Pay inequality up in majority of EU countries

The gap in earnings between the richest and poorest Europeans grew in a majority of EU countries over the last decade, according to a new report which underlines the need for EU action to end poverty pay.

The ‘unequal Europe’ report released today by the ETUC and its ETUI research institute shows wage inequality increased in 14 member states between 2010 and 2019, most notably in Hungary, Spain and Belgium.

That is the result of a decrease in the share of workers covered by collective bargaining agreements and fall or freeze in the relative value of minimum wages, the experts behind the report explain.

Collective bargaining coverage has fallen in 22 of the EU’s 27 member states since 2000 as a result of policies pursued by the EU and member states designed to make work less secure.

Wage inequality increased in 8 of the 14 countries where the relative value of the statutory minimum wage as a percentage of the median or average wage has fallen or been frozen since 2010.

The findings come ahead of the final negotiations over the draft EU directive on minimum wages and collective bargaining following the European Parliament’s support for strong action to tackle growing wage inequality. An increase in minimum wages would also cut the gender pay gap significantly.

The ETUC is calling for:

- A threshold of decency for statutory minimum wages set at 60% of the median wage and 50% of the average wage in each member state

- A ban on public money for companies which refuse to engage in collective bargaining or break agreements as part of measures to increase coverage in all member states

- Guarantees that this law will not touch existing well-functioning system of collective bargaining in Sweden and Denmark

ETUC Deputy General Secretary Esther Lynch said of the findings:

“It’s clear that the policies pursued at EU and national level over the last decade have increased inequality and this report shows many workers are being left behind. CEOs can afford more luxuries while millions of working people struggle to pay their heating bill, have to eat less and poorer quality food and are forced into debt to afford their rent.

“It’s hardly surprisingly that social and political polarisation have grown over the last decade. We couldn’t be further from the ‘economy that works for people’ promised by the European Commission.

“But this report shows that the solutions to the problem are equally as clear as its cause – adequate minimum wages are crucial to reducing inequality and stronger collective bargaining is the best way to genuinely fair pay.

“The EU directive on minimum wages is a chance to correct the mistakes of the past and ensure millions of working people and their families are no longer left living in poverty. EU and national leaders must show the urgency demanded by the situation set out in this report and conclude negotiations on a strong directive as soon as possible.”


Full report: Benchmarking Working Europe 2021