Via Financial Times

Brussels is facing a battle over plans to introduce a minimum wage across the EU as Nordic nations warn that the measure could undermine their long-standing systems of collective bargaining between employers and employees.

Ursula von der Leyen, the new European Commission president, pledged in July to introduce a “framework” for minimum wages in the EU while respecting differences between individual labour markets, as part of her pitch to win support in the European Parliament.

But officials and politicians in countries where wage-setting deals between unions and employers are commonplace have warned against the introduction of an EU standard under jobs commissioner Nicolas Schmit, fearing damage to their own systems.

Peter Hummelgaard, the Danish employment minister, said that while he had received assurances from Mr Schmit that the commission had no desire to undermine collective bargaining — under which bosses and employee representatives hammer out deals on salaries and other working conditions — “we are not calmed before we see the final details in print”. 

“We are worried a directive will not contain the necessary exemptions or safeguards for our system,” he said in an interview. “The basic principle in the Danish model is [that] we have no political meddling.”

EU policymakers want wages to converge at a higher level across the bloc, given wide disparities in salaries, especially between western nations and newer members in the east. The debate over minimum wages was given a push this year when Frans Timmermans, the commissioner who was unsuccessfully campaigning to be commission president, called for each EU member state to have a minimum wage equivalent to 60 per cent of the median salary in that country.

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The commission has yet to make any proposals or decide what legal form any provisions would take, with a consultation expected in mid-January. Dictating wage levels is not within Brussels’ power but one option is a directive that would provide a framework for minimum wages to be set, using multiple indicators.

“The number of people in employment in the EU is at a record high. But many working people still struggle to make ends meet and can even find themselves slipping into poverty. It’s essential that workers have a fair wage that provides for a decent standard of living,” Mr Schmit told the Financial Times.

Only six of the EU’s 28 member states — Denmark, Finland, Sweden, Austria, Italy and Cyprus — do not have a legal minimum wage. The minimum monthly levels in other countries range from less than €500 in Bulgaria and Romania to more than €2,000 in Luxembourg, according to Eurostat.

A handful of European countries, among them Nordic states with high pay levels, are heavily reliant on collective bargaining systems under which the state plays a minimal role.

Karl-Petter Thorwaldsson, the president of the Swedish Trade Union Confederation, said his country had fought off attempts to impose a minimum wage and did not want a new battle over the topic. He questioned how easy it would be to frame a minimum wage directive that gave exemptions to countries such as Sweden, where 91 per cent of workers are in collective agreements.

Mr Thorwaldsson said he was concerned that the Swedish parliament could gain a say over wage-setting at a time when rightwing parties were bidding for more power. “There is a major fear for us to lose control over salaries to our parliament,” he said. “If Europe takes a decision on the minimum wage we can never protect the Nordic system”. 

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Mr Schmit, a member of Luxembourg’s socialist workers’ party, insisted this was not his intention.

Some member states’ high standards on wage setting had become integral to their social fabric, he said. “Promoting high standards on wages could support the kind of upward economic and social convergence — the race to the top — that helps to boost the EU’s social market economy.”