Why is Denmark opposed to an EU minimum wage law?

An agreement over a minimum wage for EU member states has been reached between the EU parliament and European Council but why has it raised concerns in Denmark?

Danish Prime Minister Mette Frederiksen and President of the EU Commission Ursula von der Leyen
Danish Prime Minister Mette Frederiksen and President of the EU Commission Ursula von der Leyen. Denmark is against an EU minimum wage. File photo: Bo Amstrup/Ritzau Scanpix

The president of the European Commission, Ursula von der Leyen, announced the agreement in a statement on Tuesday following an agreement between the parliament and council on Monday night.

The agreement must be formally approved by the EU Parliament and the Council before taking effect. That process is expected to be a formality.

A proposal to introduce a minimum wage was introduced by the EU Commission in 2020. A subsequent proposal for an EU directive on the area has since met with strong opposition from Denmark’s government.

The government opposes EU rules in an area that is normally regulated in Denmark by labour market forces, specifically collective bargaining agreements between trade unions and employer organisations.

READ ALSO: EXPLAINED: What is a Danish collective bargaining agreement?

Several attempts have been made in Brussels to accommodate the Danish concerns. Von der Leyen also repeated those sentiments on Tuesday, stating that there would be “full respect for national traditions and the autonomy of labour market partners”.

Employment minister Peter Hummelgaard, along with Swedish government representatives, have led calls by nine EU countries expressing concerns about an EU minimum wage.

The European Commissioner for Jobs and Social Rights, Nicolas Schmit, has meanwhile said that Denmark does not need to be concerned about any threat to its labour model.

Prime Minister Mette Frederiksen has also stated that she does not believe there is any threat to the Danish practice of setting wages and working conditions through labour market negotiations.

But Marianne Vind, an MEP with Denmark’s governing Social Democratic party, gave critical marks on Tuesday relating to the EU agreement.

“In the final outcome, this could mean that the Commission and EU Court can force Denmark to introduce a minimum wage,” Wind said.

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 to continue with its current practice, however.

That is because the system practiced in Denmark ensures good wages and working conditions for employees, it said.

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

Those assurances were not enough to convince Vind. The Social Democratic MEP said that the EU directive is an intervention in an area in which the union should not legislate.

“If this proposal genuinely introduces minimum wages in Denmark, I will bang the drum (in favour of) Denmark, even if we have to do it alone, going to court against the EU,” she said to news wire Ritzau.

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Danish businesses repeat call for foreign workers amid labour shortage

Local authorities and a major business interest organisation have urged Denmark’s government to address a labour shortage.

Danish businesses repeat call for foreign workers amid labour shortage

Unmet demand for labour in both private businesses and the public sector has reached a crisis point, according to an appeal to the government to reach a broader labour agreement. 

Parliament must renew its efforts to find a new national compromise which will secure more labour, the National Association of Municipalities (Kommunernes Landsforening, KL) and the Confederation of Danish Industry (Dansk Industri, DI) said according to financial media Finans.

“The parties [in parliament] must be honest with voters and start a completely different and strict prioritisation of what the public sector can offer people,” mayor and KL chairperson Martin Damm told news wire Ritzau.

“Otherwise, the parties must find the labour needed for private companies to provide growth and wellbeing, and for us at municipalities to have the staff and economy to deliver the services people expect,” he said.

The municipalities will need 44,000 additional employees by 2030 due to increasing numbers of children and elderly in the population, according to KL.

Short the lack of labour persist, municipal governments could be forced to reduce the priority of services such as cleaning for elderly residents, according to Damm.

Danish businesses are finding it harder than ever to recruit staff and could hire 38,000 new workers immediately if they were available, according to DI, which represents the interests of about 19,000 Danish companies. 

Lars Sandahl Sørensen, managing director of DI, firmly believes the answer to the labour shortage lies outside Danish borders. 

“We will need many more foreigners,” Sørensen told Finans.

“It is not about getting cheap labour, but about getting people at all. We are in a situation where we do not have employees to carry out the things on green conversion that we have already decided to do, and that we would like to do on health and welfare,” he said.

Employment minister Peter Hummelgaard told Finans that the government agreed a deal on international recruitment shortly before the summer break.

READ MORE: How can you get a work permit in Denmark if you aren’t an EU national?