Who earns minimum wages in Europe - European Trade Union ...

Main findings
Who earns minimum wages in Europe ?
Minimum wages continue to stir controversial policy debates. The current
economic climate in Europe might contribute to increase the pressure on
wages at the bottom of the wage distribution and, as a consequence, renew the
interest in wage floors as a tool to protect workers and employees. This study
contributes to a better understanding of minimum wages by providing a solid
empirical assessment of minimum wage policies and their socio-economic
consequences for a range of European countries.
An obstacle to providing comparable information on wage minima for
different countries is the institutional diversity of European minimum wage
systems. This diversity reflects the historical evolution of each of the national
collective bargaining systems. While one has to acknowledge the existence of
national idiosyncrasies, it is nevertheless useful to distinguish European
countries with the help of a straightforward typology. Central and Eastern
European countries, the UK and Ireland, as well as Luxembourg, the
Netherlands, Cyprus, Spain, and Portugal operate minimum wage systems
that produce a "clean cut" in the income distribution. By contrast, all of the
Nordic countries, Austria, Belgium, Germany, Greece, and Italy operate
minimum wage systems that are "complex", i.e. many different minima coexist
side by side so that the left tail of the wage distribution is much smoother
in these countries.
In addition to qualitative differences between minimum wage systems, the
report documents international variations in the (absolute and relative) levels
of minimum wages. While these levels follow no clear geographical pattern, it
appears that complex systems are more likely to generate relatively high wage
floors compared to systems that determine a single wage minimum at the
national level.
An important contribution of the report is to provide a statistical panorama of
the population of minimum wage earners. Compared to the rest of the
population, the empirical results show that this group is characterised by a
lower average age; on average more female employment; lower levels of
educational attainment than workers with higher wages; a considerably
higher share of employees with temporary work contracts; and a higher share
of part time employment than the sub-population with higher wages. Even
more important in terms of the affected individuals' well being is the finding
that in all countries in the sample minimum wage earners live in bigger
households that dispose of significantly lower income and that are at a higher
risk of living in poverty.
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