Cost of Living, Living Wages and Minimum Wages in EU-27 Countries

Abstract

In the last decade the concept of living wage has received renewed international attention. This report describes the calculation of living wage in the EU-27 countries as studied for The Left in the European Parlement. The proposed approach is innovative in the way that it uses prices collected through web-surveys in combination with the standard survey data to provide timely, and reasonably accurate estimates of living wage. The calculation is based on approximately 300,000 prices of goods and services and 100,000 housing prices in total. The estimated living wage represents the amount of money sufficient to enable the cultural and social participation in society. Living wage is corrected for income tax, and social contributions to be comparable to minimum wage and real wages which are gross earnings. The living wage is estimated for 27 EU countries and rates are contrasted with the national statutory minimum wages. Because living wage is normatively based it offers an additional metric of economic adequacy that reflects the needs of workers and their cost of living.