Minimum wage: Europe’s biggest struggle between caps and increases of up to 10%

Pulse in both social dialogue He also appears to be a servant within the Government, given the tensions that have arisen in recent years between the most conservative wing of the executive and the most assured wing towards workers. Although Europe has served as a guide for Spain to decide on previous occasions, given a certain unanimity in deciding whether its States will increase minimum wages by more or less, European locomotives will have different criteria for this 2024 is implementing.

If the conservative government United Kingdom Social democrats are betting on a massive increase and rising prices. Germans They are working on a very weak increase that is far from the CPI and is marked by internal differences under Olaf Scholz’s administration. FranceHe has already decided to follow his own special recipe.

Germany: Conflict Within the Government

There was no regulated interprofessional minimum wage in Germany for decades. Given the foreseeable imbalances or comparative suffering for construction and hospitality workers, it was up to each professional sector to implement its own or not. Under the conservative-led grand coalition government in 2015 Angela Merkel introduced for the first time for a quantity 8.5 euros per hour.

This was an achievement clearly marked by the coalition partners, the social democracy, and which also involved more or less automatic regulation by level. inflationHowever, it is not fully implemented in practice. In the pandemic and post-pandemic years, it remained stable above 10 euros per hour to continue the upward path already under government among the social democrats, greens and liberals. Olaf Scholz.

It rose to 12.85 euros in October 2022 and this 2023 will end as follows: 13.60 euros. In other words, there was no automatic equalization according to inflation, which was at an average level of 200,000 in Germany. 6.2%. However, it must be said that this is also the reality for the vast majority of German employees, who see their purchasing power falling in almost all sectors.

According to calculations of the Social Democratic Ministry of Labor, the next increase is expected to reach 13.85 euros in October 2024. Hubertus Heil. Finance peer Liberal’s spending containment line Christian LindnerIt indicates a difficult struggle.

France: automatic increase based on CPI

In France, the minimum wage automatically increases with inflation. Since its creation 1950, this lower salary is subject to this law, which requires increases equivalent to the increase in the Consumer Price Index (CPI). This increase is applied starting from January 1 every year, but if inflation exceeds 2 percent in less than 12 months, there may be automatic increases in the middle of the year.

For example, there were many increases between October 2021 and August 2022, and the minimum wage increased by 5.6% during this period. The last increase occurred in May this year (2.22%).

Currently the minimum wage in the neighboring country is 1,747 euros gross (1,383 euros net) per month. There is also a possibility that the French Government will increase the CPI percentage above. However, since 2012, neither President François Hollande nor his successor Emmanuel Macron wanted to encourage these coups (nudges). And they limited themselves to implementing automatic increases.

A higher increase than the rest of the salaries

Until 1983, the rest of salaries in France also varied with inflation. However, the then president, François Mitterrand, suppressed this correlation, which is now in force. Belgium– in one of the iconic decisions of the so-called “hard turn”, in which the transition from Keynesian economic policies to others more neoliberally oriented was made to confront the inflation crisis of the time. French unions have demanded the reintroduction of this measure in recent years, but have not been successful in this demand.

Due to its parallel development with inflation, minimum wage workers are among those who have experienced the least loss of purchasing power in France in the last two years. Average salary in neighboring country for many other occupations with net salaries between 1,500 and 2,500 2,100 euros— The increases were below the CPI. The wage shift not only reinforced the lack of purchasing power, which was the main concern of the French, but also contributed to the growing sense of decline of the middle classes.

United Kingdom: Price increase above

The minimum wage increase announced by the Minister of Finance in England last week, Jeremy Hunt, aims to provide unprecedented support to British workers. In his speech to Parliament in the autumn, Hunt confirmed a 10% increase for next year; this is the highest figure since its implementation in 1999; This will benefit nearly three million workers and represents an increase of £10.42 per hour worked from April on the current £11.44. 2024. This increase means that a worker on a 170-hour monthly contract can earn no less than 1,944 pounds (2,245 euros) per month.

The British Administration also lowered the minimum age to receive the standard minimum wage; This will increase from the current 23 years to 21 years from April. Until now, young people aged 21 to 23 could earn a lower amount of £10.18 per hour. The change will mean a 12% increase in wages for young people in this age group, with young people’s annual wages increasing by £2,300 per year (2.657 euros). Hunt also announced pay rises for those under 21, although pay per hour worked will remain below the minimum wage.

With this decision, the Government accepted the Council’s recommendations. Low Pay Commission (Low Pay Commission) is an independent body set up to advise the Executive on minimum pay. That organization has already pointed to the need to impose strong raises to provide stability for workers at a time of “high economic and political uncertainty,” according to its president, Bryan Sanderson. High inflation of over 7 per cent, according to this year’s forecast, has led to impoverishment of British families and increased difficulties in coping with energy and food prices.

Penalties for companies that do not comply with the rules

The government plans to reduce as much as possible the number of workers earning less than two-thirds of the average salary in 2024; this threshold was set to define “low-earning” people. As Hunt noted in his speech to Parliament last week, that target is getting closer. He said at the time: “The national minimum wage has helped halve the number of low-paid people since 2010, ensuring business is always profitable.” The proportion of low-wage workers has fallen from 21.3 percent to 8.9 percent in the last 13 years.

The executive warned that any company that did not comply with these increases would be subject to sanctions by the British tax office (HMRC). In June this year, more than 200 companies were fined nearly seven million pounds and forced to pay compensation to more than 63,000 workers for failing to comply with regulations over the last decade. Among these companies WH Smith storeArgos or Marks & Spencer.