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WORKING IN SWEDEN

Sweden joins Denmark in push to annul EU’s minimum wage directive

Sweden will next week send a formal request to the EU's Court of Justice, asking to be allowed to join Denmark in its case requesting annulment of the EU’s minimum wage directive, the country's deputy employment minister has confirmed.

Sweden joins Denmark in push to annul EU's minimum wage directive
Denmark will seek to have the EU's minimum wage directive annulled by the EU Court. File photo: JOHN THYS / AFP

The right-wing government has been under pressure from the opposition Social Democrats, as well by both the unions and employer trade bodies, to join Denmark in its push to annul the directive, but has up until now held back from making any commitments. 

Paulina Brandberg told TT newswire that Sweden’s permission was that unions and employer trade bodies should alone be tasked with setting salary levels and that the EU should not be involved in setting wage levels through legislation. 

“This is an important issue of principle, which at root is about the limits of the EU’s authority,” she told TT. “We were waiting to see how the Danish case was formed and when we saw it, we quickly realised that it was something we could become involved in.” 

READ ALSO: Danish government sues EU over minimum wage

Denmark’s government in January brought a case requesting annulment of the EU’s minimum wage directive. 

An annulment suit is an attempt to have the directive revoked on the grounds that it is in breach of the EU Treaty.

An EU directive on minimum wages was adopted in October last year but Denmark and Sweden were both opposed because of the established labour models in those two countries, by which wages are set through negotiations between trade unions and employers.

The EU Commission has stated that it will respect the Swedish and Danish models of wage setting and would not force either country to code a minimum wage into law.

But the Danish government in January said it wanted the directive to be removed completely. At that time it was unclear whether the Swedish side would join the case. 

Member comments

  1. Speaking from experience on this , once a minimum wage is introduced, the desire to have /need a union is diminished. Employers will use this law to their advantage. Low level wage earners will never be paid a ” living wage “. Canada and U.S are my examples.

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IMMIGRATION

Nordic countries urged to set common working from home rules

The Nordic countries should have common conditions on working from the place of residence, including working from home, to fulfil the objective of an integrated labour market, says a report by the region's Freedom of Movement Council.

Nordic countries urged to set common working from home rules

The proposal is part of a series of recommendations to simplify tax agreements to facilitate free movement of people and make the region “the most integrated” in the world by 2030, as agreed by Nordic Prime Ministers.

The Freedom of Movement Council argues that the pandemic revealed the flaws in the current system, as a large proportion of cross-border workers had to operate from home, facing taxation in two countries, different tax levels and mounting bureaucracy.

“Now that more companies are open to their employees working from home, the current Nordic tax agreement just isn’t keeping up. I hope this analysis will pave the way for dialogue and that the end result will be simplification and less bureaucracy,” said Karen Ellemann, secretary-general of the Nordic Council of Ministers.

Internationally less known than EU free movement rules, the region has a special agreement on free movement of people that dates back to the 1950s.

Under the Nordic Passport Union, citizens can move within the region without travel documents or residence permits and enjoy more rights than those granted to EU citizens within the European Union. Non-EU residents, however, only partially benefit as they do not have the automatic right to work in another Nordic state.

The Nordic free movement area covers Denmark, Finland, Iceland, Norway, Sweden, the Faroe Islands and Åland. Greenland is not part of the Passport Union but is in practice subject to some of its provisions.

The Nordic governments set up the Freedom of Movement Council as an independent body to identify obstacles to this principle and propose how to remove them.

In an interview with The Local, chair Siv Friðleifsdóttir said the Council has identified over 100 barriers to free movement and prioritised 30. The tax system is one of them.

“The Nordic countries currently have several agreements that regulate cross-border and remote working. Common to all of them is that they’re based on the countries’ need to protect their tax base,” the Council notes.

INTERVIEW:

The report, prepared by consultancies KPMG and Resonans Nordic, points at four problems in particular: rules for domestic work, registration obligations in more than one country for employers, as well as taxation of wages and pensions when working in another Nordic state.

The Council therefore proposes to set common conditions on “permanent establishment” when working in the country of residence, including from home. It also suggests to tax salaries in the country of employment and consider work from home in the country of residence equal to work in the country where the employer is located.

In addition, advance tax should be reported and collected in the employer’s country to avoid having different rules for the same salary.

Pension contributions should be mutually recognised as deductible in another Nordic states and returns taxed only under the legislation of the country where the pension plan is established, the Council argues.

In the Øresund region, between Denmark and Sweden, a fully integrated labour market could generate combined annual socio-economic gains of 2.9 billion Danish kroner, the report estimates.

“Our countries have a lot to gain from having a flexible common labour market. It can solve the problem of skills shortages in one country and the problem of unemployment in another. In other words, a functioning labour market is a strong catalyst for our countries’ economies,” says Siv Friðleifsdóttir, chair of the Freedom of Movement Council.

The full report is currently only available in Danish but translations are expected in the coming weeks.

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