Rate hikes in the statutory minimum wage have risen faster than the cost of living across Europe.
At the start of the year, the wage rose by an average 9.2% across Europe – more than 50% above living cost increases in the countries concerned.
Almost half of the 26 countries that operate the legal minimum rates revised them on January 1 of this year.
Concerns have been risen, however, that the wage hikes are too generous. With the exception of Turkey, the changes have been significantly higher than the level of annual price inflation.
In the Czech Republic, for example, minimum rates rose by 7.2% against an annual inflation rate of 2.6%.
Across Europe, pay differentials remain a highly controversial issue:
* Minimum rates have been frozen by the Dutch government since 2003 as part of its austerity programme
* In France, the introduction of the 35-hour week led to widely differing rates that have only just been standardised
* In Spain the socialist government of Jose Zapatero relented last week to trade union pressure by agreeing to index minimum wage rates
* In Bulgaria, the government’s desire to raise the minimum wage by 25% later this month has been strongly opposed by the International Monetary Fund
* In Russia, the state Duma (parliament) has approved a series of increases in minimum rates that will give rise to an 83% increase over the period from December 2004 until May 2006
Recent studies have dampened sceptics concerns of economic damage caused by minimum wage implementation.
The London School of Economics found that the introduction of the minimum wage in 1999 affected only 6-7% of all workers for two months following implementation.
According to Robin Chater, Secretary-General of the Federation of European Employers (FedEE), statutory minimium wage rates appear to have a stabilising affect on pay levels in countries where they are in force.
He points out, however, that “the problem for some states such as Portugal and many poorer eastern European states is that minimum rates remain well below the level of subsistence and do not provide a realistic starting point for company pay scales.”
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