The EU’s proposed directive on an EU-wide minimum wage does indeed seek to exempt countries like Denmark from introducing a statutory minimum wage. But the Court of Justice does not apply vague guarantees from either Commissioners or politicians. Here it is only EU law that dictates how much of the power over our bargaining model is transferred up to political regulation in the EU. And experience tells us, sadly, that the Court of Justice rarely allows us to implement an EU labour law directive without legal interference.
Earlier this year, in the RÆSON columns, we discussed the EU’s minimum wage initiative, which aims to raise the wages of the most disadvantaged workers in Europe. A united Denmark has been deeply concerned that the proposal would force Denmark to legislate on pay against our will. Today, it is considerably better to be a wage-earner in Denmark, Norway, Sweden, Finland and Austria, where the social partners negotiate wages, than in countries with politically regulated minimum wages.
In fact, a statutory minimum wage often ends up lowering the wages of the many instead of raising the wages of the few – and thus becomes a de facto wage ceiling for the lowest paid.
A little over a month ago, the European Commission proposed a directive on minimum wages. It says: “Nothing in this Directive shall be construed as obliging Member States in which wage fixing is ensured solely by collective agreements to introduce a statutory minimum wage”.
Now, as a rule, there is no EU country where wages are guaranteed exclusively by collective agreements – not even here in Denmark.
But among our Danish labour market organisations, which have been working with collective agreements for more than 100 years, there is no celebration of victory over the proposal. The proposal risks being a Trojan horse and could end up lowering the wages of the many instead of raising the wages of the few.
Should the EU regulate national pay?
Looking at the basis of the proposal, Article 153(5) of the EU Treaty states in flaming letters that the EU cannot legislate on pay. However, the Commission considers that legislating on minimum wages is not legislating on pay at all. This is highly controversial and also goes against what several EU lawyers have historically believed and what is stated in EU judgments such as Impact, Bruno, Matzak, Dellas and Del Cerro Alonso. These state that the EU has no competence under Article 153 to legislate on pay.
Therefore, if we first accept the Commission’s legal basis, we also accept that pay will be an issue that can be decided at EU level. And even if it were then possible to adopt a harmless directive on (minimum) pay today, we will have handed competence over to the EU in future. Then, with a qualified majority in the Council and a simple majority in the European Parliament, it will be possible to legislate on pay issues in the future. Just as the proposal also raises something as fundamental as our collective agreements and collective bargaining to be regulated by the EU.
In this way, the entire guarantee that Denmark and Sweden were given with the Treaty of Lisbon in terms of self-determination in these matters will fall. Even if it were hypothetically possible to free Denmark in the short term, we would still be huge opponents in organisational Denmark – because then a new Commissioner, a new Council and a new European Parliament could force a harmful directive down on Denmark straight afterwards.
This is ultimately the most dangerous aspect of the minimum wage proposal and is, in the view of the Confederation of Danish Metal, contrary to the Lisbon Treaty itself and the political agreement behind Denmark’s accession to the Maastricht Treaty in the 1990s. Here we made it a condition that we could retain our agreement model. Even if one is hungry for an EU minimum wage, it must be an unavoidable principle that political agreements and treaties are respected. This includes Denmark’s accession to the Maastricht Treaty.
EU-court decides
The main danger of the proposal is that it contains several airy remarks about the EU not wanting to cram a statutory minimum wage down the throats of countries like Denmark, yet at the same time recital 2 of the proposal refers to every worker’s right to decent working conditions. Recital 3 also refers to the right of every worker to a fair wage. And the proposal refers to the EU Charter of Fundamental Rights, which points out that the EU must not discriminate.
In concrete terms, this means that, on the one hand, the EU wishes to exempt Denmark and Danish employees by means of some rather airy formulations. On the other hand, the directive refers to fundamental rights, which clearly state that there can be no discrimination against employees in the Union. Such an exercise has never been successfully carried out in a labour law directive, just as Denmark has never been exempted from implementing a labour law directive through legislation. It will therefore be up to the European Court of Justice to interpret the issue. We have no precedent here to reassure us.
So how has it been historically when EU law has to decide? First of all, Denmark has never implemented an EU directive on labour law solely through collective agreements – in other words, without legislation. It has never succeeded. Denmark was, for example, attempted to be exempted in connection with the Working Time Directive. It said that the directive could be implemented through legislation or through national practice such as collective agreements. One would then think that the Holy Grail was well protected. However, because EU legislation must treat employees equally, Denmark was subsequently forced to legislate on working time. There could be no difference between employees here.
Under the same directive, we have since been required by the EU to register the time of all employees. This is according to a recent EU ruling, even though nothing in the directive mentions time registration. This is how the European Court of Justice interpreted that “Member States should take the necessary measures” in this area. Although the directive explicitly sought to exempt Denmark from the legislation, the Luxembourg judges found that equal treatment was the most important consideration.
Also the Test-Achats judgement is being adhered to. Here, the EU legislated on equal treatment of, for example, gender in relation to various services such as insurance. At the request of several Member States, Member States were allowed to exempt parts of the insurance sector. This was supported by both the European Commission and the Council of Ministers. But the European Court of Justice did not buy this exemption. Here, equal treatment considerations and the EU Charter of Fundamental Rights again weighed most heavily – even though both the Commission and the Council had given a guarantee to the contrary.
Now it’s time for the minimum wage. As with previous EU legislation, we have got some political wording into a draft directive that tries to exempt Denmark. Do we think this outweighs the EU Charter of Fundamental Rights – for example, something as essential as equal treatment for workers? And do we believe, for the first time, that Denmark can implement an EU labour law directive without legislative interference? Or is it business as usual? It is up to the EU Court of Justice to decide if the proposal is adopted.
But the Court will not accept any guarantees from either Commissioners or politicians. A vague political guarantee does not count in the Luxembourg court – the problematic text of the directive does. Precisely because the directive is so vaguely worded, it is entirely up to the Court of Justice how much of the power over our negotiating model is transferred to political regulation in the EU.
A clear appeal must therefore be made to Danish decision-makers: do not be taken in by vague political intentions, but fight the draft directive on an EU minimum wage tooth and nail.
The Danish model must not be burnt to the ground.
You are not obliged to pay people a minimum wage, you are obliged to pay AT LEAST a minimum wage. If unions and businesses decide the wage should be higher, this is still possible
I have no statistical background for this. How much of the Danish labor force currently is payed below the proposed minimum wage? How many people would this affect?
Yes Denmark, we get it. Your system is great and perfect, and you’re the only ones who get it right, and now the ignorant EU has agreed on a law that most likely won’t even affect you. You’ve made that point clear.
The eu should push for strong collective bargaining in countries across the bloc instead of a statutory minimum wage.
More here:
So it is the EU’s internal market that makes it perfectly legal to work for Polish or Romanian wages in Denmark, because nothing must stand in the way of the free movement of labour. The trade union movement in the Nordic countries is reacting to this wage dumping with the usual well-known methods of struggle in order to defend the wage level agreed in the collective agreement, but then the EU is showing its true nature.
The Laval judgment
In 2007 comes the so-called Laval judgment; here the European Court of Justice rules that the Swedish trade union movement does not have the right to use its traditional industrial action against companies that underpay foreign workers if they are employed under the so-called Posting of Workers Directive. We know the rest of the story all too well.
However, the Laval ruling is followed by a series of other rulings [i], all of which have the same content: they do not recognise the right of the trade union movement to fight to defend its collective agreements in the Nordic countries. In fact, they basically do not recognise the Nordic labour market model itself.
The argument is that trade unions in the Nordic countries do not cover all workers and do not guarantee collective agreements for all workers (the so-called erga omnes principle).
The problem is that the EU, with its many seemingly well-meaning formulations, is in reality opening the door to areas in which it cannot officially interfere.
This is exactly what the Confederation of Skilled Crafts (FH) describes in its consultation response to the EU Commission:
“The directive means that responsibility for areas that in Denmark fall within the competence of the parties will be transferred to the government. In addition to these obvious and serious problems with the proposed directive, the proposal uses a number of key concepts and definitions – such as ‘collective bargaining’, workers’ organisations, etc. On the one hand, several of these concepts are currently defined at national level, and on the other, several are unclearly formulated. By including them in the Directive, it will be up to the European Court of Justice to establish the definition in case of doubt.” [iii]
The worker loses out
If, for example, a large foreign construction company chooses to hire workers on a large Danish construction site at the EU minimum wage rate, and if the trade union chooses to react with a dispute, this construction company can go to the European Court of Justice and have its case tried, and will probably win the case.
Of course, if a major employer can pay at the EU minimum wage, it will have a significant competitive advantage over other construction companies, and any construction company with ambitions to survive in the industry will soon be forced to follow suit.
After a while, the EU minimum wage has become the “normal wage” in the industry.
Pressure to give up collective agreements
The pressure to break away from the collective agreements concluded within each sector will be enormous, and the special “Danish model” of the labour market will be definitively shot through.
This is precisely the scenario that the Nordic trade unions point to in their consultation response:
“A directive imposing legislation guaranteeing specific protection for every employee would establish dual governance of our national labour market. If state legislation guarantees pay conditions in the often temporary gaps created by regulation by the social partners, a larger group of employers and workers will fall out of the collective bargaining system. The incentive to organise, on both sides, will be greatly weakened. The price of refusing to take responsibility and organise and secure collective agreements will fall. In addition, the level of protection that the state will provide, through EU legislation, will push down the level of collectively agreed pay. EU minimum wages risk undermining social Europe through a less organised labour market, rather than strengthening it.” [v]
But it is written by people who are, very likely, not Danish. So I imagine it will be dully ignored as insufficient compared to this piece of fluffy fanfiction.
For a nation so proud of collective bargaining and unions Denmark seems to attempts everything in their power to weaken them in other eu countries.
Why else would they veto a pro-union measure from.which they are exempt?
9 comments
The EU’s proposed directive on an EU-wide minimum wage does indeed seek to exempt countries like Denmark from introducing a statutory minimum wage. But the Court of Justice does not apply vague guarantees from either Commissioners or politicians. Here it is only EU law that dictates how much of the power over our bargaining model is transferred up to political regulation in the EU. And experience tells us, sadly, that the Court of Justice rarely allows us to implement an EU labour law directive without legal interference.
Earlier this year, in the RÆSON columns, we discussed the EU’s minimum wage initiative, which aims to raise the wages of the most disadvantaged workers in Europe. A united Denmark has been deeply concerned that the proposal would force Denmark to legislate on pay against our will. Today, it is considerably better to be a wage-earner in Denmark, Norway, Sweden, Finland and Austria, where the social partners negotiate wages, than in countries with politically regulated minimum wages.
In fact, a statutory minimum wage often ends up lowering the wages of the many instead of raising the wages of the few – and thus becomes a de facto wage ceiling for the lowest paid.
A little over a month ago, the European Commission proposed a directive on minimum wages. It says: “Nothing in this Directive shall be construed as obliging Member States in which wage fixing is ensured solely by collective agreements to introduce a statutory minimum wage”.
Now, as a rule, there is no EU country where wages are guaranteed exclusively by collective agreements – not even here in Denmark.
But among our Danish labour market organisations, which have been working with collective agreements for more than 100 years, there is no celebration of victory over the proposal. The proposal risks being a Trojan horse and could end up lowering the wages of the many instead of raising the wages of the few.
Should the EU regulate national pay?
Looking at the basis of the proposal, Article 153(5) of the EU Treaty states in flaming letters that the EU cannot legislate on pay. However, the Commission considers that legislating on minimum wages is not legislating on pay at all. This is highly controversial and also goes against what several EU lawyers have historically believed and what is stated in EU judgments such as Impact, Bruno, Matzak, Dellas and Del Cerro Alonso. These state that the EU has no competence under Article 153 to legislate on pay.
Therefore, if we first accept the Commission’s legal basis, we also accept that pay will be an issue that can be decided at EU level. And even if it were then possible to adopt a harmless directive on (minimum) pay today, we will have handed competence over to the EU in future. Then, with a qualified majority in the Council and a simple majority in the European Parliament, it will be possible to legislate on pay issues in the future. Just as the proposal also raises something as fundamental as our collective agreements and collective bargaining to be regulated by the EU.
In this way, the entire guarantee that Denmark and Sweden were given with the Treaty of Lisbon in terms of self-determination in these matters will fall. Even if it were hypothetically possible to free Denmark in the short term, we would still be huge opponents in organisational Denmark – because then a new Commissioner, a new Council and a new European Parliament could force a harmful directive down on Denmark straight afterwards.
This is ultimately the most dangerous aspect of the minimum wage proposal and is, in the view of the Confederation of Danish Metal, contrary to the Lisbon Treaty itself and the political agreement behind Denmark’s accession to the Maastricht Treaty in the 1990s. Here we made it a condition that we could retain our agreement model. Even if one is hungry for an EU minimum wage, it must be an unavoidable principle that political agreements and treaties are respected. This includes Denmark’s accession to the Maastricht Treaty.
EU-court decides
The main danger of the proposal is that it contains several airy remarks about the EU not wanting to cram a statutory minimum wage down the throats of countries like Denmark, yet at the same time recital 2 of the proposal refers to every worker’s right to decent working conditions. Recital 3 also refers to the right of every worker to a fair wage. And the proposal refers to the EU Charter of Fundamental Rights, which points out that the EU must not discriminate.
In concrete terms, this means that, on the one hand, the EU wishes to exempt Denmark and Danish employees by means of some rather airy formulations. On the other hand, the directive refers to fundamental rights, which clearly state that there can be no discrimination against employees in the Union. Such an exercise has never been successfully carried out in a labour law directive, just as Denmark has never been exempted from implementing a labour law directive through legislation. It will therefore be up to the European Court of Justice to interpret the issue. We have no precedent here to reassure us.
So how has it been historically when EU law has to decide? First of all, Denmark has never implemented an EU directive on labour law solely through collective agreements – in other words, without legislation. It has never succeeded. Denmark was, for example, attempted to be exempted in connection with the Working Time Directive. It said that the directive could be implemented through legislation or through national practice such as collective agreements. One would then think that the Holy Grail was well protected. However, because EU legislation must treat employees equally, Denmark was subsequently forced to legislate on working time. There could be no difference between employees here.
Under the same directive, we have since been required by the EU to register the time of all employees. This is according to a recent EU ruling, even though nothing in the directive mentions time registration. This is how the European Court of Justice interpreted that “Member States should take the necessary measures” in this area. Although the directive explicitly sought to exempt Denmark from the legislation, the Luxembourg judges found that equal treatment was the most important consideration.
Also the Test-Achats judgement is being adhered to. Here, the EU legislated on equal treatment of, for example, gender in relation to various services such as insurance. At the request of several Member States, Member States were allowed to exempt parts of the insurance sector. This was supported by both the European Commission and the Council of Ministers. But the European Court of Justice did not buy this exemption. Here, equal treatment considerations and the EU Charter of Fundamental Rights again weighed most heavily – even though both the Commission and the Council had given a guarantee to the contrary.
Now it’s time for the minimum wage. As with previous EU legislation, we have got some political wording into a draft directive that tries to exempt Denmark. Do we think this outweighs the EU Charter of Fundamental Rights – for example, something as essential as equal treatment for workers? And do we believe, for the first time, that Denmark can implement an EU labour law directive without legislative interference? Or is it business as usual? It is up to the EU Court of Justice to decide if the proposal is adopted.
But the Court will not accept any guarantees from either Commissioners or politicians. A vague political guarantee does not count in the Luxembourg court – the problematic text of the directive does. Precisely because the directive is so vaguely worded, it is entirely up to the Court of Justice how much of the power over our negotiating model is transferred to political regulation in the EU.
A clear appeal must therefore be made to Danish decision-makers: do not be taken in by vague political intentions, but fight the draft directive on an EU minimum wage tooth and nail.
The Danish model must not be burnt to the ground.
You are not obliged to pay people a minimum wage, you are obliged to pay AT LEAST a minimum wage. If unions and businesses decide the wage should be higher, this is still possible
I have no statistical background for this. How much of the Danish labor force currently is payed below the proposed minimum wage? How many people would this affect?
Yes Denmark, we get it. Your system is great and perfect, and you’re the only ones who get it right, and now the ignorant EU has agreed on a law that most likely won’t even affect you. You’ve made that point clear.
The eu should push for strong collective bargaining in countries across the bloc instead of a statutory minimum wage.
More here:
So it is the EU’s internal market that makes it perfectly legal to work for Polish or Romanian wages in Denmark, because nothing must stand in the way of the free movement of labour. The trade union movement in the Nordic countries is reacting to this wage dumping with the usual well-known methods of struggle in order to defend the wage level agreed in the collective agreement, but then the EU is showing its true nature.
The Laval judgment
In 2007 comes the so-called Laval judgment; here the European Court of Justice rules that the Swedish trade union movement does not have the right to use its traditional industrial action against companies that underpay foreign workers if they are employed under the so-called Posting of Workers Directive. We know the rest of the story all too well.
However, the Laval ruling is followed by a series of other rulings [i], all of which have the same content: they do not recognise the right of the trade union movement to fight to defend its collective agreements in the Nordic countries. In fact, they basically do not recognise the Nordic labour market model itself.
The argument is that trade unions in the Nordic countries do not cover all workers and do not guarantee collective agreements for all workers (the so-called erga omnes principle).
The problem is that the EU, with its many seemingly well-meaning formulations, is in reality opening the door to areas in which it cannot officially interfere.
This is exactly what the Confederation of Skilled Crafts (FH) describes in its consultation response to the EU Commission:
“The directive means that responsibility for areas that in Denmark fall within the competence of the parties will be transferred to the government. In addition to these obvious and serious problems with the proposed directive, the proposal uses a number of key concepts and definitions – such as ‘collective bargaining’, workers’ organisations, etc. On the one hand, several of these concepts are currently defined at national level, and on the other, several are unclearly formulated. By including them in the Directive, it will be up to the European Court of Justice to establish the definition in case of doubt.” [iii]
The worker loses out
If, for example, a large foreign construction company chooses to hire workers on a large Danish construction site at the EU minimum wage rate, and if the trade union chooses to react with a dispute, this construction company can go to the European Court of Justice and have its case tried, and will probably win the case.
Of course, if a major employer can pay at the EU minimum wage, it will have a significant competitive advantage over other construction companies, and any construction company with ambitions to survive in the industry will soon be forced to follow suit.
After a while, the EU minimum wage has become the “normal wage” in the industry.
Pressure to give up collective agreements
The pressure to break away from the collective agreements concluded within each sector will be enormous, and the special “Danish model” of the labour market will be definitively shot through.
This is precisely the scenario that the Nordic trade unions point to in their consultation response:
“A directive imposing legislation guaranteeing specific protection for every employee would establish dual governance of our national labour market. If state legislation guarantees pay conditions in the often temporary gaps created by regulation by the social partners, a larger group of employers and workers will fall out of the collective bargaining system. The incentive to organise, on both sides, will be greatly weakened. The price of refusing to take responsibility and organise and secure collective agreements will fall. In addition, the level of protection that the state will provide, through EU legislation, will push down the level of collectively agreed pay. EU minimum wages risk undermining social Europe through a less organised labour market, rather than strengthening it.” [v]
[Danish link](https://www.folkebevaegelsen.dk/eu-mindsteloen-er-en-bombe-under-den-danske-model/)
the minimum wage would not impact Denmark, this is all window dressing for the sake of being outraged at EU
I am going to leave the position of [European Trade Union Confederation](https://www.etuc.org/sites/default/files/page/file/2021-04/Debunking%20the%20myths%20on%20the%20Directive%20on%20Adequate%20minimum%20wages%20in%20the%20EU.pdf), in the hopeless attempt at getting Danes to read something that is not directly in Danish.[More here](https://www.etuc.org/en/fair-minimum-wages-and-collective-bargaining)
But it is written by people who are, very likely, not Danish. So I imagine it will be dully ignored as insufficient compared to this piece of fluffy fanfiction.
For a nation so proud of collective bargaining and unions Denmark seems to attempts everything in their power to weaken them in other eu countries.
Why else would they veto a pro-union measure from.which they are exempt?