On 7 June 2022 the Council and the European Parliament announced a provisional agreement on a directive on adequate minimum wages. It sets no EU-wide minimum wage, but it does require criteria, regular updates and plans to extend collective bargaining.
After overnight talks, on 7 June 2022 the Council of the EU and the European Parliament announced a provisional agreement on the directive on adequate minimum wages in the European Union, which the Commission had proposed in October 2020. It is an important step, but it is not yet law: the text needs formal approval from both institutions.
What the text requires
For countries that have a statutory minimum wage, the directive sets out a framework for fixing and updating it. There must be clear criteria — purchasing power and the cost of living, the level, distribution and growth of wages, and national productivity — indicative reference values to judge whether the minimum wage is adequate, and effective involvement of the social partners. As examples of those values, the text mentions 60% of the gross median wage and 50% of the gross average wage.
Updates must be regular: at least every two years or, in countries that use automatic indexation, every four years at most. Member states will also have to collect data on the coverage and adequacy of minimum wages, and workers must be able to use dispute-resolution mechanisms and obtain redress.
The second part of the text concerns collective bargaining. If collective agreements cover less than 80% of a country’s workers, that state must establish an action plan to promote bargaining and progressively increase its coverage. Reaching 80% is not required: what is required is a plan when a country falls short.
What it does not do
The directive does not set a common amount: there is no European minimum wage. Nor does it oblige any state to introduce a statutory minimum wage. In some EU countries wages are set solely by collective agreement, and the text respects that tradition, national competences and the autonomy of the social partners. According to the Commission, minimum wage protection exists in every member state, whether through a statutory minimum wage, through collective agreements or through both.
What happens next, and what it means in Spain
The agreement must be formally approved by the Parliament and the Council. The directive will enter into force twenty days after its publication in the Official Journal of the EU, and member states will have two years to bring the new elements into their law.
Spain has a statutory minimum wage: in 2022 it is €1,000 a month (€33.33 a day), 3.63% higher than in 2021, under the royal decree of 22 February. The Workers’ Statute already requires the government to set it every year after consulting the most representative trade unions and employers’ organisations, taking into account, among other factors, the consumer price index and average national productivity. The European agreement changes nothing in payrolls today: any changes will come with the law that transposes the directive into Spanish law.
A company with staff in several European countries should follow how the directive is transposed in each, because each state will decide how to apply the criteria and reference values. A company with employees in Spain should check every year that no contract or collective-agreement pay scale falls below the minimum wage in force. Ask your employment adviser how it affects your workforce.
The directive sets how the minimum wage is decided, not how much it should be.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
