Minimum wage earners across the EU saw their purchasing power improve in 2025, but rising housing costs are limiting the benefits, according to new data from Eurofound.
The Minimum wages in 2025: Annual review found that gross national minimum wages rose in 21 of the 22 EU countries with a statutory rate, with increases outpacing inflation in most cases. The largest gains were in central and eastern Europe, led by Romania with a rise of nearly 23 percent, followed by Croatia and Bulgaria at 15 percent.
The report said this continues a 20-year pattern of minimum wages growing faster than average and median wages. It also offers the first EU-wide comparison of how Member States have implemented the Minimum Wage Directive. Most have made only incremental changes, though the directive is increasingly influencing wage setting, with more countries linking minimum wages to median or average wages.
Despite wage growth, the study highlights a persistent affordability gap in housing. On average, minimum wage earners spend 34.8 percent of disposable income on housing, compared with 26.2 percent for higher earners. Among younger workers aged 16–34, almost half (48.9 percent) of those on minimum wages live with their parents, compared to 29.1 percent of better-paid peers.
Eurofound warns that current minimum wage levels often fail to support independent living for many young people, even where purchasing power has increased. The report suggests wage setters, social partners and advisory bodies take housing costs into account when assessing minimum wage adequacy.
It also notes that taxation and benefit systems can significantly affect take-home pay. Employee tax rates range from around 5 percent in Belgium and Estonia to nearly 40 percent in Romania.
Eurofound concludes that complementary policies — including fairer taxation and better access to benefits , are needed to help low and minimum wage earners live independently and maintain a decent standard of living.
HT
