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Danish government sues EU over minimum wage

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

Published: 18 January 2023 16:36 CET

Danish government sues EU over minimum wage

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

The Danish lawsuit was confirmed by the Ministry of Employment in a press statement.

The case was expected as it was part of the policy agreement for the coalition government, signed in December. The deadline to bring the case against the EU Court in Luxembourg was Wednesday.

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 are 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 Danish model and will not force the country to code a minimum wage into law, but the Danish government wants the directive to be removed completely.

READ ALSO: Why is Denmark opposed to an EU minimum wage law?

“It’s important to underline that the directive does not force Denmark to introduce a minimum wage,” Employment Minister Ane Halsboe-Jørgensen said in the statement.

“But despite that, this is a case of legislation without precedent, which makes it a principal case. We insist that wages must be set in Denmark and not the EU,” she said.

“The government has therefore decided that the EU Court must rule on this case,” she said.

The ministry said the process could take up to two years. The date on which the case will be taken up by the EU Court is yet to be set.

The directive sets an EU-wide minimum wage. The intention is that workers are given a fair minimum wage either by law or through collective bargaining.

The directive includes a requirement for member countries to produce an action plan if collective bargaining agreements cover less than 80 percent of working terms in the relevant country.

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Why are Danish experts recommending closure of all job centres?

Denmark’s job centres, which are responsible for administration of social welfare benefits for people seeking employment and of facilitating training and work placements under welfare lows, should be closed according to recommendations handed to the government on Monday.

Additionally, over half of the current rules related to unemployment benefits should be scrapped and 9 in 10 sanctions for people who fail to comply with criteria such as attending meetings or applying for a set number of jobs.

Denmark has two broad tiers for those out of work: dagpenge, which provides an income calculated on the person’s tax payments while in employment, and the more basic kontanthjælp.

Dagpenge is available to people who a paying members of a semi-private uninsurance provider called an Arbejdsløshedskasse or A-kasse, while kontanthjælp is available to everyone.

Both groups must comply with legal requirements related to job searching in order to receive the benefits they qualify for – these are administered by municipal job centres.

READ ALSO:

When the coalition government took office at the end of 2022 it stated that it wanted to save three billion kroner annually by reforming the municipal unemployment area and improving its efficiency – specifically by targeting job centres.

This has led to an expert group, appointed by the government, making six specific requirements – those announce on Monday.

The government is not obliged to follow the recommendations.

But the expert group says there is much to gain from closing job centres.

“There’s great potential in replacing the current one-size-fits-all system with a new approach where individual needs are in focus,” group chairperson Claus Thustrup Kreiner said in a press statement.

The six broad recommendations are as follows:

Fewer target groups and special rules
Individual programmes
More balanced sanctions system
Abolish job centres and introduce free organisation at municipalities
Give more influence to A-kasse and private interests
Results, not system-based approach

|Source: DR

“Our report includes recommendations for the biggest reform of the jobseeking area ever, and will make the system cheaper, simpler and more dignified without weakening employment,” Kreiner said.

The national confederation for trade unions, Fagbevægelsens Hovedorganisation (FH), criticised the costcutting element of the recommendations in comments to broadcaster DR, and also said it would reduce the options and rights of jobseekers.

“I thought this was about giving unemployed people more freedom to decide what they need,” FH chairperson Nanna Højlund said.

“But the expert group clearly sees it as being about allowing municipalities to do exactly what they want,” she said.

The Confederation of Danish Industry (DI) welcomed the proposals.

“The expert group has proposed a simplification of employment with fewer rules and benefit categories and with a large saving” DI deputy director Steen Nielsen said in a statement.

“That is a good idea because it’s difficult to run a job centre efficiently with the many different criteria and rules that must be met for each of the many categories,” he added.

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