Carlos Vacas Soriano

In this episode Mary McCaughey sits down with Eurofound expert Carlos Vacas Soriano to explore how minimum wages have changed in Europe over the past year, as well as the implications of these shifts.Listeners are invited to dive into the intricacies of Europe's minimum wage dynamics and the factors driving these changes. The conversation also sheds light on the broader implications of minimum wage change for income inequalities and gender equality.

In this special episode of Eurofound Talks for International Women's Day 2024, Mary McCaughey speaks with Eurofound researchers Carlos Vacas and Barbara Gerstenberger about the gender pay and employment gaps in Europe.Despite gender equality being a core principle of the EU, women are less likely to be in employment than men in all EU Member States and are paid less than men in almost every Member State, with the pay gap larger in higher paying jobs. Mary, Carlos, and Barbara discuss what progress has been made on these issues in recent years, the broader consequences of gender inequalities in the world of work, and the challenges that must be addressed if Europe is to meet gender equality targets.

Minimum wages have risen significantly in 2022, as the EU Member States leave behind the cautious mood of the pandemic. However, rising inflation is eating up these wage increases, and only flexibility in the regular minimum wage setting processes may avoid generalised losses in purchasing power among minimum wage earners. On 6 June 2022, the Council of the EU and the European Parliament reached a political agreement on the Directive on adequate minimum wages proposed by the Commission in October 2020. Once formally approved, EU Member States will have to transpose it into national law within two years.

Decision-makers approached minimum wage setting for 2021 cautiously due to the economic uncertainty caused by the pandemic. Despite this, nominal statutory minimum wages rose in most Member States and the UK, although at lower rates than in recent years.

Wages grew and wage inequality fell in most EU countries in 2015. Germany is not one of the countries where wages rose most, but it did have the largest reduction of wage inequality. Our analysis shows that the German minimum wage policy introduced in 2015 strongly lifted the wages of the lowest-paid employees, particularly those employees who were lower-skilled, younger or working in services.

EU-wide income inequality declined notably prior to 2008, driven by a strong process of income convergence between European countries. The Great Recession broke this trend. After 2008, income convergence has been sluggish, while inequality within many countries has increased significantly.