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Why are Sweden and Denmark opposed to an EU minimum wage law?

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Why are Sweden and Denmark opposed to an EU minimum wage law?
Sweden's Prime minister Ulf Kristersson and EU Commission President Ursula von der Leyen at an EU Summit in Brussels in 2022. Sweden and Denmark want the EU's minimum wage directive annulled by the EU Court. Photo: Kenzo TRIBOUILLARD / AFP

Sweden has announced it wants to join Denmark’s EU Court case requesting annulment of the European Union's minimum wage directive. Why is an agreement over a minimum wage for EU member states a problem for the two Nordic countries?

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An agreement over a minimum wage for EU member states was reached last summer between the EU parliament and European Council. The proposal to introduce a minimum wage was first introduced by the EU Commission in 2020, but has met with determined resistance from both Sweden and Denmark.

Both countries oppose EU rules in an area that they normally regulate through labour market forces, specifically collective bargaining agreements between trade unions and employer organisations.

Several attempts have been made in Brussels to accommodate the Nordic concerns. The president of the European Commission, Ursula von der Leyen, said in June 2022, when the EU agreement was announced, that there would be “full respect for national traditions and the autonomy of labour market partners”.

Strong opposition to the directive in the Danish parliament nevertheless persisted, and in January Copenhagen brought a case requesting annulment of the EU’s minimum wage directive. An annulment suit is an attempt to have the directive revoked on the grounds that it is in breach of the EU Treaty.

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In Sweden, the country's deputy employment minister Paulina Brandberg confirmed on Friday that the Swedish government will next week send a formal request to the EU's Court of Justice, asking to be allowed to join Denmark in the annulment case.

Sweden's right-wing government has been under pressure from the opposition Social Democrats, as well by both the unions and employer trade bodies, to join Denmark in its push to annul the directive, but has up until now held back from making any commitments.

The Swedish government position is that unions and employer trade bodies alone should be tasked with setting salary levels and that the EU should not be involved in setting wage levels through legislation, Brandberg said.

"This is an important issue of principle, which at root is about the limits of the EU's authority," she told news wire TT. "We were waiting to see how the Danish case was formed and when we saw it, we quickly realised that it was something we could become involved in."

The EU Commission has stressed that it will respect the Swedish and Danish models of wage setting and would not force either country to code a minimum wage into law. 

But Marianne Vind, an MEP with Denmark’s governing Social Democratic party, argued in June 2022 that “in the final outcome, this could mean that the Commission and EU Court can force Denmark to introduce a minimum wage."

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Left wing parties in Denmark, notably the Red Green Alliance (Enhedslisten), have previously raised a similar concern – that an EU agreement could have the unintentional effect of forcing Denmark to introduce a minimum wage.

The EU Commission believes that a minimum wage directive would enable Denmark and Sweden to continue with their current practices because the labour systems in those countries ensure good wages and working conditions for employees.

The aim of the directive would not be to impact countries like Denmark, but other EU member states which have a legal minimum wage, the Commission has said.

While Denmark does not disagree with this, it has said it objects to the directive in principle.

“It’s important to underline that the directive does not force Denmark to introduce a minimum wage,” Danish Employment Minister Ane Halsboe-Jørgensen said in January.

“But despite that, this is a case of legislation without precedent, which makes it a principal case. We insist that wages must be set in Denmark and not the EU. The government has therefore decided that the EU Court must rule on this case,” she said.

The legal process could take up to two years according to the Danish employment ministry. The date on which the case will be taken up by the EU Court is yet to be set.

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