Why isn’t there an EU-wide minimum wage?

Following the Brexit referendum last year, when social media was groaning with opinions from those on both sides of the argument, an acquaintance of mine posted an innocent-sounding question on Facebook: why doesn’t the EU have a single, unified minimum wage? As most people attributed the referendum result to concerns over unchecked immigration to the UK from other parts of the EU, he thought this would solve many of the problems perceived to be caused by freedom of movement.

I can only speculate on the reasons behind his thinking. Perhaps he thought certain foreign workers, used to lower wages in their home country, could be paid less than their British equivalents while working in the UK, making them more attractive to employers there. This isn’t (or shouldn’t be) true; the UK minimum wage legislation applies to all employees regardless of nationality. Moreover, companies based in the EU who send employees to work in another member state need to be aware of the Posted Workers Directive (96/71/EC) which stipulates that posted workers are protected by the employment laws of the member state in which they work. This includes minimum wage regulations. (Directive 96/71/EC was recently complemented by Directive 67/2014/EU which updates some of the provisions of the original directive, in particular regarding enforcement. The deadline for transposing the new Directive was 18 June 2016.)

In other words, anyone working for less than the minimum wage is doing so illegally. Having the EU set the minimum wage instead of national governments won’t solve the problem of unscrupulous employers ignoring their legal obligations, unfortunately.

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Source: ECA International – GAI