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Malta’s average monthly minimum wage is €697

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 - Thursday, 21 February 2013, 09:52

by Noel Grima

Malta’s average monthly minimum wage has been established by Eurostat to be €697.

This puts Malta solidly in the middle of the EU countries, or better in a middle grouping of countries, just short of the US figures which are also added as a comparison.

In January 2013, 20 of the EU’s 27 member states (Belgium, Bulgaria, the Czech Republic, Estonia, Ireland, Greece, Spain, France, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, and the United Kingdom), Croatia and Turkey had national legislation setting a minimum wage by statute or by national intersectoral agreement.

Monthly minimum wages varied widely, from €157 in Romania to €1,874 in Luxembourg.

The 20 member states concerned together with Croatia, Turkey and the United States can be divided into three groups based on the level of minimum wage on 1 January 2013.

The first group includes the 11 countries with the lowest minimum wages, between €100 and €500 a month: Romania, Bulgaria, Latvia, Lithuania, the Czech Republic, Estonia, Slovakia, Hungary, Croatia, Poland and Turkey.

The second group comprises five member states (Portugal, Greece, Malta, Spain and Slovenia) and the United States with an intermediate level of minimum wages, from over €500 to just below €1,000 a month.

The third group comprises six member states (the United Kingdom, France, Ireland, the Netherlands, Belgium and Luxembourg) in which the minimum wage was above €1,200 per month.

When adjusted for price differentials across countries, the disparities between the member states are reduced from a range of one to 12 (in EUR) to a range of one to six in purchasing power standard (PPS).

At the opposite ends of the scale were Romania (274 PPS) and Luxembourg (1,524 PPS per month).

In this case, Malta moves up a notch to reach 895 PPS.

As one would expect, adjusting for differences in price levels reduces the variation between countries: while the minimum wage in euro ranged from €157 to €1,874 in January 2013 (a factor of about 1:12), the minimum wage in PPS ranged from 274 to 1 524 (a factor of about 1:6).

The countries in group 1 with relatively lower minimum wages in euro also have lower price levels and therefore higher minimum wages when expressed in PPS. On the other hand, countries in group 3 with higher minimum wages in euro have higher price levels, and their minimum wages in PPS are relatively lower. In addition, as a consequence, the breaks between the three groups are partly smoothed out when looking at minimum wages expressed in PPS.

Comparing the ranking of the monthly minimum wages in euro with those in PPS, the most remarkable changes are for Estonia, Lithuania, Poland and Portugal, all moving by two positions.

Several other countries change their position, but only by one rank (Belgium, Ireland, Spain, France, Hungary, Malta, Netherlands and Croatia). The monthly minimum wages expressed in PPS group the countries in the same class as when expressed in euro with the exception of Hungary, Poland Croatia and Turkey, moving from group 1 (lower wages) to group 2 (medium wages) and the United States moving from group 2 (medium wages) to group 3 (higher wages).

In 2011 the minimum wage level varies between 30% and 50% of average gross monthly earnings in industry, construction and services (except activities of households as employers and extra-territorial organisations and bodies)

Looking at the minimum wage in relation to average gross monthly earnings in industry, construction and services, the highest values are reported for Greece (50.2%), Turkey (50.0% in 2010) and Slovenia (49.0%) followed by France (2010) and Malta (both 47.4%) and Luxembourg (46.7%).

At the lower end of the scale, the United States, the Czech Republic, Estonia and Spain report minimum wages below 35 % of the average gross monthly earnings.

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