Press release -
Rising housing costs dampen effectiveness of Europe's minimum wage increases
New analysis from Eurofound shows that minimum wages in most EU countries saw substantial increases in 2025, outpacing inflation and boosting the purchasing power of low-wage earners. However, rising housing costs are disproportionately affecting minimum wage earners, limiting their ability to afford housing and achieve independent living. This is particularly the case for younger workers.
Eurofound’s Minimum wages in 2025: Annual review shows that gross national minimum wages rose in 21 of the 22 Member States with a national minimum wage. The most significant increases were seen in central and eastern Europe, with Romania seeing a nearly 23% rise, followed by Croatia and Bulgaria at 15%. This marks a continuation of a two-decade trend where minimum wages have grown faster than average and median wages.
The annual report presents minimum wage rates for 2025 and how they were set and increased during 2024. It includes information on countries with and without national minimum wages. In addition, it provides the first comparative overview of how Member States have transposed the Minimum Wage Directive and presents new estimates of the proportion of minimum wage earners and their ability to afford housing.
While most countries have completed the transposition process of the EU Minimum Wage Directive, the changes have been largely incremental rather than radical. The directive is emerging as a structural factor influencing minimum wage increases, with a growing number of countries adopting ‘indicative reference values’ linked to median or average wages, often aligning with the directive's examples. The report also shows how tax and benefit systems can significantly impact take-home pay, with employee tax rates ranging from approximately 5% in Belgium and Estonia to nearly 40% in Romania.
Despite the upwards wage trends, minimum wage earners face significant financial pressure from housing costs. Eurofound analysis shows that minimum wage earners spend an average of 34.8% of their disposable income on housing, compared to 26.2% for higher earners. This disparity is even more pronounced for young workers. The report reveals that nearly half (48.9%) of young minimum wage earners (aged 16–34) live with their parents, compared to only 29.1% of their better-paid peers. This implies that current minimum wage levels may be insufficient to support independent living for many young people.
Complementary policies are needed for low and minimum wage earners to live independently and attain a decent standard of living. In particular, national wage setters, social partners, and consultative bodies should consider the impact of housing costs when assessing minimum wage adequacy. Fair taxation systems, and accessibility to benefits are also important in improving the financial situation and quality of life for minimum wage earners across the EU.
- Download the report: The full report Minimum wages in 2025: Annual review
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