On 14 January 2025, the Advocate General issued an opinion in favour of the position of Denmark and Sweden in the case brought by them for the annulment of Directive (EU) 2022/2041 on Adequate Minimum Wages.
The main issue raised by the two States (which had also voted against the Directive during the approval process) is whether it exceeds the division of competences between the European Union and its Member States, as defined by the Treaty on the Functioning of the European Union (TFEU). Denmark, the main complainant, argues that the Directive exceeds such limits.
According to the Advocate General, the Directive does indeed exceed them, in that it represents a “direct interference” in the area of “pay”, which Article 153(5) of the TFEU expressly excludes from the competence of the European Union.
In essence, according to such interpretation, what matters is not only the fact that the Directive does not directly set wages, but its objective of regulating pay, no matter how strictly or flexibly. Therefore, even a procedural action aimed at regulating “pay” would constitute direct interference and breach the TFEU, it being a matter of exclusive national competence.
The action was brought by Denmark and Sweden, while Germany, France and Spain (among others) took a stand against said position.
Are Denmark and Sweden against the minimum wage?
As underlined by the Advocate General, “The present action does not arise in a vacuum, as it is intrinsically linked to Denmark’s and other Nordic Member States’ constant opposition to European Union actions which they regard as interfering with their labour law and industrial relations systems”.
It is clear, in fact, that Denmark and Sweden are not opposing minimum guarantees for workers. Both countries have a collective bargaining coverage rate of over 80%, ensuring extensive protection for workers. However, their opposition is based on the established model of labour law and industrial relations, which emphasises the autonomy of the social partners. In both countries, wages and working conditions are not regulated by statutory act, but determined through collective bargaining.
The objection, therefore, does not concern the content and principles of the Directive – both countries being already bound by the International Labour Organization (ILO) Minimum Wage Fixing Convention of 1970 – but rather the principle of non-interference in the areas of pay and the right of association (another aspect under dispute).
Where does the European Union stand in terms of minimum wages?
To date, 22 of the 27 member states of the European Union have national minimum wages established by law. The five countries that still do not have minimum wages are Denmark, Italy, Austria, Finland and Sweden. The amounts vary considerably within the EU, ranging from 2,638 Euros per month in Luxembourg to 550.66 Euros in Bulgaria.
So what about Italy?
In Italy, the debate on the introduction of legal minimum wages has been a major topic of discussion in 2024, especially in light of news stories and court rulings that shed light on the problem of poor work and the shortcomings of certain collective agreements with respect to the constitutional principle of proportionality and adequacy of wages. Such a principle, according to established case law, is immediately enforceable.
The National Council for Economics and Labour (CNEL) – which many considered abolishing over time – played an important role in the debate. The CNEL carried out an investigation upon completion of which it issued an opinion, arguing that the phenomenon of poor work should be evaluated in broader terms than just the introduction of minimum wages, and emphasising the role of collective bargaining.
The opinion highlights that the Directive, as is known, does not impose on Member States an obligation to establish adequate minimum wages by law. Where a solid and comprehensive collective bargaining system is already in place, with pay rates defined by relevant representatives, no further checks or compliance measures are required.
In Italy, the collective bargaining coverage rate is close to 100%. Nonetheless, some critical issues remain, such as the delay in collective bargaining renewals, although the CNEL believes that the system has corrective tools to manage periods of contractual vacancy. As far as the so-called “pirate bargaining” is concerned, 96.5% of the workers whose applied contract is known are covered by an agreement signed by the main trade unions (CGIL, CISL and UIL).
In any case, the CNEL concludes by suggesting the adoption of a plan to support collective bargaining, bearing in mind the wage issue and the existence of fraudulent and elusive practices.
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According to the National Institute for the Analysis of Public Policies (INAPP), the introduction of a minimum wage of 9 Euros gross per hour would apply to about 21% of employees, equal to 2.6 million people. For companies, the estimated cost – excluding compulsory social security contributions and severance pay, calculated on the gross monthly salary – would be around 6.7 billion Euros.
