Minimum Wage Growth in the EU: A Decade of Progress and Disparities

Romania Leads the Way in Minimum Wage Growth

Over the past decade, Romania has emerged as the EU country with the highest growth in minimum wage, according to Eurostat. Between January 2015 and January 2025, Romania, alongside Lithuania, Bulgaria, and Poland, recorded the highest average annual minimum wage growth rates in the European Union. These countries saw their minimum wages increase by between 10% and 14% annually, reflecting significant efforts to improve income levels for low-wage workers. This growth is particularly notable given the economic challenges and disparities that many of these countries have faced in recent years.

However, not all EU member states have experienced the same level of progress. France and Malta, for instance, recorded the lowest average annual growth rates, at +2.1% and +2.9%, respectively. These figures highlight the uneven pace of wage growth across the EU, with some countries making significant strides while others lag behind.

The Landscape of Minimum Wages Across the EU

As of the latest data, 22 out of the 27 EU member states have a nationally mandated minimum wage. However, the monthly minimum wage varies significantly from one country to another. At the higher end of the spectrum, Luxembourg, Ireland, the Netherlands, Germany, Belgium, and France all have minimum wages exceeding €1,500 per month, with Luxembourg leading at €2,638. These countries have established relatively high wage floors, reflecting their strong economies and high cost of living.

On the other end of the scale, Croatia, Greece, Malta, Estonia, Czechia, Slovakia, Romania, Latvia, Hungary, and Bulgaria have the lowest minimum wages, all below €1,000 per month. Bulgaria has the lowest minimum wage at €551, while Croatia’s minimum wage is slightly higher at €970. These disparities underscore the economic and social challenges faced by these countries, where wages often struggle to keep pace with living costs.

Why Salary Alone Isn’t the Full Story

While the absolute minimum wage is an important indicator of economic well-being, it doesn’t tell the whole story. The purchasing power standard (PPS) provides a more nuanced measure by accounting for differences in the cost of living across countries. PPS adjusts wages based on the price of specific goods and services, offering a fairer comparison of the actual purchasing power of workers in different EU member states.

When adjusted for PPS, the disparities in minimum wages across the EU narrow significantly. Eurostat categorizes EU countries into three groups based on PPS: above 1,500 PPS, between 1,000 and 1,500 PPS, and below 1,000 PPS. Germany, Luxembourg, the Netherlands, Belgium, Ireland, France, and Poland fall into the top tier, with PPS values above 1,500. At the other end, Slovakia, Czechia, Estonia, Bulgaria, Latvia, and Hungary are in the below 1,000 PPS category.

Interestingly, countries with lower absolute minimum wages can still offer comparable purchasing power due to lower living costs. Poland, for example, rises to the top tier when its minimum wage is adjusted for PPS, indicating that its wage levels provide relatively strong purchasing power compared to its cost of living. This highlights the importance of considering both salary and cost of living when evaluating the effectiveness of minimum wages.

The Balance Between Salary and Purchasing Power

The interplay between salary and purchasing power is crucial for understanding the real value of wages. While higher absolute minimum wages in countries like Luxembourg and France are certainly advantageous, they must be considered in the context of the high cost of living in these nations. Conversely, countries with lower absolute wages, such as Poland and Romania, may offer workers a decent standard of living due to lower expenses.

Policymakers and researchers often use PPS to assess the real value of wages across borders, as it provides a more accurate reflection of the economic well-being of workers. For instance, a worker earning €800 in Poland may have a higher purchasing power than someone earning €1,200 in Germany, given the differences in housing, food, and transportation costs between the two countries.

This approach also emphasizes the need for tailored policies that account for national and regional differences in living costs. A one-size-fits-all minimum wage policy may not be effective across the EU, as the economic and social contexts vary significantly from one country to another.

Conclusion: The Path Forward for Minimum Wage Policy

The past decade has seen significant progress in minimum wage growth across the EU, with countries like Romania leading the charge. However, the data also reveal persistent disparities, both in absolute terms and when adjusted for purchasing power. As the EU continues to grapple with economic and social challenges, including inflation, rising living costs, and labor market inequalities, the issue of minimum wage policy remains a critical area of focus.

Moving forward, policymakers must strike a balance between raising wages to reflect the real cost of living and ensuring that minimum wage levels are sustainable for businesses. By adopting a more nuanced approach that considers both salary levels and purchasing power, the EU can work towards creating a more equitable and prosperous future for all its citizens.