The European Union agrees to increase the minimum wage

According to the European Parliament chief negotiator Dennis Radtke, the compromise includes standards on how minimum wages will be set, updated and implemented. In addition, the proposed law stipulates that EU countries should set out action plans to increase coverage of collective agreements by 80 per cent, the CDU politician for the German Press Agency (DPA) confirmed. The lives of millions of workers will be significantly improved.

EU countries announced that the minimum wage should be updated at least every two years in the future. There is an exception for countries that use an automatic indexing mechanism. This is valid for a period of four years. Social partners such as employers’ unions and associations should be involved in procedures for setting and updating minimum wages.

The European Commission welcomed the agreement. According to the Commission, the new directive does not oblige member states to set minimum wages by law. It also does not define the common level of the minimum wage in the EU.

The EU Commission had proposed a draft law in October 2020. With the agreement now reached, there was a challenge that EU treaties set too narrow limits – because the European Union is not allowed to set specific wage levels, but only to issue instructions.

Federal Labor Minister Hubertus Heil (SPD) was pleased with the deal. This will set new standards for a social Europe. “Everyone who works should be able to make a decent living from their salary – this applies in Stockholm and Lisbon, as well as in Berlin and Bucharest,” Heil explained.

The EU Parliament and the member states must now formally approve the agreement. Subsequently, member states have two years to incorporate these rules into national law. “The new EU regulation must now be put in place quickly and then implemented immediately in Germany,” said Pascal Meiser, the left-wing spokesman for trade union policy in the Bundestag. However, the current plans of the ruling coalition do not go so far and do not envisage enough changes to reach a collective agreement in Germany. A comprehensive package of measures against wage dumping and to strengthen the collective bargaining system is therefore needed.

But Sweden and Denmark have spoken out against the regulation adopted on Tuesday. They see this document as a political intervention in determining wages in their countries. However, the regulation is a success because more than 15 of the 27 member states have supported common minimum wage standards.

In Germany, it was decided last week to increase the minimum wage to twelve euros per hour worked. The decision will take effect in October. Germany already has one of the highest minimum wages in the EU. Only in Luxembourg is more paid, according to information from the Federal Statistical Office and the Federal Ministry of Labor. However, the coverage rate of collective agreements in the Federal Republic is much less than the 80 percent currently targeted by the regulation adopted in Brussels.

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