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

François Rycx and Stephan Kampelmann
A rather basic solution to this problem is to limit the analysis to countries with
relatively similar systems. This approach has been adopted by most existing
studies that focus exclusively on countries in which a national statutory
minimum wage is determined by some centralised mechanism such as a
government agency (like in the UK) or a tripartite commission that negotiates
a national minimum wage through collective agreement (like in Poland).
Countries whose system does not define a statutory minimum wage at the
national level (like Italy, Germany, or the Scandinavian countries) are
typically not considered in these studies.
We argue that this approach is not satisfactory if our task is to reflect how
minimum wages affect the labour market in Europe as a whole, and not only
in countries that happen to share a relatively similar minimum wage system.
As a matter of fact, focusing only on national statutory minimum wages
completely misses other minimum wages mechanisms, such as sectoral or
regional determination of wage floors. For instance, it is clear that the lowest
tariffs guaranteed by collective agreements typically function as effective
minimum wages and should therefore enter the scope of this study. Or, as the
introduction to the WSI minimum data base puts it, "Tariflöhne sind
Mindestlöhne". The following quote taken from a typical Belgian collective
agreement also illustrates that the lowest wages agreed in collective
bargaining are effective minimum wages:
"Ce salaire horaire minimum correspond au niveau le plus bas
applicable, à savoir à la fonction de manoeuvre ordinaire."
(CCT relative au salaire horaire minimum conclue le 27 juin
2007 au sein de la Commission Paritaire de l'industrie
chimique.)
In order to bring countries in which minimum wages are set at the infranational
level back into the picture, we propose a straightforward typology
that has both intuitive appeal and fits well to the empirical results presented
in Section 3. Our typology distinguishes between two types of minimum wage
systems:
— Type I: the minimum wage that applies to most workers and employees
is determined through the decision of a governmental agency or
collective bargaining at the national level. Further differentiation of this
minimum wage plays a minor role in countries that belong to this type.
In its ideal-typical form, such a system leads to a clean cut in the wage
distribution at the level of the national minimum wage, which is why we
refer to this kind of set-up as a "clean-cut system"
— Type II: the minimum wage that applies to most workers and employees
is determined at the infra-national level, for instance in sector or regional
negotiations. The ideal-type of this system includes many different
minima so that no clear truncation is visible at any particular point of the
wage distribution. Due to the multiplicity of minimum wages, we refer to
this type as "complex system".
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