Nordics split as EU minimum wage proposal delayed

Nordic resistance to the EU Commission’s proposed statutory minimum wage was evident back when the Nordic Labour Journal wrote about this over a year ago. It was seen as a threat to the Nordic collective bargaining model. Since then the issue has nevertheless progressed through the EU machine and right now the European Parliament is negotiating with the European Council (the governments) about a compromise.

Over time, it has become evident that there are splits between the Nordic countries too. Before the last leg of negotiations, Finland, Denmark and Sweden have reached different conclusions.

When EU Commission President Ursula von der Leyen presented the proposed minimum wage directive in October 2020, the aim was to give all EU citizens a decent standard of living, increase equality and reduce poverty. It was also hoped this would encourage more people to find work and that it would prevent unfair competition from bad employers. 

Von der Leyen pointed out that no country should be forced to adopt statutory minimum wages and added that the proposal even aimed to strengthen the collective bargaining system that forms the basis for the Nordic model.

United Nordic outcry

The reception was, to put it mildly, split. Many EU countries welcomed the initiative, but in the Nordic region, it was met by a near united outcry from politicians, trade unions and employers – at least in Sweden and Denmark. The split within the European Trade Union Congress became so bad that the Swedish LO trade union confederation stopped paying its membership fee. 

“You cannot pay someone to kill you,” Torbjörn Johansson, Negotiations Secretary at Swedish LO told the Arbetet newspaper. 

Despite the protests from the North, the EU institutions have done their thing. In December last year, a majority in the EU Parliament voted in favour of a far-reaching proposal that included binding rules and a guaranteed minimum wage protection.

Soon after, the Council of Ministers agreed to a compromise with less stringent rules. The Swedish and Finnish governments supported this proposal, while Denmark turned it down out of principle. (Finland has been more positive than its Nordic neighbours throughout). 

A large and a small "no"

Danish MEP Marianne Vind is a Social Democrat and member of the employment committee. She plays down the differences between the Danish and Swedish positions. 

“Sweden and Denmark share the same position in the EU and our labour ministers agree, but there is a cultural difference between us. We express stronger reservations and say no to what we disagree with, while you in Sweden are more willing to compromise and take what is best out of negotiations.

"But we are still pursuing the same cause. While the Danish LO and Danish employers express a clear no, the Swedish partners express a small no. The difference appears to be bigger than it really is,” she says.

Abir Al-Sahlani is an MEP for the Centre Party. Photo: Bengt Rolfer

Swedish MEP Abir Al-Sahlani is from the Centre Party and also a member of the employment committee. She thinks Sweden should have done what Denmark did. 

“I don’t know why Sweden’s government chose this position when it could have taken a much harder line. This is an incredibly important issue for the future, so we must give it all we have and say ‘Stop, this is not OK’. But a softer line was chosen and now we will see where that leads.”

Abir Al-Sahlani was born in Iraq and moved to Sweden in 1991 at 15. She has mainly got involved in labour market issues from an integration perspective. She was a member of the Swedish parliamentary employment committee between 2010 and 2014.  

“That taught me a lot about Swedish labour market policies. I am critical to a lot of it, but by learning things you also get involved in different issues,” she explains.  

The other Swedish labour committee member is Social Democrat Ilan De Basso. Unlike Al-Sahlani and his Danish party colleague Marianne Vind, he considers the Council of Ministers’ proposal to be ”a reliable compromise”. 

Ilan De Basso is an MEP for the Social Democrats. Photo: Bengt Rolfer

“It would have been optimal if we had watertight guarantees that there will be no impact on our own wage formation model. But we have not got that, so now the parliament negotiators need to accept the Council’s proposal as it is,” says Ilan De Basso. 

Minimum wage in 21 out of 27 countries

The fact remains that 21 out of 27 EU countries already have statutory minimum wages (the exceptions being Cyprus, Denmark, Finland, Italy, Sweden and Austria). But the levels vary wildly from 332 euro a month in Bulgaria to 2,202 euro in Luxembourg (Eurostat 2021). 

It can be difficult for many politicians and union representatives elsewhere in Europe to understand the Nordics’ tough resistance. Many see this as a lack of solidarity and an attempt at self-protection. Nordic MEPs have had a hard time trying to explain the Nordic model. 

These are the main points of the Swedish-Danish resistance:

• Politicians should not get involved in wage formation. That is the responsibility of the social partners and should happen through negotiations.
• Leaving this to politicians means they can increase wages, but also lower them.
• A minimum wage might also become a maximum wage that makes further wage increases more difficult to achieve.
• The EU has no mandate to interfere in wage formation.
• If a minimum wage is introduced, the EU court of justice in Luxembourg gets a final say over our agreements.

Countries that are not familiar with the Nordic model also fail to realise that our collective agreements are about more than just wages. 

“Our negotiations encompass a range of issues. We negotiate on training, integration, unemployed youths and more. It is a completely different model,” says Marianne Vind.

“So much is at stake – our tradition of creating better working conditions, our way of handling change. Yes, this will have an impact on a lot of things,” says Abir Al-Sahlani. 

The war might postpone the decision

The fact that Ursula von der Leyen during questioning in the EU Parliament repeated that the Nordic model would be respected does not seem to have changed Sweden and Denmark’s position. 

But there are other things that could make the proposal fail. The Parliament, Council and Commission have met several times to negotiate in the first few months of 2022, as part of the so-called triologue led by the French presidency. President Macron has had a clear vision for landing the minimum wage issue before the French presidential elections. This has failed for various reasons. One important explanation is the war in Ukraine.

“The minimum wage issue might get delayed now,“ says Marianne Vind. 

“Millions are fleeing and I am afraid that those who come to Sweden and Denmark will be paid low wages. Our wages are higher than what they are used to, but it is also more expensive to live in our countries. Many do not know this.”

She thinks the EU, rather than pushing through a minimum wage, should work to strengthen trade unions to allow them to spread knowledge about workers’ rights. 

Carl-Albert Hjelmborn, head of the office for Swedish trade unions in Brussels, believes the minimum wage issue could drag on. 

“It is difficult to see how you can reach a consensus. The European Parliament wants to go considerably further than the current proposal, while the Council says there is no wriggle room at all. If there is no agreement during the French presidency, this could become a never-ending story. I don’t think the Czech presidency [which takes over on 1 July] has much of an appetite to drive this forward, particularly not now,” says Hjelmborn.

Norway puts its hope in Sweden and Denmark

So where is non-EU member Norway in all this?

Robert René Hansen at the Norwegian LO’s Brussels office points out that there is little experience on a European level to solve issues through agreements and that this will colour the law-making process. 

“So much prestige has gone into this issue that only a few countries are against it. The Norwegian position has not changed, but there is not much the Norwegians can do now since we are not sitting around the table. It is, however, important that the EU members Sweden and Denmark take the lead,” he says.