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20th May 2022

Danes still sceptical on EU minimum wage

  • Danes say their successful model would be endangered by new minimum wage proposals (Photo: florriebassingbourn)

Danes remain sceptical despite a European Commission statement the EU will not introduce statutory minimum wage in countries with a high extent of collective bargaining.

"There is nothing in this material that calms us down. We notice that there are no legal guarantees. And even if we got a legal guarantee, we would still recommend [the EU] to forget all about this initiative" - so says Johan Moesgaard Andersen, EU-director for the Danish Metalworkers' Union, who remains worried about the commission's new proposal on a European minimum wage.

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And he is not alone in his concerns.

The proposal was published last Tuesday (14 January).

It calls for a debate with labour market stakeholders on reasonable minimum pay for employees in the European Union.

It is merely the first step on a long and winding road before any final legislation.

But it has already created a big stir among politicians and trade unions in Denmark.

Danish model still at risk

During the initial European Parliament hearing of Nicolas Schmit, the EU commissioner for jobs and social rights, left-wing Danish MEP Nikolaj Villumsen asked for a guarantee that the Nordic labour market model would not be compromised by new laws overruling member state traditions.

But last week's proposal from the commission did not give him such a guarantee.

"It is clear, they want to legislate on minimum wage. A move that would expand the EU's competency to decide over our salary. Despite reassurances that it will not affect the Nordic work model, we have formerly seen the EU court limiting trade unions' abilities to create collective agreements," he told EUobserver.

Bente Sorgenfrey, the chairwoman of the Danish Trade Union Confederation, was also unhappy with the proposal.

"It is not reassuring enough. I had expected more based on our talks on how to deal with the Nordic issue," she noted.

During last year, she and the Danish Employers' Association met with the EU's Schmit several times to discuss the topic.

The commissioner has publicly pronounced that the Nordic system of collective bargaining would under no circumstances be compromised by new legislation.

But last Tuesday's proposal lacked compelling evidence to that effect, the Danish trade unions said.

Fear of juridical overruling

The biggest concern was that the European Court of Justice could potentially overrule the law of any individual member state.

Both the Danish Metalworkers' Union and the Danish Trade Union Confederation want to see a juridical framework for a successful model of co-existence between Nordic collective bargaining traditions and a set minimum wage.

"We need to know that the European Court of Justice cannot pursue us and dictate that we have to implement a statutory wage in Denmark," Sorgenfrey said.

She explained that in the past, there had been disagreements between the European Court of Justice and Nordic member states.

One famous example was the Laval case in 2007, when Swedish construction workers clashed with Latvian company Laval u Partneri regarding equal pay for both Latvian and Swedish workers.

Trade unions in Denmark, Finland, and Sweden said the EU court should not interfere in these kinds of conflicts and industrial action.

But despite all that, the Swedes lost the case, as their demand was deemed a hindrance to the free movement of services, a pillar of the EU single market.

And ever since, jurists have argued that the European Court of Justice could impose verdicts in matters on minimum wage in Denmark, despite special exemptions from a given directive.

For his part, Bengt Furåker a professor of sociology and work science at Sweden's Gothenburg university, agreed that Nordic unions were somewhat afraid of juridical interference in the future.

"Nordic unions tend to believe in their model of collective bargaining. If there is an intervention through European legislation, then you never know what can happen in court after some years," he noted.

If minimum becomes maximum

Nordic countries remain hesitant when it comes to the benefits of legislation on wages.

Furåker recently conducted comprehensive research on the issue.

He asked trade union officials about the advantages and disadvantages of imposing a minimum wage and their replies were unambiguous.

Scandinavian trade unions tended to disagree with the proposed advantages, such as avoiding poverty and preventing wage dumping.

Instead, they expressed great concern over a potential deterioration in worker's wages.

If the European minimum wage was lower than the rate Nordic workers' unions managed to negotiate with employers, it could hamper the possibility of achieving a rise in those native rates.

"What we see in countries that have a minimum wage in Europe, is that it becomes a maximum and not a minimum in the wage development," said Sorgenfrey.

Denmark has a very high trade union density rate, which means that most workers have their rights collectively protected.

But unorganised workers may have something to gain from a set minimum wage, admitted Furåker.

And over the past few years, income inequality has been on the rise, also in Nordic states.

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