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ARTICLE16 September 2020

An EU directive on minimum wages is unacceptable

Trade unions and employers’ organisations in the private sector, are deeply concerned about the Commission’s plans to present proposals on European minimum wages.

Martin Linder, President, PTK – the Council for Negotiation and Cooperation, Susanna Gideonsson, President, Swedish Trade Union Confederation, and Mattias Dahl, Deputy Director General, Confederation of Swedish Enterprise.

This Wednesday, EU Commission President, Ursula von der Leyen, will deliver her first State of the Union address to the European Parliament. Ahead of the speech, in an opinion piece in Swedish daily newspaper Dagens Nyheter on Monday, von der Leyen pledged that “the Commission will never ask Sweden to introduce a statutory minimum wage”.

We work on the assumption that the Commission would not make such a request, but this statement was anything but reassuring. Representing trade unions and employers’ organisations in the private sector, we are deeply concerned about the Commission’s plans to present proposals on European minimum wages at all.

An EU directive – an instrument that is legally binding for EU member states – is entirely unacceptable. And our position is not unique to Sweden: it is shared by employers, trade unions, and governments across Scandinavia.

Our labour market models are based on the understanding that social partners, unions and employers, enter into collective agreements on key issues such as wages, working time, and other working conditions. In Sweden, this model has contributed to a successful economy and strong welfare for decades. It means that the state does not get involved in wage formation. State involvement results in less flexible and less sector-adjusted wage setting, greater costs for employers, and undermines the bargaining power of workers.

Our labour market model is deeply integrated with other parts of society. The social security system and our welfare model are intertwined with the Swedish collective agreement model. This is why the issue of statutory minimum wages is much broader and more important than it might appear at first glance – it is a question that essentially affects our national identity and our sovereignty. A social welfare model is an intrinsic part of the social partner system.

The Commission lacks competence to propose a directive on minimum wages. The EU treaty, (article 153.5), states that the EU’s legislative competence does not include “pay, the right of association, the right to strike or the right to impose lockouts”. Furthermore, a proposal for legally binding wage legislation is in breach of the EU’s subsidiarity principle, that decisions should be taken at the lowest possible [administrative] level. It should also be noted that during negotiations on Sweden’s EU membership, we perceived it as a promise that the EU is not to get involved in the area of wage formation.

Von der Leyen writes that “all shall have access to minimum wages either through collective agreements or through statutory and regularly updated minimum wages” and that “minimum wages shall be adequate and guarantee a fair standard of living”. The implication is that it is the EU’s regulatory framework and, ultimately, the European Court of Justice that will rule on wage formation, including in Sweden.

The proposals strike at the heart of our model for wage formation – under which it is the responsibility of the social partners to regulate wages through collective agreements. It is not possible to regulate this issue with the content announced by the Commission, to make it “waterproof” and at the same time claim to fully respect our model of self-regulation in which unions and employers share responsibility for wage formation.

In addition, von der Leyen’s proposals risk creating a parallel labour market regulation that risks undermining the self-regulation model. A directive, regardless of how it is framed, would severely disrupt our self-regulating collective agreement system.

A directive on European minimum wages would be in breach of the EU treaties and would represent an unacceptable infringement of the member states’ sovereignty, in a fundamental issue with far-reaching consequences for our societal model as a whole, and not exclusively in the labour market area.

We expect the Commission, as guardian of the treaties, to honour the EU treaties in line with the EU’s motto “United in Diversity”. If the Commission instead regulates wages through legislation, the political premises on which Sweden joined the EU risk being eroded. It would risk undermining confidence in the EU in our country and inciting the EU-critical voices that have been on the rise in recent years.

Perhaps the Commission believes that an offensive reform agenda will boost popular support for the EU and strengthen ties between member states. As supporters of the EU and advocates of a well-functioning and strong EU, naturally we welcome the Commission striving to increase democratic support for the EU. However, we are concerned about the serious consequences the Commission’s plans for the EU to enter into the domain of wage formation would have for the smooth functioning of the Scandinavian societal models and for EU public support in our countries.

We, the parties of the Swedish Labour Market Council for EU Affairs, have a clear message to the Commission: do not interfere with the Swedish collective agreement model. We would also like to extend a joint invitation to government and opposition representatives to create a national coalition against a minimum wage directive. We must stand united against the Commission: Social partner autonomy and the freedom of contract are such important matters of principle for our country that we will defend them using all available political and legal means.

Swedish EU membership is important for businesses as well as for workers and must be handled with the utmost care. The Commission should carefully evaluate the risks associated with making proposals that lack an EU legal basis.

Mattias Dahl, Deputy Director General, Confederation of Swedish Enterprise
Susanna Gideonsson, President, Swedish Trade Union Confederation
Martin Linder, President, PTK – the Council for Negotiation and Cooperation

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Publisher and editor-in-chief Anna Dalqvist