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Minimum wage data in EU member states reveals stark East-West divide

Minimum wage data in EU member states reveals stark East-West divide

The minimum wage in Luxembourg is almost seven times higher than the same in Bulgaria

According to a Eurostat report on the minimum wage in the EU Member States, published last Friday, Luxembourg has the highest absolute minimum wage, while Bulgaria has the lowest. The report shows the staggering imbalance between the different countries as the highest minimum wage is almost 7 times higher than the lowest.

The Eurostat data goes a step further, by adjusting wages based on the purchasing power standard. While that approach shrinks the gap between wages in Luxembourg and Bulgaria to three times, it seems to do little to change their position in the wider picture.

Three distinct divides, based on minimum wage

The Eurostat report focuses on 21 out of the 27 EU Member States, because Italy, Denmark, Austria, Sweden, Finland and Cyprus do not have an official minimum wage, making them an outlier in the block. At the same time, the findings are based on data for January 2022.

The remaining 21 countries are divided into three groups based on wages in euros. The first group includes 13 countries where the number was below 1,000 euros. These are Bulgaria (332 euros), Latvia (500 euros), Romania (515 euros), Hungary (542 euros), Croatia (624 euros), Slovakia (646 euros), Czechia (652 euros), Estonia (654 euros), Poland (655 euros), Lithuania (730 euros), Greece (774 euros), Malta (792 euros) and Portugal (823 euros).

With a couple of notable exceptions in the higher-end of the spectrum, all countries here are from the former Eastern Bloc.

The second category includes Slovenia (1,074 euros) and Spain (1,126 euros), where the minimum wage is just over 1,000 euros but under 1,500. Finally, the third group includes the remaining six Member States: France (1,603 euros), Germany (1,621 euros), Belgium (1,658 euros), the Netherlands (1,725 euros), Ireland (1,775 euros) and Luxembourg (2,257 euros).

Mapping the minimum wage in the European Union, January 2022, Source: Eurostat

For comparison, the federal minimum wage in the United States was 1,100 euros in January 2022.

The divide shrinks when accounting for purchasing power

The second part of the report dives into adjusting the data by purchasing power standard (PPS), which shrinks the disparities between countries considerably.

Adjusted for purchasing powerWhen adjusting for purchasing power, a lot of countries shuffle around,
Source: Eurostat

The higher prices in western countries is the main factor in accounting for western real wages shrinking while those in the former Eastern Bloc going up. After the adjustment, minimum wages ranged from 604 PPS per month in Bulgaria to 1 707 PPS in Luxembourg, meaning that the highest minimum wage was almost 3 times higher than the lowest.

Here, the authors have divided countries into two groups, those above and those below 1,000 euros. Another interesting point is that here, the east-west divide is much less prominent, with Slovenia, Poland and Lithuania making it into the above-1,000 PPS group.

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