The report ‘Minimum wages in 2020: Annual review’ was recently published by the European Foundation for the Improvement of Living and Working Conditions (Eurofound), a tripartite EU agency providing knowledge to assist in the development of better social, employment and work-related policies. Authors are Christine Aumayr-Pintar and Matthias Rasche.
Panteia provided the information on the Netherlands, being National Eurofound Correspondent for the Netherlands.
The full report can be found on the Eurofound website.
This report, as part of an annual series on minimum wages, summarises the key developments during 2019 and early 2020 around the EU initiative on fair wages, and puts the national debates on setting the rates for 2020 and beyond in this context. The report features how minimum wages were set and the role of social partners in doing so. It discusses developments in statutory minimum wages and presents data on minimum wage rates established in collective agreements relating to 10 low-paid jobs for countries without statutory minimum wages. The report also includes a section on the regional dimension of minimum wages and presents the latest research on the effects of minimum wage changes on wages, employment, in-work poverty, prices and profits.
Some key findings at EU level compared to findings on the Netherlands
First of all, it should be noted that almost all employees in the Netherlands have an income clearly above minimum wage level (97%). Very few employees (3%) in the Netherlands earn around minimum wages, when compared to the average EU Member State (9%). The level of the minimum wage in the Netherlands is the third highest in the EU.
In 2019, many countries were debating a further substantial increase to minimum wages beyond 2020. In the Netherlands, the FNV (the largest union) recommends an additional and substantial increase above the formula-based update twice a year set by legislation. Employers and government are, however, reluctant to deviate from the rule. Government promised to research how a higher minimum wage would balance out with a decrease of jobs. This discussion will be influenced heavily by the pandemic.
Since the beginning of the millennium, in most EU Member States, statutory minimum wages have become fairer compared to median wages of all workers. The Netherlands is one of three exceptions to this finding: the minimum wage increased less than the median wages of all workers.
Despite this upward trend, minimum wages in the majority of countries remain below 60% or even below 50% of median wages. This is particularly true in the central and eastern Member States, which were starting from very low relative levels at the beginning of the millennium. They continue working to reach set targets in their minimum wage regulations of around or below 50%. In the Netherlands, this number dipped from just above 50% in 2000 to clearly below 50% in 2018.
Overall, 7 out of 10 minimum wage workers report at least some difficulty in making ends meet, as compared to less than 5 out of 10 other workers, although these figures vary greatly across countries. For example, less than 10% of minimum wage workers find it difficult to very difficult in Denmark, Finland, Germany and Sweden to make ends meet; compared to 50% to 60% in Bulgaria, Croatia and Cyprus, and 80% in Greece. For the Netherlands, between 8% and 15% of minimum wage workers reported having difficulty making ends meet.
Sectors and occupations with larger shares of minimum wage workers have been particularly affected by the COVID-19 pandemic. For example, workers in agriculture (minimum wage workers account for 15% of the sector and up to 20% for some agricultural jobs), retail (13%) or cleaners and helpers (25%) are among those who keep a society going during times of social distancing and lockdown. Other sectors and occupations with larger shares of minimum wage workers – particularly those in accommodation and hospitality (16%), the arts, entertainment, recreation sectors, or those working in domestic households (14%) or personal service worker (16%) – were among those feeling the effects of the public health measures immediately.
Governments across Europe are reacting with income stabilisation measures for those affected by the COVID-19 crisis. Minimum wages can have a role in the policy mix to stabilise incomes and thus demand to counteract a downward spiral into recession or depression.
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