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Saturday, August 10, 2013

Minimum wages in Europe

The Wirtschafts- und Sozialwissenschaftliches Institut of the Hans Böckler Foundation published its 2013 report on minimum wages. 21 of the 28 member states of the EU have them set by law (in Germany no general minimum wage exists, it is set only in some professions). The report compares the hourly minimum wages of EU and also third countries. Of course an average would not make sense (even when the number of people earning minimum wage would be known and used for weighting. Comparison and developments are worth looking at, however. 12 EU member states increased the minimum wage the 1st January 2013 (and two others late 2012) while Greece cut it by 23 percent. Portugal, Ireland, Romania and the Czech Republic froze their minimum wage. In Western Europe is the hourly minimum wage between 8.65 and 10.83 Euro, while in the Mediterranean countries between 3 and 4.06 Euro. Eastern European countries are the only ones paying below 2 Euro, while Slovenia is higher than the Mediterranean bunch, with 4.53. The lowest is the minimum earning in the two countries joining in 2007 (the newest member, Croatia has no minimum wage set) and in the three Baltic countries. Hungary precedes Slovakia and the Czech republic, just below 2 EUR (1.95 in Hungary, 1.94 in Slovakia and 1.91 in the Czech Republic. Of course the comparison has to be adjusted to purchasing power parity. Hungary's price level is 61.9 percent of the EU in 2012 (compared to 74.6 of the Czech Republic and 71.6 of Slovakia (see: http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00120). This will give 3.15 EUR in PPP for Hungary, while 2.60 for Slovakia and 2.67 for the Czech Republic, i.e. the Hungarian real minimum wage is higher. It is said by many economists and apparently data show that they are right, that increasing it in Hungary is not a good idea. In other cases, the order did not change by using purchasing power parities. It is worth mentioning Greece: 3.60 EUR compared to 3,36 in Portugal. but lower than Spain (4.09). So despite the strong cut in Greece, and that it fell behind Malta and Spain with this cut, it is still within the range of similar countries. The foundation also keeps a Database of minimum wages. Another interesting page summarising information and opinions about the minimum wage.