CWS 3.0: June 29, 2011 - Vol. 3.15

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Because You Asked: Minimum Wage in Europe

Our company has a global program and we use contingents in many cities in Europe. Does Europe have minimum wage legislation like the U.S.?
— Questioning in Quakertown, N.J.

Dear Questioning,
For the most part, yes, but as is the case with many European issues, the answer is more complex. Within the United States, some states and municipalities have set their own minimum wages that are higher than the federal level. Likewise, the minimum wage in Europe varies from country to country. Certainly, the concept of a minimum threshold for wages is widely accepted in Europe, even among many conservatives and, in the few countries that do not have a National Minimum Wage, most workers are, nevertheless, still protected by a series of industry-specific collective agreements.

Whereas France, Greece, Portugal, Spain and the Benelux countries have had a long tradition of protecting low paid workers, Ireland and the UK introduced national minimum wage systems only in the late 1990s. In Austria, Denmark, Finland, Germany, Italy, Sweden, Norway and Cyprus, collective agreements are the main mechanism used for regulating low pay. In Germany, minimum wage legislation specifically for temporary workers was adopted in February 2011 — and set at €7.79 per hour for workers in Western Germany and €6.89 per hour for workers in Eastern Germany.

The actual level of minimum wage across Europe varies considerably and is mostly related to the standard of living and average earnings in each country (although, on this basis, it’s difficult to understand why Ireland has the second highest minimum wage in Europe!). Eastern and Central European countries have relatively low minimum wages (below $4 per hour and as low as $1 per hour in Bulgaria). At the top of the list is Luxembourg, where the minimum wage is more than $13 per hour — mind you, the cost of le Big Mac in the charmingly picturesque principality will set you back 11 bucks!

In a number of countries, such as Belgium, France, Ireland, the Netherlands and the U.K., a different minimum is applicable for younger workers.

Interestingly, with a federal rate of $7.25 per hour, the United States is sandwiched just ahead of Spain and below Greece in the minimum wage rankings. Washington State, with its higher minimum wage rate of $8.67, is closer to the U.K.

All countries with statutory minimum wages, apart from Bulgaria and Greece, oversee their enforcement. However, the specific institutions that are responsible for this differ. In most cases, labor inspectorates take responsibility. However, in countries, either industrial or employment tribunals (Belgium and the U.K.), or labor offices (the Czech Republic) or the relevant ministry (Cyprus and Malta) are responsible. These countries also differ widely with regard to fines on employers for non-compliance.

Minimum wages are, of course a moving feast and rates are changing regularly (The Netherlands faces a 0.76 percent increase on July 1). So, for those managing a global contingent program, constant monitoring has to be a way of life.

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