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Expertise 25. August 2026 Hagen Lesch / Lennart Eckle / Sandra Vogel European Minimum Wage Directive and Strengthening Collective Bargaining Coverage

The EU Minimum Wage Directive recommends that EU Member States achieve a collective bargaining coverage of 80 per cent to ensure adequate minimum wages.

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A critical assessment
Expertise 25. August 2026 Hagen Lesch / Lennart Eckle / Sandra Vogel

European Minimum Wage Directive and Strengthening Collective Bargaining Coverage

Expert Report Commissioned by Gesamtmetall – The Employers' Associations of the Metal and Electrical Industries

Hagen Lesch / Lennart Eckle / Sandra Vogel German Economic Institute (IW) German Economic Institute (IW)

The EU Minimum Wage Directive recommends that EU Member States achieve a collective bargaining coverage of 80 per cent to ensure adequate minimum wages.

This figure is not binding in its implementa-tion. However, EU Member States not reaching the target are obliged to submit a National Action Plan. This plan needs to contain measures aimed at strengthening collective bargaining coverage. It remains legally contested whether the adoption of such measures constitutes a binding obligation. The Directive accords primacy to sectoral or cross-sectoral wage negotiations. A target of 80 per cent is arbitrary and cannot be convincingly justified on either empirical or theoretical grounds. Equally, no sufficient empirical evidence can be found to support the prioritisation of sectoral or cross-sectoral collective bargaining systems. The EU Minimum Wage Directive pursues exclusively distributional policy objectives. Allocative policy objectives, such as the promotion of employment, are mentioned only in passing in the Directive. In doing so, the Directive follows the narrative that only collective agreements guarantee fair and adequate wage-setting, without addressing the possible negative externalities of higher collective bargaining coverage. Such effects may include higher unemployment or higher prices. 

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A critical assessment
Expertise 25. August 2026 Hagen Lesch / Lennart Eckle / Sandra Vogel

European Minimum Wage Directive and Strengthening Collective Bargaining Coverage

Expert Report Commissioned by Gesamtmetall – The Employers' Associations of the Metal and Electrical Industries

Hagen Lesch / Lennart Eckle / Sandra Vogel German Economic Institute (IW) German Economic Institute (IW)

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Expert Workshop on the Industrial Accelerator Act
Event 14. October 2026 Alexander Radunz

Expert Workshop on the Industrial Accelerator Act

The German Economic Institute (IW) and Frontier Economics are pleased to invite you to a rapporteur & stakeholder workshop on the Industrial Accelerator Act (IAA) in Brussels.

Alexander Radunz IW

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Event 28. September 2026 Sandra Parthie / Alexander Radunz

Online-Veranstaltungsreihe „Von Brüssel nach Berlin”: Regionalentwicklung und Industriepolitik

Wir laden Sie herzlich zu einer weiteren Online-Veranstaltung unserer Veranstaltungsreihe „Von Brüssel nach Berlin“ ein. Mit ihr wollen wir in loser Folge Themen aus der europäischen in die deutsche Hauptstadt tragen.

Sandra Parthie / Alexander Radunz IW

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