Eu's Minimum Wage Directive on the Line: A Blow to Workers' Rights and Social Justice?
EU's Minimum Wage Directive Challenged in European Court of Justice: The Game Isn't Over Yet...
The CJEU took the world by surprise when Advocate General Nicholas Emiliou, on 14th January 2025, delivered his Scathing Opinion against the European Minimum Wage Directive. This opinion, if endorsed by the CJEU, could severely undermine one of the EU's most influential pieces of social legislation, causing a stir across Europe. But let's not jump the gun - the game isn't over yet!
Legal Battle Over the Minimum Wage Directive
In 2022, the European Council adopted the "European Minimum Wage Directive" whooping in favor of 24 out of 27 Member States. The Directive aims to establish a harmonized framework addressing adequate minimum wages and strengthening collective bargaining. Undeterred, Denmark and Sweden voted against its adoption, expressing concerns about its impact on their national labor market models.
Early 2023, the Danish government, alongside employers' associations and unions, followed by Sweden, challenged the Directive in the CJEU (Case C-19/23). They argue that the Directive contravenes Article 153(5) of the TFEU by encroaching on the authority of "pay."
In his Opinion, the Advocate General echoes the Danish and Swedish views and advocates for the Directive's complete annulment. While the European Parliament, Council, and Commission had previously scrutinized the Directive's legal foundations, the Advocate General's position sharply contrasts theirs.
Controversy Over Article 153(5) TFEU
The heart of the debate revolves around the interpretation of Article 153(5) TFEU. This clause restrains the EU's authority to engage with "pay." However, advocates of the Directive argue that it does not directly regulate wage levels or specific procedures for setting minimum wages as it offers a procedural framework for member states to establish statutory minimum wages and increase collective bargaining at the national level.
Despite the arguments in favor, the Advocate General draws an expansive view of Article 153(5) TFEU, claiming that any kind of pay regulation, even indirect, contradicts EU law. In a questionable distinction, he classifies an "acceptable implicit" impact on pay, as seen in other EU directives like the Fixed-Term Work Directive and the Temporary Agency Work Directive, and an "unacceptable explicit" regulation on pay, which he believes the European Minimum Wage Directive embodies. The validity of this distinction remains to be seen.
Moreover, the Advocate General overlooks the protections in the Directive designed to safeguard national autonomy, especially with regard to collective bargaining. For example, the Directive empowers member states with the flexibility to use diverse criteria when setting minimum wages, with the wage benchmarks ranging from 46% in Latvia to 60% in Slovakia. Even the critics of the Directive acknowledge that it does not disrupt their national wage-setting systems.
The European Court's Next Move
Although the Advocate General's Opinion holds no binding force, the CJEU often aligns with its recommendations. Given the potential consequences of the case, the Court will likely exercise caution and take a more balanced approach. The CJEU will also ponder the political implications of its decision. The European Minimum Wage Directive stands as a crucial step in the EU's pursuit of a more socially inclusive Europe, annulling it could deepen the divide between the EU and its citizens, further fueling nationalist and populist sentiment.
Irrespective of the Directive's current legal status, it has already sparked discussions and initiatives in many countries focused on ensuring fair wages and encouraging collective bargaining. Even before the Directive's transposition, its proposals have set off debates and driven action. In addition, it has practical implications, serving as an "adequate wage benchmark" for the European Sustainability Reporting Standards for companies.
Should the CJEU ultimately decide to annul the Directive in full, the fundamental objectives it sets forth - ensuring adequate minimum wages and promoting collective bargaining - will continue to hold significance. The Directive's success hinges on ambitious national implementation, and this process is already in motion. The endorsement of the Directive by 24 EU member states symbolizes a powerful commitment to addressing in-work poverty, promoting social cohesion, and combating unfair competition fueled by low wages.
Whether the Directive survives the CJEU proceedings or not, this commitment to fair wages and solid labor protections persists. Member states retain the freedom to define clear criteria for adequate minimum wage levels, such as 60% of the median wage or 50% of the average wage, within their national legislation. Additionally, they retain control over action plans aimed at boosting collective bargaining coverage. While the annulment of the Directive would be a major setback for proponents, the national fight for fair wages and workers' rights will carry on. The future is far from certain, but one thing remains clear - it's not all over yet!
By Thorsten Schulten & Torsten Mueller
Thorsten Schulten is the Head of the collective agreements archive at the Institute of Economic and Social Research (WSI) at the Hans Boeckler Stiftung. He is also an Honorary Professor at the University of Tübingen. Torsten Mueller is a senior researcher at the European Trade Union Institute.
- The European Minimum Wage Directive, aimed at establishing a harmonized framework for minimum wages and collective bargaining, is currently under legal scrutiny by the CJEU.
- The Danish government, employers' associations, and unions, alongside their Swedish counterparts, have challenged the Directive in the CJEU, arguing that it contravenes Article 153(5) of the TFEU by encroaching on the authority of "pay."
- Despite concerns about its impact on national labor market models, the European Minimum Wage Directive has sparked discussions and initiatives in many countries, focused on ensuring fair wages and encouraging collective bargaining in both business and politics, as well as in general news.
