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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INTERVIEW: Does Denmark have a distinct management style?

The Local's Emma Firth interviewed Jakob Lauring, Professor at Aarhus University and researcher of cross-cultural management, about the Danish style of leadership.

INTERVIEW: Does Denmark have a distinct management style?

Does Denmark have a distinctive management style?

“I would guess so. Of course it’s somewhat in line with other Northern European styles, which is relatively democratic with a low power style. In a Danish workplace, everyone can voice an opinion and even managers need to ask employees for their point. This is similar to Norway and Sweden but it’s been argued that the Danish style is more informal and less consensus-seeking than other Nordic countries.

“If you compare Danish management to Germany and the U.K., it is quite different. There are not many layers in the Danish company, perhaps just three layers of employee, middle manager and top manager. In a British organisation for example there are seven to eight layers.

“The Nordic style of management is more similar but that’s the same with the cultural values in those countries.”

Where does the Danish leadership style come from?

“It relates to national cultural values, which in Denmark are about having equality and respect for everyone. Whether it’s always fulfilled, we don’t know but the idea is there and it’s something to strive for. Participation, involvement and inclusion are key elements of it. It’s perceived negatively if people are striving for power.

“In Denmark, the ideal manager is very much part of the workforce. They help the workforce with the job and do not have to actually lead them. This idea of being equal can mean it’s more demanding for workers, especially the lower levels as they are expected to know what do do by themselves and get on with things when they run out of work.

“This can be hard cross-culturally. If Danish managers go abroad, they can get quite frustrated that people don’t organise themselves and take initiative.”

Does this leadership style cause cultural clashes? 

“Yes, it seems to be generally that when Danish managers go abroad, they expect far too much from the workers. But these workers don’t have the salary that goes with the Danish responsibility, so they’re not interested in taking that on. Something core to Danish workplace relations, is that everyone wants to take responsibility, that’s how you get status. In the UK for example, it is more to have a form of power and some managers lead but don’t take part in the work.”

What challenges do people face when they move to Denmark to work?

“When foreign people come to work in Denmark, it takes time for them to get used to an informal way of working and a lot of informal values.

“In a Danish workplace, there are no clear hierarchies, so it is much more of a cultural balance of taking responsibility and having freedom.

“For example, if there’s fruit in the office, you can take it freely. But some people might come and take it home to their family. This is not allowed but it’s not a written rule, you’re just expected to know. Similarly, your workplace may say you can work from home but really only for two days a week. But there are no written rules on that. We don’t have explicit rules but they are still there and Danish people know when not to step over the line.

“So it can be quite difficult for foreign workers to know, ‘What is my responsibility and what is my freedom?'”

How good is Denmark’s work-life balance for managers?

“Denmark is usually known to have fairly good work life balance but in a family, both parents tend to work full-time.

“The standard working week is 37 hours and there’s some flexibility, so for example one parent can go into work early and the other come home later, so you can be with your children. But it also means that all children are in nursery or kindergarten. It is very uncommon for one parent not to have a career, or to be at home with children. So you can say work-life balance is quite good but it also means both people are quite busy.”