Minimum wages: ball back in EU Commission's court

As the Nordic Labour Journal has reported earlier, Denmark and Sweden question whether the EU has so-called competence – i.e. the right to pass legislation – on minimum wages in the member states. They point to an article in the EU treaty that says the Union cannot adopt directives concerning ”pay”. This is the issue which the Council of Ministers’ legal service now has investigated.

If you only read the conclusion at the end of the statement you might get the impression that the legal service has given a green light for adopting the directive as long as one article that goes too far is removed or changed. In reality, the statement contains several proposed changes and a veiled criticism which the Commission will likely have to address, at least partially.

Referring to EU Court case-law, the legal service observes that the EU cannot decide on the level of wages in member states, nor present conditions which would interfere directly in the determination of pay.  

Inconsistent and contradictory

The statement also stresses that the proposal’s wording is inconsistent and contradictory on several points. The aims and ambitions expressed in the directive’s title and the so-called recitals in the directive’s introduction do not fit with the content of the binding provisions. The way the legal service interprets the binding rules, the idea is not to order member states to actually introduce adequate minimum wages. The aim is only to dictate a procedure – how member states with statutory minimum wages will actually go about fixing these. In other words, this is about them making an effort, and not about what result they should arrive at, writes the legal service while suggesting that the proposed directive is adjusted to clarify this.  

And as already mentioned, it also thinks one article goes beyond what the EU treaty allows and must be deleted or reworked.

Reporting criticised

In passing, the legal service also presents a veiled criticism of how the proposed directive suggests that all member states each year should report to the Commission how they have succeeded in their efforts to promote adequate minimum wages. In a footnote, the legal service writes that its opinion does not address the question whether the proposed measures are proportional. However, it says, the member states’ duty to monitor and gather data are very detailed. It is also not clear how these obligations would ”ensure the effective protection of minimum wages”” or an “effective implementation of this Directive” in light of the fact that the proposal only sets a framework for improving the adequacy and coverage of minimum wages, but does not oblige the member states to achieve a certain result. 

If all the points made by the legal service are taken into consideration, the result is very watered-down compared to the ambitions which the Commission has expressed. The question now is how the Commission will act. If it presents a revised proposal, negotiations between the Council of Ministers and the European Parliament will follow. And in a resolution from February, the Parliament expressed ambitions that were at least as high as those of the Commission. The question of where exactly is the line for the EU’s competence will then remain relevant for the duration of the negotiations.

If the text is changed substantially from the current proposal, further assessment may be necessary, the legal service points out.