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

Who earns minimum wages in Europe ?
two types: while Austria, Belgium, Germany, Greece, and Italy have complex
minimum wage systems, Luxembourg, the Netherlands, Cyprus, Spain, and
Portugal resemble more the clean-cut type.
Level of minimum wages and incidence of minimum
wage earners
There are two ways to assess the "bite" of a given minimum wage: (a)
comparing its absolute level across countries and its relative to the national
median wage and (b) looking at the proportion of the labour force that earns
minimum wages. The computation of both statistics is tedious due to the coexistence
of many different minimum wages within most countries. While the
range of different minima is relatively narrow in some countries (in 2007, the
lowest minima in Bulgaria was 0.48 and the highest 0.53 euros per hour),
other countries apply rather unequal rates to different segments of the labour
market (in the UK, the lowest minimum in 2007 was 4.85 and the highest
minimum 7.86 euros).
The study deals with this difficulty by computing employment-weighted
averages of the different national minima, both absolute and relative to the
national median wage. The latter is a common measure typically referred to
as the Kaitz index. Spain has a very low Kaitz index of 39.3, which means that
the employment-weighted average of the different minimum wages in Spain
amounts to around 40 per cent of the Spanish median wage. Bulgaria (41.0),
Romania (44.4), and Poland (47.5) also have relatively low Kaitz indices,
contrary to Ireland (52.6) or Hungary (57.0).
Countries with high Kaitz indices tend to have a bigger share of minimum
wage earners: the higher a minimum wage is relative to the middle of the
wage distribution, the more people fall within its range. This relationship
comes out in the study: as much as 11.5 per cent of Hungarians earn minimum
wages, but only 3.8 per cent of Spaniards.
In countries like Belgium, Germany, Italy, or Sweden, the national level is not
the most relevant focus of analysis since sectoral minimum wages
predominate in these countries. However, the complexity of sectoral
bargaining is such that hardly any statistical information on Kaitz indices or
the number of minimum earners is available for complex minimum wage
systems. The study provides novel evidence in this regard and estimated the
average of sectoral minima in Belgium at 59.6 per cent of the Belgium median
wage. The Kaitz index for Germany is estimated at 57.8 per cent. This suggests
that in countries with complex systems, the observed wage floors are
relatively high compared to countries with clean-cut systems. Accordingly,
more people tend to earn (sectoral) minimum wages in these countries. In
Belgium, for instance, the study estimates that 11.4 per cent of the labour
force receives sectoral minima.
Report 124
7