European Court of Justice rules against minimum wage regulation

The European Court of Justice has today delivered its judgment on the EU's minimum wage directive. Denmark had appealed the directive, supported by Sweden, because it believed that the EU should not interfere in how wages are set nationally.

The Court partly agrees with Denmark and Sweden. It ruled that the EU cannot determine how wages are set in member countries and removed some parts of the directive that were considered to go too far. At the same time, other parts remain. This means that countries like Sweden and Denmark - where wages are negotiated between employers and unions - can continue to maintain their systems without a statutory minimum wage.

The ruling is seen as confirmation that the Swedish model of wage formation remains protected within the EU.

- "It is gratifying that the judgment makes it clear that the EU has no right to interfere in national wage formation. In Sweden, it is the social partners who are responsible for wage formation and not any legislator in either the EU or Sweden," says Karolina Löf, General Counsel and Head of Employer Policy at TechSverige.

At the same time, parts of the Directive that affect Member States' labor market models remain.

- "It is unfortunate that the entire directive is not annulled. Even the parts concerning collective bargaining coverage are, in our opinion, beyond the EU's competence," continues Karolina Löf.