Towards a European minimum wage and more collective agreements



On 7 June 2022, the Council of the European Union and the European Parliament finally reached a provisional agreement on the draft directive on adequate minimum wages in the European Union.  

The agreement does not set a uniform and binding European minimum wage as such, but encourages Member States to achieve an “adequate” level of minimum wages, guaranteeing a “decent life” for their citizens. Luxembourg currently is at the top of the list of minimum wages in Europe among the 22 Member States with a minimum wage. 

The agreement also requires the strengthening of social dialogue on wage issues. The European text stipulates that a state where less than 80% of the workforce is covered by a collective agreement should draw up an action plan to promote collective bargaining. Currently, the rate of coverage by collective agreement is 53% in Luxembourg for the private sector (see STATEC’s panorama of the Luxembourg labour market on the occasion of 1 May – Regards n° 03 – 04/2022). However, this objective must be qualified: although the figure of 80% is indicated in the agreement, it is not set as an absolute objective to be achieved. It is indeed essential to bear in mind that the objectives of social dialogue and social protection can be achieved in many different ways. Luxembourg has no reason to be ashamed of its performance in this area and there is no reason to artificially promote a model that does not meet the expectations and needs of the field. Finally, it is necessary to take into account the economic structure of Luxembourg, which is based on relatively intellectual professions and small companies (98% with less than 50 employees). 

The agreement on the future directive will still have to be formally approved by the Council of the EU and by the European Parliament’s Committee on Employment and Social Affairs before the new European legislation can enter into force. The 27 Member States will then have two years to transpose the directive into their respective national laws. UEL will closely follow the transposition of this European text into national law, in order to ensure that the functioning and development of companies is protected and that the national economy as a whole prospers.