Eurofound: Minimum wages in 2021- Annual review

This report summarises how minimum wage rates for 2021 were set during 2020 – the year marked by the COVID-19 pandemic. It reviews the difficulties faced by national decision-makers and how they reacted to the challenges of the economic and social fall-out of the pandemic when making decisions regarding the minimum wage. It maps the extent to which minimum wages were referred to in COVID-19-related support measures. It discusses advances made on the EU initiative on adequate minimum wages and maps the reactions of the EU-level social partners and national decision-makers.
Minimum wages were raised cautiously in most Member States from 2020 to 2021, with the median country recording an increase of 3% (calculated in national currencies). Just a few Member States decided to freeze the level of their minimum wage into 2021. This is very different from how Member States reacted during the financial crisis.
In countries without statutory minimum wages (Austria, Denmark, Finland, Italy, Sweden and Norway), wage increases were moderate, but bargaining overall proved reasonably stable. Because collective bargaining was in some cases affected by the pandemic, some renewals and pay increases were postponed.
The main challenge faced by decision-makers during the 2020 round of minimum wage setting was the general economic uncertainty surrounding the pandemic. Where forecasts could be made, they were more uncertain or volatile than usual.
The positions of the social partners on the proposed EU minimum wage directive remain unchanged. In general, employer organisations are most critical and would prefer a non-binding recommendation. Most trade unions are in favour of the initiative but would like to see it go further. Governments’ positions are mixed.