changes in terms of the position of individual countries in the two rankings were registered for Estonia, Croatia, Hungary, Latvia, Poland and Portugal — each moving by two or more places. Seven countries changed their position by a single place between the two rankings (Bulgaria, Romania, Slovakia, Malta, Spain, France and Ireland). On the basis of a comparison in PPS terms and using the same ranges for grouping the countries (<500, 500–1 000 and >1 000) the vast majority of the countries remained in the same group. The exceptions were Hungary, Poland, Croatia and Turkey, which moved from Group 1 (low minimum wages) to Group 2 (medium minimum wages) and the United States moving from Group 2 (medium minimum wages) to Group 3 (higher minimum wages).

Minimum wage levels in relation to average gross monthly earnings

In 2012, the level of gross minimum wages varied between 30 % and 50 % of the average gross monthly earnings for somebody working in industry, construction or services (activities of households as employers and extra-territorial organisations and bodies are excluded), as covered by NACE Rev. 2 Sections B–S — see Figure 3.

The level of minimum wages in relation to average gross monthly earnings, was highest in Greece (50.1 %, 2011), Slovenia (50.0 %) and Turkey (also 50.0 %, 2010), followed by France (47.0 %, 2011), Luxembourg (46.9 %) and Malta (46.8 %). At the lower end of the ranking, the United States, the Czech Republic, Estonia, Romania and Spain reported that the level of their minimum wages was less than 35 % of average gross monthly earnings.

Proportion of minimum wage earners

The proportion of employees earning the minimum wage can vary sizeably across countries. By linking micro data from the latest 4-yearly Structure of Earnings Survey (SES2010) with the level of the minimum wages in force at the time (October 2010), it is possible to derive an estimate of this proportion as provided in Figure 4. For the sake of comparability, the scope has been restricted to full-time workers aged 21 years and over, working in enterprises with 10 employees and more, after excluding the sector comprising public administration, defence and compulsory social security (NACE Rev. 2 Section O). Moreover, the reference monthly earnings calculated from the SES exclude any earnings related to overtime and shift work.

Among the EU Member States with a minimum wage, the proportion of employees being paid less than 105 % of the national minimum wage was above 9.0 % in eight Member States, namely: Slovenia (19.2 %), Lithuania (13.7 %), Latvia (11.8 %), Luxembourg (10.2 %), Poland (9.9 %), Ireland (9.2 %), France (9.2 %) and Croatia (9.2 %). Spain (0.2 %) registered the lowest proportion whereas the other 11 Member States recorded a proportion between 2.0 % and 4.7 %.

Data sources and availability

Statutory monthly minimum wages

The basic national minimum wage is fixed at an hourly, weekly or monthly rate, and this minimum wage is enforced by law (the government), often after consultation with social partners, or directly by national intersectoral agreement. Minimum wages are gross amounts, that is, before deduction of income tax and social security contributions; such deductions vary from country to country. The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country; it is reported as gross wages.

Minimum wage statistics published by Eurostat refer to monthly national minimum wages; data are published for the minimum wages applied on 1 January and 1 July each year. For countries where the national minimum wage is not specified as a monthly value (for example, where they are specified on an hourly or weekly basis) the level of minimum wages is converted into a monthly rate according to conversion factors supplied by the countries:

Ireland: (hourly rate x 39 hours x 52 weeks) / 12 months;

France: data for January 1999–January 2005: (hourly rate x 39 hours x 52 weeks) / 12 months; data from July 2005 onwards (hourly rate x 35 hours x 52 weeks) / 12 months;

Malta: (weekly rate x 52 weeks) / 12 months;

United Kingdom: (hourly rate x mean basic paid hours per week for full-time employees in all sectors x 52.18 weeks) / 12 months;

United States: (hourly rate x 40 hours x 52 weeks) / 12 months.

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.

Data on national minimum wages are submitted to Eurostat in national currency terms. For the non-euro area countries, the minimum wages in their 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 2013 was used for minimum wages as of 1 January 2014).

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 national currencies (euro-fixed series for euro area countries) to an artificial common unit called the purchasing power standard (PPS). If PPPs for the latest reference period are not yet available, they are replaced by the PPP of the previous year, and the series are updated once the latest PPPs are available.

Countries not covered by the data collection

Germany and Cyprus (as well as the former Yugoslav Republic of Macedonia) have statutory minimum wages that do not apply to all or to the large majority of employees but are restricted to specific groups which are defined, for example, by sectors or by professions; these countries are therefore excluded from the data collection exercise. Also excluded are countries where there are no statutory national minimum wages: Denmark, Italy, Austria, Finland and Sweden, as well as Iceland, Norway and Switzerland. In these countries, wages are either determined by negotiations between social partners, at a company level, or at the level of each individual contract. Sectoral agreements are often applied to all workers (so called erga omnes applicability), thus constituting de facto (in practice) minimum wages.

Average monthly earnings

Data on gross monthly earnings cover remuneration in cash paid before any tax deductions and social security contributions payable by wage earners and retained by the employer, and restricted to gross earnings which are paid in each pay period. 'Non-standard payments' such as 13th or 14th month payments, holiday bonuses, and so on are excluded; this definition follows that applied within the Structure of earnings survey (SES).

Data on gross monthly earnings 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. The reference period is the annual average; if not available, then a specific month may be used.

Context

Several of the founding EU Member States have a lengthy tradition of ensuring a minimum wage for those at the lower-paid end of the labour market. By contrast, countries such as Ireland, the United Kingdom and many of the countries that joined the EU in 2004 or later have only recently introduced minimum wage legislation. In seven of the EU-28 Member States there was no statutory minimum wage as of 1 January 2014.

In recent years there has been a pattern of relatively low wage increases (wage moderation) in most European countries, and many groups representing workers have argued that purchasing power and overall standards of living have fallen. Some politicians, representative/pressure groups and commentators have started to promote the idea of a ‘European minimum wage’.

Minimum wages are generally set by law; however in some cases, collective agreements are used to determine the minimum salary a worker receives in exchange for his or her work. The level of the minimum wage is not necessarily updated every year, nor does the adjustment always result in a wage increase — for example, the level of minimum wages in Greece decreased in 2012 as part of the austerity measures introduced by the government.

See also

Further Eurostat information

Publications

Main tables

Earnings (t_earn)
Minimum wages (tps00155)

Database

Earnings (earn)
Minimum wages (earn_minw)
Monthly minimum wages - bi-annual data (earn_mw_cur)
Monthly minimum wage as a proportion of average monthly earnings (%) - Nace Rev. 2 (from 2008 onwards) (earn_mw_avgr2)
Monthly minimum wage as a proportion of average monthly earnings (%) - Nace Rev. 1.1 (1999-2009) (earn_mw_avgr1)

Dedicated section

Methodology / Metadata

Source data for tables and figures (MS Excel)

External links


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