Directive Proposes to Coordinate Minimum Wages

The situation

The Commission of the European Union has proposed a Directive seeking to ensure adequate minimum wages across the European Union.

A closer look

The proposal seeks to achieve this goal through the following measures:

• Collecting bargaining. Member States should encouraging collective bargaining, particularly where collective bargaining covers under 70% of workers, for instance by building social partners’ capacity to engage in meaningful collective bargaining.
• Adequate minimum wages. Member States should link setting up and updating of national minimum wages to clear criteria, such as purchasing power, cost of living, average gross wages, wage development and development of labor productivity. The Commission used the example of 60% of the gross median wage and 50% of the gross average wage.
• Variations. Member States should limit permissible variations to a minimum, and ensure that variations are non-discriminatory and proportionate. Similarly, deductions should be limited and proportionate.
• Stakeholder input. Member States should ensure involvement of social partners when determining relevant indicators, updating minimum wage levels and establishing permitted variations and deductions.
• Effectiveness. Member States should strengthen inspection and enforcement, and provide clear information to workers. 

 

Impact

Fragomen expects these developments to improve transparency on minimum wages and predictability of minimum wage development.

Minimum wages have the following immigration impact in the European Union:

• Key work authorization types in a limited number of countries: the Czech Republic, Hungary, Portugal and Slovakia;
• EU national Posted Workers, a group under particular compliance scrutiny since the Posted Worker Enforcement Directive was adopted in 2014;
• General work authorization types that do not benefit from streamlined processing, e.g., for skilled or blue-collar workers; and
• Spouses of employment-based permit holders, permitted to work based on their dependent status.

 

Background

This topic has been a policy priority since the start of the Commission President Von der Leyen’s mandate, and was repeated in the EU State of the Union.

The Commission stresses that many COVID-19 frontline workers earn the minimum wage, and that nearly 60% of minimum wage earners are women.

Looking ahead

The proposed Directive will be submitted to the European Parliament and the Council for approval, a process which typically takes approximately two years. Once adopted, EU Member States will have two years to transpose the Directive into national law. This Directive is therefore unlikely to be implemented before the end of 2024.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].