Legal barriers to EU minimum wages

The EU Commission has published a long-announced initiative on European minimum wages: a directive on appropriate minimum wages in the EU has been proposed.

The Directive on European minimum wages aims to protect workers in the EU by providing them with "adequate minimum wages" which will enable them to have a "fair standard of living" where they work. To this end, all Member States must promote collective bargaining on wages [Art. 3 COM(2020) 628 final]. Member States with statutory minimum wages must provide stable and clear criteria for setting the minimum wage, benchmarks for assessing adequacy and regular and timely updates of minimum wages. Social partners must be involved in the definition and updating of minimum wages [Art. 5-7 COM(2020) 628 final].

According to the Commission, the proposal fully respects national traditions and the social partners' freedom to negotiate. However, many social partners, particularly in Northern Europe, see the binding instrument as a strong interference in their freedom to bargain.

From a legal point of view, the situation is clear: with the proposal for a directive, the EU is exceeding its competences. The reason is that pay is explicitly excluded from the EU's social policy competence [Art. 153 (5) TFEU, see also cepInput of 2 May 2020].

With this proposal, the EU is not only violating the wording of the EU Treaty, but also disregarding the competence of the national states for pay.