Minimum wages in 2022: Annual review

Jun 15, 2022

• While minimum wages increased substantially between 1 January 2021 and 1 January 2022 in nominal terms, the real-life impact does not signify a boost to living standards when rising inflation is taken into account. During the same period, minimum wage workers in 15 out of the 21 Member States with a statutory minimum wage saw a decline in their wages in real terms.
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• If present inflation trends continue, minimum wages will barely grow in real terms in any country in 2022, and significant losses in the purchasing capacity of minimum wage earners will become a dominant theme unless the issue is addressed by additional uprates or other support measures for low-paid employees during the year. Countries with automatic indexation mechanisms, such as Belgium, France and Luxembourg, were quicker in uprating wages in line with inflation; but additional increases can be also introduced ad hoc, as in Greece.
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• The proposed EU directive on adequate minimum wages is already prompting a few Member States to refocus debates on the topic and prepare for change in areas such as setting the criteria for wage setting or raising wages in line with the ‘international reference values’ mentioned in the proposal. Germany, for example, has decided to uprate its minimum wage to €12 per hour, or about 60% of median wages, in October 2022.
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• New findings indicate that substantial debates among national actors on how to promote collective bargaining and increase bargaining coverage are taking place in only Denmark, Latvia and Norway. Establishing action plans to promote collective bargaining is an important element of the new EU directive on adequate minimum wages and will be a key requirement for Member States.
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• Minimum wages can play a critical role in reducing wage inequality. For example, findings relating to Spain demonstrate that the impact of the 22% increase in the minimum wage in 2019 led to the greatest reduction in wage inequality in the EU27 Member States in the same year. This is likely to have been a result of the minimum wage increase, which counteracted the high level of wage inequality in Spain, a gap that had grown in the year before the hike.

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