Minimum wage—yet another gender divide?

The number of minimum-wage earners has increased across Europe over the last decade—and they are more likely to be women.

Despite the progress in statutory minimum wages across many European Union member states over the last decade, there are important divides. In 2019, around 7 per cent of employees in the EU were statutory minimum-wage earners—earning no more than 10 per cent above or below the minimum wage rate in each member state. Across countries, this rate ranges from 10-15 per cent in some central- and eastern-European member states (Romania, Poland, Bulgaria and Lithuania) and Portugal to less than 4 per cent in Czechia, the Netherlands and Slovenia. 

Against a background of generally notable minimum-wage hikes in many member states over the last decade—with statutory rates growing faster than average wages in most cases—a growing share of employees have fallen within the range of statutory minimum-wage levels. The 7 per cent proportion of minimum-wage earners in the EU is an increase from 5.5 per cent in 2010. 

This expansion has occurred especially in those member states where minimum-wage levels have progressed most, notably in central and eastern Europe (Romania, Poland, Bulgaria, Slovenia and Slovakia). There have been significant increases also in Spain, Portugal and the UK, following notable minimum-wage rises in recent years, as well as in Germany after the introduction of its statutory minimum wage in 2015.

Gender divide    

While this might seem an increasingly positive picture, further investigation reveals a significant gender divide: more women earn less. 

In the EU, there is a higher percentage of minimum-wage earners among female employees (8.7 per cent) than among males (5 per cent) and women account for more than 60 per cent of all minimum-wage earners. In almost every member state, more than half of the total number of minimum-wage earners are women—in some countries, this rate reaches two-thirds, for example in Slovakia, Czechia, Belgium and Latvia (Figure 1). Given the fact that they typically make up less than 50 per cent of the workforce, women are significantly over-represented in this category.

Figure 1: share of minimum wage earners, by gender and share of women among minimum wage earners (%)

Minimum-wage earners are typically found in the lower-paying sectors (hotels, restaurants and catering, retail, health and other service activities) and occupations (elementary occupations and service and sales workers). This is especially the case for female minimum-wage earners, since women are more likely to work in these lowest-paid sectors and occupations.

Education and industry and office-based clerical occupations are other areas where female minimum-wage earners may be typically employed. Male minimum-wage earners, on the other hand, are often found in industry and manufacturing, as well as in occupations such as craft and trades and among plant and machine operators.

Materially deprived

Women are over-represented in the minimum-wage bracket and minimum-wage workers are much more likely to live in materially-deprived households. Fifteen per cent of minimum-wage earners in the EU live in such households, compared with 6 per cent among other employees (Figure 2).

A household measure of material deprivation captures the capacity of the household to afford several items considered desirable to enjoy adequate living standards, such as being able to pay the rent, keep the house warm, face unexpected expenses, go on holidays and have a washing machine or a telephone. 

Across countries, the proportion of employees affected by household material deprivation varies greatly—from above 20 per cent in some central- and eastern-European member states (Romania, Hungary, Bulgaria and Croatia), as well as Greece and Malta, to below 10 per cent in the Benelux countries and Germany.

Figure 2: share of employees living in materially deprived households (%)

Household material deprivation is a complex phenomenon caused by many factors. Studies have highlighted joblessness of other household members—rather than low wages—as the main one in Europe. Nevertheless, Eurofound data show that minimum-wage earners are much more affected than employees earning higher wages across all member states. And minimum-wage earners—and the materially deprived households in which they are more likely to live—are especially vulnerable to economic downturns.

The pandemic has already taken a disproportionate toll on women across many areas and this is likely to continue. Policy-makers need a comprehensive strategy—comprising not only statutory minimum-wage rates but also, among other things, social benefits, income protection, childcare and eldercare facilities and active-labour-market policies—to improve the working and living conditions of minimum-wage earners and their households.

This first appeared on the Eurofound blog