The fate of the Adequate Minimum Wages Directive is not sealed

The recommendation of the Advocate General of the EU Court of Justice on the Adequate Minimum Wages Directive is surprising.

The editorial of Helsingin Sanomat newspaper covered (HS 16 January, in Finnish) the recommendation of the Advocate General of the EU Court of Justice to overturn the Adequate Minimum Wages Directive. The Court is not bound by the Advocate General’s recommendation. The verdict is expected to be delivered after several months, so it is not yet time for conclusions. There is also no extensive case law on the subject, so it is difficult to assess what position the court will take.

The aim of the Directive is to improve employees’ livelihood and reduce wage poverty, which remains a major problem in many EU countries. The Directive aims to ensure that adequate minimum wages are introduced in all EU Member States to ensure a decent standard of living for employees. The Directive was to be implemented nationally by 15 November 2024.

Denmark and Sweden opposed the Adequate Minimum Wages Directive and brought the matter to the EU Court of Justice to test whether it is beyond the competence of the EU. In his recommendation, the Advocate General of the Court supported Denmark and Sweden. He estimates that the Adequate Minimum Wages Directive will directly interfere with the pay structure in the Member States. According to the Treaty on the Functioning of the European Union, wages fall outside the competence of the Union, and the Advocate General estimates that, as a whole, the Directive targets the pay structure in the Member States.

The Directive does not set any minimum wages in euros. Instead, it supports collective bargaining.
Comprehensive collective agreements
are the most effective way to combat poverty wage.

The Advocate General’s recommendation is surprising and can justifiably be challenged. The Directive does not set any minimum wages in euros. Instead, it supports collective bargaining. Comprehensive collective agreements are the most effective way to combat poverty wage. The Directive only generally requires certain criteria to be taken into account when setting possible statutory minimum wages and promoting collective bargaining, but it does not directly interfere with the determination or amount of pay.

The EU has adopted a number of directives that impact the amount of pay in practice, such as the Working Time Directive. The concept of pay is also broadly defined in the equality directives. The concept of pay in the division of competence is therefore not clear, and the questions here is of a legal evaluation of the concept.

It would be very unfortunate if the directive was now overturned as a result of interpretation of the EU’s competences. The Directive does not threaten the Finnish labour market system but instead respects it. Overturning it could have far-reaching effects on EU regulation, especially in the area of labour law. Social issues, such as promoting good working conditions, are essential. Overturning the Directive could undermine the EU’s legitimacy to act on these issues, which could weaken the position of employees across the EU.

Sanna Rantala
The author is a lawyer at STTK

The text was first published in Helsingin Sanomat on 22 January 2025.