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

François Rycx and Stephan Kampelmann
Advocates of minimum wages typically use one of the two following
arguments to defend the introduction or increase of wage floors. They
typically argue that minimum wages (a) affect the wage distribution so as to
reduce overall wage inequality and/or (b) directly improve the living
conditions of workers in the lower tail of the wage distribution.
Unfortunately, scholars of minimum wages know little about some of the
basic statistical facts that underpin both types of argumentation.
In order to provide a sound statistical basis for the first argument, one would
arguably want to know more about how the observed diversity of minimum
wage systems is linked to international variations in the shapes of wage
distributions. On this point, we document how two types of systems generate
contrasting wage distributions: countries operating "clean-cut systems" are
associated with wage distributions that are truncated at the level of the
minimum wages; in this type of system, the minimum wage affects a very
specific segment of the distribution. By contrast, in "complex systems" many
different minima co-exist so that the left tail of the distribution is more or less
bell-shaped; as a consequence, in these countries minimum wage policies
affect individuals at different strata of the distribution, including relatively
well-paid groups.
Also the second argument raises fundamental questions that have not yet
been answered satisfactorily in the literature. These questions include: How
many people earn minimum wages in Northern, Western, Central, or Eastern
European countries? Most extant studies on this question are outdated and
exclude several key countries from Central and Eastern Europe. Crucially, we
also still know little about the people that are affected by minimum wage
policies. For instance, to what extent do they differ from the rest of the labour
force in terms of individual, job, and household characteristics ?
This report presents comprehensive statistical information allowing to map
the impact of minimum wages in Europe. While statistics on the general level
of national statutory minimum wages are published by international data
providers on an annual basis, detailed information on specific groups of
employees has to be computed from individual-level labour market surveys.
The results of this report are based on large, representative surveys with
micro-data for a set of European countries: the European Union Survey on
Income and Living Conditions (EU-SILC) and the German Socio-economic
panel (GSOEP).
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