Analysis of the new EU Adequate Minimum Wages Directive

Abstract

Although under the Treaty on the Functioning of the European Union the EU does not have competence to set minimum wages (Article 153), the EU adopted a directive on an adequate minimum wage in 2022. The aim of the directive is to encourage the convergence of national minimum wages upwards, ensuring a decent standard of living in all EU countries. The purpose of this article is to analyse the actions included in the Directive and to assess the adequacy of its legal framework. Interest in the new EU minimum wage regulations stems from the ineffectiveness of the existing and temporarily 'paused' mechanism in Russia, which links the minimum wage to 42% of the median wage. In an explanatory memorandum to the law which reformed the minimum wage in Russia in 2021, the authors refer to the "European experience". An analysis of the new EU directive showed that although it is largely advisory in nature, the EU obliges member states to ensure a decent level of the minimum wage that can be calculated on the basis of 60% of the median gross wage or 50% of the average gross wage. In addition, the EU establishes the factors to be taken into account in determining the minimum wage: the purchasing power of the statutory minimum wage in relation to the cost of living; the general level of wages and their distribution; the rate of wage growth; long-term national productivity levels and its development.