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

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

Open Access
|Oct 2022

Figures & Tables

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Figure B1

Distribution of gross hourly wages.HMW, hypothetical MW.

Labor supply elasticities and average working hours

CountryLabor supply elasticityAverage working hours of MW earnersAverage working hours of non–MW earners
Belgium0.04831.436.8
Bulgaria0.04138.240.4
Czechia0.04537.740.9
Germany0.12329.837.9
Estonia0.03137.540.1
Greece0.02535.539.9
Spain0.05230.238.3
France0.08332.937.3
Croatia0.00539.040.7
Hungary0.02339.939.7
Ireland0.09230.534.3
Lithuania0.04837.439.6
Luxembourg0.04136.839.7
Latvia0.03738.040.2
Malta0.05631.339.6
Netherlands0.04628.233.3
Poland0.02537.241.0
Portugal0.06937.240.3
Romania0.01140.841.0
Slovenia0.03637.540.1
Slovakia0.02339.039.7

A summary of results at the EU level

Median wageAverage wage


50% of median wage55% of median wage60% of median wage40% of average wage45% of average wage50% of average wage
Countries affected (of the 21 with a statutory national MW)9 MS: CZ, DE, EE, EL, HR, IE, LV, MT, NL15 MS: all but BG, ES, FR, PT, RO, SI19 MS: all but PT and BG6 MS: CZ, EE, HU, IE, LV, MT17 MS: all but ES, FR, PT, SI20 MS: all but PT
Number of workers affected5 million11 million22 million0.7 million12 million24 million
Increase in the EU wage bill (%)0.20.41.00.010.41.0
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) (%)0.000.070.150.050.090.17

Median number of hours worked by full-time employees

CountryMedian working hours
BE38
FR38
IE39
All other 18 EU Member States with SMWs40

SMWs in the various scenarios

CountriesStatutory MWHypothetical MW as a ratio of

Median wageAverage wage


50%55%60%40%45%50%
Belgium1,5941,5841,7421,9001,4341,6131,792
Bulgaria286239262286266299332
Czechia519580638695545613681
Germany1,5571,6801,8482,0161,5371,7291,921
Estonia540636699763601676751
Greece758761837914695782869
Spain1,0509521,0471,1428931,0051,116
France1,5211,2881,4171,5461,2431,3991,554
Croatia506510561611478538598
Hungary464451496541469528586
Ireland1,6561,8862,0742,2631,7571,9772,196
Lithuania555538591645532598665
Luxembourg2,0711,9192,1102,3021,8882,1242,360
Latvia430470517564470529588
Malta7628719581,045798898997
Netherlands1,6161,6621,8281,9941,5451,7381,931
Poland523505555606506570633
Portugal700499549599561631701
Romania446402443483440495551
Slovenia887771848925748842935
Slovakia520515566618498560622

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) (%)
Belgium47−3
Bulgaria33285
Czechia442420
Germany89−1
Estonia26224
Greece1147
Spain37334
France410−6
Croatia22148
Hungary3243−12
Ireland710−3
Lithuania4666−20
Luxembourg981
Latvia1626−10
Malta512−7
Netherlands652
Poland27198
Portugal1386
Romania5979−20
Slovenia1293
Slovakia281810
Language: English
Accepted on: Jul 28, 2022
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Published on: Oct 23, 2022
Published by: Sciendo
In partnership with: Paradigm Publishing Services
Publication frequency: 1 issue per year

© 2022 Klaus Grünberger, Edlira Narazani, Stefano Filauro, Áron Kiss, published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 License.