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Social and fiscal impacts of statutory minimum wages in EU countries: a microsimulation analysis with EUROMOD


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Figure 1

MWs, expressed as a percentage of the gross median and average wage of full-time workers, 2019.Source: European Commission calculations based on Eurostat data. MWs, minimum wages.
MWs, expressed as a percentage of the gross median and average wage of full-time workers, 2019.Source: European Commission calculations based on Eurostat data. MWs, minimum wages.

Figure A1

Implied MW increases for various indicative reference values (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Source: Own calculations based on Eurofound data on monthly MW levels in 2019 (Eurofound, 2019) and Eurostat data on monthly earnings in 2019. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Implied MW increases for various indicative reference values (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Source: Own calculations based on Eurofound data on monthly MW levels in 2019 (Eurofound, 2019) and Eurostat data on monthly earnings in 2019. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A2

The relative difference between the average and the median wage, 2019.Source: Eurostat. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
The relative difference between the average and the median wage, 2019.Source: Eurostat. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A3

Share of workers earning (a wage close to) the SMW in the baseline scenario.Notes: EUROMOD simulations for 2019. The graph shows the share of workers earning from 80% to 105% of the MW in the baseline. Countries are sorted alphabetically. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia; SMW, statutory MW.
Share of workers earning (a wage close to) the SMW in the baseline scenario.Notes: EUROMOD simulations for 2019. The graph shows the share of workers earning from 80% to 105% of the MW in the baseline. Countries are sorted alphabetically. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia; SMW, statutory MW.

Figure A4

Share of workers affected by increases of the MW.(A) Scenarios of MWs as proportion of median wages. (B) Scenarios of MWs as proportion of average wages.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Share of workers affected by increases of the MW.(A) Scenarios of MWs as proportion of median wages. (B) Scenarios of MWs as proportion of average wages.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A5

Average increase in the wages of those affected by increases in the MW (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Average increase in the wages of those affected by increases in the MW (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A6

Change in the total wage bill as a result of changes in the MWs (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Change in the total wage bill as a result of changes in the MWs (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A7

Reduction in wage inequality in simulated HMW scenarios, D5/D1 indicator.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. The D5/D1 indicator is obtained by comparing the median (D5) divided by the first decile (D1) of the earnings distribution. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Reduction in wage inequality in simulated HMW scenarios, D5/D1 indicator.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. The D5/D1 indicator is obtained by comparing the median (D5) divided by the first decile (D1) of the earnings distribution. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A8

Reduction in in-work poverty in simulated HMW scenarios.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Reduction in in-work poverty in simulated HMW scenarios.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A9

Reduction in the gender pay gap in simulated HMW scenarios.(A) Scenarios of MW as a proportion of the median wage. (B) Scenarios of MW as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MW in 2019. Countries are sorted alphabetically. Countries with actual MW above the hypothetical scenarios are excluded. The gender pay gap is the difference between average gross hourly wages of male and female employees as a percentage of male wages, unadjusted for individual characteristics. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Reduction in the gender pay gap in simulated HMW scenarios.(A) Scenarios of MW as a proportion of the median wage. (B) Scenarios of MW as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MW in 2019. Countries are sorted alphabetically. Countries with actual MW above the hypothetical scenarios are excluded. The gender pay gap is the difference between average gross hourly wages of male and female employees as a percentage of male wages, unadjusted for individual characteristics. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A10

Impact on public budgets (change in fiscal balance as a percentage of GDP).(A) Changes in fiscal balance when MWs are set as a proportion of the median wage. (B) Changes in fiscal balance when MWs are set as a proportion of the average wage.Notes: EUROMOD simulations. Positive numbers reflect improvements in the public fiscal balance. Countries are sorted alphabetically. Countries with MWs above 60% of the median wage are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, GDP, gross domestic product; Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Impact on public budgets (change in fiscal balance as a percentage of GDP).(A) Changes in fiscal balance when MWs are set as a proportion of the median wage. (B) Changes in fiscal balance when MWs are set as a proportion of the average wage.Notes: EUROMOD simulations. Positive numbers reflect improvements in the public fiscal balance. Countries are sorted alphabetically. Countries with MWs above 60% of the median wage are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, GDP, gross domestic product; Greece; ES, Spain; FR, France; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A11

Estimation of possible negative employment effects in simulated HMW scenarios.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Estimation of possible negative employment effects in simulated HMW scenarios.(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure A12

Estimation of possible positive labor supply effects in simulated HMW scenarios (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations using EUROLAB. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.
Estimation of possible positive labor supply effects in simulated HMW scenarios (%).(A) Scenarios of MWs as a proportion of the median wage. (B) Scenarios of MWs as a proportion of the average wage.Notes: EUROMOD simulations using EUROLAB. The baseline scenario reflects MWs in 2019. Countries are sorted alphabetically. Countries with actual MWs above the hypothetical scenarios are excluded. BE, Belgium; BG, Bulgaria; CZ, Czech Republic; DE, Germany; EE, Estonia; EL, Greece; ES, Spain; FR, France; HMW, hypothetical MW; HR, Croatia; HU, Hungary; IE, Republic of Ireland; LT, Lithuania; LU, Luxembourg; LV, Latvia; MS, Member States; MT, Malta; MW, minimum wage; NL, The Netherlands; PL, Poland; PT, Portugal; RO, Romania; SI, Slovenia; SK, Slovakia.

Figure B1

Distribution of gross hourly wages.HMW, hypothetical MW.
Distribution of gross hourly wages.HMW, hypothetical MW.

Labor supply elasticities and average working hours

Country Labor supply elasticity Average working hours of MW earners Average working hours of non–MW earners
Belgium 0.048 31.4 36.8
Bulgaria 0.041 38.2 40.4
Czechia 0.045 37.7 40.9
Germany 0.123 29.8 37.9
Estonia 0.031 37.5 40.1
Greece 0.025 35.5 39.9
Spain 0.052 30.2 38.3
France 0.083 32.9 37.3
Croatia 0.005 39.0 40.7
Hungary 0.023 39.9 39.7
Ireland 0.092 30.5 34.3
Lithuania 0.048 37.4 39.6
Luxembourg 0.041 36.8 39.7
Latvia 0.037 38.0 40.2
Malta 0.056 31.3 39.6
Netherlands 0.046 28.2 33.3
Poland 0.025 37.2 41.0
Portugal 0.069 37.2 40.3
Romania 0.011 40.8 41.0
Slovenia 0.036 37.5 40.1
Slovakia 0.023 39.0 39.7

A summary of results at the EU level

Median wage Average wage


50% of median wage 55% of median wage 60% of median wage 40% of average wage 45% of average wage 50% of average wage
Countries affected (of the 21 with a statutory national MW) 9 MS: CZ, DE, EE, EL, HR, IE, LV, MT, NL 15 MS: all but BG, ES, FR, PT, RO, SI 19 MS: all but PT and BG 6 MS: CZ, EE, HU, IE, LV, MT 17 MS: all but ES, FR, PT, SI 20 MS: all but PT
Number of workers affected 5 million 11 million 22 million 0.7 million 12 million 24 million
Increase in the EU wage bill (%) 0.2 0.4 1.0 0.01 0.4 1.0
Impact on wage inequality (%) −2 −5 −8 −1 −6 −10
Impact on in-work poverty (%) −2 −6 −12 −1 −7 −13
Gender pay gap (%) −0.7 −2 −5 −0.2 −2 −5
Impact on total employment (%) −0.1 −0.2 −0.4 −0.01 −0.2 −0.5
Impact on labor supply (hours offered) (%) 0.00 0.07 0.15 0.05 0.09 0.17

Median number of hours worked by full-time employees

Country Median working hours
BE 38
FR 38
IE 39
All other 18 EU Member States with SMWs 40

SMWs in the various scenarios

Countries Statutory MW Hypothetical MW as a ratio of

Median wage Average wage


50% 55% 60% 40% 45% 50%
Belgium 1,594 1,584 1,742 1,900 1,434 1,613 1,792
Bulgaria 286 239 262 286 266 299 332
Czechia 519 580 638 695 545 613 681
Germany 1,557 1,680 1,848 2,016 1,537 1,729 1,921
Estonia 540 636 699 763 601 676 751
Greece 758 761 837 914 695 782 869
Spain 1,050 952 1,047 1,142 893 1,005 1,116
France 1,521 1,288 1,417 1,546 1,243 1,399 1,554
Croatia 506 510 561 611 478 538 598
Hungary 464 451 496 541 469 528 586
Ireland 1,656 1,886 2,074 2,263 1,757 1,977 2,196
Lithuania 555 538 591 645 532 598 665
Luxembourg 2,071 1,919 2,110 2,302 1,888 2,124 2,360
Latvia 430 470 517 564 470 529 588
Malta 762 871 958 1,045 798 898 997
Netherlands 1,616 1,662 1,828 1,994 1,545 1,738 1,931
Poland 523 505 555 606 506 570 633
Portugal 700 499 549 599 561 631 701
Romania 446 402 443 483 440 495 551
Slovenia 887 771 848 925 748 842 935
Slovakia 520 515 566 618 498 560 622

Difference in growth between SMWs and average wages from 2016 to 2019

Country (A) Nominal growth of SMW 2016–2019 (%) (B) Average nominal wage growth 2016–2019 (%) Difference between (A) and (B) (%)
Belgium 4 7 −3
Bulgaria 33 28 5
Czechia 44 24 20
Germany 8 9 −1
Estonia 26 22 4
Greece 11 4 7
Spain 37 3 34
France 4 10 −6
Croatia 22 14 8
Hungary 32 43 −12
Ireland 7 10 −3
Lithuania 46 66 −20
Luxembourg 9 8 1
Latvia 16 26 −10
Malta 5 12 −7
Netherlands 6 5 2
Poland 27 19 8
Portugal 13 8 6
Romania 59 79 −20
Slovenia 12 9 3
Slovakia 28 18 10
eISSN:
2193-9004
Sprache:
Englisch