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EU minimum wage directive undercuts Scandinavian model

The European Commission has presented its proposal for a directive on adequate minimum wages. We, the Scandinavian Trade Unions, share the view that wages are too low in many parts of Europe. At the same time, we have reminded the EU Commission that EU legislation on pay would not only be in breach of the treaty, but would also interfere with well-functioning labour market models.

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Publicerad i EU Observer 23 november 20202

First of all, it is our firm position that the EU lacks competence to legislate on issues regarding pay. Pay is - just like the right of association, the right to strike or the right to impose lockouts - explicitly exempted from EU legislation, according to Article 153(5) in the treaty and related ECJ rulings.

This safety clause protects national wage-setting systems, which can vary substantially between member states. Having conducted an analysis of the proposed directive, we can clearly say that our worries and concerns remain.

EU social affairs commissioner Nicolas Schmit has repeatedly promised that the directive would not affect Scandinavian countries, because it would include a "waterproof firewall" to protect our labour market models. We take note of the inclusion of a reference in this spirit, but the proposed directive falls short of living up to these promises.

The draft directive states that "it that does not oblige member states where wage setting is exclusively done by collective agreements to introduce a statutory minimum wage nor to make the collective agreements universally applicable."

However, a directive is a binding legal act and the proposal requires member states – no exceptions made – to live up to the basic requirements in the directive: the need to ensure that all workers have access to minimum wage protection, either by statutory minimum wage or under collective agreements.

In addition, the directive states that every worker should be able to go to court to claim that minimum wage. These rules, addressed to member states, intervene directly in fields that in Scandinavia are exclusively defined and determined not through legislation, but by the social partners alone. Thus, the directive is deeply contradictory and will leave room for interpretations by the Court of Justice.

From our experience this means that the commission's "waterproof firewall" - despite its intention - would not be able to safeguard our labour market model and will definitely not constitute a firewall, waterproof or not. Although the commission's ambition is to strengthen collective bargaining, the draft directive would therefore directly interfere with existing and well-functioning collective bargaining structures.

The proposed directive also for the first time, introduces EU legislation concerning collective bargaining at national level, providing EU definitions to national concepts such as "collective bargaining" and "collective agreements". This together with the demand of "adequate minimum wages" raises a number of other questions, as many articles are detailed – and at the same time very vague.

This leaves room for ambiguous interpretations, which would provide a carte blanche for the European Court of Justice to issue rulings that directly interfere with our labour market models and the autonomy of national social partners.

'Waterproof firewall'?

We have never asked for a "waterproof firewall". Simply because we already have one. The Lisbon Treaty provides a safeguard, as its Article 153 exempts crucial labour market elements such as wage-setting and the right of association from EU interference.

It can also be noted that when agreeing on rules regarding representation and collective defence of the interests of workers and employers, including co-determination, the council shall act unanimously according to Article 153 (1f) in the Treaty. Considering this, we would like to remind the commission that rather than proposing legal texts that stand in contradiction with the treaty, it should remember its role as guardian of the treaties.

As always, we are more than willing to engage in discussions on how to create a real Social Europe. We share the commission's willingness to increase wages and improve collective bargaining in many parts of Europe. However, imposing minimum wages and interfering in collective bargaining through binding legislation, not only means breaching EU treaties. There is also a serious risk that this will undermine successful labour market models that have delivered real wage increases for decades. We know that it is not the intention of the Commission. It may, however, be the direct consequence.

This is a momentum for a real Social Europe. However, it would be very unfortunate if the commission missed it due to misguided ambitions to harmonise widely-differing labour market models.

Lizette Risgaard is president of the Danish Trade Union Confederation.
Bente Sorgenfrey is first vice-president of the Danish Trade Union Confederation.
Lars Qvistgaard is president of the Danish Confederation of Professional Associations.
Hans-Christian Gabrielsen is president of the Norwegian Trade Union Confederation.
Peggy Hessen Følsvik is vice president of the Norwegian Trade Union Confederation.
Ragnhild Lied is president of the Confederation of Unions for Professionals.
Kjetil Rekdal is vice president of the Confederation of Unions for Professionals.
Erik Kollerud is president of the Confederation of Norway Vocational Unions.
Hans-Erik Skjæggerud, is vice president of the Confederation of Vocational Unions.
Susanna Gideonsson is president of the Swedish Trade Union Confederation.
Therese Guovelin is first vice-president of the Swedish Trade Union Confederation.
Therese Svanström is president of the Swedish Confederation of Professional Employees.
Peter Hellberg is vice president of the Swedish Confederation of Professional Employees.
Göran Arrius is president of the Swedish Confederation of Professional Associations.