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28th May 2022

Denmark and Hungary oppose EU rules on minimum wages

  • Minimum wages vary widely across the EU - from €312 a month in Bulgaria to €2,142 in Luxembourg (Photo: Martin Vorel)
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EU labour ministers agreed on Monday (6 December) minimum standards to better protect minimum wages in Europe, after months of negotiations - and strong opposition led by Scandinavian countries.

Although the EU draft law will not set a common EU-wide minimum wage, this new legislation is seen as a potential game-changer in countries where salaries are very low.

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Under new rules, minimum wages are expected to increase in more than half of member states, helping over 25 million workers.

"Decent and fair pay must be ensured for the work done," said Slovenian labour minister Janez Cigler Kralj, whose country currently holds the rotating EU Council presidency

"We cannot accept that people who put all their energy in their job still live in poverty and cannot afford a decent standard of living," he added.

EU countries have different labour market models, and monthly minimum wages vary widely across the 27-nation bloc, from €312 in Bulgaria to €2,142 in Luxembourg.

In Denmark, Italy, Cyprus, Austria, Finland and Sweden, minimum wage protection is provided exclusively by collective agreements, while the remaining 21 countries have statutory minimum wages set by governments.

The issue of setting an EU framework for a minimum wage was particularly challenged by the Nordic countries who feared that the proposal would undermine their well-established systems, in which companies arrange working salaries with trade unions without state intervention.

But Sweden finally decided to back the draft law, after the country's parliamentary committee on EU affairs voted to support the commission proposal last Friday.

Denmark and Hungary, however, voted against it.

And there were two abstentions from Austria and Germany – in the case of Germany because of the lack of a current government. Yet, Berlin has made clear that it supports the text.

The proposal on minimum wages does not oblige member states to harmonise their systems, but it does promote collective agreements and strengthening the role of social partners.

The compromise text states that EU member states, where collective bargaining coverage is below 70 percent, are encouraged to implement such approach – either by law after consultation of the social partners or by agreement with them. But this is only a guiding principle.

Collective bargaining systems from Nordic countries are in fact seen as "one of the most progressives in Europe", commissioner for jobs Nicolas Schmit told a media briefing.

In Germany, for example, only 50 percent of the workforce are covered by this system.

Meanwhile, countries with the so-called statuary minimum wage systems are tasked to put a framework in place to set and update these minimum wages according to common criteria.

Difficult trilogues ahead

The successful outcome of the negotiations in the EU council, which now paves the way for negotiations with the European Parliament, was deemed unlikely at the beginning of the Slovenian presidency.

However, according to commissioner Schmit, the "trialogues will not be easy". Three-way negotiations will take place under the upcoming French presidency of the EU council starting in January.

MEPs adopted their own approach in November, arguing that the EU draft law should explicitly forbid undermining collective agreements on wage setting.

They also argued that countries should try to cover 80 percent of the workforce with collective bargaining.

However, only a few countries currently reach this level of coverage – namely Austria, France, Italy, Belgium, Finland, Denmark and Sweden.

These are all countries where minimum wages are set through collective bargaining, bar France and Belgium.

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