Everything you need to know about the controversial minimum wage decision

What was the minimum wage debate about again?

The background to this is an EU directive from 2022, with which the EU intended to "improve the working and living conditions of people in Europe by creating a Europe-wide framework for adequate minimum wages".

The directive does not prescribe minimum wages, but calls for clear criteria for setting and updating them. Further objectives are the promotion of collective bargaining (collective agreements) and compliance with the applicable minimum wage provisions.

The member states were supposed to transpose the directive into their national legislation within two years (more precisely: by 15 November 2024). However, transposition was delayed because the political continuity of the EU law was unclear in the meantime. In March 2023, Denmark had filed an action with the European Court of Justice (ECJ) to declare the directive null and void. According to the state, the EU had exceeded its competences. In the end, the directive survived the ECJ's judgement largely unscathed. At least that is what its author, the former EU Commissioner for Social Affairs and Employment, Nicolas Schmit (LSAP), told the Tageblatt.

For example, the court overturned the ban on lowering the statutory minimum wage if, as in Luxembourg, there is an automatic adjustment mechanism.

How is Luxembourg implementing the directive?

At the end of March, the government announced that, in addition to an index adjustment due before the middle of the year, the minimum wage would also be adjusted to real wage developments at the turn of the year. This comes to a total adjustment of 170 euros (plus 6.3 per cent). This means that the Luxembourg minimum wage will correspond to 60.2 per cent of the median wage – which would fulfil one of the reference values proposed by the EU. It is therefore refraining from a structural increase in the minimum wage. At the same time, the state will assume a portion (1.3 per cent) of this adjustment in order to reduce the burden on companies.