Minimum wage statistics

From Statistics Explained

Data from September 2014. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: February 2015.
Map 1: Minimum wages, 1 July 2014
(EUR per month) - Source: Eurostat (earn_mw_cur)

This article illustrates how minimum wage levels vary considerably across the European Union (EU) Member States; it also provides a comparison with the situation in the candidate countries and the United States.

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

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

Variations in national minimum wages

Minimum wages in the EU Member States ranged from EUR 174 to EUR 1 921 per month in July 2014

Figure 1: Minimum wages, July 2014 (¹)
(EUR per month) - Source: Eurostat (earn_mw_cur)

In 2014, 21 out of the 28 EU Member States (Denmark, Germany, Italy, Cyprus, Austria, Finland and Sweden were the exceptions) had a national minimum wage (see Map 1). As of 1 July 2014, monthly minimum wages varied widely, from a low of EUR 174 in Bulgaria to EUR 1 921 in Luxembourg. There was also a national minimum wage in the following candidate countries: Albania, Montenegro, the former Yugoslav Republic of Macedonia, Serbia and Turkey.

Figure 1 shows gross minimum monthly wage levels expressed in euro terms in July 2014. The countries are divided into three groups based on the level of their minimum wages. The first group includes 15 countries whose minimum wages were lower than EUR 500 a month: Albania, Bulgaria, Montenegro, Romania, the former Yugoslav Republic of Macedonia, Serbia, Lithuania, the Czech Republic, Latvia, Hungary, Slovakia, Estonia, Turkey, Croatia and Poland.

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, Lithuania, Hungary, Poland, Romania and the United Kingdom), as well as for Albania, the former Yugoslav Republic of Macedonia, Serbia, Turkey and the United States, the levels and ranking of minimum wages expressed in euro terms are affected by exchange rates.

Minimum wages expressed in purchasing power standards

The gap between countries in the level of minimum wages is considerably smaller once price level differences are taken into account

Figure 2: Minimum wages, July 2014 (¹)
(PPS per month) - Source: Eurostat (earn_mw_cur)

Figure 2 compares gross minimum wages taking into account differences in price levels by applying purchasing power parities (PPPs for household final consumption expenditure). As might be expected, 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 purchasing power standard (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 has the effect of partly smoothing the distinct breaks between the three different groups of countries that were identified when ranked in euro terms. The disparities in minimum wage rates between the EU Member States were reduced from a ratio of 1:11 in euro terms to a ratio of 1:5 in PPS terms. Across the EU Member States, monthly minimum wages ranged from 354 PPS in Romania to 1 559 PPS in Luxembourg.

As well as narrowing the range between the highest and lowest minimum wages, the conversion from euro to PPS changes the order of the ranking of countries. The main differences between minimum wage rates in euro terms and PPS terms were observed in Bulgaria, the former Yugoslav Republic of Macedonia, the Czech Republic, Hungary, Estonia and Portugal, as well as Turkey — each of these countries changed its position in the rankings by at least two places. Nine countries changed their positions by a single place (Montenegro, Romania, Latvia, Croatia, Poland, Malta, Spain, France and Ireland). The vast majority of the countries remained in the same group when analysing Figures 1 and 2. The exceptions included Hungary, Croatia, Turkey and Poland, which moved from Group 1 (low minimum wages) to Group 2 (medium minimum wages) and the United States which moved from Group 2 (medium minimum wages) to Group 3 (higher minimum wages).

Minimum wage levels in relation to average gross monthly earnings

Figure 3: Minimum wages as proportion of the mean value of gross monthly earnings, 2013 (¹)
(%) - Source: Eurostat (earn_mw_avgr2)

In 2013, the level of gross minimum wages varied from 30 % to just over 50 % of the average gross monthly earnings for those 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 Slovenia (51.4 %), Greece (50.1 %, 2011) and Turkey (50.0 %, 2010). At the lower end of the ranking, the United States, the Czech Republic, Estonia (2012), Romania (2012) and Spain each reported that the level of their minimum wages was less than 35 % of average gross monthly earnings.

Proportion of minimum wage earners

Figure 4: Proportion of employees earning less than 105 % of the monthly minimum wage, October 2010 (¹)
(%) - 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

The proportion of employees earning the minimum wage can vary sizeably across countries. By linking microdata from the latest four-yearly structure of earnings survey (SES) with the level of minimum wages in force at the time (October 2010 for the last SES), it is possible to derive an estimate (as presented 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 public administration, defence and compulsory social security (NACE Rev. 2 Section O). Moreover, monthly earnings calculated from the 2010 edition of 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 of employees earning less than 105 % of the national minimum wage, while the proportion of employees in the remaining 11 Member States earning less than this amount stood between 2.0 % and 4.7 %.

Data sources and availability

Monthly national minimum wages

Minimum wage statistics, published by Eurostat, refer to monthly national minimum wages. Data are published in relation to the minimum wages applied on 1 January and 1 July each year.

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 a national intersectoral agreement. The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country; the information is reported in gross terms.

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:

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 Serbia, the hourly minimum net wage is fixed. The following conversion is applied: (hourly net rate x 40 hours x 52.2 weeks) / 12 months. The amount is then grossed up to cover the applicable taxes.

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, 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 2013 was used for calculating minimum wages in euro terms 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 euro or national currencies 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 minimum wage statistics

As of 1 July 2014, there was no national minimum wage in Denmark, Germany, Italy, Cyprus, Austria, Finland and Sweden, as well as Iceland, Norway and Switzerland. In Germany, minimum wages are set for several sectors by collective agreements under the provisions of the Posted Workers Act. They are declared binding by the Federal Ministry of Labour and Social Affairs. A national minimum wage in Germany will come into force from January 2015. In Cyprus, minimum wages are set by the government for specific occupations. In Denmark, Italy, Austria, Finland and Sweden, as well as Iceland, Norway and Switzerland minimum wages are laid down by collective agreements in specific sectors.

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 (except Greece, Spain, and Portugal), holiday bonuses, and so on are excluded; this definition follows that applied within the structure of earnings survey.

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.

Context

Several of the founding EU Member States have a lengthy tradition of ensuring a national minimum wage for those at the lower-paid end of the labour market. By contrast, a number of Member States including Ireland, the United Kingdom and many of the countries that joined the EU in 2004 or later have only recently introduced minimum wage legislation, while seven of the EU-28 Member States had no national minimum wage as of 1 July 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, worker representatives, pressure groups and commentators promote the idea of a ‘European minimum wage’ or national minimum wages set in all EU Member States.

National minimum wage levels are not necessarily changed every year, nor does the adjustment always result in a minimum wage increase — for example, the level of minimum wages in Greece decreased in 2012 as part of the austerity measures introduced by the government. The National Collective Agreement was suspended in Greece that year and the national minimum wage is now fixed by government decision.

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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