9 November, 2022 seen 113OECD or The Organisation for Economic Co-operation and Development is an intergovernmental organization with 38 member…
A year ago I created a blog post about minimum wages in European Union in 2014, that post generated a lot of views (more than 20,000 page views) and some buzz (got shared on Facebook, Reddit, and many other websites)
I decided to look back and compare how does minimum wage has changed in European Union member countries a year later (2015)
Minimum wage in European Union 2015
In short - minimum wage has been increased almost in every country, with the exception - Ireland and Germany. Germany is a newcomer to the minimum wage list this year.
The fastest growing minimum wages have been recorded in Romania 14% growth (+33 EUR/monthly), Latvia 11% growth (+40 EUR/monthly), Lithuania 11% growth (+36 EUR/monthly), United Kingdom 11% growth (+152 EUR/monthly) and Bulgaria 10% growth (+21 EUR/monthly)
Now - at first I was surprised to see the United Kingdom among fastest growing minimum wages, but then I realized - it's all about currency exchange rates (the United Kingdom is not part of Euro Zone) - read more about that bellow.
The largest monthly minimum wage has been set in Luxembourg (EUR 1,923/USD 2,134) while the lowest in Bulgaria (EUR 194 / USD 215) making a gap between those two countries of EUR 1729 / USD 1919
About minimum wage
Minimum wage is set by government minimum standard of guaranteed income (hourly/monthly) that worker should receive for work he/she performs. In 2015, there were 22 countries out of 28 in European Union, which had their national minimum wages set. A newcomer to this list is Germany, which starting 2015 have set a minimum wage of EUR 1,473. Countries that don't have a minimum wage set by the government in European Union - Austria, Denmark, Finland, Cyprus, Italy and Sweden (these countries have some collective bargaining agreements)
Minimum wage table in European Union 2015
|EUR||USD||EUR||USD||Hourly EUR||Hourly $||Growth EUR||Growth $||Growth %|
Data sources for above chart: Minimum wages on Eurostat, List of sovereign states in Europe by minimum wage. USD currency conversation rates for 2015 are taken on July 1st (1 EUR = 1.11 USD). USD currency rates for 2014: 1 EUR - 1.35 USD.
This year I decided to include an hourly minimum wage in this table as well.
In some countries, the basic national minimum wage is not fixed at a monthly rate but at an hourly or weekly rate. For these countries, the hourly or weekly rates are converted into monthly rates. The national minimum wage is enforced by law, often after consultation with the social partners, or directly by national intersectoral agreement (this is the case in Belgium and Greece). The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country. Minimum wages are gross amounts, that is, before deduction of income tax and social security contributions. Such deductions vary from country to country.
Currency exchange rates
7 countries (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania and United Kingdom) out of these 22 are using their own national currency instead of EUR so it's not possible to guarantee 100% precise currency exchange rates for Euro money. Another interesting trend: EUR USD exchange rates for the last year have gone down from 1.35 to 1.11. In all above listed 22 countries (although the minimum wage has been increased) minimum wage in 2015 are less (if converted to USD) than in 2014. I believe this is a huge issue for those minimum wage receivers who have some debts in USD currency.
What's up for 2016?
In my first review of minimum wages in European Union, I was an eager promoter of the idea of a standard of the minimum wage in European Union. Now I'm looking into this with ambivalent feelings - at first, I'm looking to have more socially equal Europe, on the other hand, I understand that idea of standard minimum wage is a pretty populist idea. I doubt there will be standard of the minimum wage in EU in 2016.
We have seen a pretty good increase in minimum wages for the EU newcomers from the Eastern Block this year, speaking of 2016 I would forecast more humble growth there. Probably some good growth rate in Romania and Bulgaria.
Will 2016 will bring a cut in the minimum wage? Personally, I doubt this, but if, then most probably in Greece.