Just two days before the European council accepted Cyprus, along with Malta, to join the eurozone as from 1 January 2008, the Council of Ministers of Cyprus decided to increase the minimum wage in Cyprus from CYP384 monthly to CYP409 or EUR699 effective April 2007 and after a period of six months, that is from 1 October, to CYP434 or EUR742.

Malta’s minimum wage is EUR585 per month.

The increase in the minimum wage in Cyprus places the country between the first and second group of top EU countries with the highest minimum wage among the EU27. According to a study by Eurostat, in the 20 member States of the European Union (Belgium, Bulgaria, Spain, Estonia, Greece, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Czech Republic and the United Kingdom) and one candidate country (Turkey), collective bargaining is subject to a statutory national minimum wage. The other Member States do not have a statutory national minimum wage.

Among the Member States, the gross minimum wage varied from 92 euro (Bulgaria) to 1570 euro (Luxembourg). For the candidate country, the minimum wage was 298 euro in Turkey.

Looking at the level of the minimum wage in euro, Member States fell into three broad groups. In Bulgaria (EUR92 per month), Romania (EUR114), Latvia (EUR172), Lithuania (EUR174), Slovakia (EUR217), Estonia (EUR230), Poland (EUR246), Hungary (EUR258) and the Czech Republic (EUR288), minimum wages were below EUR300 per month in January 2007. Portugal (EUR470), Slovenia (EUR522), Malta (EUR585), Spain (EUR666) and Greece (EUR668 in July 2006) fell into a second group, with minimum wages of between EUR400 and EUR700 per month. In France (EUR1,254), Belgium (EUR1,259), the Netherlands (EUR1,301), the United Kingdom (EUR1,361), Ireland (EUR1,403) and Luxembourg (EUR1,570) minimum wages were over EU1 200 per month.

The Irish hourly minimum wage rose to EUR8.30 per hour with effect from 1 January 2007 and will rise to EUR8.65 with effect from 1 July 2007. The 12-month rise will amount to 13 per cent.

For comparison, the federal minimum wage in the USA was EUR676 per month in January 2007.

Proportion of employees receiving minimum wages ranged from one per cent in Spain to 17 per cent in France

The proportion of employees on minimum wages in 2005 was two per cent or less in Spain (0.8 per cent), Malta (1.5 per cent), Slovakia (1.7 per cent), the United Kingdom (1.8 per cent) and the Czech Republic (2.0 per cent) and more than 10 per cent in France (16.8 per cent), Bulgaria (16.0 per cent), Latvia (12.0 per cent), Luxembourg (11.0 per cent) and Lithuania (10.3 per cent).

In the USA, 1.3 per cent of employees received the federal minimum wage.

In 2005 and among the member States for which these data are available, minimum wages represented between a third of the average monthly gross earnings in industry and services in Estonia, Romania, Latvia, Poland and Slovakia and a half in Ireland, Luxembourg, Malta and Bulgaria.

In the USA the federal minimum wage corresponded to 32 per cent of the average monthly gross earnings.

Meanwhile, Labour costs in the 13 nations that use the euro rose 2.2 per cent in the first three months of 2007 compared with a year ago, the European Union’s statistics agency said last week.

The Eurostat agency also confirmed May inflation held steady at 1.9 per cent, signifying that wages are now growing ahead of inflation.

The wage part of total hourly labour costs in the first quarter climbed 2.3 per cent from the same period in 2007, Eurostat said. Inflation rose by around 1.8 per cent during the first quarter.

Germany, the EU’s largest economy, saw the lowest labour cost increase at just 0.1 percent during the first quarter.

Eurostat said higher prices for restaurants, cafes and tobacco were the biggest factors pushing up inflation, while telecoms and transport fuel fell from a year ago.

Spain had the highest inflation in the euro area at 4.1 per cent, and Finland the lowest at 1.7 per cent. Germany and France were above the average at 2.1 per cent and 2.4 per cent.

Among the newcomers to the EU, Bulgaria posted inflation of nine per cent and Romania 7.3 per cent. Poland posted the lowest increase at 1.5 per cent.

The European Central Bank closely watches inflation before it decides whether to raise interest rates. Earlier this month the central bank hiked rates by a quarter percentage point to four per cent. The European economy is currently enjoying its fastest rate of growth since 2000.

However, ECB President Jean-Claude Trichet did warn that higher-than-expected pay demands could see inflation rise beyond the guideline as more money in the economy leads to price increases.

Trade unions have countered his analysis as “seriously flawed”, saying wage agreements do not pose any threat to inflation and he should watch excessive interest rates and the high rate of the euro against other world currencies.

In the 27-member European Union, labour costs went up 3.7 per cent over the quarter. After Germany, labour costs increased the least in the region’s smallest economy Malta at 1.4 per cent and Belgium at two per cent.

The highest labour cost rises were in the eastern European nations that are rapidly catching up to the EU average. Latvian costs rose 32.6 per cent while Romania – which joined the EU on 1 January 1 – climbed 25 per cent. Lithuania went up 22.2 per cent and Estonia 21.1 per cent.