COPENHAGEN, Denmark (AN) – Europe's experiment in helping low-paid workers' salaries appears to be gaining momentum but not fast enough to keep up with rising food and energy costs.
Minimum wages in the European Union – a topic of heated debate – have risen on average since last July, ranging from 551 euros per month in Bulgaria to 2,638 euros per month in Luxembourg, according to the latest figures released by the E.U.'s statistical office, Eurostat, on Friday.
"Minimum wage earners reported growing financial difficulties in recent years against the background of the living cost crisis," Carlos Vacas, a senior research manager at Eurofound, the E.U. agency for living and working conditions, told Arete News. "Our research shows that soaring energy and food prices had a larger negative impact on minimum wage earners than among employees earning higher wages."
Adjusted for the costs of daily living, minimum wage workers among the 22 E.U. member nations that set such standards had the most purchasing power in Germany and the least in Estonia – a lower bracket that still exceeds the purchasing power of minimum wage earners in the United States.
Eurofound also noted the E.U.’s Minimum Wage Directive, which came into force last November, has played a major role in driving up minimum wages higher among the 22 E.U. nations that have them.
Austria, Denmark, Finland, Italy and Sweden were the only five of the E.U.'s 27 member nations that do not have a national minimum wage. Nordic countries tend to set wages under collective agreements between trade unions, employers and governments.
A Eurofound survey conducted half a year before the directive took effect found that 30% of people on average in the E.U. who are in the lowest income brackets are still struggling to make ends meet.
At the lowest end is Luxembourg, 17%; the highest is Greece, 55%. The survey reflects factors such as basic living costs, physical and mental health care, and changes in telework opportunities.
Is the living wage the future?
More than 170 countries have a minimum wage, according to the United Nations Global Compact, a voluntary initiative based on CEO commitments to advance the U.N.'s 17 Sustainable Development Goals for 2030.
But with minimum wages still falling short of a decent living in many places, debates have broken out around the world on whether employers should increase the wages further both out of a moral obligation and because it would help boost economies.
The International Labor Organization last year defined a proper living wage – which is generally higher than a minimum wage – as the “wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work.”
A living wage for all workers globally would not only help their households but it also could generate as much as US$4.6 trillion a year in global GDP, according to the World Economic Forum.
The question of how to convert economic gains into fairer wages and better living conditions for workers also was on the agenda of WEF’s annual summit in Davos, Switzerland last week.
"It really goes to the heart of why we do business,” U.N. human rights chief Volker Türk told a panel session entitled “Earning a Fair Share.”
