That European Court of Justice decides today on the future of the EU minimum wage directive. Supreme Council judges must decide whether rules adopted by EU countries by majority decision in 2022 are in line with European treaties. Denmark, with Sweden’s support, opposed this and filed a lawsuit in early 2023.
The European Union’s Adequate Minimum Wage Directive defines standards for how statutory minimum wages should be set, updated and enforced.
Denmark argued that the EU legislature exceeded its authority by issuing the directive. This refers to the Treaty on the Functioning of the European Union (TFEU). From the Danish point of view, this allows, among other things, guidelines on working conditions, but not wages.
Advocate General for Removal of the Directive
In his opinion on the proceedings, the ECJ Advocate General in charge followed the arguments in key points and recommended that the Court annul the directive in its entirety. However, the judge is not bound by this.
If the minimum wage guidelines are annulled, discussions in Germany will become irrelevant as to whether national regulations in the minimum wage law, which has been in effect for eleven years, need to be brought into line with EU law. In this context, for example, there has long been a demand for: Minimum wage based on the reference values mentioned in the EU directives. This requires employers to pay at least 60 percent of the average gross wage in Germany. The average gross wage is the wage at which half of the workers earn more and the other half of the workers earn less.
Should Germany raise the minimum wage to 15 euros?
The federal government recently decided that the current minimum wage of 12.82 euros will rise to 13.90 euros an hour on January 1 and a further 70 cents to 14.60 euros an hour a year later. However, according to the union, if average wages were used, they should be increased to more than 15 euros.
According to the directive, Germany should also present an action plan to encourage collective bargaining, as currently only about 50 percent of workers in the Federal Republic have employment relationships regulated by collective agreements. This aims to increase the proportion of employment relationships that apply collective agreements. According to the guidelines, an action plan is not required if collective agreement coverage reaches 80 percent or higher.
According to the Federal Ministry of Labor and Social Affairs, Germany has not submitted an action plan to the EU Commission. According to information, this will happen on December 31st.
Labor law professor Adam Sagan from the University of Bayreuth told the German Press Agency that declaring the minimum wage guidelines invalid would be a major setback for social policy. EU. However, if the ECJ declares it effective, Germany will have to reform its minimum wage law, for example regarding the question of who can claim the minimum wage and what criteria should be taken into account when setting it. “That doesn’t mean there should be any change in the results,” stressed Sagan. Ultimately, the agreed minimum wage of 13.90 euros could remain the same.
However, political scientist Martin Höpner of the Max Planck Institute for the Study of Societies stated that the guidelines’ requirements are still vague and require interpretation. From his point of view, Germany would probably be on the safe side even if Denmark’s lawsuit was rejected. However, with regard to collective bargaining targets, Germany must submit an action plan to improve collective bargaining to the Commission.
“Contrary to trends in Europe, tariff coverage in Germany has fallen rapidly over the past two decades, to around 50 percent,” the professor said. This is dramatic, the German legislature should do more on this, Höpner said. However, it can do this either with or without an EU directive.
© dpa-infocom, dpa:251111-930-275456/1
