Minimum wages in 2025: Annual review

Directive (EU) 2022/2041 on adequate minimum wages in the European Union (hereafter the ‘Minimum Wage Directive’), passed in 2022, provides a common framework for the setting of adequate (statutory) minimum wages, promotes collective bargaining on wage setting and enhances the effective access of workers to their rights to minimum wage protection, where provided for in national legislation and/or collective agreements. Member States were required to transpose the directive into their national regulations by 15 November 2024. Most countries had (at least partially) completed this process by the end of 2024. In 2023, Denmark (supported by Sweden) filed an action for the full or partial annulment of the directive with the Court of Justice of the European Union. The ruling on this request is expected in 2025.

Minimum wage rates in 2025

• Gross national minimum wage rates increased between January 2024 and January 2025 in 21 of the 22 Member States that have a national minimum wage, with Cyprus being the only exception where the rate remained unchanged. They increased significantly in most of the central and eastern European Member States: by almost 23 % in Romania, 15 % in Croatia and Bulgaria, 12 % in Lithuania, 10 % in Czechia and Poland, 9 % in Hungary and Slovakia and 8 % in Estonia.

• Although these increases were lower than those of the previous year, in line with the moderation in inflation levels, they were still significant and resulted in a boost in the purchasing power of minimum wage earners in most countries. Minimum wages in real terms increased in most countries, remained largely stable in a few countries (Germany, Luxembourg, France, Slovenia and Belgium) and declined in Cyprus.

• The role of inflation in driving significant minimum wage hikes declined this year. Instead, the Minimum Wage Directive seems to be an emerging structural factor influencing these increases, with a growing number of countries linking their minimum wage uprates to similar thresholds referenced as examples in the directive.

• Available data show that only in a few countries, minimum wages have reached 60 % of the median wage or 50 % of the average wage. Nevertheless, the Kaitz Index (ratio of the minimum wage to the median or average wage) has increased over the last two decades in most Member States, which means that national minimum wages have grown more than median and average wages during this period.

• The tax and benefit systems can lead to significant differences between the gross minimum wage rates and the actual take-home pay (the net minimum wage rate). In 2024, the employee tax rate (including personal income tax and employee social insurance contributions) ranged from approximately 5 % in Belgium and Estonia to almost 40 % in Romania.

Transposition of the directive

• A comparative analysis of the available (draft) regulations shows that the transposition of the directive has not led to major changes in the systems and methods used to set statutory minimum wages. Legal adaptations have tended to be minor and complementary to existing national practices.

• Most countries with statutory minimum wages have included the elements listed in Article 5(2)(a) to (d) of the directive as standalone criteria and complements to the criteria that national wage-setting bodies must consider under national legislation.

• Regarding the indicative reference values that wage setters are expected to use to assess the adequacy of statutory minimum wages (Article 5(3) of the directive), most countries have included specific percentages based on average or median wages in their regulations. These values may deviate somewhat from the examples provided in the directive, ranging from 46 % of average wages in Latvia to 55 % of projected average wages in Poland (according to the draft law). Some countries, such as Ireland, the Netherlands and Romania, have adopted more flexible approaches, allowing values to vary over time or fall within a defined range. In a few Member States, such as Croatia and Portugal, it is not yet clear based on the draft regulations which indicative reference values will be used. Others refer to different indicative values (for example, Slovenia) or none at all (for example, Luxembourg), citing their specific update mechanisms.

• Several countries have made the indicative (targeted) values part of the criteria that wage setters are required to consider, while others refer to them solely in the context of assessing the adequacy of statutory minimum wages, as outlined in the directive.

• Most countries with statutory minimum wages have not substantially changed their formal approach to involving social partners in the setting and updating of minimum wage levels, as this is already a widespread practice. However, some have introduced regulatory refinements to clarify or strengthen specific aspects of this involvement.

Minimum wage earners and their ability to afford housing

• The share of workers earning the minimum wage varies across Member States, ranging from more than 10 % in Portugal, Slovakia and Poland to less than 3 % in Czechia, Belgium and the Netherlands. Nevertheless, most Member States show an upward trend, which is consistent with the fact that minimum wages have grown faster than average and median wages over the past 15 years.

• In 2024, housing costs in the EU rose faster than general inflation. According to Eurofound’s analysis based on the latest data from the European Union Statistics on Income and Living Conditions (2023 EU-SILC), minimum wage earners were disproportionately affected, as housing makes up a larger share of their disposable income (34.8 % on average, compared to 26.2 % for higher earners). Among single-adult households, minimum wage earners were also more likely to perceive housing costs as a heavy burden (35.6 % compared to 21.7%).

• Young minimum wage earners (aged 16–34, students whose primary activity was education were excluded) in many countries are significantly more likely than their better-paid peers to live with their parents (48.9% compared to 29.1 %). This suggests that current minimum wage levels may be a barrier to independent living for young workers, preventing them from moving out of family homes and limiting their housing mobility.

• The EU Minimum Wage Directive is emerging as an important factor guiding statutory minimum wage setting, with transposition largely progressing on schedule in most countries. However, not every aspect has been (or needs to be) included in national regulations. It will be up to national wage setters – including social partners and consultative bodies – to uphold and implement the spirit of the directive in practice.

• As minimum wages rise in relation to average/median wages, more employees earn wages close to the minimum level in many countries. This increases the importance of complementary policies, such as housing policies, tax relief or benefits, that improve the financial situation of minimum wage earners.

• High housing costs have a disproportionate impact on minimum wage earners, limiting their mobility and overall quality of life, and potentially constraining their economic opportunities. Depending on the relative housing costs, and when assessing the adequacy of minimum wages, wage setters may take relative housing costs into account in future years when assessing the adequacy of minimum wages and particularly during collective bargaining processes.