The European Union exceeded its powers in setting rules for minimum wages, the European Court of Justice (ECJ) said on Tuesday, annulling two provisions of an EU minimum wage directive.

The top EU court in Luxembourg struck down one provision laying out the criteria for setting and updating wages and another that prevents wages from being reduced if they are subject to automatic indexation.

Denmark had challenged the regulations, adopted by a majority of EU states in 2022, and the court has now partially sided with the country.

Danish Labour Minister Kaare Dybvad Bek called the ruling a half victory but said he wished that the entire directive had been repealed.

Judges said specifying criteria for minimum wage levels directly interferes with wage-setting, which, under EU treaties, remains the responsibility of member states.

The same reasoning applied to the provision blocking wage reductions under automatic indexation – usually a formula tied to inflation.

The rest of the directive remains in force, including obligations for countries to encourage workers to join collective bargaining over work and pay conditions.

Countries where fewer than 80 per cent of workers are covered must submit national action plans to boost participation.

The ECJ said this obligation does not constitute a direct infringement of the right to freedom of association, since member states are not required to force workers to join unions.

In Germany, trade unions lamented the annulment of uniform EU-wide wage criteria.

But Bettina Kohlrausch, research director at the Hans Böckler Foundation, which is affiliated with the unions, should spur the German government to act quickly with a concrete plan to raise collective bargaining coverage.

Germany, which falls short of the 80 per cent threshold, has yet to submit its plan and is expected to do so by December 31, according to the Labour Ministry.

The Confederation of German Employers’ Associations criticised the fact that large parts of the directive were upheld and urged the government to fight back against further EU involvement in the member state’s social policy.

Under the directive’s remaining provisions, the EU recommends that national minimum wages correspond to at least 60 per cent of a country’s median gross wage. 

(dpa/NAN)