The ITUC global trade union confederation has noted the significance of the recent award of the Nobel prize for economics to David Card, Joshua Angrist and Guido Imbens. Their key research in the 1990s demonstrated that higher minimum wages do not mean fewer jobs, providing a powerful counter-argument to the often heard claims of employers and many governments about the negative effects of minimum wages. The ITUC argues that this prize is a serious indictment of many economists in that it has taken some 30 years for the facts to be given prominence over a damaging and groundless idea. It added that whether by law or collective agreement, minimum wages play a key role in reducing poverty; reversing the long-term trend of declining labour income shares; increasing demand and building the basis for recovery.
Important minimum wage research behind Nobel prize award
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(February 2017) The Eurofound research agency has published a new analysis of minimum wage rates across the EU noting the increase in rates, particularly across Eastern Europe. The article confirms, however, that there is still a wide range of rates across the continent, ranging from EUR 1999 in Luxembourg to EUR 238 in Bulgaria. Of the 22 EU countries with statutory minimum wages all have seen an increase in real terms since 2010 with the exception of Greece where the Troika pressured a previous government to cut the rate substantially.
The monthly and hourly minimum wage rates are set to rise by just over 9%, taking the monthly amount to EUR 607 and the hourly rate to EUR 3.72. The minimum wage is discussed in a tripartite council which takes into account a number of factors but the increases are also linked to specific targets - since 2017 it was stipulated that the ratio of the minimum wage to the average wage should be kept between 45% and 50%. It is also linked to trends in minimum and average wages across the European Union.
A new report from the ETUC, as part of its Pay Rise campaign, shows that minimum wage rates across Europe need to rise significantly just to reach an official measure of low pay (60% of the national median wage as used by the Organisation for Economic Co-operation and Development). Minimum wages in Estonia, Czech Republic and Spain need some of the largest increases to reach the low pay threshold - 46%, 51% and 62% respectively. The ETUC argues that national governments need to sit down with trade unions and employers to discuss how to reach the target.