Minimum Wages and the European Union. Options for a common strategy

Seminar paper from the year 2014 in the subject Business economics - Economic Policy, grade: 1,3, University of Applied Sciences Bielefeld (Wirtschaft und Gesundheit), course: Economics, language: English, abstract: The EU countries are by far not equal when it comes to wage distribution. The types of minimum wages, their calculation and levels vary immensely. A percentage of the median national monthly wage of each member state would consider these differences. Moreover, all the stakeholders ¿ governments, NGOs, trade unions and citizens ¿ need to be involved in the implementation process.

The central questions of this paper are the following:

Would a European Minimum Wage be beneficial for the people?

What is necessary for the implementation of a European Minimum Wage and how should it be set up?

To answer these questions, concrete possibilities for the enforcement of a European Minimum Wage will be elaborated. Therefore, prevailing minimum wage regulations and their outcomes need to be presented, as well as related EU mechanisms which would enable the development. First, general aspects of minimum wages will be discussed, followed by the status quo in the EU member countries concerning the degree of coverage, levels and trends. There are various EU institutions that could support and enhance the process of creating a European Minimum Wage: The most relevant ones will be introduced here. Furthermore, necessities that a European Minimum Wage should comply with are pointed out, as well as possible implementations with respect to those. In a conclusion, the most important outcomes will be emphasized.

As national minimum wages are becoming more and more popular in the member states, there has been an ongoing discussion on whether the EU should set up a European policy and how this could look like. In 2006, Jean-Claude Juncker, former prime minister of Luxembourg and nowadays President of the European Council, claimed ¿the creation of a European Minimum Wage¿ in a speech on the conference of German Catholics. 1993, the member states were requested to ¿take appropriate measures to ensure that the right to an equitable wage is protected¿ (European Trade Union, 1993) by the European Commission. Only because some countries neglected the mention of wages in the ¿Charter of Fundamental Rights in the European Union¿, there is no direct engagement of the EU in national wage policies yet.