The Adequate Minimum Wages Directive marks a paradigm shift in Europe: it is the first EU legal act with the specific aim of establishing adequate minimum wages across Europe and strengthening national collective bargaining systems. The directive also aims to counteract social inequalities and the phenomenon of the working poor (working people whose incomes fall below the at-risk-of-poverty threshold due to low-income jobs and low familial household income).

Minimum wages are regulated very differently in the EU. Of the 27 EU member states, 22 have a statutory minimum wage. In the remaining five countries (Denmark, Finland, Sweden, Italy and Austria), the wage level is determined by collective bargaining. In Austria, 98% of employees are covered by collective agreements. It is important to note that the directive does not interfere with the way wages are determined in the member states.

Key points of the Adequate Minimum Wages Directive
For EU member states with a statutory minimum wage, the directive provides reference values that can be taken into account: in addition to criteria such as purchasing power and the cost of living, 60 % of the national median gross wage and 50 % of the national gross average wage can be applied as criteria for adequacy. Although these thresholds are not legally binding and the specific decision lies with the member states, they are a strong normative benchmark.  

No less importantly, the directive also provides for the promotion of collective bargaining and thus for a strengthening of trade unions. All member states should take measures to promote collective bargaining. Member states with collective bargaining coverage below 80 % must establish a framework for collective bargaining (by law or by social partner agreement) and a corresponding action plan to ensure better collective bargaining coverage in the future.

The third objective of the directive is to enhance effective access of workers to rights to minimum wage protection where provided for in national law and/or collective agreements. The directive refers to controls and the capacity expansion of enforcement authorities in this regard.

Minimum wages in the EU – the status quo
In 15 of the 22 EU member states with a statutory minimum wage, the nominal increases in 2024 have led to minimum wage increases in real terms, thus maintaining the purchasing power of workers in the low paying sector. However, the double threshold for adequacy provided for in the directive was only met in two of the 22 countries with a statutory minimum wage (France and Slovenia). In general, the thresholds have already served as an impetus for political discussions and for strengthening arguments. They have boosted trade unions’ demands to increase in minimum wages in certain collective agreements even before the directive is implemented.

Implementation of the Adequate Minimum Wages Directive
The current state of implementation of the Adequate Minimum Wages Directive can be viewed with an online tool provided by the European Trade Union Confederation (ETUC). Although the transposition deadline is 15 November 2024, many member states have still not started the implementation process. Effective implementation of the directive is urgently needed. After all, 19 EU states must create a framework for collective bargaining because collective agreement coverage is below 80 %.

Six member states (Belgium, Hungary, Latvia, Luxembourg, Poland, Romania) have already published a draft bill. Germany, Ireland and Slovenia argue that transposition measures are not necessary. Cyprus, Estonia, France, Italy, Lithuania, Malta and Portugal have not yet started the transposition process. The remaining nine member states, including Austria, are still in the preparation phase. Denmark has brought an action for annulment against the directive before the European Court of Justice (ECJ).

Due to the high level of collective bargaining coverage of 98%, Austrian employees do not benefit directly from the directive, but they do so indirectly. This is because wages in Austria's neighbouring countries are expected to rise, which will have a positive effect on the fight against wage and social dumping. Nevertheless, effective measures and extended powers for the European Labour Authority (ELA) will still be needed to effectively combat wage and social dumping.

The bargaining power of social partners and trade unions is essential for setting minimum wages and for a lived culture of employee representation. ETUC Confederal Secretary Tea Jarc: “The directive requires member states to take action to ensure statutory minimum wages are adequate and to promote collective bargaining as the best way to ensure genuinely fair pay!”

Further information
AK EUROPA: Fair wages in Europe: Important step towards an agreement
AK EUROPA: Seize the opportunities of the Minimum Wage Directive 
AK Vienna: Die Europäische Mindestlohn-Richtlinie: Paradigmenwechsel für ein soziales Europa (German only)
ETUI: Dawn of a new era?
ETUI: Wages and collective bargaining: the Adequate Minimum Wages Directive as a game changer
ETUC: Wage-Up Tool
UNI Europa: Time for action