European courts strike down mandatory criteria for calculating minimum wages

BrusselsCuts to European justice in the European Union directive on minimum wagesThe Court of Justice of the European Union (CJEU) has upheld the overall EU legislation aimed at guaranteeing minimum wages across the bloc, but it has weakened and reduced some of its key provisions, arguing that they infringe upon the powers of member states. The ruling by the highest court in European justice strikes down the criteria that required all national governments to consider, when calculating minimum wages in each country, factors such as the real purchasing power of their citizens. Furthermore, the Luxembourg court has rejected the prohibition on reducing minimum wages if prices fall. This means that minimum wages can continue to be indexed to the Consumer Price Index (CPI), regardless of whether the CPI rises or falls.

However, the CJEU has rejected the entire complaint filed by Denmark and Sweden, which do not have statutory minimum wages, against the European directive, asserting that it does not constitute a "direct interference" in the powers of the member states. These two countries also considered that the legislation could infringe on workers' right to freedom of association and unionization, an argument that the Luxembourg court has also dismissed.

The directive was adopted in October 2022 and its intention is to improve the living and working conditions of citizens of the European Union, as stated in the CJEU ruling itself. "The directive establishes a framework designed to ensure the adequacy of statutory minimum wages in the member states where they exist and to promote collective bargaining on wage setting," the opinion notes.

In this regard, the European Commission has welcomed the CJEU's decision and, in a statement issued this Tuesday, avoided commenting on the cuts made by the European courts. "Today's legislation is a giant step forward for Europeans, their dignity, justice, and financial security," the Commission President, Ursula von der Leyen, stated in the press release.