The EU Directive on Adequate Minimum Wages: Context, Commentary and Trajectories 9781509968749, 1509968741

This book provides an all-encompassing and timely analysis of the EU regulatory framework deriving from the enactment of

106 93 5MB

English Pages 621 Year 2024

Table of contents :
Acknowledgements
Contents
List of Contributors
Abbreviations
Table of National Court Decisions
Table of CJEU Cases
Table of Legislation
1. Introduction: Regulating Minimum Wages as a Fundamental Challenge for EU Law
I. Context
II. Structure of the Book
III. An Overall Approach to Adequate Minimum Wages
PART I: CROSS-CUTTING THEMES
2. In Search of Adequacy in Contemporary Labour Markets
I. Introduction
II. The Functions of the Wage
III. Market-Correcting Conceptions of Minimum Wages, and the 'Competitive Wage' Model of Adequacy
IV. Minimum Wages Today and the AMW Directive
3. Choosing a Tightrope Instead of a Rope Bridge – The Choice of Legal Basis for the AMW Directive
I. Introduction
II. Walking the Tightrope: Article 153 TFEU
III. Forgoing the Rope Bridge: Article 175(3) TFEU
IV. Conclusion: The Bigger Picture
4. The Impact of the AMW Directive on EU Labour Law
I. Introduction
II. Wage-setting as an Object of EU Policy
III. Minimum Wage as a Fundamental Right in the EU and in International Labour Law
IV. Wages as Factor Costs versus Wages as a Means of Subsistence
V. Social Security – More than Minimum Wages
VI. Conclusions
5. The Legal Institutions of Industrial Relations on Wage-setting
I. Introduction
II. A Preliminary Question about Wage-setting: The Economic and Political Nature of Wage Adequacy as Market Competition Rule
III. The Legal Source of the Adequate Wage: The Issue of Labour Market Demarcation
IV. The Competition between Wage-Setting Legal Sources: The Issue of Enforceability of Collective Agreements
V. Adequacy of Statutory Minimum Wage: Social Partners' Involvement and the Indirect Wage Authority of Industrial Relations
VI. Conclusions. Wage Adequacy is the Adequacy of the Wage-Setting System by Strengthening Industrial Relations
6. The Collective Bargaining Directive in Disguise – How the European Minimum Wage Directive Aims to Strengthen Collective Bargaining
I. Introduction
II. Key Provisions on the Promotion of Collective Bargaining in the AMW Directive
III. The State of Collective Bargaining in the EU
IV. Measures and Instruments to Increase Collective Bargaining Coverage
V. Recent Initiatives to Strengthen Collective Bargaining at National Level
VI. Conclusion
7. Minimum Wages in OECD Countries
I. Introduction
II. OECD Countries are Making Increasing Use of Statutory Minimum Wages
III. Minimum Wage and Collective Bargaining: An Increasingly Complementary Relationship
IV. Minimum Wages Interact Closely with the Tax and Benefit System
V. Despite its Increasing Use, the Economic Effects of the Minimum Wage Remain a Source of Discord
VI. Minimum Wage-setting Mechanisms Differ Significantly across OECD Countries
VII. Concluding Remarks
8. The Directive on Adequate Minimum Wages and the Revival of a European Social Union
I. This Time is Different
II. Steps to Build a European Social Union
III. The EPSR as Watershed
IV. Inequalities and In-work Poverty as Novel Policy Targets
V. Conclusion: Hard on the Outside, Soft on the Inside
9. Constitutionalisation and Social Rights – A Fundamental Right to Adequate Minimum Wages?
I. Introduction
II. General Doctrinal Aspects
III. Legal Sources for a Fundamental Right to Adequate Minimum Wages
IV. Constitutionalism in the Court of Justice's Social Policy Case Law
V. Implications of a (Potential) European Fundamental Right to Adequate Minimum Wages
VI. There is no Fundamental Right to Adequate Minimum Wages that is Mandatory, Unconditional in Nature and Sufficient in Itself
PART II: COMMENTARY OF THE TEXT OF THE DIRECTIVE
10. Subject Matter (Article 1)
I. Introduction
II. Content
III. Concluding Analysis
11. Scope (Article 2)
I. Introduction
II. Understanding the Hybrid Formula Adopted by the AMW Directive. The CJEU's Elaboration on the Concept of 'Worker'
III. The Implications of the CJEU's Elaboration: Moving Employment Protections Beyond the Employment Contract
IV. The Meaning of the Reference to the CJEU Elaboration for the Interpretation of Article 2 of the AMW Directive
V. Conclusions
12. Definitions (Article 3)
I. Introduction
II. Content
III. Concluding Analysis
13. Promotion of Collective Bargaining on Wage-Setting (Article 4)
I. Introduction
II. Content
III. Conclusions: Half a Loaf is Better than None
14. The Procedure for Setting Adequate Statutory Minimum Wages (Article 5)
I. Introduction
II. Content
III. Conclusion
15. Variations and Deductions (Article 6)
I. Introduction
II. Content
III. Conclusions
16. Involvement of the Social Partners in the Setting and Updating of Statutory Minimum Wages (Article 7)
I. Introduction
II. Content
III. Concluding Analysis
17. Effective Access of Workers to Statutory Minimum Wages (Article 8)
I. Introduction
II. Content
III. Concluding Analysis
18. Public Procurement (Article 9)
I. Introduction
II. Content
III. Concluding Analysis
19. Monitoring and Data Collection and Information on Minimum Wage Protection (Articles 10 and 11)
I. Introduction
II. Content
III. Concluding Analysis
20. Right to Redress and Protection against Adverse Treatment or Consequences (Article 12)
I. Introduction
II. Content
III. Concluding Analysis
21. Penalties (Article 13)
I. Introduction
II. Penalties and the Right to an Effective Judicial Remedy
III. Relationship to Other Provisions in the AMW Directive and Other Legal Instruments
IV. Content
V. Typology of Sanctions
VI. Concluding Remarks
22. Final Provisions (Articles 14–19)
I. Introduction
II. Justifying Results
III. Determining the Exercise of National Authorities' Discretion
PART III: THE IMPACT OF THE DIRECTIVE IN THE MEMBER STATES
23. Austria
I. Introduction
II. Implications for Austria
III. Conclusions
24. Baltic States
I. Introduction
II. Key Economic Indicators
III. Legal Grounds for Setting the Minimum Wage
IV. The Implications of the Directive on the National Minimum Wage Setting
V. Conclusions
25. Belgium
I. Introduction: (Adequate) Wage-setting in Belgium
II. The Implications of the AMW Directive on National Wage-setting
III. Conclusions
26. Croatia and Slovenia
I. Introduction on Wage-setting
II. The Implications of the AMW Directive for National Wage-setting
III. Conclusions
27. Cyprus and Greece
I. Introduction
II. The Wage-setting System in Greece: An Overview
III. The Implications of the AMW Directive on Wage-setting in Greece
IV. The Wage-setting System in Cyprus: An Overview
V. The Implications of the Minimum Wage Directive on Wage-setting in Cyprus
VI. Conclusions
28. France
I. Introduction
II. Implications of the Directive on National Wage-setting
III. Conclusions
29. Germany
I. Introduction
II. Implications of the Directive on National Wage-setting
III. Conclusion
30. Hungary
I. Introduction
II. Wage-setting
III. Scope of Application
IV. Promotion of Collective Bargaining Coverage
V. Promotion of Adequate Statutory Minimum Wages
VI. Effective Access, Monitoring and Data Collection
VII. Conclusions
31. Iberian States
I. Introduction: The AMW Directive and its Possible Transposition to Iberian States
II. Portugal
III. Spain
IV. Conclusion: Two Countries but Minor Differences
32. Ireland
I. Introduction
II. Implications of the AMW Directive
III. Conclusion
33. Italy
I. Introduction: A Shocking 30-Year Wage Stagnation
II. The Italian 'Salary Issue': The Deconstruction of the National Wage Bargaining Model
III. Social and Wage Dumping in Public Procurement and Supply Chains
IV. The Possible Impact of the AMW Directive
34. Poland
I. Introduction
II. Poland versus Minimum Wage: Antecedents
III. Towards Adequate Minimum Wages in Poland
IV. Conclusions
35. Scandinavian States
I. Introduction
II. The General Approach to the AMW Directive in Denmark and Sweden
III. The Implications of the AMW Directive on Wage-setting in Denmark and Sweden
IV. Conclusions
Appendix
Index

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THE EU DIRECTIVE ON ADEQUATE MINIMUM WAGES This book provides an all-encompassing and timely analysis of the EU regulatory framework deriving from the enactment of Directive 2022/2041 on adequate minimum wages. In the first part, the book discusses the function of minimum wage policies in contemporary labour markets and the role of social partners and collective bargaining in governing minimum wage determinants and trends. The second part provides an article-by-article commentary of the Directive, including insights on crucial aspects such as the EU competence to intervene on wages, the concept of minimum wage adequacy, and the measurement and promotion of collective bargaining coverage. The third part assesses the impact of the Directive across the EU, focusing on the main systemic implications of the Directive as well as on the structural changes that Member States will need to implement. With contributions written by scholars and stakeholders from across Europe, the book sheds light on one of labour law’s most fundamental objectives – to provide for adequate minimum wages. It is an invaluable resource for researchers, policy makers, trade unionists and employers’ representatives.

ii

The EU Directive on Adequate Minimum Wages Context, Commentary and Trajectories

Edited by

Luca Ratti Elisabeth Brameshuber and

Vincenzo Pietrogiovanni

HART PUBLISHING Bloomsbury Publishing Plc Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK 1385 Broadway, New York, NY 10018, USA 29 Earlsfort Terrace, Dublin 2, Ireland HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2024 Copyright © Luca Ratti, Elisabeth Brameshuber, Vincenzo Pietrogiovanni, and Contributors severally 2024 Luca Ratti, Elisabeth Brameshuber, Vincenzo Pietrogiovanni, and Contributors have asserted their right under the Copyright, Designs and Patents Act 1988 to be identified as Authors of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www. nationalarchives.gov.uk/doc/open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2024. A catalogue record for this book is available from the British Library. A catalogue record for this book is available from the Library of Congress. Library of Congress Control Number: 2024931212 ISBN: HB: 978-1-50996-872-5 ePDF: 978-1-50996-874-9 ePub: 978-1-50996-873-2 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.hartpublishing.co.uk. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters.

ACKNOWLEDGEMENTS Tres faciunt collegium. Yet, without our amazing 41 authors we could not have managed to publish this book within such a short period – less than 18 months after the publication of the EU Directive on Adequate Minimum Wages in the Official Journal of the European Union. Thus, we would hereby like to thank all our authors for contributing to this common effort, in particular by keeping rather tight deadlines. However, there would be no book without the publisher. We are particularly grateful to Roberta Bassi and her wonderful team, Tom Adams, Verity Stuart and Maria Skrzypiec, for their open-mindedness and braveness (one might even say they were daring – the collegium approached Roberta Bassi with their idea about this book at a time when it was not even clear that the Directive was actually going to pass), their fruitful advice and their meticulous work during the production process. You made the nearly impossible beautiful and possible – from the first manuscript to the printed book within six (!) months. Behind the scenes, in Luxembourg, Vienna and Malmö, we were extremely lucky to have the support of our teams as regards editors’ tasks, such as formal proof reading or compiling the table of cases. Thank you, Donya Sekhri Zeggar (University of Luxembourg), Sophie Hofer, Johanna Obermayer and Jasmin Pieper (University of Vienna), Patrick Lang Sørensen (SDU). We hope that this book is going to be a good and supportive friend to its readers. We have attempted to state the law as of October 2023, with more recent updates included at proof stage where possible. The usual disclaimers apply. Luca Ratti/Elisabeth Brameshuber/Vincenzo Pietrogiovanni Luxembourg/Vienna/Malmö Christmas 2023

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CONTENTS Acknowledgements�� v List of Contributors�� xi Abbreviations��xiii Table of National Court Decisions�� xvii Table of CJEU Cases�� xxi Table of Legislation�� xxix 1. Introduction: Regulating Minimum Wages as a Fundamental Challenge for EU Law�� 1 Luca Ratti, Elisabeth Brameshuber and Vincenzo Pietrogiovanni PART I CROSS-CUTTING THEMES 2. In Search of Adequacy in Contemporary Labour Markets�� 9 Zoe Adams (University of Cambridge, UK) 3. Choosing a Tightrope Instead of a Rope Bridge – The Choice of Legal Basis for the AMW Directive�� 25 Sacha Garben (College of Europe, Belgium) 4. The Impact of the AMW Directive on EU Labour Law�� 39 Claudia Schubert (University of Hamburg, Germany) 5. The Legal Institutions of Industrial Relations on Wage-setting�� 53 Vincenzo Bavaro (University of Bari, Italy) 6. The Collective Bargaining Directive in Disguise – How the European Minimum Wage Directive Aims to Strengthen Collective Bargaining�� 71 Torsten Müller (European Trade Union Institute for Research, Belgium) and Thorsten Schulten (Hans Böckler Foundation, Germany) 7. Minimum Wages in OECD Countries�� 87 Andrea Garnero (OECD) 8. The Directive on Adequate Minimum Wages and the Revival of a European Social Union�� 105 Luca Ratti (University of Luxembourg, Luxembourg) 9. Constitutionalisation and Social Rights – A Fundamental Right to Adequate Minimum Wages?�� 119 Elisabeth Brameshuber (University of Vienna, Austria)

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Contents PART II COMMENTARY OF THE TEXT OF THE DIRECTIVE

10. Subject Matter (Article 1)�� 139 Erika Kovács (WU Vienna University of Economics and Business, Austria) 11. Scope (Article 2)�� 155 Emanuele Menegatti (University of Bologna, Italy) 12. Definitions (Article 3)�� 169 Mijke Houwerzijl (Tilburg University, Netherlands) 13. Promotion of Collective Bargaining on Wage-Setting (Article 4)�� 181 Antonio Lo Faro (University of Catania, Italy) 14. The Procedure for Setting Adequate Statutory Minimum Wages (Article 5)�� 199 Adam Sagan and Alexander Schmidt (University of Bayreuth, Germany) 15. Variations and Deductions (Article 6)�� 213 Piotr Grzebyk (University of Warsaw, Poland) 16. Involvement of the Social Partners in the Setting and Updating of Statutory Minimum Wages (Article 7)�� 229 Antonio García-Muñoz (University of Castilla La Mancha, Spain) 17. Effective Access of Workers to Statutory Minimum Wages (Article 8)�� 245 Ane Aranguiz (Tilburg University, Netherlands) and Bartłomiej Bednarowicz (European Economic and Social Committee, Belgium) 18. Public Procurement (Article 9)�� 261 ACL Davies (University of Oxford, UK) 19. Monitoring and Data Collection and Information on Minimum Wage Protection (Articles 10 and 11)�� 273 Rüdiger Krause (University of Göttingen, Germany) 20. Right to Redress and Protection against Adverse Treatment or Consequences (Article 12)�� 289 Sylvaine Laulom (French Cour de Cassation, France) 21. Penalties (Article 13)�� 303 Piera Loi (University of Cagliari, Italy) 22. Final Provisions (Articles 14–19)�� 317 Jérôme Porta (University of Bordeaux, France) PART III THE IMPACT OF THE DIRECTIVE IN THE MEMBER STATES 23. Austria�� 339 Thomas Dullinger (WU Vienna University of Economics and Business, Austria)

Contents ix 24. Baltic States�� 353 Daiva Petrylaitė (Vilnius University, Lithuania) and Vida Petrylaitė (Vilnius University, Lithuania) 25. Belgium�� 369 Filip Dorssemont (UCLouvain, Belgium) 26. Croatia and Slovenia�� 383 Luka Tičar (University of Ljubljana, Slovenia) and Ivana Grgurev (University of Zagreb, Croatia) 27. Cyprus and Greece�� 397 Stamatina Yannakourou (European University Cyprus, Cyprus) 28. France�� 415 Gwenola Bargain (University of Tours, France) 29. Germany�� 427 Monika Schlachter (University of Trier, Germany) 30. Hungary�� 443 Tamás Gyulavári (Pázmány Péter Catholic University Budapest, Hungary) 31. Iberian States�� 463 Teresa Coelho Moreira (University of Minho, Portugal) and Daniel Pérez del Prado (Universidad Carlos III Madrid, Spain) 32. Ireland�� 475 Mark Bell (University College Dublin, Ireland) and Alan Eustace (University of Oxford, UK) 33. Italy�� 491 Orsola Razzolini (University of Milan, Italy) 34. Poland�� 505 Izabela Florczak (University of Łodz, Poland) and Marta Otto (University of Warsaw, Poland) 35. Scandinavian States�� 517 Petra Herzfeld Olsson (Stockholm University, Sweden) and Mette Søsted Hemme (Aarhus University, Denmark) Appendix�� 543 Index�� 563

x

LIST OF CONTRIBUTORS Luca Ratti is Associate Professor of European and Comparative Labour Law at the University of Luxembourg. Elisabeth Brameshuber is Professor of Labour and Social Security Law at the University of Vienna. Vincenzo Pietrogiovanni is Associate Professor of Labour Law at the University of Southern Denmark. Zoe Adams is Affiliated Lecturer in Law at the University of Cambridge. Ane Aranguiz is Assistant Professor at Tilburg University. Gwenola Bargain is Maître de conférences at the University of Tours. Vincenzo Bavaro is Professor of Labour Law at the University of Bari. Bartłomiej Bednarowicz is Policy Officer at the European Economic and Social Committee, Brussels. Mark Bell is Regius Professor of Laws and a Fellow of Trinity College Dublin. Teresa Coelho Moreira is Associate Professor of Labour Law at the University of Minho. ACL Davies is Professor of Law and Public Policy and a Fellow of Brasenose College at the University of Oxford. Filip Dorssemont is Professor of Labour Law at the Université Catholique de Louvain. Thomas Dullinger is Assistant Professor of Labour and Social Security Law at WU Vienna University of Economics and Business. Alan Eustace is Fellow and Lecturer in Law at Magdalen College, University of Oxford. Izabela Florczak is Assistant Professor at the Faculty of Law and Administration, University of Łódz. Sacha Garben is Professor of EU Law at the College of Europe, Bruges. Antonio García-Muñoz is Lecturer of Labour Law at the University of Castilla La Mancha. Andrea Garnero is Labour economist at the Directorate for Employment, Labour and Social Affairs of the OECD and Research fellow at Université libre de Bruxelles. Ivana Grgurev is Professor of Labour Law at the University of Zagreb. Piotr Grzebyk is Associate Professor of Labour Law at the University of Warsaw. Tamás Gyulavári is Professor of Labour Law at the Pázmány Péter Catholic University, Budapest.

xii List of Contributors Petra Herzfeld Olsson is Professor of Labour Law at Stockholm University. Mijke Houwerzijl is Professor of Labour Law at Tilburg University. Erika Kovács is Associate Professor of Labour and Social Security Law at WU Vienna University of Economics and Business. Rüdiger Krause is Professor of Civil and Labour Law at the University of Göttingen. Sylvaine Laulom is Professor of Labour Law and Advocate General at the French Cour de Cassation. Antonio Lo Faro is Professor of Labour Law at the University of Catania. Piera Loi is Professor of Labour Law at the University of Cagliari. Emanuele Menegatti is Professor of Labour Law at the University of Bologna. Torsten Müller is Senior Researcher at the European Trade Union Institute, Brussels. Marta Otto is Assistant Professor at the Faculty of Law and Administration, University of Warsaw. Daniel Pérez del Prado is Professor Titular of Labour Law and Social Security at the Universidad Carlos III Madrid. Daiva Petrylaitė is Professor of Labour Law at Vilnius University. Vida Petrylaitė is Associate Professor of Labour and Social Security Law at Vilnius University. Jérôme Porta is Professor of Labour Law at the University of Bordeaux. Orsola Razzolini is Associate Professor of Labour Law at the University of Milan. Adam Sagan is Professor of Civil Law, European and German Labour Law at the University of Bayreuth. Claudia Schubert is Professor of Civil Law, Labour Law, Corporate Law, and Comparative Law at the University of Hamburg. Thorsten Schulten is Head of the Collective Agreement Archive of the Wirtschafts- und Sozialwissenschaftliches Institut (WSI) of the Hans Böckler Foundation and Honorary Professor at the University of Tübingen. Monika Schlachter is Professor Emeritus of International and European Labour Law at the University of Trier. Alexander J Schmidt is Academic Assistant at the Chair for Civil Law, European and German Labour Law, University of Bayreuth. Mette Søsted Hemme is Assistant Professor of Labour Law at Aarhus University. Luka Tičar is Associate Professor of Labour Law at the University of Ljubljana. Stamatina Yannakourou is Associate Professor of Labour Law at the European University Cyprus.

ABBREVIATIONS ACT

Authority for Working Conditions (Portugal)

AGF

European Globalisation Adjustment Fund

AIAS

Amsterdam Institute for Advanced Labour Studies

AICALF

Italian Low Fares Airlines Association (Italy)

AMW Directive

Directive 2022/2041 on adequate minimum wages in the European Union

BGB

German Civil Code (Germany)

CBW

Collective Bargaining Wage

CC.OO

Comisiones Obreras (Spain)

CCNL

sectoral collective agreement (Italy)

CCPR

International Covenant on Civil and Political Rights

CEACR

Committee of Experts on the Application of Conventions and Recommendations

CEDU

Group of Studies in EU Law

CEEMET

European employers’ organisation representing the interests of the Metal, Engineering and Technology-based industries

CESCR

International Covenant on Economic, Social and Cultural Rights

CESI

European Confederation of Independent Trade Unions

CFREU

Charter of Fundamental Rights of the EU

CGTP

General Confederation of the Portuguese Workers (Portugal)

CJEU

Court of Justice of the European Union

CNT

Conseil National du Travail (Belgium)

CoESS

Confederation of European Security Services

CSR

Country-Specific Recommendations

ECB

European Central Bank

ECHR

European Convention on Human Rights

xiv Abbreviations ECSR

European Committee of Social Rights

EEA

European Economic Area

EESC

European Economic and Social Committee

EFSI

European Cleaning and Facility Services Industry

EGSSE

national intersectoral collective agreement (Greece)

ELA

European Labour Authority

EPSR

European Pillar of Social Rights

ERO

Employment Regulation Orders (Ireland)

ESC

European Social Charter

ESF

European Social Fund

ESF+

European Social Fund Plus

ESM

European Stability Mechanism

ETUC

European Trade Union Confederation

FURS

Financial Administration of the Republic of Slovenia

GDP

Gross Domestic Product

Geopa-Copa

Employers’ Group of Professional Agricultural Organisations in the European Union

HOTREC

Umbrella Association of Hotels, Restaurants, Pubs and Cafes and similar establishments in Europe

HUF

Hungarian forints

ICTWSS

Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts

ILO

International Labour Organization

IMF

International Monetary Fund

JLC

Joint Labour Committees (Ireland)

Law on CA and JC

Law of 5 December 1968 on Collective Labour Agreements and Joint Committees (Belgium)

LEEF

Labour-Employer Economic Forum (Ireland)

LPC

Low Pay Commission

MEAT

Most Economically Advantageous Tender

MiLoG

Minimum Wages Act (Germany)

MoU

Memorandum of Understanding

Abbreviations xv NEG

New Economic Governance

NGTT

National Economic and Social Council (Hungary)

OECD

Organisation for Economic Co-operation and Development

OÉT

National Interest Reconciliation Council (Hungary)

OMC

Open Method of Coordination

OSCE

Organization for Security and Co-operation in Europe

OSH

Occupational Safety and Health

PLN

Polish złoty

PWD

Posted Workers Directive

REA

Registered Employment Agreement (Ireland)

RESC

Revised European Social Charter

RRF

Recovery and Resilience Facility

SEO

Sectoral Employment Order (Ireland)

SME

Small and medium-sized enterprises

SMEunited

association of crafts and small and medium-sized enterprises in Europe

SMI

Salario Mínimo Interprofesional (Spanish statutory minimum wage)

SMIC

salaire minimum de croissance (France statutory minimum wage)

SMW

Statutory Minimum Wage

SWD

Staff Working Document

TEC

Treaty establishing the European Community

TFEU

Treaty on the Functioning of the European Union

UGT

Unión General de Trabajadores (Spain)

VKF

Permanent Consultation Forum (Hungary)

WEC

World Employment Confederation Europe

WRC

Workplace Relations Commission (Ireland)

WTO

World Trade Organization

ZDR-1

Employment Relationships Act (Slovenia)

ZMinP

Minimum Wage Act (Slovenia)

xvi

TABLE OF NATIONAL COURT DECISIONS Austria OGH 19.09.2002, 8 ObA 25/02p��350 OGH 17.11.2004, 9 ObA 98/04h��346 OGH 30.3.2011, 9 ObA 37/10x��341 OGH 27.11.2014, 9 ObA 134/14t��341 OGH 26.11.2018, 8 ObA 63/18z��341 OGH 25.1.2019, 8 ObA 61/18f��341 OGH 27.2.2020, 8 ObA 1/20k��341 OGH 25.3.2021, 8 ObA 106/20a��341 OGH 17.2.2022, 9 ObA 150/21f��128 OGH 30.8.2022, 8 ObA 42/22t��133 Belgium Cour constitutionnelle, 13 October 2016, nr. 130/2016��375 Croatia and Slovenia Decision of the Constitutional Court, 22/19 – ZPosS, 81/19, 203/20 – ZIUPOPDVE, 119/21 – ZČmIS-A, 202/21��384 Decision of the Constitutional Court, 15/22 and 54/22 – ZUPŠ-1��384 Cyprus and Greece Supreme Civil Court (Areios Pagos) no 954/1998 (1998) Deltio Ergatikis Nomothessias 1035��400 Supreme Civil Court (Areios Pagos) no 1292/2004 (2005) Xronika Idiotikou Dikaiou 381��400 Supreme Civil Court (Areios Pagos) no 1591/2017 (2018) 77 Epitheorissis Ergatikou Dikaiou 327��400

xviii Table of National Court Decisions Appeal Court of Dodecanese no 194/2018 (not published)��400 Council of State Decision no 2175/2022 (2022) 81 Epitheorissis Ergatikou Dikaiou 1033 (in Greek)��403 Germany BVerfG 1.3.1979 – 1 BvR 532/77��433 BVerfG 9.2.2010 – 1 BvL 1/09�� 121, 204, 436 BVerfG 11.7.2017 – 1 BvR 1571/15��433 BAG 14.7.1981 – 1 AZR 159/78��434 BAG 20.4.1999 – 3 AZR 352/97��433 BAG 14.12.2004 – 1 ABR 51/03��433 BAG 18.11.2015 – 5 AZR 761/13�� 437–38 BAG 15.5.2016 – 5 AZR 135/16 e��57 BAG 29.6.2016 – 5 AZR 716/15��431 BAG 21.12.2016 – 5AZR 374/16��57, 437 BAG 20.9.2017 – 10 AZR 171/16��438 BAG 11.10.2017 – 5 AZR 591/16��431 BAG 17.1.2018 – 5 AZR 69/17��437 BAG 25.4.2018 – 5 AZR 25/17��437 BAG 20.6.2018 – 5 AZR 377/17��429 BAG 18.11.2020 – 5 AZR 103/20��431 BAG 24.6.2021 – 5 AZR 505/20��431 BAG 13.9.2022 – 1 ABR 22/21��439 BFH, 18.8.2020 – VII R12/19��429 Hungary Supreme Court Decision: EBH 2011/2343��459 Iberian States Juzgado de lo Social de Madrid GLOVOAPP23 SL (2019) 134/19��158 Spanish Constitutional Court Judgement 31/1984, 7 March 1984��470 Spanish Supreme Court Judgment (Administrative Chamber) 24 July 1991��473

Table of National Court Decisions xix Ireland Ryanair v Labour Court [2007] IESC 6�� 479–80 John Grace Fried Chicken v Catering JLC [2011] IEHC 277��480 McGowan v Labour Court [2013] IESC 21�� 480–81 Karpenko v Freshcut Food Services Ltd [2019] IEHC 693��486 NECI v Labour Court [2020] IEHC 303; [2020] IEHC 342; [2021] IESC 36��481 Karshan (Midlands) Ltd t/a Domino’s Pizza v Revenue Commissioners [2022] IECA 124��477 Italy Cass. SU, 26 March 1997, no. 2665��496 Cass., 2 October 2023, n. 27711�� 495, 503 Tribunale di Milano Mohamed Adel Naguib Mohamed Elazab v Foodinho s.r.l. (2018) 1853/2018��158 Tribunale di Torino Digital Services XXXVI Italy s.r.l. (2018) 778/2018��158 Tribunale di Torino, 9 August 2019��495 Tribunale di Milano, 25 February 2020, n. 225��495 Tribunale di Milano, 21 February 2023��495 Poland Wyrok SN z dnia 10 lutego 2011 r., II PK 194/10, LEX nr 811846��510 Wyrok SN z dnia 12 lipca 2011 r., II PK 18/11, OSNP 2012, nr 17–18, poz. 220��510 Scandinavian States The Swedish Supreme Court [Högsta domstolen] judgment from 15 February 2022, B 1770-21��518 Swedish Labour Court Judgments (AD 1982 no 142; AD 1986 no. 76)��520 Swedish Labour Court (AD 1984 no. 79)�� 517, 530 Swedish Labour Court (AD 1932 no. 95 and AD 2022 no. 12)��517 Swedish Labour Court judgment (AD 1977 no. 222)��530 Swedish Labour Court judgment (AD 1984 no. 79. AD 1991 no. 100, AD 2001 no. 9)��530 Swedish Labour Court; AD 2003 no. 1, AD 1991 no. 26, AD 1983 no. 130 och AD 1976 no. 65��520 Swedish Labour Court Judgment (AD 2017 no. 6)�� 535, 537

xx Table of National Court Decisions Danish Labour Court, judgment of 12 December 2007, AR 2007.831��518 Danish Labour Court, ruling of 14 June 2007, case no. 2006.474 (AT 2007/199)��528 Danish Supreme Court, ruling of 4 June 2015, U 2015.3210 H�� 517, 530 Danish Western High Court, ruling of 29 October 2020, U 2021.226 V��530

TABLE OF CJEU CASES Case 75/63 Mrs M.K.H. Hoekstra (née Unger) v Bestuur der Bedrijfsvereniging voor Detailhandel en Ambachten (Administration of the Industrial Board for Retail Trades and Businesses) ECLI:EU:C:1964:19 [1964] ECR 00347��157 Case 1/67 Ciechelsky v Caisse régionale de sécurité sociale du Centre ECLI:EU:C:1967:27 [1967] ECR 00235��201 Case 152/73 Sotgiu v Deutsche Bundespost ECLI:EU:C:1974:13 [1974] ECR 00153��40 Case 43/75 Defrenne v Sabena ECLI:EU:C:1976:56 [1976] ECR 00455��107 Case 50/76 Amsterdam Bulb BV v Produktschap voor Siergewassen ECLI:EU:C:1977:13 [1977] ECR 00137��306 Case 106/77 Amministrazione delle finanze dello Stato v Simmenthal SpA ECLI:EU:C:1978:49 [1978] ECR 00629��306 Case 53/81 D. M. Levin v Staatssecretaris van Justitie ECLI:EU:C:1982:105 [1982] ECR 01035��157 Case 14/83 Von Colson and Kamann v Germany ECLI:EU:C:1984:153 [1984] ECR 01891��323 Case 143/83 Commission v Denmark ECLI:EU:C:1985:34 [1985] ECR 00427�� 335–36 Case 29/84 Commission v Germany ECLI:EU:C:1985:229 [1985] ECR 01661�� 322, 346 Case 105/84 Foreningen af Arbejdsledere i Danmark v A/S Danmols Inventar ECLI:EU:C:1985:331 [1985] ECR 02639��159 Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority ECLI:EU:C:1986:84 [1986] ECR 00723��130 Case 222/84 Marguerite Johnston v Chief Constable of the Royal Ulster Constabulary ECLI:EU:C:1986:206 [1986] ECR 01651�� 292, 307 Case 139/85 R. H. Kempf v Staatssecretaris van Justitie ECLI:EU:C:1986:223 [1986] ECR 01741��157 Case 66/85 Deborah Lawrie-Blum v Land Baden- Württemberg ECLI:EU:C:1986:284 [1986] ECR 02121�� 157–59, 161, 164, 343 Case 235/84 Commission v Italy ECLI:EU:C:1986:303 [1986] ECR 02291��335 Case 363/85 Commission v Italy ECLI:EU:C:1987:196 [1987] ECR 01733��322 Case 222/86 Union nationale des entraîneurs et cadres techniques professionnels du football (Unectef) v Georges Heylens et al ECLI:EU:C:1987:442 [1987] ECR 04097��307 Case 103/88 Fratelli Costanzo SpA v Comune di Milano ECLI:EU:C:1989:256 [1989] ECR 01839��130 Case C-379/87 Anita Groener v The Minister for Education and the City of Dublin Vocational Education Committee ECLI:EU:C:1989:599 [1989] ECR 03967��254 Case C-113/89 Rush Portuguesa v Office national d’immigration ECLI:EU:C:1990:142 [1990] ECR I-0141��212

xxii Table of CJEU Cases Case C-188/89 Foster et al v British Gas ECLI:EU:C:1990:313 [1990] ECR I-03313��130 Case C-361/88 European Commission v Germany ECLI:EU:C:1991:224 [1991] ECR I-02567��209 Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci v Italy ECLI:EU:C:1991:428 [1991] ECR I-05357��135 Case C-220/94 European Commission v Luxembourg ECLI:EU:C:1995:190 [1995] ECR I-01589��209 Case C-415/93 UEFA v Bosman ECLI:EU:C:1995:463 [1995] ECR I-04921��40 Case C-194/94 CIA Security International v Signalson and Securitel ECLI:EU:C:1996:172 [1996] ECR I-02201��207 Case C-237/94 John O’Flynn v Adjudication Officer ECLI:EU:C:1996:206 [1996] ECR I-02617��254 Case C-144/95 Maurin ECLI:EU:C:1996:235 [1996] ECR I-02909��131 Case C-84/94 UK v Council ECLI:EU:C:1996:431 [1996] ECR I-05755��28, 31 Case C-15/96 Schöning-Kougebetopoulou v Freie und Hansestadt Hamburg ECLI:EU:C:1998:3 [1998] ECR I-00047��40 Case C-85/96 María Martínez Sala v Freistaat Bayern ECLI:EU:C:1998:217 [1998] ECR I-02691��164 Case C-185/97 Belinda Jane Coote v Granada Hospitality Ltd ECLI:EU:C:1998:424 [1998] ECR I-05199�� 298–99 Case C-97/91 Oleificio Borelli SpA v Commission of the European Communities ECLI:EU:C:1992:491 [1992] ECR I-06313��303 Case C-2/97 Società italiana petroli SpA ECLI:EU:C:1998:613 [1998] ECR I-08597�� 332–33 Case C-337/97 C. P. M. Meeusen v Hoofddirectie van de Informatie Beheer Groep ECLI:EU:C:1999:284 [1999] ECR I-03289��157 Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie ECLI:EU:C:1999:430 [1999] ECR I-05751��163 Case C-369/96 Arblade and Leboup ECLI:EU:C:1999:575 [1999] ECR I-08453��441 Case C-149/96 Portugal v Council ECLI:EU:C:1999:574 [1999] ECR I-08395��33 Case C-51/96 Deliège et al ECLI:EU:C:2000:199 [2000] ECR I-02549��40 Case C-281/98 Angonese v Cassa di Risparmio di Bolzano SpA ECLI:EU:C:2000:296 [2000] ECR I-04139��41 Case C-443/98 Unilever v Central Food SpA ECLI:EU:C:2000:496 [2000] ECR I-07535��207 Case C-376/98 Federal Republic of Germany v European Parliament and Council of the European Union ECLI:EU:C:2000:544 [2000] ECR I-08419��28 Case C-162/99 European Commission v Italy ECLI:EU:C:2001:35 [2001] ECR I-00541��209 Case C-215/99 Jauch v Pensionsversicherungsanstalt der Arbeiter ECLI:EU:C:2001:139 [2001] ECR I-01901��201 Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte Sociedade de Construção Civil Lda et al ECLI:EU:C:2001:564 [2001] ECR I-07831��441 Case C-424/99 Commission v Austria ECLI:EU:C:2001:642 [2001] ECR I-09285��307

Table of CJEU Cases xxiii Case C-309/99 Wouters, Savelbergh and Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten ECLI:EU:C:2002:98 [2002] ECR I-01577��40 Case C-313/99 Mulligan ECLI:EU:C:2002:386 [2002] ECR I-05719��322 Case C-50/00 P Unión de Pequeños Agricultores v Council ECLI:EU:C:2002:462 [2002] ECR I-06677�� 303, 307 Case C-444/00 Mayer Parry Recycling ECLI:EU:C:2003:356 [2003] ECR I-06163��34 Case C-467/01 Ministero delle Finanze v Eribrand SpA ECLI:EU:C:2003:364 [2003] ECR I-06471��307 Case C-413/01 Franca Ninni-Orasche v Bundesminister für Wissenschaft, Verkehr und Kunst ECLI:EU:C:2003:600 [2003] ECR I-13187��251 Case C-256/01 Debra Allonby v Accrington & Rossendale College, Education Lecturing Services, trading as Protocol Professional and Secretary of State for Education and Employment ECLI:EU:C:2004:18 [2004] ECR I-00873��158 Case C-313/02 Nicole Wippel v Peek & Cloppenburg GmbH & Co. KG ECLI:EU:C:2004:607 [2004] ECR I-09483��162 Case C-188/03 Irmtraud Junk v Rechtsanwalt Wolfgang Kühnel as the liquidator of the assets of AWO Gemeinnützige Pflegegesellschaft Südwest mbH ECLI:EU:C:2005:59 [2005] ECR I-00885��238 Case C-297/03 Sozialhilfeverband Rohrbach v Arbeiterkammer Oberösterreich and Österreichischer Gewerkschaftsbund ECLI:EU:C:2005:315 [2005] ECR I-04305��130 Case C-341/02 Commission of the European Communities v Federal Republic of Germany ECLI:EU:C:2005:220 [2005] ECR I-02733��438 Case C-543/03 Christine Dodl and Petra Oberhollenzer v Tiroler Gebietskrankenkasse ECLI:EU:C:2005:364 [2005] ECR I-05049��164 Case C-304/02 Commission v France ECLI:EU:C:2005:444 [2005] ECR I-06263��305 Case C-144/04 Mangold ECLI:EU:C:2005:709 [2005] ECR I-09981��329 Case C-131/04 Robinson-Steele et al ECLI:EU:C:2006:177 [2006] ECR I-02531��128 Case C-10/05 Mattern and Cikotic v Ministre du Travail et de l’Emploi ECLI:EU:C:2006:220 [2006] ECR I-03145�� 430, 437 Case C-217/04 United Kingdom v Parliament and Council ECLI:EU:C:2006:279 [2006] ECR I-03771��35 Case C-432/05 Unibet v Justitiekanslern ECLI:EU:C:2007:163 [2007] ECR I-02271��307 Case C-252/05 Thames Water Utilities ECLI:EU:C:2007:276 [2007] ECR I-03883��34 Case C-411/05 Palacios de la Villa v Cortefiel Servicios SA ECLI:EU:C:2007:604 [2007] ECR I-08531��43 Case C-438/05 International Transport Workers’ Federation und Finnish Seamen’s Union v Viking Line ABP ECLI:EU:C:2007:772 [2007] ECR I-10779��43, 212 Case C-307/05 Yolanda Del Cerro Alonso v Osakidetza-Servicio Vasco de Salud ECLI:EU:C:2007:509 [2007] ECR I-07109�� 28, 149, 201 Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet et al ECLI:EU:C:2007:809 [2007] ECR I-11767�� 43, 61, 504 Case C-94/07 Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV ECLI:EU:C:2008:425 [2008] ECR I-05939��41

xxiv

Table of CJEU Cases

Case C-346/06 Dirk Rüffert v Land Niedersachsen ECLI:EU:C:2008:189 [2008] ECR I-01989�� 43, 61, 504 Case C-268/06 Impact v Minister for Agriculture and Food et al ECLI:EU:C:2008:223 [2008] ECR I-02483�� 28, 149, 201 Case C-338/06 European Commission v Spain ECLI:EU:C:2008:740 [2008] ECR I-10139��209 Joined Cases C-402/05 P and C-415/05 P Kadi and Al Barakaat ECLI:EU:C:2008:461 [2008] ECR I-06351��307 Joined Cases C-350/06 and 520/06 Schultz-Hoff et al v Her Majesty’s Revenue and Customs ECLI:EU:C:2009:18 [2009] ECR I-00179��124 Joined Cases C-378/07 to C-380/07 Angelidaki et al ECLI:EU:C:2009:250 [2009] ECR I-03071�� 330–31 Case C-12/08 Mono Car Styling SA v Dervis Odemis et al ECLI:EU:C:2009:466 [2009] ECR I-06653��307 Case C-166/07 Parliament v Council ECLI:EU:C:2009:499 [2009] ECR I-07135��35 Case C-411/06 Commission of the European Communities v European Parliament and Council of the European Union ECLI:EU:C:2009:518 [2009] ECR I-07585��183 Case C-44/08 Akavan Erityisalojen Keskusliitto AEK ry et al v Fujitsu Siemens Computers Oy ECLI:EU:C:2009:533 [2009] ECR I-08163��238 Joined Cases C-402/07 and C-432/07 Sturgeon et al ECLI:EU:C:2009:716 [2009] ECR I-10923��201 Case C-555/07 Seda Kücükdeveci v Swedex GmbH & Co. KG. ECLI:EU:C:2010:21 [2010] ECR I-00365�� 204, 254, 437 Case C-325/08 Olympique Lyonnais SASP v Olivier Bernard, Newcastle United FC ECLI:EU:C:2010:143 [2010] ECR I-02177��254 Joined Cases C-317/08 to C-320/08 Alassini et al ECLI:EU:C:2010:146 [2010] ECR I-02213��307 Case C-395/08 INPS v Bruno et al ECLI:EU:C:2010:329 [2010] ECR I-05119��42, 201 Case C-98/09 Sorge v Poste Italiane ECLI:EU:C:2010 [2010] ECR I-05837��330 Case C-471/08 Parviainen ECLI:EU:C:2010:391 [2010] ECR I-06533��27 Case C-194/08 Gassmayr ECLI:EU:C:2010:386 [2010] ECR I-06281��333 Case C-243/09 Günter Fuß v Stadt Halle ECLI:EU:C:2010:609 [2010] ECR I-09849��299 Case C-428/09 Union syndicale Solidaires Isère v Premier ministre et al ECLI:EU:C:2010:612 [2010] ECR I-09961��164 Case C-232/09 Dita Danosa v LKB Līzings SIA ECLI:EU:C:2010:674 [2010] ECR I-11405�� 159, 388 Case C-379/09 Casteels v British Airways ECLI:EU:C:2011:131 [2011] ECR I-01379��40 Case C-177/10 Francisco Javier Rosado Santana v Consejería de Justicia y Administración Pública de la Junta de Andalucía ECLI:EU:C:2011:557 [2011] ECR I-07907��430 Case C-447/09 Reinhard Prigge et al v Deutsche Lufthansa AG ECLI:EU:C:2011:573 [2011] ECR I-08003��43 Case C-155/10 Williams et al ECLI:EU:C:2011:588 [2011] ECR I-08409��27 Case C-434/11 Corpul Naţional al Poliţiştilor ECLI:EU:C:2011:830 [2011] ECR I-00196��37

Table of CJEU Cases xxv Case C-462/11 Victor Cozman ECLI:EU:C:2011:831 [2011] ECR I-00197��37 Case C-393/10 Dermod Patrick O’Brien v Ministry of Justice, formerly Department for Constitutional Affairs ECLI:EU:C:2012:110 [2012]�� 161, 253 Case C-368/10 European Commission v Kingdom of the Netherlands ECLI:EU:C:2012:284 [2012]��269 Case C-141/11 Torsten Hörnfeldt v Posten Meddelande AB ECLI:EU:C:2012:421 [2012]��43 Case C-370/12 Thomas Pringle v Government of Ireland e.a. ECLI:EU:C:2012:756 [2012]��38 Case C-152/11 Odar v Baxter Deutschland GmbH ECLI:EU:C:2012:772 [2012]��344 Case C-46/12 L.N. v Styrelsen for Videregående Uddannelser og Uddannelsesstøtte ECLI:EU:C:2013:97 [2013]��251 Case C-399/11 Melloni v Ministerio Fiscal ECLI:EU:C:2013:107 [2013]��132 Case C-128/12 Sindicato dos Bancários do Norte et al ECLI:EU:C:2013:149 [2013]��37 C-81/12 Asociaţia Accept v Consiliul Naţional pentru Combaterea Discriminării ECLI:EU:C:2013:275 [2013]��305 Case C-418/11 Texdata Software GmbH ECLI:EU:C:2013:588 [2013]��305 Case C-522/12 Tevfik Isbir v DB Services GmbH ECLI:EU:C:2013:711 [2013]��438 Case C-514/12 Zentralbetriebsrat der gemeinnützigen Salzburger Landeskliniken Betriebs GmbH v Land Salzburg ECLI:EU:C:2013:799 [2013]��41 Case C-617/10 Åkerberg Fransson ECLI:EU:C:2013:280 [2013]��132 Case C-176/12 Association de médiation sociale v Union locale des syndicats CGT et al ECLI:EU:C:2014:2 [2014]��135 Case C-270/12 United Kingdom v Parliament and Council ECLI:EU:C:2014:18 [2014]��35 Case C-596/12 European Commission v Italian Republic ECLI:EU:C:2014:77 [2014]�� 160, 333 Case C-172/11 Georges Erny v. Daimler AG – Werk Wörth ECLI:EU:C:2014:157 [2014]��41 Case C-539/12 Z.J.R. Lock v British Gas Trading Limited ECLI:EU:C:2014:351 [2014]��27, 42 Case C-206/13 Siragusa v Regione Sicilia – Soprintendenza Beni Culturali e Ambientali di Palermo ECLI:EU:C:2014:126 [2014]�� 131–32 Joined Cases C-501/12 to C-506/12 Thomas Specht et al v Land Berlin and Bundesrepublik Deutschland ECLI:EU:C:2014:2005 [2014]��436 Case C-264/12 Sindicato Nacional dos Profissionais de Seguros e Afins v Fidelidade Mundial – Companhia de Seguros SA ECLI:EU:C:2014:2036 [2014]��126 Case C-549/13 Bundesdruckerei GmbH v Stadt Dortmund ECLI:EU:C:2014:2235 [2014]�� 265, 504 Case C-311/13 O. Tümer ECLI:EU:C:2014:2337 [2014]��31 Case C-413/13 FNV Kunsten Informatie en Media v Staat der Nederlanden ECLI:EU:C:2014:2411 [2014]�� 163–64 Case C-396/13 Sähköalojen ammattiliitto ry v Elektrobudowa Spolka Akcyjna ECLI:EU:C:2015:86 [2015]��61, 438 Case C-62/14 Gauweiler et al v Deutscher Bundestag ECLI:EU:C:2015:400 [2015]�� 34–35

xxvi Table of CJEU Cases Case C-47/14 Holterman Ferho Exploitatie BV et al v F. L. F. Spies von Büllesheim ECLI:EU:C:2015:574 [2015]��160 Case C-229/14 Ender Balkaya v Kiesel Abbruch- und Recycling Technik GmbH ECLI:EU:C:2015:455 [2015]�� 160, 430 Case C-115/14 RegioPost GmbH & Co. KG v Stadt Landau in der Pfalz ECLI:EU:C:2015:760 [2015]��43, 270 Case C-239/14 Abdoulaye Amadou Tall v Centre public d’action sociale de Huy ECLI:EU:C:2015:824 [2015]��295 Case C-69/15 Nutrivet D.O.O.E.L. v Országos Környezetvédelmi és Természetvédelmi Főfelügyelőség ECLI:EU:C:2016:425 [2016]��305 Case C-258/14 Florescu et al ECLI:EU:C:2017:448 [2016]��38 Joined Cases C-8/15 P to C-10/15 P Ledra Advertising Ltd ECLI:EU:C:2016:701 [2016]��38 Case C-216/15 Betriebsrat der Ruhrlandklinik gGmbH v Ruhrlandklinik gGmbH ECLI:EU:C:2016:883 [2016]��162–64, 166, 253, 430 Case C-201/15 AGET Iraklis ECLI:EU:C:2016:972 [2016]��107 Case C-129/16 Túrkevei Tejtermelő Kft. v Országos Környezetvédelmi és Természetvédelmi Főfelügyelőség ECLI:EU:C:2017:547 [2017]��305 Case C-348/16 Moussa Sacko v Commissione Territoriale per il riconoscimento della protezione internazionale di Milano ECLI:EU:C:2017:591 [2017]��295 Case C-73/16 Peter Puškár v Finančné riaditeľstvo Slovenskej republiky, Kriminálny úrad finančnej správy ECLI:EU:C:2017:725 [2017]��294 Case C-214/16 King v The Sash Window Workshop Ltd und Richard Dollar ECLI:EU:C:2017:914 [2017]��42 Case C-193/17 Cresco Investigation GmbH v Markus Achatzi ECLI:EU:C:2018:614 [2018]�� 127–28 Joined Cases C-52/16 and C-113/16 SEGRO et al ECLI:EU:C:2018:157 [2018]��306 Case C-414/16 Egenberger ECLI:EU:C:2018:257 [2018]��294 Case C-684/16 Max-Planck-Gesellschaft zur Förderung der Wissenschaften v Tetsuji Shimizu ECLI:EU:C:2018:874 [2018]��124, 127–28, 133–34 Joined Cases C-569/16 and C-570/16 Bauer ECLI:EU:C:2018:871 [2018]��128 Case C-378/17 Minister for Justice and Equality and Commissioner of An Garda Síochána v Workplace Relations Commission ECLI:EU:C:2018:698 [2018]��304 Case C-493/17 Weiss et al ECLI:EU:C:2018:1000 [2018]�� 34–35 Case C-385/17 Hein v Albert Holzkamm GmbH & Co. KG ECLI:EU:C:2018:1018 [2018]��42 Case C-368/18 Casteels v Ryanair ECLI:EU:C:2019:91 [2019] ECR I-1379��43 Case C-420/16 Izsák and Dabis v Commission ECLI:EU:C:2019:177 [2019]��33 Case C-396/17 Martin Leitner v Landespolizeidirektion Tirol ECLI:EU:C:2019:375 [2019]��294 Case C-55/18 Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SA ECLI:EU:C:2019:402 [2019]�� 406, 439 Case C-404/18 Jamina Hakelbracht et al v WTG Retail BVBA ECLI:EU:C:2019:523 [2019]��300 Case C-556/17 Torubarov ECLI:EU:C:2019:626 [2019]��294

Table of CJEU Cases xxvii Case C-703/17 Krah v Universität Wien ECLI:EU:C:2019:850 [2019]��41 Case C-233/18 Zubair Haqbin v Federaal Agentschap voor de opvang van asielzoekers ECLI:EU:C:2019:956 [2019]��46 Joined Cases C-609/17 and C-610/17 TSN ECLI:EU:C:2019:981 [2019]�� 132, 332 Joined Cases C-585/18, C-624/18 and C-625/18 A.K. (Independence of the Disciplinary Chamber of the Supreme Court) et al ECLI:EU:C:2019:982 [2019]��294 Case C-692/19 B v Yodel Delivery Network Ltd ECLI:EU:C:2020:288 [2020]�� 400, 477 Case C-710/18 WN v Land Niedersachsen ECLI:EU:C:2020:299 [2020]��41 Cases C-119/19 P and C-126/19 P European Commission et al ECLI:EU:C:2020:676 [2020]��128 Case C-620/18 Hungary v European Parliament and Council of the European Union ECLI:EU:C:2020:1001 [2020]��151 Case C-726/19 Instituto Madrileño de Investigación y Desarrollo Rural, Agrario y Alimentario v JN ECLI:EU:C:2021:439 [2021]��249 Case C-928/19 P European Federation of Public Service Unions (EPSU) v Commission ECLI:EU:C:2021:656 [2021]��170 Case C-233/20 WD v job-medium GmbH ECLI:EU:C:2021:960 [2021]��128 Case C-86/21 Gerencia Regional de Salud de Castilla y León v Delia ECLI:EU:C:2022:310 [2022]��40 Case C-534/20 Leistritz ECLI:EU:C:2022:495 [2022]��333 Case C-477/21 IH v MÁV-START Vasúti Személyszállító Zrt ECLI:EU:C:2023:140 [2023]��127 Case C-19/23 Kingdom of Denmark v European Parliament and Council of the European Union pending��1, 26, 59, 116, 151, 182, 202, 221, 314, 522 Opinions Opinion of Advocate General Maduro, Case C-307/05 Yolanda Del Cerro Alonso v Osakidetza-Servicio Vasco de Salud ECLI:EU:C:2007:3 [2007] ECR I-07109�� 126, 172 Opinion of Advocate General Kokott, Case C-268/06 Impact v Minister for Agriculture and Food et al ECLI:EU:C:2008:2 [2008] ECR I-02483��28 Opinion of Advocate General Bot, Case C-166/07 Parliament v Council ECLI:EU:C:2009:213 [2009] ECR I-07135��33, 35 Opinion of Advocate General Bot, Case C-501/12 Specht et al v Land Berlin et al ECLI:EU:C:2013:779 [2013]��201 Opinion of Advocate General Wahl, Case C-201/15 AGET Iraklis ECLI:EU:C:2016:429 [2016]��107 Opinion of AG Bobek, Case C-193/17 Cresco Investigation v Markus Achatzi ECLI:EU:C:2018:614 [2018]�� 127, 128 Opinion of Advocate General Sánchez-Bordona, Case C-620/18 Hungary v European Parliament and Council of the European Union ECLI:EU:C:2020:392 [2020]��34

xxviii

TABLE OF LEGISLATION European Union Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms [2023] OJ L132/21�� 110, 112, 188, 248, 283, 285–86, 290, 308 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (AMW Directive) [2022] OJ L275/33�� 1–4, 9–10, 14, 19–52, 55, 59–60, 64, 67–68, 72–74, 76–77, 81–86, 88, 92–94, 104, 106, 110–17, 119–20, 123–24, 127, 129–35, 140–57, 159, 165–77, 179, 182–97, 200–09, 211–13, 215–17, 219–21, 224, 227, 229–39, 241–43, 245, 247–51, 253–55, 257–61, 263, 265, 267–68, 270–72, 274–80, 283–84, 286, 289–316, 318, 320, 322–28, 331, 333–36, 342–51, 356, 365, 368, 376–83, 387–89, 392, 394–95, 397, 400–07, 410–13, 415–16, 418–19, 421–25, 430–36,438–40, 442, 444–45, 447–49, 456, 463–69, 472–73, 475–79, 482–85, 487–89, 491, 496–500, 502–06, 513–18, 521–41 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting [2022] OJ L322/15�� 2, 107, 283 Regulation (EU) 2021/1057 of the European Parliament and of the Council of 24 June 2021 establishing the European Social Fund Plus (ESF+) and repealing Regulation (EU) No 1296/2013 [2021] OJ L 231/21�� 258, 282 Regulation (EU) 2021/240 of the European Parliament and of the Council of 10 February 2021 establishing a Technical Support Instrument [2021] OJ L 57/1�� 258, 282 Council Decision (EU) 2020/1512 of 13 October 2020 on guidelines for the employment policies of the Member States [2020] OJ L344�� 112, 173, 205, 237, 276 Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union [2019] OJ L186/105��110, 147, 156, 165, 173, 248–49, 285, 290–91, 300, 430

xxx Table of Legislation Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU [2019] OJ L188/79�� 110, 147, 156, 251, 291, 430 Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services (Text with EEA relevance) [2019] OJ L186/57��287 Regulation (EU) 2019/1149 of the European Parliament and of the Council of 20 June 2019 establishing a European Labour Authority, amending Regulations (EC) No 883/2004, (EU) No 492/2011, and (EU) 2016/589 and repealing Decision (EU) 2016/344 (Text with relevance for the EEA and for Switzerland) [2019] OJ L 186/21��257 Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services [2018] OJ L173/16��43, 61, 110, 151–52, 197, 264 Directive (EU) 2016/2102 of the European Parliament and of the Council of 26 October 2016 on the accessibility of the websites and mobile applications of public sector bodies [2016] OJ L 327��249, 285–86 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) [2016] OJ L119/1�� 308, 403 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System (‘the IMI Regulation’) [2014] OJ L159/11��173, 256, 285–86 Directive 2014/24 EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC Text with EEA relevance [2014] OJ L94/65�� 43, 74, 173, 261–72, 498 Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts [2014] OJ L94/1��74, 173, 261, 498 Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC [2014] OJ L94/243��74, 173, 261, 498 Regulation (EU) No 223/2014 of the European Parliament and of the Council of 11 March 2014 on the Fund for European Aid to the Most Deprived [2014] OJ L72/1��33 Regulation (EU) No 1304/2013 of the European Parliament and of the Council of 17 December 2013 on the European Social Fund and repealing Council Regulation (EC) No 1081/2006 [2013] OJ L 347/470��36

Table of Legislation xxxi Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014–2020) and repealing Regulation (EC) No 1927/2006 [2013] OJ L 347/855��36 Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, [2011] OJ L306/12��44 Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances, [2011] OJ L306/25��44 Council Directive 2009/13/EC of 16 February 2009 implementing the Agreement concluded by the European Community Shipowners’ Associations (ECSA) and the European Transport Workers’ Federation (ETF) on the Maritime Labour Convention, 2006, and amending Directive 1999/63/EC [2009] OJ L 124/30��153 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work [2008] OJ L 327/9��27, 148, 162, 166 Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer, [2008] OJ L283/36��42 Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L 204/23��40, 148, 158, 172, 279, 297, 299, 380, 501 Directive 2006/22/EC of the European Parliament and of the Council of 15 March 2006 on minimum conditions for the implementation of Council Regulations (EEC) No 3820/85 and (EEC) No 3821/85 concerning social legislation relating to road transport activities and repealing Council Directive 88/599/EEC (Text with EEA relevance) [2006] OJ L 102/35��256 Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (Working Time Directive) [2003] OJ L299/9��27–28, 31, 42, 128, 134, 299, 439 Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, [2001] OJ L82/16�� 41, 159, 272 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1��160 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L 303/16��40, 148, 158, 172, 224–25, 279, 293–95, 380, 501

xxxii Table of Legislation Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (the Fixed-term work Directive) [1999] OJ L175/43��27, 42 Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies [1998] OJ L225/16��160–61, 238 Council Directive 1997/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC – Annex: Framework agreement on part-time work (the Part-Time work Directive) [1997] OJ L014/9��27, 42, 161–62 Council Directive 1997/80/EC on the burden of proof in cases of discrimination based on sex [1998] OJ L 14/6��301 Directive 1996/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, [1997] OJ L18/1��43, 65, 151, 173, 197, 256, 264, 285, 331, 333 Council Directive 1993/104/EC of 23 November 1993, concerning certain aspects of the organisation of working time, [1993] OJ L307/18 (repealed)��42 Council Directive 1980/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer, [1980] OJ L283/23 (repealed)��42 Council Directive 1977/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses, [1977] OJ L061/26 (repealed)�� 41, 159, 335 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L 39/40 (repealed)��292–93, 298 Council Directive 75/117 EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women [1975] OJ L 45/19 (repealed)��292 International Law International Labour Organization (ILO) Maritime Labour Convention, 2006 (No. 186)��152–53, 176 International Labour Organization (ILO) Worst Forms of Child Labour Convention, 1999 (No. 182)��265 International Labour Organization (ILO) Minimum Age Convention, 1973 (No. 138)��265 International Labour Organization (ILO) Minimum Wage Fixing Convention, 1970 (No. 131)�� 46–47, 124, 129, 134, 182, 200, 205, 217, 232–36, 238, 234–35, 250, 353, 383–84

Table of Legislation xxxiii International Labour Organization (ILO) Minimum Wage Fixing Recommendation, 1970 (No. 135)��217, 219, 222–23, 234–35, 250 International Labour Organization (ILO) Discrimination (Employment and Occupation) Convention, 1958 (No. 111)��265 International Labour Organization (ILO) Abolition of Forced Labour Convention, 1957 (No. 105)��265 International Labour Organization (ILO) Social Security (Minimum Standards) Convention, 1952 (No. 102)��52 International Labour Organization (ILO) Equal Remuneration Convention, 1951 (No. 100)��265, 383–84 International Labour Organization (ILO) Minimum Wage Fixing Machinery (Agriculture) Convention, 1951 (No. 99)�� 234, 384 International Labour Organization (ILO) Right to Organise and Collective Bargaining Convention, 1949 (No. 98)��261, 265, 311, 499 International Labour Organization (ILO) Protection of Wages Convention, 1949 (No. 95)��213, 219, 223, 383 International Labour Organization (ILO) Labour Clauses (Public Contracts) Convention, 1949 (No. 94)�� 262, 504 International Labour Organization (ILO) Protection of Wages Recommendation, 1949 (No. 85)�� 213, 223 International Labour Organization (ILO) Labour Clauses (Public Contracts) Recommendation, 1949 (No. 84)��262 International Labour Organization (ILO) Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87)��261, 265, 311, 353, 380, 390, 499 International Labour Organization (ILO) Labour Inspection Convention, 1947 (No. 81)��250, 252–53 International Labour Organization (ILO) Forced Labour Convention, 1930 (No. 29)��265 National Legislation Austria Federal Act enacting a law to combat wage and social dumping (BGBl I 44/2016) (Austria)��351 Federal Act on the Chambers of Labour and the Federal Chamber of Labour (BGBl 626/1991) (Austria)��350 Labour Constitution Act (BGBl 22/1974) (Austria)�� 339–46, 350–51 Federal Act of 29 February 1956 on the Remuneration of Federal Civil Servants (BGBl 54/1956) (Austria)��342 Federal Act of 17 March 1948 on the Service and Remuneration Law of Federal Contractual Staff (Contractual Staff Act 1948, BGBl 86/1948) (Austria)��342

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Table of Legislation

Federal Act of 5 April 1930 for the protection of the freedom of occupation and the freedom of assembly (BGBl 113/1930) (Austria)��346 Austrian Civil Code – ABGB (JGS 1811/946) (Austria)�� 133, 341 Belgium Act of 26 July 1996 on the promotion of employment and the preventive safeguarding of competitiveness (Loi du 26 juillet 1996 relative à la promotion de l’emploi et à la sauvegarde préventive de la compétitivité) (Belgium)�� 372, 374 Act of 5 December 1968 on collective agreements and joint committees (Loi du 5 décembre 1968 sur les conventions collectives et les commissions paritaires) (Belgium)��369–71, 374, 376–79, 381–82 Act of 8 April 1965 instituting shop rules (Loi du 8 avril 1965 instituant les règlements de travail) (Belgium)��370 Law of 20 September 1948 regarding the Organisation of the Economy (Loi du 20 septembre 1948 portant organisation de l’économie) (Belgium)��380 1931 Belgian Constitution (Belgium)��375, 378–79 Croatia Minimum Wage Act 2018 (Croatia)�� 384–85, 387–88, 388, 392–95 Act on Representativeness of Employers’ Associations and Trade Unions 2014 (Croatia)�� 389–90 Act on Base of Salaries in Public Services 2009 (Croatia)��385 Civil Servants Act 2005 (Croatia)��384 Act on Civil Servants and Employees 2001 (Croatia)��384 Act on Salaries in Public Services 2001 (Croatia)�� 384–86 Labour Act 1995 (Croatia)��384, 386, 389–90, 394–95 Constitution of the Republic of Croatia 1990 (Croatia)�� 383, 387 Cyprus Minimum Wage Law 2022 (Cyprus)��409 Denmark Act on the European Convention on Human Rights 2022 (Denmark)��530 Act on Conciliation in Labour Market Disputes 2022 (Denmark)�� 520, 532 Danish Holiday Act 2021 (Denmark)�� 524, 533 Act on the Labour Court and industrial arbitration tribunals 2017 (Denmark)��532 Danish Contract Act 2016 (Denmark)��520 Danish Employment Contract Act 2010 (Denmark)��533 Act on Equal Pay 2010 (Denmark)��518 Danish Criminal Code 2009 (Denmark)��518 Act on Conciliation in Labour Market Disputes 2008 (Denmark)�� 520, 532 Discrimination Act 2008 ��518

Table of Legislation xxxv Act on Freedom of Association 2006 (Denmark)�� 529–30 Danish Working Time Act 2004 (Denmark)��533 Act on the Danish Labour Court and Industrial Arbitration 1976 (Denmark)�� 517, 532 Estonia Basic Schools and Upper Secondary Schools Act 2018 (Estonia)��359 Employment Contracts Act 2015 (Estonia)��358, 361–62, 367 Civil Service Act 2014 (Estonia)��360 Collective Agreements Act 2012 (Estonia)�� 362, 389 Constitution of the Republic of Estonia 1992 (Estonia)��354 France Labour Code (Code du travail) (France)��415–16, 418, 420–23, 421, 423 Germany Minimum Wage Act (Gesetz zur Regelung eines allgemeinen Mindestlohns – MiLoG) (Germany)��147, 428, 430–31, 435–40, 442 Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) (Germany)��438 Act on Collective Agreements (Tarifvertragsgesetz – TVG) (Germany)�� 432–33 German Basic Law (Grundgesetz) (Germany)��121 German Civil Code (BGB) (Germany)�� 427, 430 Greece Law N°4093/2012 approving the medium-term fiscal strategy 2013–2016 (Greece)��402 Law No. 1876/1990 concerning free collective bargaining and other provisions (Greece)�� 397, 402 Greek Constitution (Greece)�� 397, 403 Hungary Act on promotion of employment and labour inspection 2020 (Hungary)��460 Government Decree No. 367/2019 (XII.30.) on minimum wage and guaranteed wage minimum for 2020 (Hungary)��444 Act on government administration 2018 (Hungary)��448 Labour Code 2012 (Hungary)�� 443–55 Hungarian Constitution (Fundamental Law) 2011 (Hungary)��449 Act on the National Economic and Social Council 2011 (Hungary)��99, 444, 456–58, 460 Act on public work (2011) (Hungary)��449 Act on public employees 2011 (Hungary)��448 Act on simplified employment states 2010 (Hungary)��448 Act on Sectoral Social Dialogue Committees and intermediate level social dialogue 2009 (Hungary)�� 450–52 Act on civil servants 1992 (Hungary)��448

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Table of Legislation

Ireland Industrial Relations (Amendment) Act 2015 (Ireland)�� 478–79 Workplace Relations Commission Act 2015 (Ireland)��486 Irish Human Rights and Equality Commission Act 2014 (Ireland)��485 Industrial Relations (Amendment) Act 2001 (Ireland)��478–79, 481 National Minimum Wage Act 2000 (NMW Act 2000) (Ireland)�� 475–79, 485, 487–89 Industrial Relations Act 1946 (Ireland)�� 479–82 Trade Union Act 1941 (Ireland)��479 Trade Disputes Act 1906 (Ireland)��481 Italy Legislative Decree No. 36/2023 on public procurement (Italy)�� 497–99 Legislative Decree No. 50/2016 on public procurement (Italy)�� 497–98 Legislative Decree No. 248/2007 on the cooperative sector (Italy)��496–97, 503 Workers Statute 1970 (Italy)��313–15, 463–64, 469, 472 Italian Constitution 1948 (Italy)�� 63, 122–23, 133, 315, 494–95, 497, 503 Italian Civil Code 1942 (Italy)��496 Latvia Constitution of the Republic of Latvia 1992 (Latvia)��354 Lithuania Law on Public Procurement 2018 (Lithuania)��363 Labour Code of Lithuania 2016 (Lithuania)�� 357, 367 Constitution of the Republic of Lithuania 1992 (Lithuania)��354 Poland Minimum Wage Act (Poland)��507–10, 512 Polish Constitution 1997 (Poland)��507 Polish Labour Code 1974 (Poland)��506 Portugal Portuguese Constitution 1976 (Portugal)��465 Portuguese Labour Code (Portugal)��466 Slovenia Employment Relationships Act (ZDR-1) 2013 (Slovenia)�� 384, 387, 394 Representativeness of Trade Unions Act (ZRSin) 1993 (Slovenia)��389 Minimum Wage Act (ZMinP) 1990 (Slovenia)�� 384–85, 387–88, 391

Table of Legislation xxxvii Spain Royal Decree-Law 3/2004 on the rationalization of the regulation of the national minimum wage and the increase of the amount (Spain)��471 Spanish Constitution 1978 (Spain)��470 Sweden Employment Protection Act 1982 (Sweden)�� 533, 537 Working Time Act 1982 (Sweden)��533 Vacation Act 1977 (Sweden)��533 Co-determination Act 1976 (Sweden)�� 517, 524, 527–28, 531–32, 535–38 Trade Union Representative Act 1974 (Sweden)�� 531, 537 Contracts Act 1915 (Sweden)��520 UK National Minimum Wage Regulations 2015 (United Kingdom)��20 National Minimum Wage Act 1998 (United Kingdom)��20

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1 Introduction: Regulating Minimum Wages as a Fundamental Challenge for EU Law LUCA RATTI, ELISABETH BRAMESHUBER AND VINCENZO PIETROGIOVANNI

I. Context In early 2020 the European Commission launched its plan to intervene in the field of adequate minimum wages, based on the European Pillar of Social Rights’ commitment to ensure fair wages leading to a decent standard of living for workers and their families. After two rounds of consultations with European social partners, in October 2020 the Commission formulated a proposal for a directive,1 which was then discussed and partly revised by the EU Parliament2 and the Council.3 Notwithstanding the opposition of some Member States, a final text was eventually agreed upon in June 2022 and consequently published in the Official Journal of the EU.4 The enactment of the Directive on adequate minimum wages (hereinafter the AMW Directive) has been welcomed with a variety of reactions from the involved actors at EU and domestic level. The legal services of both the Council and the EU Parliament have expressed their positive opinion on the proposed Directive, while also highlighting some possible setbacks.5 Some scholars, as well as some Member States,6 raised fundamental 1 European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on adequate minimum wages in the European Union’ (COM/2020/682 final) https://eur-lex.europa.eu/legal-content/EN/TXT/ ?uri=CELEX%3A52020PC0682. 2 European Parliament, ‘Draft legislative resolution on the proposal for a directive on adequate minimum wages in the European Union’ (November 2021) https://www.europarl.europa.eu/doceo/document/A-9-20210325_EN.html#top. 3 Council of the European Union, ‘Opinion of the legal service on the Commission proposal for a Directive on adequate minimum wages’ (March 2021) https://data.consilium.europa.eu/doc/document/ST-6817-2021-INIT/ en/pdf. 4 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:320 22L2041&from=EN. 5 European Parliament, Committee on Legal Affairs, ‘Opinion on the legal basis of the proposal for a Directive on adequate minimum wages’ (October 2021) https://www.europarl.europa.eu/doceo/document/JURI-AL699235_EN.pdf. 6 cf the Danish action for annulment brought before the Court of Justice of the EU on 18 January 2023, Case C-19/23 Kingdom of Denmark v European Parliament and Council of the European Union, pending.

2 Luca Ratti, Elisabeth Brameshuber and Vincenzo Pietrogiovanni issues regarding not only the legal basis but also possible conflicts between the regulation of minimum wages and the national systems of industrial relations. BusinessEurope and other employers’ associations expressed their concerns on the potential impact of such a directive on job creation and retention, as well as more technical critiques on its ability to meet the goals expressed in its preambles. The European Trade Union Confederation (ETUC), conversely, endorsed the proposed Directive, also considering its symbolic impact on the construction of Social Europe. While the AMW Directive’s implementation will concretely depend on a number of factors – including the individual Member State’s ability to meet the minimum standards required by the text in addition to the good functioning of domestic industrial relations systems – its significance goes well beyond the merit of its provisions, touching the core institutions of labour law and industrial relations of each Member State. In reality, the policy impact of the AMW Directive is already visible in EU secondary law. According to the Corporate Sustainability Reporting Directive 2022/2464, European undertakings are required to comply with mandatory ‘sustainability reporting standards’ on ‘social concerns’ that include, inter alia, ‘working conditions …, adequate wages, … existence of works councils, collective bargaining, including the proportion of workers covered by collective agreements, the information, consultation and participation rights of workers’.7 The respective European Sustainability Reporting Standards explicitly refer to the AMW Directive and the thresholds provided therein (60 per cent of a country’s median wage and 50 per cent of the gross average wage) when defining the ‘adequate wage benchmark’.8 The momentum to intervene is therefore evident at EU level. For the first time since the Treaty of Rome, the EU has taken the lead in the field of wages with a courageous and systemic action towards Member States’ labour markets. Far from being just one of the many EU directives on social policy, the AMW Directive marks a change of paradigm (whether in the positive or the negative will be for readers to assess) in EU labour law which will have socio-economic and regulatory effects in the decades to come.

II. Structure of the Book The book is organised around three building blocks. Part I addresses cross-cutting themes, such as the function of minimum wages in contemporary labour markets, the AMW Directive’s legal basis, the respect of subsidiarity and proportionality, and the ability of minimum wages to combat in-work poverty. In Part II, an article-by-article commentary is provided, with the aim of considering the main obligations imposed on domestic legal systems across the EU. Finally, Part III gives the perspective of selected Member States and detects obstacles and potential inconsistencies as well as opportunities that may be addressed in the implementation process. 7 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, Art 29b. 8 Annex 1 to the Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards (published on 22 December 2023).

Introduction 3

A. Part I: Cross-cutting Themes The first section of the book is devoted to analysing pivotal transversal topics that are essential for a sound conceptualisation and understanding of any policy intervention in the field of minimum wages. In particular, the contributors to Part I touch upon three main areas: 1. the function and limits of minimum wage policies and practices in contemporary labour markets (Chapters 2, 7, and 8). This area embraces a theoretical discussion on the labour market function of minimum wages, how they integrate (or do not) with the current momentum for a stronger Social Europe, and how they may help combating in-work poverty and material deprivation; 2. the fundamental issues that an intervention of the EU legislator in the field of wages poses to the architecture of EU law (Chapters 3, 4, and 9). This area includes a discussion on the (contested) legal basis adopted by the EU legislator (Article 153 TFEU), on the regulatory space that EU law may effectively have in the field of wage setting, and on the impact the AMW Directive might have on deriving a proper fundamental right to a decent/adequate minimum wage from EU primary law; 3. the role of collective bargaining and social partners, and more in general of collective autonomy in the fixing and functioning of minimum wage systems (Chapters 5 and 6). This area implies an analysis aimed at conceptualising the main legal institutions devoted to the establishment of minimum wages in industrial relations systems and testing the ability of social partners to govern minimum wage determinants and trends.

B. Part II: Commentary The second section of the book consists of an article-by-article commentary on the AMW Directive. It analyses its text in the light of the case law of the Court of Justice of the EU (CJEU) and it anticipates potential inconsistencies with the current social acquis. At the core of the AMW Directive, the two main regulatory pillars of ‘coverage’ and ‘adequacy’ are assessed in detail. In particular, it is questioned whether the concept of adequacy embedded in Article 5 and permeating the entire edifice of the AMW Directive entails a new function of EU social policy in enhancing living and working conditions of persons working in the EU. On the many other aspects included in the text, the analysis further touches on the ability of the AMW Directive to address important issues such as the role of social partners, the regulation of public procurement, enforcement and the right to redress, and non-regression. Chapters included in Part II largely respect the following pattern: the ‘Introduction’ features sections on the context of the article under discussion and its historical embedding. Where possible, the law-making process specific to the provision is addressed in this section. Elaborations on the teleological embedding of the provision that take account of the AMW Directive’s recitals and the purpose of the specific provision are also to be found in the introductory section. Furthermore, the article’s relationship to other provisions in the Directive as well as to other legal instruments is explained. The sections dealing with the ‘Content’ of each article include a general analysis and in many cases country-specific

4 Luca Ratti, Elisabeth Brameshuber and Vincenzo Pietrogiovanni remarks, which might then stimulate the reader to have a closer look at the respective chapters in Part III of the book. A concluding analysis provides the reader with the personal assessment of the author(s).

C. Part III: Impact in the Member States Despite its aim not to undermine domestic regulatory frameworks, the enactment of the AMW Directive has a significant impact across EU Member States. Such impact may be differentiated according to the industrial relations system at stake, and considering the specific situation of the countries where minimum wages are established by autonomous collective bargaining agreements. The choice of the legal systems to analyse has been driven by a number of considerations. First of all, an adequate territorial representation of EU Member States has been ensured by including the majority of EU Member States in the scope of the analysis. Second, ratione materiae, the differentiation between jurisdictions that will fall under the obligations deriving from Article 4 and those that are instead to be subsumed under Article 5 has been duly taken into account. Third, the sharp wage differentials across the EU suggested the inclusion of both high-wage and low-wage countries, to capture the potential impact of the Directive on levels of in-work poverty. Based on the vibrant scholarly debates animated since October 2020 by the directive proposal, the national chapters featured in Part III analyse the systemic impact of the AMW Directive in the respective Member State. They do not merely focus on implementation issues, but rather on the imaginaries of changes that the Member States will need to incorporate because of the AMW Directive, examining to what extent the text meets the domestic concerns in the area of (low) wages and (weak) collective bargaining.

III. An Overall Approach to Adequate Minimum Wages The need to take three different perspectives on the topic of minimum wages derives from its inherent complexity. Not only do adequate minimum wages have significant macroeconomic implications – including on employment levels, wage distribution, consumer prices, social security contributions, and the banking system – but they also touch the very essence of the exchange realised through the contract of employment (the ‘wage-work bargain’) as well as the axiological foundations of such contract based on human dignity and its corollary of the right to a dignified existence. The legal regulation of adequate minimum wages therefore elicits theoretical and practical discussions at different levels, all ultimately revolving around the value(s) of work. A feature which has been duly considered concerns the variety of minimum wage systems across EU jurisdictions, in turn characterised by different combinations of (regulatory) state legislation and collective bargaining agreements (as well as their related auxiliary legislation), sometimes concluded also at enterprise level. Such diversity contributes both to shaping the legal institutions tasked to determine and update minimum wages, and establishing their level and distribution across the working population.

Introduction 5 While the right to a minimum wage is widely recognised at supranational level – for instance by the UN Declaration of Human Rights (1948), the two ILO Conventions on Minimum Wages (1928 and 1970), the Revised European Social Charter (1996) and the Community Charter of Fundamental Social Rights for Workers (1989) – ‘hard’ EU primary law still lags behind. Neither EU Treaties nor the Charter of Fundamental Rights of the EU contain clear indications of where an individual (fundamental) right to receive an adequate, sufficient, fair minimum wage may be derived from. Furthermore, EU law as such does not contemplate a right to receive a minimum wage commensurate with the needs of workers and their families. All such attributes of minimum wages are therefore to be inferred through legal interpretation and contextualisation with the domestic legal situations, to which some chapters of this book are dedicated. Overall, the book provides the reader with an ample theoretical background on the role of minimum wage legislation and social partners in contemporary labour markets.

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Part I Cross-Cutting Themes

8

2 In Search of Adequacy in Contemporary Labour Markets ZOE ADAMS

I. Introduction The AMW Directive gives expression to the commitment of the President of the European Commission, Ursula Von der Leyen, to ‘propose a legal instrument to ensure that every worker in our Union has a fair minimum wage’,1 by imposing a legal obligation on Member States to guarantee the existence of minimum wage-setting mechanisms capable of securing adequate wages to all workers. In this context, ‘adequacy’ is equated with the realisation of a range of socio-economic outcomes: the enjoyment by all workers of a decent standard of living irrespective of where they work; the promotion of fair competition; the avoidance of social dumping; the ending of in-work poverty, and the narrowing of the gender wage gap.2 In order to facilitate scholars’ and social actors’ attempts to critically assess and tease out the implications of the AMW Directive, this chapter develops a theoretical framework through which to understand the conception of adequacy towards which the Directive aspires, how far its concrete provisions actualise and embody this aspiration, and how well they are likely to achieve it. For this purpose, the chapter draws a distinction between three different understandings of the role of minimum wage-setting mechanisms in the context of a capitalist labour market: (a) a market ‘correcting’ conception of minimum wages, which sees minimum wage mechanisms as a way of regulating competition, preventing, or remedying, market imperfections, so as to keep supply and demand in equilibrium (thereby maximising employment opportunities while minimising job losses); (b) a market ‘constituting’ conception, which sees minimum wage mechanisms as a necessary part of the process by which labour markets are institutionalised, guaranteeing the conditions in which they can sustainably function; and (c) a market ‘challenging’ conception, one which seeks to expose the political and contingent nature of the way in which labour markets are institutionalised, and social reproduction organised.

1 ‘State of the Union 2020’ (European Commission) https://ec.europa.eu/info/strategy/strategic-planning/ state-union-addresses/state-union-2020_en. 2 Commission, ‘Proposal for a Directive of the European Parliament and of the Council on adequate minimum wages in the European Union’ COM (2020) 682 final.

10 Zoe Adams The chapter will show that each perspective on the function of minimum wage-setting mechanisms supports a different conception of adequacy: a different understanding of what ‘adequate wages’ should aspire to do, and how they should be set, and enforced, and that these different understandings have important implications for the role of an institution like the EU in relation to minimum wages. The rest of this chapter proceeds as follows. Section II explores the contradictory functions of wages in a capitalist society, with a view to understanding the structurally necessary role of minimum wage mechanisms when it comes to securing their performance. Section III goes on to draw on this analysis to contrast competing understandings of the function of minimum wages – the market-regulating; the market-constituting; and the market-challenging – and the different conceptions of adequacy which they support, exploring the emergence of such conceptions in concrete theoretical, and social, movements throughout the nineteenth and twentieth centuries. Section IV concludes with some observations about how to apply the analytical framework developed in the chapter to critically assess the notion of adequacy that inspired and is embodied in the AMW Directive, and the likely implications of this Directive for the wider class struggle.3

II. The Functions of the Wage A. Wages and Markets Capitalism is characterised by the fact that decisions about how to use, and distribute, society’s collective resources, including ‘labour time’, are primarily mediated by markets, rather than, for example, collective decision-making mechanisms, and/or democratic institutions.4 This ‘market mediated’ mode of distribution is predicated on the assumption that where individuals are able to make decisions about what to buy and sell, and how much, free from coercion, they will make those decisions purely on the basis of what different commodities are worth to them, when assessed by reference to their subjectively conceived interests. In a context of generalised, and regular, exchange, therefore, prices will come to reflect the true value of different commodities as compared with the value of all other commodities exchanged in the labour market, securing an ‘efficient’ allocation of resources throughout society – an allocation consistent with maximising aggregate (private) welfare. In labour markets, then, we can expect employers to pay a ‘wage’ for labour power that reflects the value of that labour power to them; a wage which simultaneously reflects the costs, to the worker, of giving up that labour power.5 At a societal level, then, we would expect wage rates to converge in the long-run (as supply and demand tend towards equilibrium) around the costs of reproducing the labour power of the average worker, with wage rates supporting, therefore, a standard of living for the working class that is most

3 While an understanding of the appropriate personal scope of minimum wage-setting mechanisms is relevant to understanding the underlying conception of wages it expresses, this matter is discussed at length in later chapters and thus it will not be covered in this chapter. 4 N Fraser and R Jaeggi, Capitalism: A Conversation in Critical Theory (John Wiley & Sons, 2018). 5 J Hicks, The Theory of Wages (Springer, 1963).

Adequacy in Contemporary Labour Markets 11 compatible with maximum aggregate welfare.6 Thus, from this perspective, with wages studied through the lens of market practices, their functions as prices, co-ordinating decision-making in order to secure an efficient allocation of resources, is entirely consistent with – and parallels – its subsistence functions: its role in determining workers’ living standards, and ensuring that their costs of living can be met.

B. Wages and Social Reproduction If, however, we shift perspective away from the market, to explore the wider conditions that sustain it, things begin to look somewhat different. Markets, and the ‘laws of supply and demand’ that are so central to capitalism, do not exist in a vacuum. Rather, markets become the primary mechanism mediating the distribution of social resources only in the context of a particular mode of production and, thus, a particular form of socio-economic relations.7 The nature and dynamics of these markets cannot, then, be fully comprehended in isolation from these particular relations and the wider structure in which they are located, and from which they develop. Central to this ‘wider structure’ is the particular set of social relations, and particular power-dynamic, that emerges as a result of the systematic exclusion of the direct producers from access to the non-market means of subsistence, and their resulting dependence on selling their labour power to others in order to live. It is this dependence that lies at the heart of capital’s social power, the power of those in possession of money (capital) to influence the purpose to which the productive energies of society are put. It is this power, moreover, which frames the bargaining positions of individual workers and employers, and thus shapes the resulting terms of any ensuing arrangement. Because the interest of those purchasing labour power lies in maximising output relative to input, a fundamental antagonism or struggle exists within the context of individual work relations; this encourages employers to maximise the effort they extract from workers, relative to the wage they pay, and workers to actively resist these strategies, attempting to minimise effort relative to the wage.8

C. Minimum Wages as a Response to the Tension between Markets and Social Reproduction The struggle by individual workers to maximise their wages and improve their working conditions, relative to the amount of work they expend, and by individual employers to increase the amount of surplus labour they extract from their own workers, with a view to boosting profits, ultimately determines the balance of power between labour and capital at a macro level. We might refer to this as the rate of exploitation – as workers attempt to defend their living standards, and capital attempts to increase the rate of accumulation, or

6 J Bates Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (Macmillan, 1908). 7 Fraser and Jaeggi (n 4). 8 K Marx and F Engels, Wage-Labor and Capital (International Publishers, 1969) http://slp.org/pdf/marx/w_l_ capital.pdf.

12 Zoe Adams the rate at which surplus value is produced and realised. While it is possible for the wages of individual workers to dip below subsistence level in the short term, the effect of competition is that any ‘cost-saving’ or ‘productivity enhancing’ step taken by one employer tends to become generalised.9 As such, by depressing the wages of one group of workers, employers exert a downward pressure on the wage rate and, thus, on workers’ living standards generally. Given the structures of inequality in which labour markets are embedded, therefore, ‘free competition’ in the context of such markets always presupposes the power-dynamic between capital and labour that empowers the former to influence the terms of the wagelabour exchange, as well as how, how much, and how intensely, workers work. It is this that ensures that the labour power purchased by the wage produces a benefit of a magnitude that is greater than the value embodied in that wage. It is in this sense that the mediation of social relations by markets – and thus the price function of the wage – is itself a precondition for the production of surplus value, for the possibility that the total value advanced to purchase and reproduce the labour power required to produce goods and services, can be less than the amount of value realised when those goods and services are sold in the market. The problem, however, is that the same conditions that make surplus value production possible also incentivise behaviours that can potentially interfere with and undermine it: attempts by employers to depress wages below subsistence level, and the structural disempowerment of workers when it comes to their capacity to resist these attempts.10 It is the social dislocation and instability that these tendencies produce which have historically given rise to the struggles and conflicts, by both workers and employers, for mechanisms that regulate work and wages and which have thereby provided the conditions for the introduction of ‘minimum wage institutions’ – institutions which are oriented towards minimising the harms produced as a result of the contradictions between the wage’s twin functions. In this sense, mechanisms for setting minimum wages can be seen as a historically contingent response to a structural necessity, within capitalism, for some mechanism capable of aligning the wage’s functions in order to mediate their inherent contradictions.11

D. The Politics of Minimum Wages While minimum wage-setting frameworks of some form may be a structural necessity in capitalism, the precise dynamics of the struggles from which they have developed, as well as the precise nature of the mechanisms introduced in response to them, are a contingent product of the way in which labour markets have been institutionalised, and social reproduction organised, in different countries, as capitalism has developed.12 Thus, the precise nature, and subjective experiences, of the harms produced by below-subsistence wages has been profoundly shaped by the way in which national and local markets have been

9 G Palermo, ‘Competition: A Marxist View’ (2017) 41 Cambridge Journal of Economics 1559. 10 Z Adams, ‘La Proposta Di Direttiva UE Relativa Ai Salari Minimi Adeguati: Ripensare La Funzione Sociale Dei Salari Minimi’ (2021) 31 Diritto delle relazioni industriali 283; G Palermo, ‘Power, Competition and the Free Trader Vulgaris’ (2016) 40 Cambridge Journal of Economics 259. 11 Z Adams, Labour and the Wage: A Critical Perspective (Oxford University Press, 2020). 12 Z Adams, The Legal Concept of Work (Oxford University Press, 2022).

Adequacy in Contemporary Labour Markets 13 constituted and by the wider social, cultural, and legal conditions which ultimately shaped particular groups of workers’ ‘needs’ (their living standards) and the degree to which they were dependent on wages to meet them. Moreover, in some countries the social dislocation caused by below-subsistence wages generated not only struggles at the point of production, for minimum ‘wage’ regulation, but also struggles at the point of social reproduction – for various forms of non-market provisioning13 – and this too shaped the responses of states to these challenges, as well as the relative importance, at a given time, of any ‘wage’-regulating mechanisms introduced. Exactly what is required of minimum wage regulation, when it comes to mediating the tension between the wages’ functions, thus depends on the wider conditions shaping labour power’s reproduction and the wider institutional framework through which labour market practices take place.14 As such, any question of adequacy – of how minimum wage-setting mechanisms should be structured and implemented, and of how the minimum rate should be calculated and expressed – is inherently political. Not only is adequacy in the context of minimum wage-setting mechanisms always inseparable from the twin functions that the wage must perform in the context of capitalism, and, thus, the structures of inequality and exploitation which those functions presuppose; but its precise meaning is also influenced by the legal and political decisions that shape how that inequality and exploitation have been institutionalised in different contexts in practice. This observation brings us to another important point not sufficiently accounted for when wages are conceptualised from the perspective of the market: the distinctive features of the labour power commodity, and its uniquely social and collective process of reproduction. Labour power is the only commodity whose reproduction is not – and cannot be – mediated solely by the market.15 Thus, the reproduction of labour power cannot be secured through the consumption of goods and services alone and so its costs cannot simply be determined through the lens of prices.16 Rather, the costs of reproducing labour power depends on the organisation of the vast amounts of reproductive labour that must be performed by families and communities, including education systems, healthcare systems, leisure facilities, and support for children and elderly, without which workers and their labour power could not be sustainably reproduced.17 While the conditions under which this reproductive labour is performed are profoundly shaped by markets and practices of production, these conditions themselves influence the supply of labour power and, thus, both how much money individual workers must receive from their employers in order to cover their living costs, as well as the total value which society must advance in order to reproduce workers, and their families, collectively, over time. Importantly, the individualised nature of the wage as price, the necessity of its alignment with the ‘value’ of an individual worker’s labour power, is incapable of capturing the inherently collective nature of its process of reproduction and, thus, of taking into consideration that, reproducing the 13 C Arruzza et al, Feminism for the 99%: A Manifesto (Verso Books, 2019); T Bhattacharya (ed), Social Reproduction Theory: Remapping Class, Recentring Oppression (PlutoPress, 2017). 14 S Ferguson, Women and Work: Feminism, Labour, and Social Reproduction (Pluto Press, 2019). 15 J Fudge, ‘Feminist Reflections on the Scope of Labour Law: Domestic Work, Social Reproduction, and Jurisdiction’ (2014) 22 Feminist Legal Studies, 1. 16 DM Figart et al, Living Wages, Equal Wages: Gender and Labour Market Policies in the United States (Routledge, 2005). 17 Bhattacharya (n 13).

14 Zoe Adams labour power of a single wage-earner, requires reproducing the entire person of the worker and all those on whom they depend for care and/or support. These observations have a number of important consequences when it comes to assessing the notion of adequacy inspiring a trans-national mechanism such as the AMW Directive. In particular, it suggests that the precise implications of the conception of adequacy the Directive embodies will vary depending on the precise ways in which labour markets and practices of social reproduction are institutionalised in the context of different Member States. As such, unless the particular ways in which labour markets are institutionalised in different states – and the ways in which they relate to wider labour law, and industrial relations, institutions – are taken into account in the design and enforcement of the Directive, the notion of adequacy realised in different countries will vary significantly. This generates two possible risks: on the one hand, that the notion of adequacy which the Directive supports will not be translated, consistently, in different contexts, undermining the goal of ‘harmonising’ living standards between states; and/or, on the other hand, that the conception of adequacy which the Directive upholds will be rendered subordinate to its wider economic goals, to promote fair competition and support high economic growth, with these goals ultimately dictating what a ‘decent standard of living’ can actually mean in the context of the EU today.

III. Market-Correcting Conceptions of Minimum Wages, and the ‘Competitive Wage’ Model of Adequacy For most of the nineteenth century, economic orthodoxy viewed the wage as a price of a commodity which, like all other commodities, was determined by the ‘free play’ of market forces. The premise underpinning this view was that, for markets to be ‘efficient’ as mechanisms for allocating resources, it must be possible for individuals to make ‘rational’ decisions in a market populated by formal equals, that is, persons equally capable of maximising their subjectively conceived private interests, free from coercion.18 In a context in which social actors accepted the existence of markets as ‘given’ and failed to explore the legal and political processes through which they were constituted, and which profoundly shaped their dynamics, any attempt to ‘regulate’ wages, that is, to ‘interfere’ with supply and demand, was conceived as unnecessary, illegitimate, and inefficient. Market forces would determine the standards of living compatible with maximising welfare and would, as a result, ensure that wages reflected the ‘objective’ value of the labour power provided – in terms of skill, and productivity – as well as the costs, to the workers, of its (re)production. This conception of the wage, and as a result, of minimum wage-setting mechanisms, failed to take into account the wider structures in which market practices are embedded, and the wider web of social relations which supported them. So too did it fail to take into account the distinctive properties of the commodity labour power, and the inherently social nature of its processes of reproduction.19 It is perhaps no surprise, therefore, that 18 Hicks (n 5). See also the discussion in S Blackburn, A Fair Day’s Wage for a Fair Day’s Work? Sweated Labour and the Origins of Minimum Wage Legislation in Britain (Ashgate Publishing Ltd, 2007). 19 Fudge (n 15); Figart et al (n 16).

Adequacy in Contemporary Labour Markets 15 the outcomes predicted by this conception of wages began to be discredited, as the social dislocation, poverty, and unrest, caused by ‘unregulated’ markets became clear in the late nineteenth century. As a result, a number of attempts were made to enrich these theories of wages, without, however, fundamentally challenging the way in which minimum wagesetting mechanisms were conceived.20 During the late nineteenth century, then, new ideas about ‘market failure’ emerged that recognised the possibility for markets in which the assumptions of perfect competition did not hold. This was said to be so, primarily, when markets were populated by so-called ‘weak’ labour market groups, however conceived, deemed to lack – for whatever reason – the bargaining power required to resist ‘unscrupulous’ employers’ attempts to depress wages.21 This recognition helped to popularise the view that minimum wage-setting mechanisms might actually be necessary to regulate particular markets which were liable to ‘fail’; to support, rather than ‘qualify’ competition. Exactly how these mechanisms might do this, and how they must thereby be structured, ultimately depended on what was deemed to constitute a ‘weak’ labour market group, and of what the ‘weakness’ was deemed to consist. These ideas about minimum wages as market ‘correcting’ mechanisms, helped support the idea that minimum wage mechanisms should be designed so as to substitute the wage that emerged in labour markets populated by these ‘weak’ economic groups with the ‘true’ competitive wage – the wage that would have emerged had the market been operating competitively.22 Given the way in which the weakness of these groups had been conceived and framed at the time, this tended to support an approach to minimum wage-setting mechanisms that sought to align the ‘mandated’ minimum with the wage that existed in organised sectors or workplaces, and/or with a percentage of the wages paid to ‘skilled’ workers in the same industry.23

A. Market-Constituting Conceptions of Minimum Wages and the ‘Sustainable Wage’ Model of Adequacy This market-correction conception of minimum wages was more likely to emerge in contexts characterised by uneven union coverage, where there existed little legislative support for sectoral- and/or national-level collective bargaining, and/or where the trade union movement was particularly racialised, and gendered, whereby the interests of often white, male (often skilled) workers were directly aligned with attempts to limit the scope for women, children, and/or migrants to undercut their wages.24 Even in countries in which the union movement was strong, however, market-correcting conceptions of minimum wages often emerged in tandem with a different conception of wages, inspired by a different economic tradition, namely classical political economy.25 In 20 Blackburn (n 18). 21 DM Figart, Living Wage Movements: Global Perspectives (Taylor & Francis, 2004) 33–34. 22 For a detailed history, see Adams (n 11). 23 It was this notion of adequacy, as the ‘true’ market wage, set by reference to the wages already paid to different groups of workers in prevailing conditions, that inspired the UK Trade Board Act 1906: Z Adams, ‘Understanding the Minimum Wage: Political Economy and Legal Form’ (2019) 78 The Cambridge Law Journal 42. 24 On the emphasis on migrant and female labour, see Blackburn (n 18). 25 JA Hobson, ‘A Living Wage’ (1896) 1 Commonwealth 128, 128–29, 165–67.

16 Zoe Adams contrast with neoclassical economics, which sees economics as the study of the allocation of resources in conditions of scarcity, classical economists, such as Adam Smith and David Ricardo, had not studied markets in isolation from the wider social relations in which they functioned. Instead, they had seen markets as one element in an entire social system – involving processes of production, distribution, and consumption – and sought to understand the relations that existed between them. As a result, these economists were much more attentive to the conditions that sustained and reproduced market practices, and so tended to highlight the contingency – and political character – of ‘market forces’.26 This enabled them to draw attention to the possibility for a tension to exist between the wage’s price and subsistence functions, and the necessity for using laws and institutions as a means through which to better align them.27 These observations about the ‘gap’ between the subsistence and the market wage, were harnessed in the late nineteenth century by a range of social and political actors in order to support the idea that legal mechanisms were required to align the market wage with actual living costs, to provide a ‘floor’ upon which ‘free’ competition could build.28 Perhaps the most well-known proponents of this conception of minimum wages were Sydney and Beatrice Webb, who had sought to show, in a number of written publications as well as in the context of parliamentary select committees, that capitalism incentivises and encourages the payment by employers of below subsistence wages, and in this way helps to prop up and sustain inefficient employers unable to cover their full costs of production.29 The Webbs sought to expose the inherent tendency, in capitalism, towards ‘parasitism’ – the payment by employers of below-subsistence wages – and to explain that only through law could this tendency be checked. The ideas put forth by the Webbs tended to find expression in the motif of the ‘living wage’, a concept around which some aspects of the organised labour movement mobilised in the early twentieth century.30 In the context of these mobilisations, the living wage concept was being used as a means through which to emphasise the interdependence of the wage’s price and subsistence functions, and to show that only a legally guaranteed wage set at subsistence level was consistent with the efficiency, and sustainability, of labour markets. This was not, then, a conception of the minimum wage that sought to challenge its function as price, nor the basic structural conditions which that function presupposed. Rather, it was simply an attempt to expose the legal and institutional preconditions for the free operation of the market forces on which that function was deemed to depend – and which, as a result, were still deemed to be ‘responsible’ for, and conducive to, maximising social welfare.31

26 B Kaufman, ‘Adam Smith’s Economics and the Modern Minimum Wage Debate: The Large Distance Separating Kirkcaldy from Chicago’ (2016) 37 Journal of Labor Research 29; A Stirati, The Theory of Wages in Classical Economics: A Study of Adam Smith, David Ricardo, and Their Contemporaries (Edward Elgar, 1994). 27 Adams (n 23). 28 S Webb and B Webb, Industrial Democracy, vol 2 (Longmans, Green, and Company, 1897) 779. 29 ibid 774. 30 In this respect, it was influenced by the wider humanist position, and religious tracts as well, such as J Atkinson Hobson, Work and Wealth: A Human Valuation (Allen and Unwin, 1933) 9–11; J Atkinson Hobson, Confessions of an Economic Heretic (Routledge, 2012) 38–43. 31 See the discussion in HW Macrosty, ‘The Recent History of the Living Wage Movement’ (1898) 13 Political Science Quarterly 413.

Adequacy in Contemporary Labour Markets 17

B. Market-Challenging Conceptions of Minimum Wages and the ‘Political Wage’ Conception of Adequacy The early twentieth century saw a reconfiguration of the relationship between economics and politics.32 In many advanced capitalist countries, responsibility for regulating the labour market had been delegated to civil society organisations – to trade unions, and employers/employer organisations – with the state’s role reconfigured as one of providing a framework for spontaneous, voluntary, self-organisation. In a context in which the economic and political were deemed to be legitimately, and integrally, connected, it is perhaps no surprise that the motif of the living wage came to be deployed in ways that challenged the idea that either the price of labour power, or workers’ costs of living, were objectively fixed.33 Instead, social actors began to use the motif to expose the political and legal structures which influenced the relative bargaining power of different labour market groups and, thus, their bargaining practices, and workers’ living standards, through their impact on the prevailing organisation of social reproduction. By asserting the primacy of the wage’s function as a source of subsistence over its function as price, this conception of the living wage sought to show how minimum wage mechanisms might actually raise workers’ living standards, reshaping labour power’s conditions of reproduction, while, simultaneously, leading to adaptations in production that might raise the skill and productivity of labour at the same time.34 The emphasis by these campaigns on the primacy of the subsistence function of the wage meant that minimum wage mechanisms were conceived less in terms of aligning the price of a commodity with its ‘true value’ or costs of (re)production, and more about ensuring that the wages system provided workers with a guaranteed income sufficient to sustain a ‘socially acceptable’, and politically determined, standard of living. While ultimately constrained by the limits set by the capitalist mode of production – the requirement that minimum wage regulation be consistent with the generalised wage dependence that provides the conditions for the wages system itself – this notion of the living wage was harnessed in this period to show how a commitment to a given standard of living for the working population might stimulate support for a range of institutional changes which, in combination, could change the way in which markets themselves functioned and, thus, the precise distribution of surplus value as between capital, and labour, and as between particular labour market groups as well.35

32 R Knox, ‘Law, Neoliberalism and the Constitution of Political Subjectivity: The Case of Organised Labour’ in H Brabazon (ed), Neoliberal Legality: Understanding the Role of Law in the Neoliberal Project (Routledge, 2016). 33 Figart refers to this as a conception of wages as praxis, emphasising how wages can shape, and challenge, rather than merely reinforce, existing structures: DM Figart, ‘Social Responsibility for Living Standards: Presidential Address, Association for Social Economics, 2007’ (2007) 65 Review of Social Economy 391. 34 For a discussion of how this policy was developed in the UK Independent Labour Party, see I Bullock, Under Siege: The Independent Labour Party in Interwar Britain (Athabasca University Press, 2017); HN Brailsford et al, ‘The Living Wage: A Report Submitted to the National Administrative Council of the Independent Labour Party’ (ILP, 1926). 35 In the UK, this campaign was adopted as official policy of the Independent Labour Party in 1925. For the broad contours of this policy, see HN Brailsford, Socialism for Today (New Leader, 1925). It should be emphasised, however, that even this model tended to reinforce a highly gendered notion of the wage, which limited the advantages of this model to a range of marginalised groups. See Figart et al (n 16).

18 Zoe Adams While there were more or less radical currents in these campaigns, with some harnessing these ideas as a direct challenge to capitalist social relations, and others merely deploying them with a means to improving life and work within the framework of those relations, the radical thrust of these campaigns was clearly influential in shaping the labour market policies of advanced capitalist societies after the Second World War. While we can see these ideas behind the wage regulations introduced in a number of countries during this period – such as the Wages Councils system in the UK and the SMIG and SMIC in France – and in the guaranteed earnings commitments agreed between employers and unions, they also find their expression more broadly in the institutional architecture and normative premises of the welfare state, and the commitment to Keynesian style demand management and state-supported industrial relations with which it was associated. Central to these models was the premise that, because the question of the appropriate wage is a political one, it was imperative that considerations about wage-setting not be delegated to policy-makers alone. Rather, worker participation, through trade unions, was deemed imperative when it came to ensuring that minimum wages might function as a means through which to raise – and not merely reproduce – the standards of living of the working class, and laws oriented towards realising minimum wages also had this goal of worker participation in mind.36 In order to make space for such participation, it was not enough to merely provide for abstract rights to collective bargaining. Rather, a whole host of policy mechanisms were introduced to empower workers to take an active role in the decision-making processes that affected their work and everyday lives. Partly as a result of this, the relative significance of minimum wage-setting mechanisms for realising the ideal of the living wage varied significantly between Member States, depending on the relative priority afforded to such measures by trade unions and policy-makers.37 In many countries, therefore, where a framework for collective bargaining had been established, trade unions often focused their attention on matters such as publicly-funded education, housing, pensions, and unemployment insurance, thereby reducing the significance of minimum wage-setting mechanisms to workers’ standard of living, and reducing the impetus for the introduction of any statutorily guaranteed minimum standard. Regardless of the precise orientation of these policies, however, a common feature was the attempt to partially de-commodify labour power, an attempt to decouple workers’ income from questions about the precise quantum of work provided to a particular employer38 – thereby de-emphasising (while not completely denying or undermining) the wage’s function as price. While in those countries where minimum wage mechanisms were introduced, often alongside these other measures, different techniques were developed to calculate these minima, generally speaking a comprehensive attempt was made to calculate the minimum rate by reference to the average costs of living of the average worker, with the state then taking responsibility for topping up such wages depending on the composition of the worker’s family/individual circumstance.39 In many countries, these wage-setting techniques were (or have subsequently been) accompanied by indexing mechanisms that ensured an 36 Eg this was the policy underpinning the Wages Councils Act 1945. 37 Brabazon (n 32). 38 For an analysis of these movements in a US context, see DA Seastone, ‘The History of Guaranteed Wages and Employment’ (1955) 15 The Journal of Economic History 134. 39 I chart how this was achieved through a strategic use of legal concepts, in Adams (n 10).

Adequacy in Contemporary Labour Markets 19 alignment of wages with prices, as well as, very often, legal or collectively negotiated, childsubsidies as well.40 This particular approach to minimum wages thus maintained the premise that minimum wages should be based on a calculation of worker’s actual costs of living, but minimum wage mechanisms now formed part of a comprehensive policy framework that sought to change the way in which labour markets were institutionalised, and social reproduction organised, with a view to raising living standards – thereby profoundly shaping what those costs of living actually were. Central to this was the introduction of a new institutional framework designed to guarantee to workers an active role in the decision-making processes that affect the value and productivity of labour power, as well as workers’ standards of living. In combination, the effect was to help politicise the process of wage-setting, to reveal the complex interests at stake and, in this way, help make space for considerations of social need to influence the institutional framework in which profit-making and capital accumulation takes place. In this way, it provided a framework through which to build working class power, and so contribute to struggles oriented not merely towards shaping capitalism, but doing so in ways likely to facilitate attempts to move beyond it.

IV. Minimum Wages Today and the AMW Directive Minimum wage mechanisms that sought to guarantee workers a minimum income calculated by reference to a politically determined assessment of need, decoupled from the amount of work performed, had been highly dependent on certain material and political conditions particular to the post-Second World War period: mass production, vertical integration, a commitment to Keynesian demand management, and high levels of collective bargaining, oriented around a model of stable, full-time employment.41 Since the 1970s, as these conditions have been eroded through globalisation and associated processes of neoliberal restructuring, it is no surprise that the structure and conceptual foundations of minimum wage mechanisms have undergone significant change. On the one hand, trade union membership has fallen into decline, and this has been accompanied by a decentralisation – and in some cases marginalisation – of collective bargaining, reducing the scope for worker involvement in the setting of wages, while, on the other hand, many important policies which had helped underpin and support this model of minimum wage regulation have been dismantled, under the aegis of neoliberalism and its attempts to maximise individual competition. As noted above, a feature of the conception of adequacy animating the wage-setting mechanisms of the welfare state period was an attempt to align the regulation of wages with mechanisms that would guarantee security and stability of employment over time. This meant that minimum wages translated into minimum guaranteed incomes, and so the ‘rate’ could be set on the basis of what someone working a standard working week would 40 For a discussion of the controversies surrounding the use of ‘family allowances’, see M Barrett and M McIntosh, ‘The “Family Wage”: Some Problems for Socialists and Feminists’ (1980) 4 Capital & Class 51. For a history of indexing in minimum wage-setting mechanisms, see HS Carpenter, ‘European Experience: Linking Wages to Cost-of-Living Indexes’ (1975) 98 Monthly Labor Review 53. 41 E Mutari and DM Figart, ‘Wages and Hours: Historical and Contemporary Linkages’ in Figart (n 21).

20 Zoe Adams need to live. In a context in which the ability to work such a standard week is denied to a vast proportion of the low paid workforce, however, a gap has opened up between the model of work on which the minimum wage mechanisms are predicated, and the calculation of workers’ living costs is made, and the model of work to which most workers have access.42 Those minimum wage-setting mechanisms that simply guaranteed a minimum hourly rate to workers, taking the existence of stable and secure employment for granted, have thus become woefully inadequate to realise the notion of adequacy on which they were initially based, because an hourly wage alone – of whatever amount – is relatively meaningless if it is not coupled with mechanisms that help transform that hourly wage into a stable, and continuous, income.43 In those countries whose minimum wage regulation deliberately decoupled the right to be paid from the obligation to work, providing guaranteed weekly, monthly, or annualised incomes,44 minimum wage-setting mechanisms have been dismantled and/or restricted so as to re-establish a proportionate relationship between pay and work. In the UK, for example, the guaranteed ‘minimum remuneration’ that workers covered by Wages Councils had to receive under the Wages Councils system has been replaced by a minimum ‘wage’ that is payable only for work actually provided. This has gone hand-in-hand with the nearcomplete abandonment of the industry-level collective bargaining that had performed a similar function for unionised workers.45 Indeed, most countries that have introduced minimum wage-setting mechanisms in the last 40 years have done so on the basis of a model in which the link between pay and work is explicit: providing for minimum hourly or daily wages, while making little attempt to regulate working hours in order to ensure regular, and continuous, work. Despite this shift (back) to ‘hourly’ minimum wage regulation, some countries continue to calculate the wage by reference to an assessment of workers’ living costs, assuming, without guaranteeing, the regular work which would be required to translate that wage into a subsistence income. Thus, states are able to pay lip service to the idea of a ‘living wage’ despite the fact that the intuitional conditions are not there to realise it in practice.46 In other countries, an entirely different model for calculating and adjusting wage rates has been adopted, with adjustment bodies expressly instructed to have regard to a wide range of criteria other than prices and costs of living. For example, a number of countries expressly require adjustment bodies to have regard to the likely effect of any rate on employment levels and competitiveness, and/or to the ‘general economic situation’, thereby making adequacy a function of what can be achieved in existing conditions, rather than placing obligations on authorities to re-regulate and restructure markets so as to ensure that a given wage rate can actually be realised in practice.47 In other countries, the rate is linked with the national wage structure, with the minimum wage required to be set at a given proportion of net household income, or the median net wage (often the metric used is an internationally 42 ibid. 43 Adams (n 10). 44 Eg the Wages Councils system of the UK. 45 See the National Minimum Wage Act 1998 and National Minimum Wage Regulations 2015, SI 2015/621 (as amended). 46 Eg the French SMIC. 47 For an overview, see L Funk and H Lesch, ‘Minimum Wage Regulations in Selected European Countries’ (2006) 41 Intereconomics 78.

Adequacy in Contemporary Labour Markets 21 recognised ‘poverty’ threshold, and so often helps ensure alignment with international obligations).48 The effect of these mechanisms is to tighten the link between wages and the idea of prices, and to subordinate wage-setting to a market logic. In addition to shifting to a ‘competitive’ wage model of adequacy, which links the minimum wage rate with existing market performance, countries have also introduced a range of exceptions to the coverage of the minimum wage, to ensure that certain labour market groups whose labour is deemed to be of lesser value – such as young persons, apprentices, prisoners and/or asylum seekers – are either guaranteed a lower rate and/or exempted from the scope of minimum wage protection entirely, further reinforcing the link between wages and the amount of work performed. As a result of these trends, few states today have a system in which the right to be paid is decoupled from the amount of work provided, nor developed institutions through which regular and continuous work can be guaranteed to the majority of the population, so as to translate minimum hourly wages into a decent and secure income. At the same time, few countries base their minimum wage-setting mechanisms on an absolute conception of what workers should be entitled to receive in exchange for their participation in the labour market. Instead, most minimum wage-setting mechanisms support a conception of the minimum wages that continues to see the market – whether national, or global – as the institution best placed to ‘decide’ what sort of living standards workers should expect, with many countries insisting that minimum wages should vary by skill level, and/or e xperience;49 that certain groups should be excluded from the scope of minimum-wage coverage entirely,50 and that wages should thereby vary depending on the quantity – and quality – of the labour power provided. Despite asserting that minimum wages should be sufficient to provide for a decent standard of living, therefore, most states today effectively delegate the power to decide what ‘decency’ means, to the market – making decency a function of what industry can, under current conditions, afford.

A. The EU Directive on Minimum Wages: An Assessment of Adequacy The above analysis suggests that Member States have shifted away from a market-constituting, or even a market-challenging, conception of minimum wages, towards a market-correcting one that supports a ‘competitive’ wage understanding of adequacy. It also suggests, however, that the institutional preconditions required to support an alternative, market-constituting or even market-challenging model of minimum wages, underpinned by a ‘subsistence’based notion of adequacy, are now absent, or at least weakened. The question to be asked, in this context, is thus whether the AMW Directive is liable to reinforce and exacerbate these trends, or act as an effective counterweight, capable of steering national minimum wage policies in new directions. While the chapters in the rest of this book will explore the features of the Directive in more depth, the answer to this question is ultimately that 48 Z Adams and S Deakin, ‘Article 4: The Right to a Fair Remuneration’ in N Bruun et al (eds), The European Social Charter and The Employment Relation (Bloomsbury, 2017) 4. 49 Eg Hungary: Funk and Lesch (n 47). 50 ibid Table 7.

22 Zoe Adams while the Directive might, by helping trigger institutional changes conducive to supporting the introduction of a more market-constituting model of minimum wages, help prompt a move towards a more subsistence wage conception of minimum wages in the EU, the AMW Directive does not go far enough in providing an effective steer to Member States as to the importance and necessity of such a model, and so fails to empower them to take the steps that will be required if such a model is to be realised – and workable – in Member States in practice. First, while the political discussion surrounding the introduction of the AMW Directive, and the Directive’s preamble, purport to support a market-constituting conception of minimum wages, and a ‘subsistence’ notion of adequacy, in practice the substantive provisions of the Directive suggest that minimum wage-setting mechanisms are seen instead as marketcorrecting, and adequacy seen in terms of a ‘competitive’ rather than the ‘sustainable’ wage. Thus, recitals 4 and 5 of the AMW Directive make express reference to the European Social Charter and the European Pillar of Social Rights, which includes rights to a ‘fair remuneration sufficient for a decent standard of living for themselves and their families’51 and to wages that ‘provide for the satisfaction of the needs of the worker and his/her family in the light of national economic and social conditions’. Recital 28 expressly states, moreover, that minimum wages are considered adequate if they are ‘fair in relation to the wage distribution in the country and if they provide a decent standard of living’. However, the Directive’s definition of wages (Article 3) tightly couples the right to be paid to the amount of work provided, and fails to link the concept of adequacy it promotes to an analysis of worker need and costs of living. Thus, minimum wages are defined as the ‘the minimum remuneration set by law or collective agreements that an employer, including in the public sector, is required to pay to workers for the work performed during a given period’. Rather than adopting a definition that emphasises what workers receive, therefore, and how well their needs are met, the emphasis is on the price that employers have to pay, where that obligation to pay is proportionate to the amount of work provided. Notably, moreover, the EU has taken no steps to couple this Directive with obligations on Member States to promote more regular, and stable, work, further reinforcing the premise that the overriding concern is to regulate markets rather than to encourage a given standard of living for all workers in the EU.52 Second, the AMW Directive does not establish a mechanism through which to assess the appropriate wage rate, nor mandate that such wage rate take into account a determination of costs of living. Instead, the Directive simply requires Member States to establish national criteria for defining adequacy that have regard to purchasing power, the general level of wages and their distribution, the growth rate of gross wages, and labour productivity developments.53 Recital 28 read in conjunction with Article 5 also makes it clear that it is for the Member State to decide the appropriate weight to be afforded to these factors, 51 Recital 21. 52 Other EU policies, such as the new Directive concerning the rights of gig-workers, The Transparent and Predictable Working Conditions Directive, go some way towards this end, in the sense that they seek to provide greater regularity and predictability to some of those whose working arrangements have proven most contingent and variable. However, all these mechanisms stop far short of providing all workers with a legal right to be provided with a guaranteed minimum amount of work per week, or month, as a mechanism of securing them a guaranteed minimum income. 53 Art 5.

Adequacy in Contemporary Labour Markets 23 and for the Member State to decide what indicators and reference values should be used as a basis for assessing adequacy in practice. In other words, then, in the context of the Directive, adequacy is a function of the existing structure, and institutionalisation, of labour market practices in different countries, and no attempt is made by the EU to encourage an adaptation of that structure and those institutions in order to guarantee a particular standard of living to all workers. Rather, in suggesting that Member States may make use of internationally and nationally recognised reference values in determining adequacy, the EU seems to be prioritising the goal of harmonisation over ensuring that the actual result achieved in each state is socially acceptable. While a late addition to the Directive was what is now Article 5(3), which permits Member States to use an automatic indexation mechanism to adjust statutory minimum wages, it makes no attempt to prescribe how this might be done, nor to suggest an appropriate mechanism for this purpose. As such, this addition to the Directive appears to be a nod to the wide sphere of discretion left to Member States, rather than an attempt by the EU to encourage the introduction of a minimum wage that is explicitly linked to – and adjusted in line with – the cost of living. Third, the AMW Directive clearly sees the EU’s role primarily in overseeing fair competition between Member States, rather than in facilitating the realisation of a given standard of living in all states regardless of existing conditions. Hence, the focus of the Directive is on minimising the scope for variation between Member States when it comes to wages, while minimising the scope for unfair competition, with states taking advantage of the lower living standards in ‘new’ Member States, with a view to depressing wage rates. Rather than signalling to Member States what sort of standard of living they should aspire to, therefore, the EU simply attempts to ensure that, whatever that standard, it is broadly consistent across Member States. Hence, little indication is given as to what the EU considers adequate, and why certain criteria for assessing adequacy might be deemed more relevant than others. Indeed, the mere fact that so many contradictory factors are cited as relevant to this question indicates a concern to ensure that wage rates do not challenge the existing market order, and that Member States simply aspire to raising wages as much as can be accommodated within the context of that existing order. Having said this, and despite the persistence of a market-correcting model of minimum wages in which a tight link is preserved between wages, and work, some of the AMW Directive’s provisions may – where the political will is present – help trigger institutional changes conducive to the development of a more market-constituting notion of minimum wages in particular states. In particular, an innovation in the final draft of the Directive was Article 7’s requirement that Member States involve the social partners in the process by which minimum wages are set, including the process by which criteria are selected for assessing the adequacy of the rate, and afforded weight. While notably excluding a right to co-determination in the process of such discussions, this provision might well prove to be significant for triggering a shift towards a more subsistence-based model of minimum wages in certain states – if such is actively pursued by the social partners. This is particularly so in light of further innovations in the final version of the Directive. For example, while an earlier draft had sought to encourage Member States to aspire to raise collective bargaining coverage to a level of 70 per cent, the final draft does nonetheless encourage Member States to strengthen the capacity of social partners to engage in collective bargaining over wages, and significantly, requires Member States in which collective bargaining coverage is less than 80 per cent to provide for a framework of enabling conditions for collective bargaining,

24 Zoe Adams either after consulting with or in agreement with social partners. While little guidance is given as to how the adequacy of that framework might be assessed, such an innovation may nonetheless help bring into being an institutional framework more conducive to the introduction and support of a ‘subsistence orientated’ mode of the minimum wage in certain states, even if we might have hoped for a more active steer by the EU in this direction. In this sense, at least, there is some scope for optimism in the AMW Directive, most particularly in its commitment to encouraging high levels of collective bargaining coverage in Member States, and promoting dialogue with social partners in the development of minimum wage-setting mechanisms. However, in many ways, the Directive constitutes a missed opportunity – the EU could have used the Directive to help establish machinery for promoting ongoing democratic debate over the meaning, function, and content of minimum wages at the EU level; and could have taken the opportunity to clarify the conceptual confusion that has set in throughout the EU as to the appropriate meaning and function of minimum wages in the context of a capitalist system. Instead, the AMW Directive largely reproduces – and to some extent exacerbates – this confusion, while leaving too much discretion to Member States when it comes to choosing which ‘model’ and ‘conception’ of minimum wages to pursue. Whether or not Member States will seize the opportunity to re-orient their minimum wage policies, or will merely adapt them as little as possible to ensure compliance, is an open question – the answer to which will, however, have significant implications when it comes to how well the Directive achieves its stated ambition of securing a decent standard of living for all workers in the EU.

3 Choosing a Tightrope Instead of a Rope Bridge – The Choice of Legal Basis for the AMW Directive SACHA GARBEN

I. Introduction Undoubtedly one of the most contentious issues in the context of the AMW Directive,1 the topic of the present edited volume, is the issue of its legal basis.2 More than a few were taken by surprise when, in 2019, Commission President Ursula Von der Leyen announced an EU minimum wage legislative initiative, aiming at making ‘work pay’ by developing a ‘framework’ on fair minimum wages,3 not least because it had often been assumed that such an issue would fall outside the scope of EU social competence in light of the provision in Article 153 TFEU (the main social policy legal basis) that ‘the provisions of this Article shall not apply to pay, the right of association, the right to strike or the right to impose lockouts’.4 The non-binding European Pillar of Social Rights (EPSR) had (unlike the EU Charter of Fundamental Rights5) explicitly included the right to fair minimum wages,6 but it was not generally expected that the EU would (or could) take legislative action to give binding expression thereto.

1 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (AMW Directive) [2022] OJ L275/33. 2 See also A Fernandez de Aranguiz Chueca and S Garben, ‘Combating Income Inequality in the EU: A Legal Assessment of a Potential EU Minimum Wage Directive’ (2021) European Law Review 156. Parts of this chapter have been based on this earlier work. 3 Von der Leyen, ‘Opening Statement in the European Parliament Plenary Session by Ursula von der Leyen, Candidate for President of the European Commission’ 16 July 2019. https://ec.europa.eu/commission/presscorner/ detail/en/SPEECH_19_4230. 4 Consolidated Version of the Treaty on the Functioning of the European Union [2012] OJ C326/1, Art 153(5). 5 In spite of being included in the original list of social rights under the heading working conditions, the right to a fair remuneration was not retained thereafter: Draft Charter of Fundamental Rights of the European Union (2000) 4112/0/00 Rev 2 Body 4, 6; J Hunt, ‘Fair and Just Working Conditions’ in T Hervey and J Kenner (eds), Economic and Social Rights under the EU Charter of Fundamental Rights: A Legal Perspective (Hart Publishing, 2003) 54. 6 Principle 6 (Wages): ‘Workers have the right to fair wages that provide for a decent standard of living. Adequate minimum wages shall be ensured, in a way that provide for the satisfaction of the needs of the worker and his/ her family in the light of national economic and social conditions, whilst safeguarding access to employment and incentives to seek work. In-work poverty shall be prevented. All wages shall be set in a transparent and predictable way according to national practices and respecting the autonomy of the social partners.’

26 Sacha Garben Unwaveringly, however, the year following the announcement, the Commission proposed a directive on the basis of Article 153(1)(b) TFEU, with the twofold objective of promoting collective bargaining and the adequacy of minimum wages.7 After tough political negotiations in which especially Denmark and Sweden opposed the measure out of a concern for the autonomy of their social model, the Directive was successfully adopted in October 2022. However, shortly after its adoption, in January 2023, Denmark brought an action for annulment, arguing that the Directive is in breach of the principle of the conferral of powers and Article 153(5) TEU.8 Denmark argues that the Directive ‘interferes directly with the determination of the level of pay in the Member States and concerns the right of association, which is excluded from the competence of the EU legislature pursuant to Article 153(5) TFEU’.9 Denmark also submits that the contested directive could not validly be adopted on the basis of Article 153(1)(b) TFEU because the Directive pursues both the objective set out in Article 153(1)(b) TFEU and the objective set out in Article 153(1)(f) TFEU, the latter requiring unanimity in the Council (Article 153(2) TFEU). In the alternative, Denmark argues that Article 4(1)(d) and Article 4(2) of the Directive (promoting collective bargaining on wage-setting) breach the principle of the conferral of powers and Article 153(5) TFEU as these provisions interfere directly with the determination of the level of pay in the Member States and concern the right of association, which is excluded from the competence of the EU legislature pursuant to Article 153(5) TFEU. This chapter analyses the choice of legal basis of Directive 2022/2041. It will be argued that the current Directive has not been adopted ultra vires on the basis of Article 153 TFEU (Section II). While it has pushed the interpretation of Article 153 TFEU to its limit, the Directive in its current form has nevertheless, it is contended, stayed within these limits. As such, the annulment action should be rejected by the Court. However, with this legal basis, the EU legislature has had to walk a tightrope, which has had a bearing on the level of ambition expressed in the Directive. Section III will argue that an alternative legal basis, namely Article 175 TFEU on social and economic cohesion, would have been available and – even if that legal basis would also have involved some measure of legal creativity – would have provided a broader and more solid basis for action (a rope bridge instead of a tightrope). Beyond the legalistics concerning the question of competence, it will finally be argued (Section IV) that taking a broader, constitutional and democratic perspective, it will be important for the Court to uphold the Directive as a landmark step towards the achievement of Social Europe and addressing the asymmetry between economic and social Union.

II. Walking the Tightrope: Article 153 TFEU In its proposal, the European Commission opted for Article 153(1)(b) TFEU as the potential legal basis for its measure, a choice that was ultimately confirmed by the co-legislator in the final act. Article 153(1) TFEU, the main social policy legal basis, is of course in some 7 Proposal for a Directive of the European Parliament and of the Council on adequate minimum wages in the European Union, COM/2020/682 final. 8 Case C-19/23 Denmark v Parliament and Council, pending. 9 Action brought on 18 January 2023, Kingdom of Denmark v European Parliament and Council of the European Union.

Choice of Legal Basis – AMW Directive 27 ways the obvious choice. Directive 2022/2041 has primarily been presented, in political terms, as a measure to protect workers and reduce in-work poverty – matters for which Article 153 TFEU is the most obvious reference point. However, Article 153(5) TFEU states unequivocally that the ‘provisions of this Article shall not apply to pay’. While this gives some credence to an interpretation that this legal basis does not apply to pay, in competence matters, the truth is often more complex.

A. Article 153(5) TFEU and the Exclusion of ‘Pay’ It is first of all important to stress that despite the stipulations of Article 153(5) TFEU, the article has been the legal basis for several prior legal measures dealing with pay. Directive 2008/104/EC on temporary agency work provides that agency workers shall be treated like directly employed workers in terms of their ‘basic working and employment conditions’10 which includes ‘pay’.11 Similar equal treatment provisions apply in other measures concerning non-standard employment, such as the Fixed-Term Work Directive12 and Part-Time Work Directive.13 These are both implementations of Social Partner Agreements in accordance with Article 155(2) TFEU, by virtue of which the competence criteria of Article 153 TFEU apply (including therefore the exclusion of pay under Article 153(5)). Furthermore, the Working Time Directive 2003/88 has been adopted on the basis of Article 153 TFEU and while it primarily regulates limits to working hours and minimum rest periods and not the remuneration thereof, it does lay down the right to paid annual leave in its Article 7. In its case law concerning this provision, the Court has had to delve deeply into the various components of ‘pay’ for the purposes of the right to paid annual leave.14 The EU legislator has therefore given a restrictive reading of Article 153(5) TFEU. The Court has upheld this interpretation. In Bruno and Others15 the Court held: That exception [of Article 153(5)] must therefore be interpreted as covering measures – such as the equivalence of all or some of the constituent parts of pay and/or the level of pay in the Member States, or the setting of a minimum guaranteed wage – which amount to direct interference by European Union law in the determination of pay within the Union. It cannot, however, be extended to any question involving any sort of link with pay; otherwise some of the areas referred to in [Article 153(1)] would be deprived of much of their substance.

This is in line with the Court’s general approach to the interpretation of EU competence. First, derogations from main rules always need to be interpreted restrictively. Accordingly, 10 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work [2008] OJ L327/9, Art 5. 11 ibid Art 1(f)(ii). 12 Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (the Fixed-term work Directive) [1999] OJ L175/43. 13 Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC – Annex: Framework agreement on part-time work (the Part-Time work Directive) [1997] OJ L014/9. 14 Case C-539/12 ZJR Lock v British Gas Trading Ltd ECLI:EU:C:2014:351, paras 28–33; Case C-471/08 Parviainen ECLI:EU:C:2010:391, para 73, and Williams and Others ECLI:EU:C:2011:588, para 27. 15 Case C-395/08 Bruno and Others ECLI:EU:C:2010:329, paras 37–39. For more on the limits of pay see B Ryan, ‘Pay, Trade Union Rights and European Community Law’ (1997) 13 International Journal of Comparative Labour Law and Industrial Relations 305.

28 Sacha Garben since Article 153(5) derogates from the main provisions of that of Article 153 TFEU, ‘the matters reserved by paragraph 5 must be interpreted strictly so as not to affect unduly the scope of paragraphs 1 to 4, nor to call into question the aims pursued’.16 Second, the Court will generally give a robust interpretation to the legislative powers of the Union and it will only very rarely annul a measure for having been adopted ultra vires.17 Although the Court has sometimes been criticised for what some consider a permissive approach to competence creep by the EU legislator, in general terms the Court’s reluctance to annul legislation on the basis of lack of competence should be defended for several reasons. In constitutional terms, a measure of deference by the judiciary towards the legislator is warranted, including on competence issues. But more importantly, since virtually any issue (including wages and income) can be the subject of European integration in the form of ‘negative integration’ (where the Court considers a particular national rule contrary to a directly-effective Treaty provision, for instance the freedom of establishment or to provide services), soft law and policy coordination (such as the Country Specific Recommendations (CSRs) in the European Semester) or parallel integration on the fringes of the EU legal and institutional framework (such as the various structural reforms specified in the Memoranda of Understanding (MoU) with programme countries in return for financial assistance), and since these forms of integration benefit from much less democratic legitimacy than the EU legislative process does, it would be perverse to curtail the most legitimate and accountable form of decision-making. The ordinary legislative procedure is the world’s most accomplished feat of transnational constitutional democracy and features a range of checks and balances, ensuring that the affected interests are represented (in fact, often better than at purely national level).18 We will come back to this point in Section IV below. The case law of the Court thus indicates that Article 153(5) does not preclude Article 153 TFEU measures from covering issues related to ‘pay’. But from that case law it can be deduced that such measures may not directly regulate the level of ‘pay’: it appears to exclude ‘direct interference by European Union law in the determination of pay within the Union’. The exclusion of ‘pay’ does not preclude the legislator from adopting measures that have financial consequences, but it appears that it would be excluded from establishing the level of some of the constituent parts of pay.19 Advocate General Kokott argued in Impact that the limitation on pay prevents the EU from legislating, for example, for annual inflationary compensation, to introduce an upper limit for annual pay increases or to regulate the amount of pay for overtime or for shiftwork, public holiday overtime or night work.20 What does the foregoing mean concretely for the AMW Directive? Denmark clearly considers that the Directive in its current form does not respect these conditions. In earlier work, on the basis of the various proposals and ongoing negotiations on both the form and substance of the initiative, it was suggested that ‘the aim to regulate wages, not in terms 16 Case C-307/05 Del Cerro Alonso ECLI:EU:C:2007:509, para 39, and Case C-268/06 Impact v Minister for Agriculture and Food and Others ECLI:EU:C:2008:223, para 122. 17 A rare example is Case C-376/98 Federal Republic of Germany v European Parliament and Council of the European Union (Tobacco Advertising) ECLI:EU:C:2000:544. In Case C-84/94 UK v Council ECLI:EU:C:1996:431 the Court annulled the provision in the Working Time Directive concerning Sunday rest. 18 S Garben, ‘From Sneaking to Striding: Combatting Competence Creep and Consolidating the EU Legislative Process’ (2020) 26(5/6) European Law Journal 429. 19 Case C-307/05 Del Cerro Alonso ECLI:EU:C:2007:509 paras 45–46; Case C-395/08 Bruno and Others ECLI:EU:C:2010:329, para 36. 20 Case C-268/06 Impact ECLI:EU:C:2008:2, Opinion of Advocate General Kokott paras 174–75.

Choice of Legal Basis – AMW Directive 29 of equal treatment for a specific group of workers or merely incidentally to guarantee the effectiveness of a right to leave from work, but as a matter of social protection for all workers, means that it collides with the letter and spirit of Article 153(5) TFEU’, and that ‘defending that a provision relating to adequacy of the level of wages would not fall foul of Article 153(5) TFEU would stretch any interpretation beyond the credible’.21 How does the text of the AMW Directive, as adopted, measure up in this regard? The current AMW Directive provides in the Preamble that: (19) In accordance with Article 153(5) TFEU, this Directive neither aims to harmonise the level of minimum wages across the Union nor does it aim to establish a uniform mechanism for setting minimum wages. It does not interfere with the freedom of Member States to set statutory minimum wages or to promote access to minimum wage protection provided for in collective agreements, in accordance with national law and practice and the specificities of each Member State and in full respect for national competences and the social partners’ right to conclude agreements. This Directive does not impose and should not be construed as imposing an obligation on the Member States where wage formation is ensured exclusively via collective agreements to introduce a statutory minimum wage or to declare collective agreements universally applicable. Moreover, this Directive does not establish the level of pay, which falls within the right of the social partners to conclude agreements at national level and within the relevant competence of Member States.

In its first article, the Directive states that ‘with a view to improving living and working conditions in the Union, in particular the adequacy of minimum wages for workers in order to contribute to upward social convergence and reduce wage inequality’, the Directive ‘establishes a framework’ for the adequacy of statutory minimum wages with the aim of achieving decent living and working conditions, the promotion of collective bargaining on wage-setting, and for enhancing effective access of workers to rights to minimum wage protection where provided for in national provisions. It furthermore reiterates the abovementioned statement in the Preamble that ‘in accordance with Article 153(5) TFEU’, the Directive ‘shall be without prejudice to the competence of Member States in setting the level of minimum wages’, as well as ‘the choice of the Member States to set statutory minimum wages, to promote access to minimum wage protection provided for in collective agreements, or both’. The concrete legal obligation imposed on Member States as regards statutory minimum wages is specified in Article 5, entitled ‘Procedure for setting adequate statutory minimum wages’. In light of the Court’s prior case law, the central legal question is whether this amounts to a ‘direct interference by European Union law in the determination of pay within the Union’ in the sense of determining ‘the constituent parts of pay and/or the level of pay in the Member States, or the setting of a minimum guaranteed wage’. There is no unequivocal answer to this question; it is open for interpretation and depends on how much weight one attaches to what part of the Court’s ‘test’: the Directive does undeniably relate to the determination of pay within the Union, but does it ‘directly interfere’? It does not directly determine the constituent parts of pay, or the level, nor does it set a minimum guaranteed wage. It does indirectly influence the level of pay since it requires the statutory wage-setting procedure to use criteria with a view to the adequacy of the wages. Such indirect influence

21 Fernandez

de Aranguiz Chueca and Garben (n 2).

30 Sacha Garben has been allowed in prior legislation through, for instance, the protection of groups of atypical workers as mentioned above. If the obligation under Article 5 as regards adequacy of wages is not read as an obligation of result from which a directly effective right for workers to challenge the level of their wages flows, it does not seem to directly set a (right to an adequate) minimum wage. The EU legislator has thus very carefully walked the tightrope of Article 153 TFEU as interpreted by the Court, and although a little wobbly, it has not fallen off. Especially in a grey zone such as this, in which various legal interpretations are possible, it would seem reasonable that the Court practises a degree of deference towards the legislator. There thus is sufficient ground to reject the ultra vires challenge of Denmark to the extent that it concerns Article 153(5) TFEU. Those same considerations apply, mutatis mutandis, to Denmark’s challenge of Article 4 of the AMW Directive, promoting collective bargaining on wage-setting, on the basis that it allegedly ‘interferes directly with the determination of the level of pay in the Member States’. Article 4 provides that ‘with the aim of increasing the collective bargaining coverage and of facilitating the exercise of the right to collective bargaining on wage-setting’, Member States (with the involvement of the social partners where applicable) shall take appropriate measures to promote the building and strengthening of the capacity of social partners, to encourage constructive, meaningful and informed negotiations on wages, to protect the exercise of the right to collective bargaining on wage-setting and ‘where appropriate’ ‘to protect trade unions and employers’ organisations participating in collective bargaining against any acts of interference by each other or each other’s agents or members in their establishment, functioning or administration’. In addition, each Member State in which the collective bargaining coverage rate is less than a threshold of 80 per cent shall provide for a framework of enabling conditions for collective bargaining, either by law after consulting the social partners or by agreement with them. Such a Member State shall also establish an action plan to promote collective bargaining. A textual reading of Article 4 suggests that the only enforceable obligation flowing from this provision is the adoption of a framework of enabling conditions and an action plan for Member States where the collective bargaining coverage rate is less than a threshold of 80 per cent. Such an obligation does not determine the constituent parts of pay, or the level, nor does it set a minimum guaranteed wage, and does not seem to directly interfere with the determination of pay.

B. Article 153(1)(b) on ‘Working Conditions’ and Article 153(1)(f) on ‘Representation and Collective Defence of the Interests of Workers and Employers, Including Co-determination, Subject to Paragraph 5’ Denmark also submits that the contested directive could not validly be adopted on the basis of Article 153(1)(b) TFEU because the Directive pursues both the objective set out in Article 153(1)(b) TFEU and the objective set out in Article 153(1)(f) TFEU, the latter requiring unanimity in the Council (Article 153(2) TFEU). Article 153 TFEU allows a wide range of action in relation to a broad set of objectives, to wit: (a) the improvement of the working environment to protect workers’ health and safety, (b) working conditions,

Choice of Legal Basis – AMW Directive 31 (c) social security and social protection of workers, (d) protection of workers where their employment contract is terminated, (e) the information and consultation of workers, (f) representation and collective defence of the interests of workers and employers, (g) conditions of employment for third-country nationals legally residing in Union territory, (h) the integration of persons excluded from the labour market, (i) equality between men and women with regard to labour market opportunities and treatment at work, (j) the combating of social exclusion, and (k) the modernization of social protection systems. When choosing between these specific objectives the EU legislature can be expected first to take account of the different procedures and voting rules attached to the various objectives. In the fields (a), (b), (e), (h), and (i), the ordinary legislative procedure applies. By contrast, in the fields listed under (c), (d), (f), and (g), the Council shall act unanimously, in accordance with a special legislative procedure. However, several of the objectives listed in the different indents could be said to overlap, with ‘(b) working conditions’ arguably encompassing many of the other indents. Furthermore, a single measure could pursue various different objectives at the same time. The pending challenge by Denmark will present the Court with the occasion to rule on the question of the inter-relationship between the various objectives listed in Article 153(1) TFEU. While following the lex specialis principle, one could argue that the procedure listed in the most specific indent would have to apply, the principle of effet utile would on the other hand suggest that the indent ‘working conditions’ cannot be hollowed out by a lex specialis reading of the provision as a whole. As the Court is generally inclined to interpret the authorising provisions widely, eg upholding the original Working Time Directive in UK v Council,22 and making clear that Article 153 also applies to third-country nationals in Tümer,23 one could speculate that when confronted with the choice between various indents in Article 153(1), the Court is likely to give an interpretation allowing the broadest basis for EU action. Where an act pursues various different objectives, the CJEU’s settled case law on the choice of legal basis would entail that the ‘centre of gravity’ of the measure would have to determine which indent, and hence which procedure, would apply. In the case of Directive 2022/2041, the overall aim seems more appropriately described as concerning ‘working conditions’ than ‘representation and collective defence of the interests of workers and employers’. All this provides sufficient ground to reject Denmark’s challenge to the extent that it concerns the choice of indent (b) over indent (f).

C. Article 153(5) TFEU and the Exclusion of ‘the Right of Association’ Finally, Denmark argues that Directive 2022/2041 falls foul of Article 153(5) to the extent that it excludes ‘the right of association’ from the legal basis. Article 153(1)(f) TFEU allows

22 Case 23 Case

C-84/94 UK v Council ECLI:EU:C:1996:431 (with the exception of the provision on Sunday rest). C-311/13 Tümer ECLI:EU:C:2014:2337.

32 Sacha Garben the EU to adopt measures concerning the representation and collective defence of the interests of workers and employers, including co-determination, ‘subject to paragraph 5’. It is not entirely clear what this means. No legislative measures have been adopted on the basis of Article 153(1)(f) TFEU, and the Court has not had occasion to specify this further. But a systematic, contextual reading of Article 153 as a whole suggests that as a rule, collective bargaining falls within the scope of EU legislative competence under Article 153(1)(f), with the exception to ‘the right to association’ specifically, as laid down in its firth paragraph by way of derogation. The latter would, as per ordinary rules of legal interpretation, have to be interpreted narrowly for these purposes. The right to form, join and operate an association, such as a trade union, does not seem to be either the main subject of regulation or even directly affected by Directive 2022/2041. The Directive does concern the ‘closely linked’24 but separate right to collective bargaining, which is on the contrary not excluded by Article 153(5) TFEU and instead falls under ‘co-determination’ for which the EU is explicitly competent under Article 153(1)(f) TFEU (and, as argued under Section II.A. above, indirectly though ‘working conditions’ under Article 153(1)(b)). As such, this argument challenging the validity of the Directive also should be rejected.

III. Forgoing the Rope Bridge: Article 175(3) TFEU Although the discussion in the preceding section has concluded that Directive 2022/2041 could validly be adopted on the basis of Article 153(1)(b) TFEU, the discussion also revealed that the choice of this legal basis has come at a certain cost. Because it has had to walk the tightrope, respecting the limitations of especially Article 153(5) TFEU as regards its exclusion of direct interference with the level of pay, it has not been able to formulate a directly effective obligation on Member States to ensure adequate minimum wages. This is a missed opportunity because, as has been argued in earlier work, another legal basis in which the legislator would not have to contend with Article 153(5) TFEU was available in the form of Article 175 TFEU.

A. Article 175 TFEU Article 175 TFEU provides: Member States shall conduct their economic policies and shall coordinate them in such a way as, in addition, to attain the objectives set out in Article 174. The formulation and implementation of the Union’s policies and actions and the implementation of the internal market shall take into account the objectives set out in Article 174 and shall contribute to their achievement. The Union shall also support the achievement of these objectives by the action it takes through the Structural Funds (European Agricultural Guidance and Guarantee Fund, Guidance Section; European Social Fund; European Regional Development Fund), the European Investment Bank and the other existing Financial Instruments.

24 ILO, ‘Freedom of Association and Collective Bargaining’, available at https://www.ilo.org/global/topics/dw4sd/ themes/freedom-of-association/lang--en/index.htm.

Choice of Legal Basis – AMW Directive 33 The Commission shall submit a report to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions every three years on the progress made towards achieving economic, social and territorial cohesion and on the manner in which the various means provided for in this Article have contributed to it. This report shall, if necessary, be accompanied by appropriate proposals. If specific actions prove necessary outside the Funds and without prejudice to the measures decided upon within the framework of the other Union policies, such actions may be adopted by the European Parliament and the Council acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions.

This gives the EU competence to adopt measures to strengthen the economic, social and territorial cohesion of the EU. Because a minimum wage instrument (especially where it would feature a hard obligation on Member States where they provide for statutory wages to ensure their adequacy) would reduce socio-economic disparities across the EU, promote upward convergence and facilitate a more harmonious development of the EU, a textual reading of the provision does not seem to preclude using this legal basis.

B. Wage Inequality and Social and Economic Cohesion Because social cohesion has been deemed to be ‘a broad and overall concept with imprecise contours’ that are difficult to define,25 the Court acknowledged the extensive discretion of the Union to act under this basis.26 Furthermore, the Court has recognised that economic and social progress indeed corresponds to the objectives of Article 174 TFEU.27 It is worth noting, there are at least two earlier initiatives that aimed at tackling poverty that were conceived under the auspices of social cohesion.28 In this regard, Molle argues that social cohesion could be understood as a way of decreasing inequalities when these become ‘politically and socially intolerable’, which translates into the need to act at the EU level because Member States are unable to tackle these inequalities by themselves.29 The wage inequality between Member States can certainly be qualified as politically and socially intolerable. As Kukovec has argued, ‘regional wage inequality in the EU is staggering’,30 workers in Bulgaria and Romania earn less than half in real terms of the amount earned workers in north-west Europe, and workers in the south of the EU earn over 20 per cent less than in the north-west.31 When measured in purchasing power 25 Case C-166/07, Parliament v Council ECLI:EU:C:2009:213, Opinion Advocate General Bot, para 82. 26 ibid para 53; W Molle, European Cohesion Policy (Routledge, 2007) 16. 27 Case C-420/16 Izsák and Dabis v Commission ECLI:EU:C:2019:177, para 68; Case C-149/96 Portugal v Council ECLI:EU:C:1999:574, para 86. 28 Regulation (EU) No 223/2014 of the European Parliament and of the Council of 11 March 2014 on the Fund for European Aid to the Most Deprived [2014] OJ L72/1; Commission, ‘The European Platform against Poverty and Social Exclusion: A European framework for social and territorial cohesion’ COM (2010) 758 final. 29 Molle (n 26) 16. 30 D Kukovec, ‘The Origins of the Crisis of Common Values of the European Union’ in T Capeta et al (eds), The Changing European Union – A Critical View on the Role of Law and the Courts (Hart Publishing, 2022). 31 Eurostat, ‘Income inequalities’ (data from 2016) https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ EDN-20180426-1; B Galgóczi and J Drahokoupil (eds), Condemned to be Left Behind? Can Central and Eastern Europe Emerge from Its Low-wage Model? (ETUI, 2017) 7–9; Eurostat, ‘Earnings Statistics’ (data from 2016) https:// ec.europa.eu/eurostat/statistics-explained/index.php?title=Earnings_statistics.

34 Sacha Garben standards, Northern countries such as Denmark and Belgium score around four times as much as Romania and Bulgaria.32 These persistent wage inequalities are disruptive of the social functioning of the internal market; on the one hand it leads to brain drain in the low-wage countries33 through the free movement of persons and on the other hand it leads to wage competition in the high-wage countries through the provision of workers as services (posting).34 This traps the internal market in wage-lowering dynamics – the opposite of not only the EU’s social and cohesion objectives but arguably its core raison d’être.35 Concerned especially about the issue of brain drain, the Commission notes in its 2023 Communication on ‘harnessing talent in Europe’s regions’ that: adequate minimum wages are essential to ensure that competition is based on high social standards in the Single Market, stimulating productivity improvements and promoting economic and social convergence in these regions. The new directive on adequate minimum wages is of particular relevance in this context, because it sets up a framework to ensure the adequacy of statutory minimum wages that promotes collective bargaining on wage-setting and enhances the workers’ access to minimum wage protection.36

In light of the above, it seems indisputable that the AMW Directive concerns the ‘social cohesion’ of the Union and as such falls within the scope of Article 175 TFEU, but may it be argued that Article 153 TFEU is nevertheless the more specific provision, and that following the lex specialis principle, the use of social policy legal basis should prevail?37 While in several cases, the Court has recognised, either explicitly or implicitly, the principle of lex specialis,38 this has not precluded the Court from allowing the use of a more general and indirect basis insofar as the conditions thereof have been met.39 The more general legal basis, the Court has argued, should not serve the purpose of circumventing a specific derogation.40 In this vein, Flynn argues that it is ‘perfectly proper’ to turn to cohesion measures to adopt instruments on another legal base as long as the given measure fits 32 Eurostat, ‘Median Gross Hourly Earnings, EUR and PPS’ (data from 2014) https://ec.europa.eu/eurostat/ statistics-explained/index.php?title=File:Median_gross_hourly_earnings,_EUR_and_PPS,_2014_V3.png. 33 See the contributions by A Watt, ‘Towards a European Social Union: from Spillovers to Just Transitions’ and L Andor, ‘A Timely Call for a Social Union’ in M Ferrera (ed), Towards a European Social Union: The European Pillar of Social Rights and the Roadmap for a fully-fledged Social Union (Centro Einaudi, 2019) 160. 34 S Garben, ‘Posted Workers are Persons Too! Posting and the Constitutional Democratic Question of Fair Mobility in the European Union’ in NN Shuibhne (ed), Revisiting the Fundamentals of the Free Movement of Persons in EU Law (Oxford University Press, 2023) Ch 3. 35 Art 3 TEU provides that ‘The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment.’ This means that the respect of these social conditions and social rights, including adequate wage, is an actual pre-condition for the constitutional legitimacy of the internal market. 36 European Commission, Harnessing Talent in Europe’s Regions, COM(2023) 32 final. 37 For the importance of the lex specialis principle in limiting the freedom of legal reasoning of the Court see G Conway, The Limits of Legal Reasoning of the European Court of Justice (Cambridge University Press, 2012) 153. 38 Case C-252/05 Thames Water Utilities ECLI:EU:C:2007:276, paras 39–51; Case C-444/00 Mayer Parry Recycling ECLI:EU:C:2003:356, paras 51–57. 39 Case C-376/98 Germany v Parliament and Council ECLI:EU:C:2000:544, paras 77–79; Case C-92/14, Gauweiler and Others ECLI:EU:C:2015:400, para 52; Case C-493/17 Weiss and Others ECLI:EU:C:2018:1000, paras 61–62. Opinion shared also by the Advocate General Sanchez-Bordona in Case C-620/18 Hungary v Parliament and Council ECLI:EU:C:2020:392, paras 73–85. 40 Case C-376/98 Germany v Parliament and Council ECLI:EU:C:2000:544, paras 77–79.

Choice of Legal Basis – AMW Directive 35 the Treaty provision being used.41 He further argues that taking such alternative route does not constitute an illegal circumvention: the fact that the effects of the measure will have an impact on economic policy does not mean that the use of that other legal base constitutes a circumvention of the limitations associated with Article 121 TFEU. The Court accepted in Gauweiler and Weiss that monetary policy measures taken by the European Central Bank (‘ECB’) do not fall into the sphere of economic policy for the sole reason that they may have indirect effects that can also be sought in the context of economic policy. By the same logic, measures adopted by the other Union institutions under other policies are not equivalent to economic policy measures due to such indirect effects. Moreover, the fact that such effects are definitely foreseeable by the measure’s author(s) and are knowingly accepted does not rob them of the status of ‘indirect’ effects.42

If this argument is valid for using Article 175 TFEU instead of Article 121 TFEU, a consistent reasoning suggests that social cohesion could also serve as the basis for a minimum wage directive. It can be added that the procedural requirements are the same under Articles 175 and 153 TFEU and that therefore, claims of using this legal basis to circumvent higher consensus requirements or to limit the role of the Parliament are simply void. A similar argument applies to the caveat of Article 175 TFEU that reads ‘without prejudice to the measures decided upon within the framework of the other Union policies’. A very narrow reading could suggest that Article 175 TFEU is subordinated to other provisions in the Treaty. However, the weak wording of the provision advocates against such a restrictive interpretation. Other provisions with a stronger wording, such as ‘references to be decided upon [..] other Treaty provisions’ have not been interpreted so restrictively (Articles 18 and 22 TFEU). Even if it were, so far nothing suggests that an instrument on minimum wages would interfere in the way of other measures. Another potential concern relates to whether a minimum wage instrument would qualify as a ‘specific action’ that the EU could adopt under Article 175 TFEU. In Parliament v Council the ECJ had the opportunity to reflect on what a ‘specific action’ entailed, but what followed did not shed much light.43 While the Court was ambiguous, Advocate General Bot agreed with the Parliament on a wide interpretation, including action in any given legal form.44 This interpretation seems to be in line with what the Masters of the Treaty had in mind, otherwise, they could have opted for a more clear wording as is the case for other areas such as education (Article 165 TFEU), culture (Article 167 TFEU) and tourism (Article 195 TFEU) where EU has competence to adopt ‘complementary actions’ but harmonisation is specifically excluded.45 41 L Flynn, ‘Greater Convergence, More Resilience? Cohesion Policy and the Deepening of the Economic and Monetary Union’ in D Fromage and B de Witte (eds), Recent Evolutions in the Economic and Monetary Union and the European Banking Union: A Reflection (Maastricht University, 2019) Maastricht Law Faculty of Law Working Paper series 2019/03 48. 42 ibid 49. 43 ‘Title XVII of the EC Treaty provides adequate legal bases allowing for the adoption of means of action which are specific to the Community, administered in accordance with the Community regulatory framework and the content of which does not extend beyond the scope of the Community’s policy on economic and social cohesion’: Case C-166/07 Parliament v Council ECLI:EU:C:2009:499, para 46. 44 Case C-166/07 Parliament v Council ECLI:EU:C:2009:213, Opinion of Advocate General Bot, para 38 and paras 91–92. 45 Case C-217/04 United Kingdom v Parliament and Council ECLI:EU:C:2006:279, para 44; Case C-270/12 United Kingdom v Parliament and Council ECLI:EU:C:2014:18, para 104 ff; Case C-376/98 Germany v Parliament and Council ECLI:EU:C:2000:544, para 85.

36 Sacha Garben Perhaps one could argue that the role of Article 175 TFEU is limited to coordination and funding, as this is explicitly worded in the provision. The fact, however, that the provision also precisely refers to ‘actions outside the Funds’ suggests that the Union may pursue a different policy insofar as it falls within the scope of social cohesion,46 which could include an instrument on minimum wages. Lastly, one could reason that Article 175 TFEU is limited to serving region-specific problems. Nevertheless, three existing instruments, namely the European Social Fund (ESF), the European Globalisation Adjustment Fund (AGF) and most recently and most prominently the Recovery and Resilience Facility (RRF), that were adopted under this provision, go well beyond regional integration. The AGF even introduced an amendment after the financial crises where the regional limitation was specifically dropped.47 Given that Article 174 TFEU explicitly refers to strengthening economic, social and territorial cohesion in order to promote the Union’s overall harmonious development, the positive effects of a potential instrument under this basis should be measurable at the EU level. Consequently, it can hardly be argued that the legislator is limited to region-specific problems.

C. The Value of the Alternative All things considered, there is no reason to believe that Article 175 TFEU could not have served as a solid and sound legal base for the adoption of a comprehensive instrument on minimum wages that could have ‘unashamedly’ interfered with wages in a way that adequacy levels can be firmly set. In light of the importance of adequate minimum wages for both the social cohesion of the EU through the reduction of inequalities between Member States, and to reduce in-work poverty and inequalities within Member States, the joint use of Articles 153(1)(b) and 175 TFEU would have been ideal. This would have provided a secure legal basis for action and the adoption of a(n even) more ambitious minimum wage directive. But the point of this is not merely to point out, in hindsight, the error of not taking that road. It may well prove crucial in the future. For one, should the Court not be convinced of the arguments presented under Section II above and instead side with Denmark on the issue of Article 153 TFEU, it may provide the alternative for the EU legislator to re-adopt the measure (like Article 153(1)(b) TFEU, Article 175 prescribes qualified majority vote in the Council).

IV. Conclusion: The Bigger Picture An adequate minimum wage is the EU’s business. If people in full-time jobs on the European labour market cannot live in dignity and face poverty, the EU project fails – constitutionally, 46 See in this regard R Repasi, ‘Legal Options and Limits for the Establishment of a European Unemployment Benefit Scheme’ (European Commission, 2017) 25. 47 Regulation (EU) No 1304/2013 of the European Parliament and of the Council of 17 December 2013 on the European Social Fund and repealing Council Regulation (EC) No 1081/2006 [2013] OJ L 347. See particularly Art 2(a) of Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014–2020) and repealing Regulation (EC) No 1927/2006 [2013] OJ L 347.

Choice of Legal Basis – AMW Directive 37 legally, politically and economically. If the dynamics of a common market, economy and currency entrench inequalities within and between Member States, trapping some in self-reinforcing cycles of low quality of work, life and society, the EU project fails. If the EU proclaims fundamental social rights, commits to a social market economy, and yet produces as the only tangible effect on one of the most central elements of an individual’s (working) life a decidedly and consistently downward pressure, the EU project fails. It is precisely because of the significance of wages in a joined economy, market and currency, that the EU has of course acted in previous years on domestic wage-setting mechanisms and levels. Perhaps most visibly, such action has taken place in the context of the intergovernmental European Stability Mechanism (ESM), through the reforms required by the MoU in return for receiving financial assistance. While strictly speaking outside the EU legal framework, the EU institutions, primarily the Commission and the Central Bank, have deeply intervened in wage formation mechanisms of the bailout Member States by requiring cutbacks in minimum wage levels, public expenditure and decentralisation of collective bargaining mechanisms.48 Within the EU framework, such action has similarly been undertaken in the context of economic policy coordination through the European Semester. The CSRs have, for example, encouraged the freezing of minimum wage growth in order to support competitiveness, job creation, or alleviate structural unemployment49 (even when minimum wages fell well below the poverty threshold50). In parallel, the Euro Plus Pact and the Six Pack have also incentivised wage austerity and bargaining decentralisation.51 While these actions confirm the argument about the importance of wages in the EU, they of course decidedly do not promote the right to fair and adequate wages; on the contrary.52 There can be discussion as to the appropriateness of these policies from a purely economic and monetary perspective. While there is some common ground on the need for convergence, as a monetary union presupposes a certain degree of risk-sharing and stability, which can partly be achieved through social policies,53 the question whether this should 48 Case C-434/11 Corpul Naţional al Poliţiştilor ECLI:EU:C:2011:830; Case C-462/11 Cozman ECLI: EU:C:2011:831; Case C-128/12 Sindicato dos Bancários do Norte and Others ECLI:EU:C:2013:149. All these cases were, however, declined by the ECJ as in the opinion of the Court their complaints were not related to EU sources. See, more extensively on the impact of the austerity measures, C Barnard, ‘The Charter in Time of Crisis: A Case Study of Dismissal’ in N Countouris and M Freedland (eds), Resocialising Europe in a Time of Crisis (Cambridge University Press, 2013) 250; C Kilpatrick, ‘On the Rule of Law and Economic Emergency: The Degradation of Basic Legal Values in Europe’s Bailouts’ (2015) 35 Oxford Journal of Legal Studies 325. 49 See for example: Council Recommendation of 12 July 2011 on the National Reform Program 2011 of France and delivering a Council opinion on the updated Stability Program of France, 2011–2014 [2011] OJ C213; Council Recommendation of 14 July 2015 on the 2015 National Reform Program of France and delivering a Council opinion on the 2015 Stability Program of France [2015] OJ C 272. 50 The at-risk-of-poverty threshold is set at 60% of the median equivalised income of a country. This particular case referred to a CSR for Slovenia. Council Recommendation of 10 July 2012 on the National Reform Program 2012 of Slovenia and delivering a Council opinion on the Stability Program of Slovenia, 2012–15 [2015] OJ C 219, Preamble 16. 51 K Busch et al, ‘Euro-crisis, Austerity Policy and the European Social Model: How Crisis Policies in Southern Europe Threaten the EU’s Social Dimension’ Friedrich-Ebert-Stiftung International Policy Analysis (2013); E Fernandez-Macías and C Vacas-Soriano, ‘A Coordinated European Union Minimum Wage Policy?’ (2015) 22 European Journal of Industrial Relations 97 at 98; T Schulten, ‘European Minimum Wage Policy: A Concept for Wage-led Growth and Fair Wages in Europe’ (2012) 4(1) International Journal of Labour Research 85. 52 E Menegatti, ‘Challenging the EU Downward Pressure on National Wage Policy’ (2016) 32 International Journal of Comparative Labour Law 195. 53 F Costamagna, ‘The European Social Union as a “Union of National Welfare States”: a Legal Perspective’ in Ferrera (n 33).

38 Sacha Garben be in an ‘upward’ or ‘downward’ direction (and what the relationship between wages and growth is in that respect) depends on one’s economic school of thought and political ideology. Precisely, therefore, these issues should be deliberated and decided in a democratic, political process, within a constitutional framework of fundamental rights’ protection. The problem is that European economic and monetary governance largely operates without either. Both processes are examples of hard-core intergovernmentalism with all the de-parliamentarisation and democratic deficits that this entails. Actions under the ESM are not subject to the Charter of Fundamental Rights of the EU (CFREU) as the Court held in Pringle,54 and the in itself welcome mitigation by the Court in Ledra55 that EU Institutions nevertheless may be liable in case of an attributable infringement of the CFREU is a mere plaster on a gaping wound in that regard. Similarly, CSRs are not considered as legally binding and thus the CFREU is not applicable to the political decisions made therein or in reaction thereto. All this creates a dangerous constitutional vacuum in which democracy, the Rule of Law and fundamental rights are displaced, to the detriment of especially social standards, as has been widely deplored in academia and beyond. The issue of wages is situated right at the heart of that vacuum. Directive 2022/2041, adopted through the ordinary legislative procedure and with the appropriate consultation of the social partners, is a very welcome way to start filling that vacuum. It is therefore hoped that it will be upheld (and if not, that it can be re-adopted on the basis of Article 175 TFEU).

54 Case C-370/12 Thomas Pringle v. Government of Ireland ea ECLI:EU:C:2012:756. This is different when the MoU is adopted on the basis of the provisions of the Treaty on mutual assistance: Case C-258/14 Florescu and Others ECLI:EU:C:2017:448, para 48. 55 Joined Cases C-8/15 P to C-10/15 P Ledra Advertising Ltd ECLI:EU:C:2016:701.

4 The Impact of the AMW Directive on EU Labour Law CLAUDIA SCHUBERT

I. Introduction Wages are one of the core working conditions, yet for a long time they were not subject to EU social policy, but remained part of the Member States’ labour and economic policies (Article 153(5) TFEU). In principle, the setting of wage levels within the Member States is a matter for the parties to the employment contract. Protection against excessively low wages was, depending on the social-historical development of the Member State, either primarily a matter for the social partners (eg Austria, Denmark, Finland, Italy, and Sweden) or (also) part of the state-regulated minimum working conditions in the form of general or sectorspecific minimum wages. Directive 2022/20411 for the first time sets out guidelines for setting the minimum wage and for strengthening the social partners as autonomous actors. In particular, the Directive implements Principle 6 of the European Pillar of Social Rights (EPSR),2 according to which every worker has a right to fair wages that provide for a decent standard of living for them and their families. Wages are thus seen – unlike in the EU’s economic and fiscal policy – not only as an economic factor cost, but as a fundamental prerequisite for securing a dignified social existence.3 This converges with the efforts of both the International Labour Organization and the Council of Europe, which legally guarantee the securing of an adequate standard of living in their legal acts.4 For the EU, it is also an essential step in the development towards a social market economy in the sense of Article 3(3) TEU as well as a community of values that also strives for the realisation of fundamental social rights. In an economic community, this must fit into the macroeconomic framework and must not destroy jobs or remove work incentives. Adequate wages are one element of guaranteeing social security, which is the responsibility not only of employers but also of the public welfare system. Yet, setting the minimum wage, and supplementing it with social benefits, remains a matter for the Member States. 1 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (the AMW Directive) [2022] OJ L275/33. 2 See in detail Part I. 3 AMW Directive, recitals 4–6, 28. 4 ILO Convention Nos 29, 99 and 131; Article 4(1) RESC.

40 Claudia Schubert

II. Wage-setting as an Object of EU Policy A. Protection against Discrimination Initially, wages in the EU were mainly covered by internal market and competition policy before becoming a component of social policy. In 1992–1997, only a separate protocol to the Maastricht Treaty, in which Ireland and the United Kingdom did not participate, contained the EU’s first competences for social policy.5 It was not until 1997 that this policy area was included in the Treaty of Amsterdam, specifically in Article 136 ff EC Treaty. Wages, however, were also covered by EU anti-discrimination law from the beginning. The right to equal pay for men and women was already part of the Treaty of Rome (Article 119 EEC Treaty; today Article 157 TFEU). Since the Treaty of Nice, there has been an independent EU policy field (Article 19 TFEU), for the implementation of which there are several directives (eg Directive 2000/78/EC, Directive 2006/54/EC). Anti-discrimination law, on the other hand, is limited to the protection of employees against discrimination on the grounds of personal characteristic such as gender, sexual orientation, age, religion, or belief. It does not aim at the establishment of an adequate standard of living but can at most indirectly work towards it in the sense that employees with comparable employment receive a higher remuneration that ensures such a standard of living. The protection of income is thus at best indirectly secured. The protection of the general right of personality, which comprehensively includes working life, is in the foreground.

B. From the Implementation of the Single Market Towards a Social Policy i. Freedom of Workers and Wage Setting The EU initially concentrated on establishing the single market, including the free movement of workers. The focus was exclusively on removing obstacles to the departure or arrival of workers within the EU, not on standardising minimum working conditions. Article 45 TFEU prohibits discrimination by state regulations against EU foreigners in relation to domestic workers. Incoming workers must not be discriminated against in the Member States, and this also applies to their remuneration.6 Furthermore, the CJEU takes private associations to task as intermediary powers, so that neither social partners nor other associations (eg sports associations) may hinder the free movement of workers without objective justification.7 Therefore, both collective agreements and association statutes must 5 Protocol on Social Policy to the Treaty on the European Union, [1992] OJ C191/1. 6 Eg Case 152/73 Sotgiu v Deutsche Bundespost ECLI:EU:C:1974:13, para 11; Case C-15/96 SchöningKougebetopoulou v Freie und Hansestadt Hamburg ECLI:EU:C:1998:3, para 23; Case C-379/09 Casteels v Ryanair ECLI:EU:C:2011:131, para 22; Case C-86/21 Gerencia Regional de Salud de Castilla y León v Delía ECLI:EU:C:2022:310, paras 30–31. 7 Eg Case C-415/93 UEFA v Bosman ECLI:EU:C:1995:463, para 82; Schöning-Kougebetopoulou v Freie und Hansestadt Hamburg (n 6) para 12; Case C-51/96 et al Deliège ECLI:EU:C:2000:199, para 47; Case C-309/99 Wouters, Savelbergh and Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten ECLI:EU:C:2002:98, para 120.

Impact of AMW Directive on EU Labour Law 41 be in line with the free movement of workers. Private employers are also covered by the prohibition of discrimination in Article 45 TFEU, as their conduct may constitute serious infringements of the right to free movement of workers.8 Although the cases cited here did not concern pay, they can be transferred. In each case, the employers applied a uniform approach to a large number of cases, so that the discrimination did not have effect for a single employment relationship and made the protection of the internal market necessary. The CJEU has developed the free movement of workers into a prohibition of restrictions. This protects in particular the so-called returnees who initially make use of the free movement of workers and later return to their country of origin.9 In particular, the lack of recognition of foreign qualifications or periods of service abroad can lead to lower remuneration for these workers than for those who have not made use of their freedom of movement.10 This makes the exercise of the free movement of workers less attractive and constitutes a disadvantage. If there is no objective and proportionate justification for the less favourable treatment, Article 45 TFEU is violated. Article 45 TFEU and its implementing provisions thus do not regulate wage levels as a core condition of employment with the aim of ensuring an adequate standard of living. They concern wage levels only to the extent that they discriminate or disadvantage moving or returning workers and contradict the establishment of a single market.

ii. Wage-setting: From Competition Factor Towards Social Protection The establishment of the internal market was not originally aimed at creating labour standards, but primarily at removing inter-state barriers to free trade and the movement of services, labour, and capital. However, the different wage levels and labour protection standards soon led to competition between low-wage and high-wage countries. In addition, there were competitive advantages for those Member States that had low – and thus cheaper – worker protection standards. To avoid a race to the bottom and distortions of competition, worker protection had already been harmonised in certain areas before the Treaty of Amsterdam.11 This included several regulations that are now considered part of social policy. However, there was no targeted regulation of wage levels or minimum wage standards. The regulations motivated by competition policy only contain selective regulations on wages. The Directive relating to the safeguarding of employees’ rights in the event of transfer of undertakings, businesses or parts of undertakings or businesses12 ensured that the 8 Case C-281/98 Angonese v Cassa di Risparmio di Bolzano SpA ECLI:EU:C:2000:296; Case C-94/07 Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV ECLI:EU:C:2008:425; Case C-172/11 Georges Erny v Daimler AG – Werk Wörth ECLI:EU:C:2014:157. 9 Case C-514/12 Zentralbetriebsrat der gemeinnützigen Salzburger Landeskliniken Betriebs GmbH v Land Salzburg ECLI:EU:C:2013:799, para 30 ff; Case C-703/17 Krah v Universität Wien ECLI:EU:C:2019:850, paras 40–41; Case C-710/18, WN v Land Niedersachsen ECLI:EU:C:2020:299, para 24 ff. 10 Zentralbetriebsrat der gemeinnützigen Salzburger Landeskliniken Betriebs GmbH v Land Salzburg (n 9) para 30 ff; Krah v Universität Wien (n 9) paras 40–41, 71; WN v Land Niedersachsen (n 9) para 24 ff. 11 M Fuchs et al, Europäisches Arbeitsrecht, 6th edn (Verlag Österreich, 2020) 10 ff, 20 ff. 12 Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses, [1977] OJ L061/26; now Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, [2001] OJ L82/16.

42 Claudia Schubert employee did not lose his employment relationship because of the transfer of the undertaking and that working conditions did not deteriorate. The aim was to protect the status quo at the time of the transfer of the business, which the transferee can only change under certain conditions or after the expiry of a protection period (Article 3(1), (2)). In addition, the Working Time Directive contained an entitlement to paid rest leave.13 The amount of paid leave corresponds to the remuneration in a reference period,14 so that no influence is exerted on the determination of remuneration. Finally, the Directive on the granting of an insolvency allowance harmonised the protection of workers’ pay in the event of the employer’s insolvency.15 With the entry into force of the Treaty of Amsterdam, the protection of precarious employment relationships (part-time employment relationships, fixed-term employment relationships, temporary agency work) in particular was introduced. To protect these workers, who were often placed in a worse position than full-time employees, the directives contained a prohibition of discrimination.16 This prohibition also applies to remuneration.17 This does not create a general minimum standard applicable to all in the sense of a minimum wage, but at least a worse position for these workers is avoided. If the Member States provide for an adequate minimum wage for workers, such a regulation is sufficient. However, Union law as such – prior to the AMW Directive – has not ensured the elimination of in-work poverty,18 nor has the introduction of social policy in the Treaty of Amsterdam (Article 154, 155 TFEU) given rise to a European social partnership for setting minimum wages. The social dialogue is no European collective bargaining autonomy with the aim of concluding cross-border collective agreements with minimum working conditions. Initially, the social dialogue served mainly as an impetus for a hesitant EU social policy of the Member States, which was under the impact of the economic recession and accompanied by rationalisation measures in many European companies in the 1980s and 1990s.19 Several social policy directives were initiated by the social partners, taken up by the European Commission and accepted by the Member States.20 There was no direct regulation of social partnership or collective agreements in secondary legislation, also in view of the limited competence of the EU. Rather, primary legislation and (transformed) 13 Art 7 Council Directive 93/104/EC of 23 November 1993, concerning certain aspects of the organisation of working time, [1993] OJ L307/18; now Art 7 Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (Working Time Directive) [2003] OJ L299/9. 14 Case C-539/12 Lock v British Gas Trading Ltd ECLI:EU:C:2014:351, para 17; Case C-214/16 King v The Sash Window Workshop Ltd und Richard Dollar ECLI:EU:C:2017:914, para 35; Case C-385/17 Hein v Albert Holzkamm GmbH & Co KG ECLI:EU:C:2018:1018, para 32 ff. 15 Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer, [1980] OJ L283/23; now Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer, [2008] OJ L283/ 36. 16 Annex clause 4 of Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC (Part-Time Work Directive) [1998], OJ L14/9; Annex clause 4 of Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixedterm work concluded by ETUC, UNICE and CEEP (Fixed-Term Work Directive), [1999] OJ L175/43. 17 Case C-395/08 INPS v Tiziana Bruno et al ECLI:EU:C:2010:329, para 32 ff. 18 See Ch 8 below by Ratti. 19 Fuchs et al (n 11) 13 ff. 20 Eg see n 17.

Impact of AMW Directive on EU Labour Law 43 EU directives set mandatory requirements for the permissible content of collective agreements.21 In addition, the CJEU made the trade unions’ industrial action subject to proportionality with regard to the freedom of establishment or the freedom to provide services.22 Special provisions at the interface of internal market policy and social policy exist for the posting of workers and public procurement law. In the original version of Directive 96/71/EC, the law on posted workers was a compromise between the freedom to provide services and social protection, without completely depriving low-wage countries of the advantage of lower factor costs.23 Although the Member States had bound employers to the national minimum working conditions, and thus also to the statutory or generally binding collectively agreed minimum wages in the case of posted workers, a cost advantage for companies from low-wage countries remained. This was especially true in sectors where competition is primarily fought over personnel costs (eg the construction industry). The high-wage countries in the EU combatted this competition as social dumping. The subsequent reform of the Posted Workers Directive in 2018 eliminated this advantage and now requires equal pay for foreign workers from the first day of their posting.24 This is a further restriction of the internal market to protect jobs in high-wage countries. Special provisions exist for public procurement. Union law aims to provide foreign undertakings with access to public contracts.25 However, this can create a competitive advantage for low-wage countries if the award is made with particular regard to the price of the offer. Directive 2014/24 EU allows a consideration of whether the undertaking complies with social and labour law obligations when awarding public contracts.26 This is in line with the case law of the CJEU, according to which Member States may oblige suppliers to respect national or regional minimum wages but not specific collective agreements.27 However, it is disputed whether the CJEU also allows the setting of so-called award-specific minimum wages that solely apply to public contracts, or whether it considers this to be a disproportionate restriction on the freedom to provide services.28 In this respect, limits are set to what is perceived as social dumping by companies from low-wage countries. However, this is linked to the minimum wages in the Member States; the EU does not regulate a minimum wage.

21 Eg Case C-411/05 Palacios de la Villa v Cortefiel Servicios SA ECLI:EU:C:2007:604, para 38; Case C-438/05 International Transport Workers’ Federation und Finnish Seamen’s Union v Viking Line ABP ECLI:EU:C:2007:772, para 54; Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet et al ECLI:EU:C:2007:809, para 57; Case C-368/18 Casteels v Ryanair ECLI:EU:C:2019:91; Case C-447/09 Reinhard Prigge et al v Deutsche Lufthansa AG ECLI:EU:C:2011:573, para 65 ff; Case C-141/11 Torsten Hörnfeldt v Posten Meddelande AB ECLI: EU:C:2012:421, para 19 ff. 22 Viking Line (n 21) para 79; Laval un Partneri (n 21) para 105. 23 Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, [1997] OJ L18/1. 24 Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services, [2018] OJ L173/16. 25 See Ch 18 below by Davies. 26 Recitals 2, 37, Art 18(2) Directive 2014/24 EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC Text with EEA relevance [2014] OJ L94/65. 27 Case C-346/06 Rüffert v Land Niedersachsen ECLI:EU:C:2008:189, para 21 ff; Case C-115/14 RegioPost GmbH & Co KG gegen Stadt Landau in der Pfalz ECLI:EU:C:2015:760, para 53 ff. 28 See S Kühnast in Münchener Kommentar zum Wettbewerbsrecht, vol 4, 4th edn (Beck Verlag, 2022) § 97 no 160.

44 Claudia Schubert

C. Fiscal Policy and its Influence on Wage-setting Whereas Union law has so far mainly regulated the equal treatment of different groups of employees regarding wages or a protection against social dumping, the EU’s fiscal policy within the European Monetary Union influences the level of wage-setting directly. In response to the financial market crisis of 2008, the EU expanded its economic and fiscal policy in order to intensify economic policy coordination in the European Monetary Union, prevent macroeconomic risks and ensure sustainable growth. This economic policy governance is carried out through the European Stability Mechanism (ESM) and the Euro Plus Pact of 2011, which was joined by several Member States outside the Eurozone. The Euro Plus Pact is intended in particular to promote competitiveness and is related to wage formation. It provides for the monitoring of unit labour costs because their strong and persistent increase undermines competitiveness.29 In addition, wage-setting procedures are to be reviewed and it must be ensured that wage settlements in the public sector do not contradict the increase in competitiveness of the private sector.30 The ESM is anchored in European primary law in Article 136(3) TFEU and was implemented through the so-called six-pack, which consists of five regulations and one directive. This includes budgetary surveillance as well as surveillance and coordination of economic policy within the framework of the European Semester (Regulation (EU) 1175/2011).31 Within this framework, Regulation (EU) 1176/2011 aims to prevent and correct macroeconomic imbalances.32 If such imbalances become apparent in the monitoring of the state budgets, the Council makes recommendations for action to the Member States in accordance with Article 7(2) of the Regulation. In the past, such corrective action plans have in some cases included requirements for collective bargaining and wage setting. This applied first to Portugal and Greece. It was recommended that collective bargaining be decentralised so that it no longer takes place at the industry level but at the company level.33 In the case of Belgium, it was also recommended that the degree of centralisation of collective bargaining be reviewed.34 In addition, wage-setting and indexation of pay (in the public sector) should be reviewed. These measures lead to a limitation of wage-setting and can be accompanied by serious interventions in the social partnership.35 They have been massively criticised as one-sided economic and fiscal policies at the expense of the social partners and social policy.36 It is 29 European Council, 23/24 March 2011, EUCO 10/1/11 REV 1, Anhang I, 16. 30 ibid. 31 Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, [2011] OJ L306/12. 32 Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances, [2011] OJ L306/25. 33 cf C Bourazeri, Tarifautonomie und Wirtschaftskrise (Nomos, 2019) 178 ff; C de Oliveira Carvalho and AT Ribeiro, ‘The Impact of the EU Economic Governance in Portugal’ (2022) 2 European Labour Law Journal 193, 206 ff. 34 cf F Dorssemont, ‘Wage Setting and Wage Moderation in Belgium: A Never-ending and Already-old Story in the Wake of the “New European Economic Governance”’ (2022) 2 European Labour Law Journal 156, 158 ff. 35 Bourazeri (n 33) 178 ff, 207 ff; de Oliveira Carvalho and Ribeiro (n 33) 193, 195, 206 ff; Dorssemont (n 34) 156, 158 ff. 36 A Fischer-Lescano in N Bruun et al (eds), Economic and Financial Crisis and Collective Labour Law in Europe (Hart Publishing, 2014) 55 ff; C Kilpatrick, ‘Constitutions, Social Rights and Sovereign Debt States in Europe’ EUI Working Paper 34/2015.

Impact of AMW Directive on EU Labour Law 45 true that such measures affecting the social partners should at least be taken after consulting them in order to tailor the measures to the Member State’s collective labour relations. Generally, the impact on the well-established social partnership was underestimated. However, serious macroeconomic risks that threaten the economic stability of a country will have to trigger far-reaching measures in individual cases, no matter how difficult their effects may be for the workers concerned. Social standards – unlike civil liberties – are dependent on economic conditions for their realisation, so that there are interactions between economic and social policy, which must not be ignored even if social rights are strengthened.

D. Conclusions and Reasons for a Minimum Wage Regulation The EU did not initially regulate workers’ remuneration as a core working condition to ensure a decent standard of living, rather the regulations served to implement the internal market and competition policy. Social policy, which was taken up later, initially focused on the protection of vulnerable workers through a right to non-discrimination. This reflects the EU’s conception as an economic community whose social dimension was to develop gradually. The EU social policy was not a comprehensive concept but took up issues where there was a particular need for action in many Member States. The regulation of the minimum wage was also driven by such a need for action because the minimum wages in some Member States were no longer suitable for ensuring an adequate living standard.37 This was particularly true of the Member States that belong to the so-called Visegrad group and the south-eastern and southern European Member States; however, deficits were also identified in other Member States.38 Nevertheless, the AMW Directive goes beyond the current occasion and at the same time serves to implement the Pillar of Social Rights in the interest of social progress, which is part of a social market economy in the sense of Article 3(3) TEU. The EU today regards itself as an inclusive community, to which a minimum wage directive contributes.

III. Minimum Wage as a Fundamental Right in the EU and in International Labour Law A minimum wage as a wage floor is guaranteed in different forms in international and European law. Whereas Article 7(a) of the International Covenant on Economic, Social and Cultural Rights provides for the minimum wage only in the sense of a subsistence 37 B Fabo and SS Belli, ‘(Un)beliveable Wages? An Analysis of Minimum Wage Policies in Europe from a Living Wage Perspective’ (2017) 6 IZA Journal of Labor Policy 6 ff; for further conclusions on the basis of the Kaitz index see T Müller and T Schulten, ‘The European Minimum Wage on the Doorstep’, ETUI Policy Brief 1/2020, 4–5; on OECD data M Moraliyska, ‘Should the Minimum Wage be Regulated on Union Level: The Case of the European Union’ (2021) 1 American Journal of Multidisciplinary Research and Development 62, 65–66. 38 Fabo and Belli (n 37) 7–8; determining further deficits: T Schulten and T Müller, ‘A Paradigm Shift towards Social Europe? The Proposed Directive on Adequate Minimum Wages in the European Union’ (2021) 1 Italian Labour Law e-Journal 1, 9 ff; E Fernández-Macías and C Vacas-Soriano, ‘A Coordinated European Union Minimum Wage Policy?’ (2016) 2 European Journal of Industrial Relations 97, 103 ff.

46 Claudia Schubert minimum to cover basic needs,39 the ILO Minimum Wage Fixing Convention from 1970 (ILO Convention No 131) and Article 4(1) Revised European Social Charter (RESC) guarantee a minimum wage that ensures an adequate standard of living for the worker and their family. The Convention and the RESC are based on the needs of the worker and their family that exceed the subsistence level. ILO Convention No 131, which has not been ratified by all EU Member States, refers to the cost of living and social security to determine the minimum wage, but also wants to take into account the relation to other remuneration groups (Article 3(a)).40 This double reference has an impact on the discussion as to whether the minimum wage should be determined in the sense of a living wage based on a basket of goods that reflects human needs, or in the sense of a minimum wage based on a percentage of the median of the gross monthly income or the monthly gross average income of a country.41 The reference to other wage groups also counteracts wage spread. In addition to personal needs, economic factors such as the requirements of economic development, the level of productivity and the desirability of attaining and maintaining a high level of employment are also taken into account (Article 3(b)). Article 4(1) RESC contains a recognition of the right of workers to a remuneration providing them and their families with a decent standard of living but without further reference to the economic development or productivity.42 Yet, the ECSR once assumed that the adequate standard of living was also related to economic development.43 The minimum wage is not determined according to specific needs. For the assessment of adequacy, reference was indeed made primarily to the monthly gross average income of the Member State.44 Because of the different taxes and social contributions, the monthly average net income was also taken into consideration as a reference.45 A precise analysis of other social benefits contributing to subsistence was not carried out initially, but more recently this has been considered, at least if the social benefits are directly related to income. The Committee regards a minimum wage as sufficient for a decent living standard if it reaches 68 per cent of the average gross or 60 per cent of the monthly net income.46 This is not identical with the Kaitz Index, which refers to the median and the average gross income. In contrast to international law, the Charter of Fundamental Rights of the EU (CFREU) does not explicitly contain a right to minimum wages. However, Articles 1 and 2 CFREU oblige the state to protect human dignity and life. In any case, a duty to ensure the minimum subsistence level is derived from this.47 This corresponds more to the guarantee of Article 7(a) 39 cf T Schulten and T Müller, ‘What’s in a Name? From Minimum Wages to Living Wages in Europe’ (2019) 3 Transfer 267, 270. 40 For details on the ILO Conventions see Ch 16 by García-Muñoz. 41 Compare for the discussion on living wage and minimum wage Fabo and Belli (n 37) 2–3; LB Glickman, A Living Wage: American Workers and the Making of Consumer Society (Cornell University Press, 1999); with regard to the Minimum Wage Directive D Hirsch and L Valadez-Martinez, The Living Wage (Agenda Publishing, 2017); Schulten and Müller (n 39) 267, 270 ff; also T Müller and T Schulten, ETUI Policy Brief 1/2020, 2. 42 For details on the RESC refer to Part I of this volume. 43 ECSR, Conclusions II, 1971, 16. 44 ECSR, Conclusions V, 1977, 25. 45 ECSR, Digest 2022, 85; Conclusions XVI-2 (2003), Denmark. 46 ECSR, Digest 2022, 85; Conclusions V, 1977, 25; Conclusions XVI-2 (2003), Denmark; Collective Complaint 111/2014 GSEE v Greece, no 187. 47 Case C-233/18 Zubair Haqbin v Federaal Agentschap voor de opvang van asielzoekers ECLI:EU:C:2019:956, para 43 ff; W Frenz in M Pechstein et al, Frankfurter Kommentar EUV/AEUV/GRC (Mohr Siebeck, 2017) Article 1, 40 ff, 54 ff.

Impact of AMW Directive on EU Labour Law 47 of the International Covenant on Economic, Social and Cultural Rights. A right to subsistence is also derived from Article 34 CFREU as a manifestation of the right to social support.48 However, this is not a guarantee of an adequate livelihood for the worker and their family in the sense of a socio-cultural subsistence. The CFREU does not grant a right to minimum remuneration within the meaning of the ILO Convention No 131 and Article 4(1) RESC. Article 31(1) CFREU guarantees workers a right to fair and just working conditions, whereby the wording of the article aims at working conditions considering health, safety, and dignity of the worker.49 Some in the academic literature assume that, despite its wording, the fundamental right also covers pay as a working condition and guarantees its determination in the sense of a minimum wage.50 The explanations of the Convention Praesidium on Article 31 CFREU, however, do not refer to Article 4(1) RESC, but only to Articles 3 and 26 RESC and the OSH Framework Directive.51 This suggests that the fundamental right is primarily intended to guarantee the protection of the physical and mental integrity of the worker.52 It mainly covers health and safety at work and protection against sexual harassment and bullying. In favour of a narrow understanding of Article 31(1) CFREU, reference is also made to the fact that Article 153(5) TFEU contains a competence barrier for the EU and does not permit any regulations on remuneration.53 This, however, does not lead to any compelling conclusion for the fundamental right and its substantive scope of protection. The fundamental rights have been drafted independently of the individual powers of the EU in order to develop an understanding of values that creates a long-term basis for this supranational union of Member States and thus develops the economic community into a community of values. This is not accompanied by additional competences of the EU as emphasised in Article 51(2) CFREU and in the second sentence of Article 6(1) TEU. The CFREU’s scope of application is limited to the implementation of Union law. More decisive for the interpretation of Article 31(1) CFREU are the explanations of the Convention Praesidium. In this respect, it must be taken into consideration that the Convention on Fundamental Rights discussed a right to a fair and adequate minimum wage but could not agree on such a fundamental social right.54 Moreover, the mandate of the Fundamental Rights Convention was limited to the consideration of economic and social rights, whereas the rights to liberty and equality were to be covered by the Charter, which suggests that fundamental social rights are not necessarily included to the same extent as in the RESC.55 48 A Nußberger/H Lang, in K Stern and M Sachs, GRCh, 2nd edn (Beck, 2016) Article 34, 132 ff. 49 For further details see Ch 9 below by Brameshuber. 50 P Hanau, ‘Die Europäische Grundrechtecharta – Schein und Wirklichkeit im Arbeitsrecht’ (2010) 1 Neue Zeitschrift für Arbeitsrecht 1, 2; C Hilbrandt, ‘Arbeitsrechtliche Unionsgrundrechte und deren Dogmatik’ (2019) Neue Zeitschrift für Arbeitsrecht 1168, 1173; B Hüpers and B Reese in J Meyer and S Hölscheidt, Charta der Grundrechte der Europäischen Union, 5th edn (Nomos, 2019) Article 31, 26; H Lang in Stern and Sachs (n 48) Article 31, 10; R Zimmer, ‘Recht auf ein existenzsicherndes Einkommen als Bestandteil des Unionsrechts?’ (2018) Zeitschrift für Europäisches Sozial- und Arbeitsrecht 151, 152–53. 51 Explanations relating to the Charter of Fundamental Rights (2007/C 303/02), OJ C303, 14 December 2007, 17, 26. 52 D Ashiagbor, ‘Economic and Social Rights in the European Charter of Fundamental Rights’ (2004) European Human Rights Law Review 62, 69; H Jarass, Charta der Grundrechte der Europäischen Union, 4th edn (Beck, 2021) Article 31, 7; T Kröll in M Holoubek and G Lienbacher, Charta der Grundrechte der Europäischen Union, 2nd edn (Manz, 2019) Article 31, 23; V Rieble and C Picker, ‘Lohnwucher’ (2014) Zeitschrift für Arbeitsrecht 153, 160. 53 Rieble and Picker (n 52) 153, 160. 54 Document CONVENT 18, 27.3.2000; CONVENT 34, 16.5.2000. 55 A Bogg, ‘Article 31 – Fair and Just Working Conditions’ in S Peers et al (eds), The EU Charter of Fundamental Rights, 2nd edn (Beck et al, 2021) 31.49.

48 Claudia Schubert The selective inclusion of social rights in the CFREU does not stand in the way of further political development of the EU. The Treaty of Lisbon, which came into force shortly before the CFREU, elevated the social market economy to guiding principle of the EU (Article 3(3) TEU). Accordingly, the EU shall establish an internal market and work not only towards balanced economic growth and price stability, but also towards a highly competitive social market economy aiming at full employment and social progress. The effect of the market is thus also to achieve socially acceptable results, which may require EU intervention. However, social protection must not call into question the competitiveness of the EU, which also makes social protection via a minimum wage subject to the competitiveness of the national economies. Otherwise, the goal of full employment cannot be achieved. The minimum wage is now one of the 20 fundamental principles of the EPSR.56 Proclaimed in 2017, this document is legally non-binding, but is intended to provide political impetus for the further development of European social policy. The EPSR contains a principle on wages in part two, which is dedicated to fair working conditions. According to this, workers have a right to fair wages that ensure an adequate standard of living. In determining an adequate minimum wage, the needs of workers and their families are the most important factor, taking into account the economic and social conditions in the respective Member State. It should be ensured that access to employment is maintained and that there is an incentive to work. At the same time, in-work poverty should be avoided. The setting of the minimum wage should be transparent, predictable and respect the autonomy of the social partners. This description partially considers the requirements of Article 3(3) TEU in economic terms. The competitiveness of the national economies is only included by referring to the economic conditions within the Member States. The criterion of productivity as a factor in calculating the minimum wage is missing. This debate had to be conducted during the drafting of the AMW Directive. The final text includes the long-term national productivity levels and developments as one of four criteria to ensure the adequacy of the minimum wage.

IV. Wages as Factor Costs versus Wages as a Means of Subsistence Since the enactment of the AMW Directive, wages are more than mere factor costs, but should also ensure the minimum subsistence level. This is not only in line with international law, but fits also into the discussion on social and economic ethics. The debate about a fair wage has existed as long as there has been wage labour. With industrialisation in the nineteenth century, the philosopher and economist Adam Smith is considered one of the first to develop the concept of a living wage.57 However, the debate on the appropriate wage was not an academic discussion and it was not only trade unions demanding adequate wages.

56 For details refer to Ch 3 above by Garben and Ch 8 below by Ratti. 57 A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (MetaLibr 1789/2007) 57–58; later see K Marx, Capital – A Critique of Political Economy, vol I (Progress Publishers, 1887) 121; compare Schulten and Müller (n 39) 270.

Impact of AMW Directive on EU Labour Law 49 The Christian churches in Europe have also developed a social doctrine that called for fair pay against the backdrop of devastating social conditions since the end of the nineteenth century. As early as 1891, Pope Leo XIII issued the Encyclical Rerum Novarum, which was not only addressed to Christian dialogue partners and in which he stated that the employer must in principle ensure fair remuneration and should not take advantage of another’s need.58 Work must enable self-preservation and in this respect is withdrawn from the laws of the market.59 The Encyclical takes a natural-philosophical approach and does not, like later social encyclicals, refer only to ecclesiastical texts of faith and traditions. It was a commandment of natural justice that wages should not be less than a frugal and righteous wage-earner needs for his subsistence; the wage had to secure the livelihood of those willing to work and their families.60 In this respect, the Encyclical seems to be oriented more towards the physical rather than the socio-cultural subsistence level. Its implementation was seen less as a task of the state than of society and its associations. This Encyclical had an impact on the social reforms at the end of the nineteenth century and the beginning of the twentieth century. The founding document of the ILO has a number of parallels. In addition, several popes have repeatedly addressed the ILO and contributed to the discussion. Following on from this, Pope Pius XI demanded in the 1931 Encyclical Quadragesimo Anno that workers must also be able to achieve modest prosperity in order to provide for the vicissitudes of life, so that wages must secure more than the subsistence demanded by Rerum Novarum, but must also not jeopardise the viability of the enterprise.61 Finally, in 1961, in Mater et Magistra, Pope John XXIII confirmed the principles of the Rerum Novarum Encyclical and added that wages must not be left to the play of the market alone, but must also be fair and just.62 In 1981, Pope John Paul II added in Laborem Exercens that state benefits could also be considered as an alternative to family-friendly pay, so that social livelihood security no longer had to be provided solely through the employment contract.63 This social-ethical discussion has been held in Protestant churches too, which have also developed a social doctrine with comparable demands. In Germany, the joint social declaration of the Council of the Protestant Church in Germany and the German Bishops’ Conference has considered the statutory minimum wage as a suitable instrument if the wage from a full-time job is not sufficient for subsistence.64 Because of the German tradition of a social partnership, it is also emphasised that the negotiation of wages by the social partners has priority and that a functioning social partnership makes statutory regulation

58 Pope Leo XIII, Rerum Novarum, 15 May 1891, 20, 45; compare M Schlagnitweit, Einführung in die Katholische Soziallehre (Herder 2021) 43 ff; P Beckett, Labour Rights and the Catholic Church (Routledge, 2021) 60–61, 74–75; H Frambach and D Eissrich, Wirtschaftsideen des Vatikans – Impulse für Politik und Gesellschaft, 2nd edn (UTB, 2020) 34 ff. 59 Pope Leo XIII, Rerum Novarum, 15 May 1891, no 20, 45. 60 ibid. 61 Pope Pius XI, Quadragesimo Anno, 15 May 1931, no 71–72. 62 Pope John XIII, Mater et Magistra, 15 May 1961, no 71. 63 Pope John Paul II, Laborem Exercens, 14 September 1981, no 19. 64 EKD und Deutsche Bischofskonferenz, ‘Gemeinsame Verantwortung für eine gerechte Gesellschaft’ 28 February 2014, dbk-shop.de/media/files_public/2757ad3bc734364ef9d904dbb4c4099f/DBK_622.pdf.

50 Claudia Schubert unnecessary.65 The setting of the minimum wage level should not lead to a crowding out of employment relationships and to obstacles in accessing the labour market.66 The call for an adequate minimum wage is also a demand of international organisations. In addition to the ILO as a subsidiary organisation, the UN itself has advocated the need for a living wage within the framework of the UN Global Compact, linking it to general standards for the consideration of human rights by companies. Even though the living wage is not part of the principles of the UN Global Compact, a number of political actions have been undertaken in recent years to realise an adequate minimum wage.67 The OECD monitors the minimum wage policy within the Member States and regards it as one (but not the only) instrument against in-work poverty;68 however, it has not included the adequate minimum wage or living wage in its Principles for Multinational Enterprises as a soft law instrument. In contrast, the economic discussion has taken up the minimum wage not only as a factor costs issue. The concept of the living wage, which focuses more on the needs of local workers, and the concept of a minimum wage, which takes 60 per cent of the median of the gross monthly wage or 50 per cent of the gross average wage as references, are controversial when it comes to determining the level of the minimum wage.69 The OECD and the UN Global Compact seem to prefer the concept of the living wage, while the ECSR interprets the RESC in terms of a minimum wage using a modification of the Kaitz Index.70 The ILO Minimum Wage Convention leaves room for both approaches. The AMW Directive is closer to a minimum wage concept than to a living wage. Even though it calls for a reference to the purchasing power of statutory minimum wages, taking into account the cost of living (Article 4(2)(a)), it also prescribes that Member States shall use indicative reference values for assessing adequate minimum wages such as 60 per cent of the median of the gross wage and 50 per cent of the gross average wage (Article 4(4)). Socioeconomic studies come to different conclusions with regard to the EU Member States on the basis of both concepts.71 While according to the minimum wage concept there is a need for action for most EU Member States,72 the living wage concept arrives at a more differentiated picture, which sees a need for action above all for individual Eastern European Member States.73 The approach of the Directive also contrasts with the considerations of Thomas Piketty as an economist,74 who puts the distribution of wealth in the foreground. His considerations on the level of the minimum wage remain economic and are based on the marginal productivity of the worker’s labour (concrete labour productivity).75 Generally, this depends on the

65 ibid. 66 ibid. 67 cf UN Global Compact, ‘Living Wage’, https://unglobalcompact.org/what-is-gc/our-work/livingwages#: ~:text=The%20UN%20Global%20Compact%20encourages%20companies%20to%20promote,of%20 consensus%20is%20no%20excuse%20for%20inaction%20. 68 See Ch 7 below by Garnero. 69 Compare Fabo and Belli (n 37) 2–3; Schulten and Müller (n 39) 271–72; see also D Hirsch and L ValadezMartinez, The Living Wage (Agenda Publishing, 2017). 70 ECSR, Digest 2022, 85; Conclusions 2010, Statement of Interpretation on Article 4§1. 71 Compare Fabo and Belli (n 37) 2 ff. 72 Schulten and Müller (n 39) 273–74. 73 Fabo and Belli (n 37) 10 ff. 74 T Piketty, Das Kapital im 21. Jahrhundert (Beck, 2014). 75 ibid 402–403.

Impact of AMW Directive on EU Labour Law 51 qualifications of the employee as well as on supply and demand. In this respect, minimum wages are a simplification in view of the difficulties in calculating marginal productivity and because of imperfect competition, but the effect of the minimum wage on the level of employment must be considered.76 The minimum wage is thus not geared to needs-based justice. In addition to the simplification effect, however, it is also assigned the task of reducing wage inequality77 – an aspect that is also included in the AMW Directive especially for the protection of women. The overall size of the wage gap depends on what is perceived as socially just in the specific society.

V. Social Security – More than Minimum Wages The AMW Directive is situated at the interface of labour, social and fiscal law. In principle, it can be stated that the granting of a minimum wage should ensure that workers can make a living with the earnings from full-time employment. This is usually linked to the demand that no tax-financed protection systems may take the place of an adequate minimum wage.78 Otherwise, companies would make their profits at the expense of the general public. At the same time, there is a risk that companies will move away because of the increase in wages. If not only individual companies are affected, this can affect the economic situation of a Member State, even though this is to be expected above all in economic crises when additional risks arise for a national economy. In practice, a minimum wage will not be able to correctly determine the marginal costs of labour. In this respect, the interaction of social and fiscal policy is essential for the stability of the Euro area. Moreover, Member States will have to set the minimum wage considering the needs of workers and the impact on their economies. For the relationship of minimum wage law to social security law, the special feature is that the social protection systems in the Member States also contain specific instruments that address individual needs that a general minimum wage cannot adequately reflect (eg needs of single parents, needs due to particularly high rent costs in large cities). The Member States must take account of this dovetailing with social systems when setting the minimum wage. As a result, setting a general minimum wage is a complex decision that, in interaction with Member States’ social benefits, must ensure that there are incentives to work for the population that is capable of working, but also incentives for further training and economic innovation. In this respect, the AMW Directive does well to leave the Member States room for manoeuvre and, above all, to take into account the existing system of social partnership. In those Member States where social partnership exists, a functioning social partnership can set more specific wages than a general minimum wage and thus weigh up the different aspects relevant to this in a more targeted way. More extensive social protection of workers remains the task of the Member States’ social security systems. These have not yet been harmonised in the EU, although corresponding competences exist. There is only coordination of social policy. There are calls for at least

76 ibid

402 ff. 409 ff. 78 Müller and Schulten (n 41) 3. 77 ibid

52 Claudia Schubert ILO Convention No 102 on minimum standards of social security of 1952 to be incorporated into Union law in order to ensure uniform minimum standards in the Member States. However, even the ILO conventions, which have been ratified by all Member States, take into account the economic situation of the respective Member State and do not define social standards independently. Nevertheless, such minimum standards can bring about convergence between the Member States, which brings about social progress in the EU within the framework of the internal market, as the EU Treaty declares it to be the goal of the EU.

VI. Conclusions Regardless of Article 153(5) TFEU, the AMW Directive harmonises the law of the Member States on a central point of industrial relations. The promotion of collective bargaining autonomy, which is at the same time imposed on the Member States, takes into account the fundamental right to collective bargaining from Article 28 CFREU and the different systems of wage determination in the Member States. However, the promotion of collective bargaining autonomy is an objective for Member States that rely primarily on the voluntary association of employees in trade unions and employers in employers’ associations. This objective can only be achieved with instruments that set incentives and always comply with the requirements of the conflicting fundamental rights of negative freedom of association or freedom to conduct a business and may also conflict with fundamental freedoms, which even the AMW Directive cannot override. For the EU, dealing with the requirements for an appropriate minimum wage is part of its development from an economic community to a community of values that not only understands wages as a cost factor, but also focuses on the livelihood of workers in the sense of a social market economy in order to pursue a value-oriented economic policy. Yet, Member States should retain leeway in the implementation of the Directive in order to resolve the conflicting goals of economic, labour and social policy. Social policy and economic policy must be thought of together.

5 The Legal Institutions of Industrial Relations on Wage-setting VINCENZO BAVARO

I. Introduction In his 1998 book De l’esclavage au salariat1 [From Slavery to the Wage-earner], Yan Moulier Boutang addresses the subject of the first workers’ liberation struggles in the Middle Ages, writing that The Peasants’ Revolt, also called ‘Wat Tyler’s Rebellion’, in 1381, was the first great popular rebellion in English history. Its immediate cause was the imposition of the unpopular poll tax of 1380, bringing the economic discontent that had been growing since mid-century to a climax. Quite likely, the main complaint of the agricultural and urban working classes was against the Statute of Labourers (1351), which attempted to set maximum wages during the labour shortage that followed the Black Death. In another labour history book from 1975, Histoire du travail et des travailleurs2 [History of Workers and Wageearners], George Lefranc gives a detailed account of the many strikes by workers in the Paris and Lyon printing works between 1539 and 1572, whose main demand was for higher wages. I mention these two examples – and many others could be given – to premise that labour history is also (or first and foremost) a history of wage claims. Similarly, the history of the trade union movement, starting with the development of industrial capitalism, is primarily a history of collective wage bargaining. After all, trade unions were born to strengthen the position of workers in a labour market in which – it is worth remembering – they made their labour-power available in exchange for a wage. The early Mutual Insurance experiences of the nineteenth century, described and analysed by Beatrice and Sidney Webb in their seminal work Industrial Democracy, bear witness to this. The Webbs quote a communication from an old English trade union, the Flint Glass Makers’ Friendly Society, stating that: our wages depend on the supply of labour in the market; our interest is therefore to restrict that supply, reduce the surplus, make our unemployed comfortable without fear for the morrow –

1 Y Moulier Boutang, De l’esclavage au salariat (Presses Universitaires de France, 1998) 298. 2 G Lefranc, Histoire du travail et des travailleurs, 1974 (It edn, Storia del lavoro e dei lavoratori, Jaca Book, 1976).

54 Vincenzo Bavaro accomplish this, and we have a command over the surplus of our labour, and we need fear no unjust employer.3

Thus, it is an incontestable historical truth that trade unions’ original function was to free workers from wage ‘blackmail’, primarily by building an autonomous social protection system capable of empowering each worker in individual labour bargaining. Equally indisputable is that the union’s function has been to overcome the individual dimension of labour bargaining in favour of the collective dimension. Beatrice and Sidney Webb wrote this clearly: ‘wherever the economic conditions of the parties concerned are unequal, legal freedom of contract merely enables the superior in strategic strength to dictate the terms. Collective bargaining does not get rid of this virtual compulsion: it merely shifts its incidence.’4 We can say that the history of industrial capitalism is made up of several faces, one of which is the history of the trade union movement and, mainly, the history of collective wage bargaining. It is no coincidence that the earliest legal studies of the regulatory products of collective bargaining concern the so-called ‘tariff agreements’, the first form of collective agreements to be given legal prominence and to address wages.5 Ultimately, since the wage is one of the basic institutions of any capitalist market economy, we can say that collective wage bargaining is a fundamental legal institution in our economy, as Hugo Sinzheimer and John Commons have argued in their studies. While Sinzheimer emphasises the importance of the legal recognition of collective bargaining as an essential element for the economic constitution of a legal system,6 Commons highlights the essential economic function of collective bargaining in wage matters.7 Moreover, history shows that the intertwining of wages, collective bargaining and the economic system inevitably also have a political relevance.8 A couple of examples will suffice. In Italy under the Fascist regime, in order to manage repeated economic and financial crises, the government intervened three times (in 1927, 1930 and 1934) to lower the wages set by corporate collective agreements.9 In Europe, during the years of the sovereign debt crisis, the 2011 Euro Plus Pact laid down the goal of fostering competitiveness, by stating that: ‘respecting national traditions of social dialogue and industrial relations’, there was a need for: measures to ensure costs developments in line with productivity, such as: review the wage setting arrangements, and, where necessary, the degree of centralization in the bargaining process, and the indexation mechanisms, while maintaining the autonomy of the social partners in the collective bargaining process ….

3 S Webb and B Webb, Industrial Democracy (Longmans, Green and Co, 1902) 163. 4 Webb and Webb (n 3) 217. 5 For Italy see G Messina, I concordati di tariffe nell’ordinamento giuridico del lavoro (Vallardi, 1904). 6 R Dukes, The Labour Constitution (Oxford University Press, 2014) 19: ‘The legal recognition of collective bargaining and the gradual elaboration of a labour code signified the concession of a “Magna Carta” to the entire wage-earning class’. 7 J Commons, Legal Foundations of Capitalism (Macmillan, 1924). 8 I defer to the dispute between A Flanders, ‘Collective Bargaining: A Theoretical Analysis’ (1968) 6(1) British Journal of Industrial Relations 1 and A Fox, ‘Collective Bargaining, Flanders, and the Webbs’ (1975) 13(2) British Journal of Industrial Relations 151 at 159. 9 M Roccella, ‘Il salario minimo legale’ (1983) Politica del Diritto 281.

Industrial Relations on Wage-setting 55 In short, in both cases, wages were the main variable to redress national economic imbalances and competitiveness and intervene in collective bargaining.10 On the other hand, it is enough to read some of the memoranda concerning the agreements between the Member States affected by the public debt crisis of 2008–2011 and the so-called Troika (ie the European Commission, European Central Bank, and the International Monetary Fund): the ‘conditionality’ for granting financial aid always required reforms of the centralised structure of collective bargaining on wage matters (as happened in Spain, Portugal, and Italy).11 The structural connection between collective bargaining and wages is also confirmed when European economic policies change to support fair economic development and improve working conditions. An example is in the Communication from the European Commission to the European Parliament, the European Council and the Economic and Social Committee of 14 January 2020 (COM/2020/14 final, which started the process that culminated in Directive 2022/2041).12 This document states that ‘well-functioning collective bargaining between employers and trade unions is an effective way to set adequate and fair minimum wages, as workers and employers are those who know their sector and their region the best’. This statement is confirmed in the AMW Directive, emphasising that ‘well-functioning collective bargaining on wage-setting is an important means by which to ensure that workers are protected by adequate minimum wages that therefore provide for a decent standard of living’; while also ‘in the Member States with statutory minimum wages, collective bargaining supports general wage developments and therefore contributes to improving the adequacy of minimum wages as well as the living and working conditions of workers’.13 In short, when it comes to wages, whether one conceives them as the ‘price of labour power’ to be ensured for workers or as a factor of macroeconomic and monetary policy, it is inevitable to also deal with collective bargaining and industrial relations. This is why any legal regulation of wages cannot disregard the function of collective bargaining in setting wages, ie governing individual free competition in each labour market (Section II). Once the scope of regulation has been defined, it is necessary to define the source of wage regulation within that market (Sections IV and V); only then is it possible to analyse the legal concept of wage ‘adequacy’ in correlation to the source determining the wage and, more generally, to the system of industrial relations where adequacy is established directly by the government source (Section VI). First, however, it is necessary to define what the wage is, regulated by collective agreement or law.14

10 T Schulten, ‘Minimum Wages in Europe under Austerity. WSI Minimum Wage Report 2012’ (2012) ETUI Policy Brief, fn 5. 11 G Ricci, ‘La retribuzione in tempi di crisi: diritto sociale fondamentale o variabile dipendente?’ (2014) Working Paper Massimo D’Antona.INT 113. 12 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (the AMW Directive) [2022] OJ L 275/33. 13 AMW Directive, recital 22. 14 See Z Adams, Labour and the Wage. A Critical Perspective (Oxford University Press, 2020).

56 Vincenzo Bavaro

II. A Preliminary Question about Wage-setting: The Economic and Political Nature of Wage Adequacy as Market Competition Rule Any legal system, at any level, recognises that the worker has a right to a wage as an element of contractual consideration. The wage is an essential right of the worker in the notion of the employment contract: two subjects, free and equal, set up an exchange relationship between labour and wage. In classical economic thinking, the wage is set at a rate that guarantees the sustenance of workers, determined according to the historical conditions of development of economic and production relations.15 In conventional economic thinking, on the other hand, wages are determined by labour productivity and, primarily, by the free interplay of supply and demand.16 It is not my aim to discuss these two economic doctrines and their differences on the nature of the wage. On this occasion, I would like to take them into account as both are consistent with the principle of ‘corrispectivity’ of the labour contract: the wage is always the product of the labour market dynamics, of the economic-social constraints that shape the market. As labour lawyers, we can say that what we call wages is nothing but the legal form of the price of labour. There is also another reason why labour lawyers must keep economic theory on wages in mind: this reason lies in the concept of ‘adequacy’. According to conventional theory, the adequate wage is the wage resulting from the intersection of labour supply and demand. In this sense, adequacy is a market variable. For the conventional theory, let us read a passage from Marx, in Wage, Price and Profit from 1898: what then is the value of labour-power? As with any other commodity, its value is determined by the amount of labour required for its production. A man’s labour-power consists solely of his living personality. For a man to grow and preserve himself in life, he must consume a certain quantity of foodstuffs … In addition to the quantity of objects of current use, which he needs for his own sustenance, he needs another quantity of objects of current use, to bring up a certain number of children … in addition, for the development of his labour-power and for the acquisition of a certain skill, a new sum of value must be spent.17

According to this economic theory, the adequate wage is the sustenance wage, a real minimum wage, necessary for the subsistence of the worker and – thus – for the survival of the capitalist labour market. The concept of ‘sustenance’ is an expression of the material conditions of a capitalist labour market, albeit necessary for the reproduction of labour-power. In short, the sustenance minimum wage is a wage that allows the vital needs of workers, necessary for their ‘reproduction’,18 to be met. Nevertheless, the living wage also depends on the conditions of the relations of production, ie the conditions of the labour market. In this sense, whatever 15 R Bellofiore et al, Il lavoro nella riflessione economico-politica (Rosenberg & Sellier, 2020). 16 E Mingione and E Pugliese, Il lavoro (Carocci, 2020). 17 K Marx, Salario, Prezzo e profitto (Editori riuniti, 1984) 51, translated from Italian. 18 The founding ‘father’ of Italian labour law scholarship, L Barassi, Il diritto del lavoro, vol III (Giuffrè, 1949) 5, wrote that ‘the wage comes to be a compromise between the utility of the company and the benefit of the worker, that is, precisely the possibility of his livelihood’.

Industrial Relations on Wage-setting 57 the economic theory, the wage is always the market-dependent price of labour. There is always a minimum threshold of adequacy that may be different depending on the relations that are determined in the labour market – relationships that depend on many factors, among which are the legal institutions that constitute that market.19 On the other hand, in the legal doctrine of labour, the idea of conceptually separating the economic function of wages from the social function is widespread: an example can be found in Italian legal doctrine on Article 36 of the Republican Constitution, which enshrines the right to a wage proportionate to the quality and quantity of work and sufficient to guarantee a free and dignified existence.20 In Italian legal scholarship, then, the idea is widespread that the principle of the adequacy of wages to guarantee a dignified life ‘requires an adaptation, if not an abandonment, of the idea of remuneration as a mere consideration for work activity’21 because ‘remuneration is anchored not to the market value of labourpower (so-called exchange value), but to the level of income necessary for the worker to lead a free and dignified existence’.22 This conception of the adequate wage separates the adequacy necessary for the sustenance of workers from the adequacy necessary for the needs of the market, as if there were a wage adequate to guarantee a decent living different from a wage adequate to market demand. This separation tends to be emphasised and formalised when the law is given the task of determining the decent living wage (statutory minimum wage, or SMW) and collective bargaining is called for the wage adequate to market needs (collective bargaining wage, or CBW). The paradox of this conceptual separation lies in the fact that it assumes that the market-adjusted wage can be lower than the sustenance-adjusted wage; hence, the sustenance-adjusted wage should be the minimum, inescapable price of labour, different from the market-adjusted wage. In this sense, let us take, for example, the German Federal Court’s view that the CBW, thus an expression of the market, has a different function from the SMW: the contractual minimum wage would establish the minimum price of a normal work performance in relation to the particular conditions of a sector of activity, whereas the statutory minimum wage would determine the remuneration that a person must receive in return for work in order for him to be assured of subsistence.23

19 I agree with Z Adams, ‘La proposta di direttiva UE relativa ai salari minimi adeguati: ripensare la funzione sociale dei salari minimi’ (2021) Diritto delle Relazioni Industriali 283, when she writes that ‘this market and its “laws of supply and demand” are normatively and politically shaped’. Only, since the market does not exist apart from its rules, the wage is the ‘price of labour’ as it is determined by the rules that constitute the market. 20 This is a principle referred to in the right of workers to decent living conditions enshrined in ILO Convention No 131/1970, Art 3: ‘The factors to be taken into consideration in determining the level of minimum wages, as far as possible and applicable, taking into account national practice and conditions, shall include: a) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits and the comparative living standards of other social groups; b) economic factors, with the requirements of economic development, productivity and the opportunity to achieve and maintain a high level of employment’. See also Social Pillar, Art 6: ‘a. Workers have the right to a fair wage that provides a decent standard of living. b. Adequate minimum wages shall be guaranteed, which meet the needs of the worker and his family according to national economic and social conditions.’ 21 T Treu, Onerosità e corrispettività nel rapporto di lavoro (Giuffrè, 1968) 345, translated from Italian. 22 L Zoppoli, La corrispettività nel contratto di lavoro (ESI, 1991) 185, translated from Italian. 23 B Dabosville, ‘Le salaire minimum légal, la convention collective et le juge’ (2018) Revue du Droit du Travail 77, translated from French, with reference to the two decisions by the German Federal Labour Court (Bundesarbeitsgericht): BAG 15.5.2016, 5 AZR 135/16 and BAG 21.12.2016, 5 AZR 374/16.

58 Vincenzo Bavaro This conception does not consider that separating the social-political dimension of wages from the economic-mercantile dimension negates the inevitable correlation between labour market and legal order. As I wrote in the first paragraph, the legal wage order has always been aimed at correcting the power relations in the labour market. The modern history of the labour market is the history of progressive super-individual (ie collective) regulation to regulate individual bargaining. The history of labour law is not a history of negation of the market but a history of regulation of its functioning, going beyond the individual regulation of contract: this is the difference with the nineteenth century bourgeois Civil Codes. Wages are precisely the first experiment in collective bargaining over the price of a particular factor of production that we call ‘labour.’24 As Beatrice and Sidney Webb wrote: with the method of collective bargaining, the foreman is prevented from taking advantage of the competition of these two categories of workers to lower the wages of others … in the building trade there are the unions of carpenters, masons, stonemasons, lead workers, painters, and sometimes also those of painters, roofers, and bricklayers, which obtain formal labour regulations governing all the contractors and all the workers in the town and district.25

Collective bargaining was born as a social (first) and legal (later) institution precisely to regulate competition in the labour market. For this reason, competitive market theorists see not only the intervention of the law but also that of collective bargaining as an obstacle to wage competition in the labour market. Friedrich von Hayek, one of the leading theorists of neoliberal thought, in Constitution of Liberty from 1960, wrote that ‘the greatest danger presented by the current development of trade unionism is that, by creating effective monopolies in the supply of different types of labour, trade unions will prevent competition from acting as an effective regulator of the distribution of all financial means’.26 These ‘trade union monopolies’, however, are not the result of legal imposition but are the expression of free bargaining, ie the free exercise of bargaining activity in the labour market, albeit bargaining not in individual but in collective form. This is the central point in the collective regulation of wages: the price of labour is still defined by free bargaining in the market; the difference lies in the different bargaining power of labour, not being the worker-as-an-individual negotiating with the enterprise, but the workers-as-a-collective bargaining with the enterprise (or with a plurality of enterprises). Through collective bargaining there is no repression of bargaining freedom nor of the market; there is only the strengthening of labour in the market. Collective bargaining is the only way through which labour, as a collective contractor in the market, can obtain better bargaining conditions than it would obtain as an individual contractor. Collective bargaining, therefore, in addition to being an institution of social protection, is an economic activity of bargaining labour conditions in the market, starting with the determination of the price of labour.27 If one agrees that in the capitalist economic system there is no difference between a wage adequate to the needs of the market and a wage adequate to the sustenance of workers, and 24 R Solow, The Labor Market as a Social Institution (Blackwell, 1990). 25 Webb and Webb (n 3) 172. 26 FA Hayek, La società libera (Vallecchi editore, 1969) 308, translated from Italian. 27 V Bavaro and V Pietrogiovanni, ‘A Hypothesis on the Economic Nature of Labour Law: the Collective Labour Freedoms’ (2018) 9(3) European Labour Law Journal 263.

Industrial Relations on Wage-setting 59 if, rather, the wage is adequate insofar as it responds to the dynamics of the labour market in which there is collective bargaining, then the legal discourse on the wage system needs to focus on the institutions of that labour market to see how effective they are in guaranteeing an adequate wage.

III. The Legal Source of the Adequate Wage: The Issue of Labour Market Demarcation The effectiveness of a system depends on the objective to be achieved. If the objective were that of the liberalist economic doctrine, ie to allow free individual bargaining over wages without constraints, the most effective system would be one that allows free individual bargaining and prevents any limitation resulting from collective (and general) regulation.28 This model is an alternative to the one formed in the historical development of industrial capitalism in almost all countries (albeit with different degrees of development), coinciding with the birth and development of trade unions and industrial relations. As I mentioned earlier, the development of workers’ collective action (even when it took place exclusively through conflict or rebellion) has almost always had the objective of regulating the labour market by overcoming wage bargaining at the exclusively individual level. From this perspective, we can say that the effectiveness of the anti-competitive system of wage regulation depends on the combination of two needs: on the one hand, the need of workers to have a collective wage determination, ie a regulatory system in which the wage is established for a collectivity of workers; on the other hand, the need of the labour market to establish an ‘adequate’ wage, ie a system in which the wage corresponds to market conditions. Thus, what needs to be analysed to assess the effectiveness of a system is precisely the institutional model of wage regulation. To this end, we can limit ourselves to examining the institutional system of wage regulation in the labour market of the EU (a common market), which today, after the entry into force of the AMW Directive, is a labour market with common wage rules.29 For a detailed analysis of the Directive’s rules, I refer to the comments in this book. On this occasion I would first like to point out that in the labour market of the EU we have different models of legal regulation of wages. There are Member States where there is a minimum wage set directly by law or by public law regulations (SMW) and, at the same time, wages set by collective bargaining (CBW) (eg France, Germany, Spain); there are Member States where the wage is set exclusively by collective agreements (eg Denmark, Sweden, Italy, Belgium). In the case of CBWs, we must distinguish Member States in which there is a universal, minimum wage established by an intersectoral collective agreement to which the law

28 Only in this sense do I agree with I Schömann, ‘Collective Bargaining and the Limits of Competition Law’ (2022) ETUI Policy Brief 2022.01 when she writes that ‘guidance should clarify that collective agreements fall completely outside the scope of competition law’. As will be argued below, collective bargaining does not generally deny competition but regulates it with certain limits. 29 Here, I cannot address the issue raised by Denmark concerning the competence of the EU in wage matters, on which see Ch 3 above by Garben. While waiting for the judgment of the CJEU (Case C-19/23) on Denmark’s own appeal, I refer to the considerations made in V Bavaro et al, ‘La proposta di Direttiva sul salario adeguato nell’Unione Europea’ (2021) Rivista Giuridica del Lavoro 111.

60 Vincenzo Bavaro gives universal effect (eg Belgium) from Member States in which the wage is established by national sectoral collective agreements (eg Italy) or, alternatively, also by regional or company collective agreements (eg Germany). In addition, a distinction must also be made between Member States where the SMW is generally effective while the CBW is only effective for parties voluntarily covered by the collective bargaining system (eg Germany) and Member States where the national sectoral collective agreement is also generally effective within its scope (eg France).30 To assess the effectiveness of a system from the point of view of wage adequacy with respect to the labour market, we have to know that the labour market has a perimeter, a sphere in which the actors of that market operate and in which rules apply. This means that the scope of a rule coincides with the market regulated by that rule.31 Well, what can we deduce from the EU labour market wage regulation system? First, we must bear in mind that the labour market in the EU is singular because although it is common it does not have a single legal regulation of wages (there is no European SMW, no European CBW). Without analysing the political reasons why the AMW Directive did not provide for a common system of wage determination, I can say here that the 27 national wage systems in the EU create 27 different labour markets within a market that we, however, consider to be unique. This differentiation responds to the demands of the capitalist economic system of production, which presupposes wage differences corresponding to the differences in the market. Marx had written: ‘just as the production costs of labour-power of different qualities are different, so are the values of the labour-power employed in different industries. The demand for wage equality is based, therefore, on an error, on a vain desire, which will never be fulfilled.’32 The current system of wage regulation in the European labour market fully responds to this pattern: there are different expected wages in the same labour market also because there are different systems of wage regulation: cases where SMW and CBW coexist, or cases where sectoral and firm-level CBW coexist, or cases where CBW coexist in the same economic sector.33 It follows from the coexistence of wages in the same labour market that the same work can be remunerated differently because the source of wage determination is different: the law, the sectoral collective agreement, the regional collective agreement, the company collective agreement. In this way, the original problem of wage competition, which the very

30 A Bugada, ‘Considerazioni globali sul salario minimo (in Francia e altrove)’ (2021) Diritto delle Relazioni Industriali 325. 31 If the wage is defined exclusively by the individual contract, it will correspond exclusively to the economic value of labour created in the individual market relationship. If the wage is defined for the collective of workers of a single enterprise by a company collective agreement, we will have a wage that corresponds to the price of labour that corresponds to the market needs of that individual enterprise. The same applies if the wage is defined by a regional, national sectoral, national inter-sectoral, European sectoral collective agreement, etc, or a universal wage established by law. 32 Marx (n 17) 52, translated from Italian. 33 According to the Eurofound report, Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (Publications Office of the European Union, 2022), the 27 EU countries can be subdivided into Member States where there is predominantly (or even exclusively as in Poland) enterprise-level bargaining, Member States where sectoral and enterprise-level bargaining coexist in clear alternation (as in Germany, for example), or in a system with a mix of sectoral and enterprise-level bargaining (eg France) or Member States where wage coverage by sectoral collective agreements prevails (as in Italy).

Industrial Relations on Wage-setting 61 first collective bargaining experiments sought to solve, returns. The difference is that originally there was competition between wages set by individual bargaining; today the danger is competition between wages set by collective bargaining and/or by law. The issue concerns the relationship between these different sources of wage determination. It mainly concerns ‘whether’ and ‘how’ the legal system delimits the scope of each of them. The first issue concerns the relationship between the wage set by law (SMW) and the wage set by collective bargaining (CBW). Whereas the SMW has general and universal force because the law has general and universal force, the force of collective bargaining agreements can be general or voluntary, so that the CBW can be binding on all or applied voluntarily. This is an extraordinarily important difference when assessing the system of wage regulation in a labour market. For this reason, the issue of the legal effectiveness of collective agreements in wage matters must first be addressed.

IV. The Competition between Wage-Setting Legal Sources: The Issue of Enforceability of Collective Agreements To address the issue of the relationship between the wage law system and the effectiveness of collective agreements, we start with two well-known CJEU cases: the Laval case34 and the Rüffert case.35 On those two occasions, the problem arose because Sweden (Laval) and Germany (Rüffert) required companies posting workers to their territories to apply the wage rates laid down in the Swedish and German collective agreements respectively. Apart from all the other arguments put forward by the Court of Justice, the main obstacle to the imposition of contractual wages was the fact that in Germany and Sweden collective agreements do not have general effect but are voluntary.36 Also as a result of these cases, EU Directive 2018/957 amended the Posted Workers Directive 96/71/EC by stating that: In the absence of, or in addition to, a system for declaring collective agreements or arbitration awards to be of universal application within the meaning of the first subparagraph, Member States may, if they so decide, base themselves on: —— collective agreements or arbitration awards which are generally applicable to all similar undertakings in the geographical area and in the profession or industry concerned, and/or

34 Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet et al ECLI:EU:C:2007:809. 35 Case C-346/06 Dirk Rüffert v Land Niedersachsen ECLI:EU:C:2008:189. 36 In another, more recent, similar case concerning Finland, the Court of Justice, 12 February 2015, Case C-396/13 Sähköalojen ammattiliitto ry v Elektrobudowa Spolka Akcyjna ECLI:EU:C:2015:86, did not object to the imposition of the collective agreement wage because in this country the collective agreement has general effectiveness. In the Nordic European States without a legal minimum wage (Denmark, Sweden, Norway, Finland and Iceland) there are collective bargaining systems that have a different effectiveness: in Iceland, Finland and Norway there are legal systems of extending the effectiveness of collective agreements (at least in the wage part) while in the other two Nordic States (moreover, members of the EU), ie Denmark and Sweden, there are exclusively voluntarist bargaining systems. See F Alsos et al, ‘Collective Bargaining as a Tool to Ensure a Living Wage. Experiences from the Nordic Countries’ (2019) 25(3) Transfer: European Review of Labour and Research 351.

62 Vincenzo Bavaro —— collective agreements which have been concluded by the most representative employers’ and labour organisations at national level and which are applied throughout national territory ….37

The legal regulation of cross-border posting of workers and the court cases show that the only way to ensure a competitive market without the scourge of wage dumping is to ensure that, in a labour market (eg in the national market of a production sector), there is no possibility that the same work can be paid differently, ie different wages for the same work. It is understandable that an enterprise might prefer to apply a lower wage if it were given a choice, with the consequence that the lowest wage would become the one most applied: wage dumping is the product of competition between different wage standards, freely chosen by the actors in a labour market. Well, if we look at the legal wage systems in the EU Member States from the perspective of wage dumping, we can see that there are several levels on which competition between sources of wage determination takes place. First, there can be competition between SMW and CBW in Member States where there is a wage set directly by law with universal effect and there is a wage set by a collective agreement that has no general effect. This wage competition is hardly ever highlighted in industrial relations studies or even in legal studies. Yet, by logical deduction, we can state that if the SMW, understood as a binding minimum wage for all workers in any enterprise and production sector, is set at a lower level than the CBW, which, on the other hand, is only effective at the free will of enterprises and workers, it is evident that the lower wage (SMW) competes with the higher wage (CBW). Proof of this can be found in the data on the percentages of workers who are covered by CBW under voluntary collective agreements. Let us take the example of Germany. In the 1980s, the contractual coverage was estimated at around 85 per cent; from the mid-1990s onwards, the coverage steadily decreased until 2016, the year when the minimum wage law came into force, when the contractual coverage was estimated at 56 per cent, considering that this coverage calculates both workers covered only by sectoral collective agreements (48 per cent) and workers covered only by company-level agreements.38 Already without SMW in Germany there was a real ‘depart from the sectoral collective agreement’ made possible by its voluntary effectiveness.39 However, after the entry into force of the SMW 37 Article 3(8). Among the many comments on this Directive see G Orlandini, ‘Salari e contrattazione alla prova dei vincoli del mercato interno’ (2020) Lavoro e Diritto 285 and T Novitz, ‘Collective Bargaining and Social Dumping in Posting and Procurement: What Might Come from Recent Court of Justice Case Law and the Proposed Reform of the Posting of Workers?’ in A Sanchez-Graells (ed), Smart Public Procurement and Labour Standards. Pushing the Discussion after Regiopost (Hart Publishing, 2018) 215. 38 T Schulten and R Bispinck, ‘Varieties of Decentralization in German Collective Bargaining’ in S Leonardi and R Pedersini (eds), Multi-employer Bargaining under Pressure. Decentralization Trends in Five European Countries (ETUI, 2018) 105, 108. 39 The drastic decline in the coverage of national sectoral collective agreements in Germany was undoubtedly caused by two factors in the system of collective bargaining regulation: on the one hand, the ‘opt-out clause’ from the collective agreement, ie the possibility of concluding company-level agreements in derogation of the sectoral collective agreement, and a new system of inclusion in German industrial relations known as ‘OT membership’ (ohne Tarif: associational membership without collective agreement application): W Gunter and M Hopner, ‘Why Does Germany Abstain from Statutory Bargaining Extensions? Explaining the Exceptional German Erosion of Collective Wage Bargaining’ (2023) 44 Economic and Industrial Democracy 88; L Bellmann et al, ‘Collective Bargaining Coverage, Works Councils and the New German Minimum Wage’ (2021) 42 Economic and Industrial Democracy 269. On the effect of the minimum wage law on workers’ trade union membership see S Ress and F Spohr, ‘Was it Worth it? The Impact of the German Minimum Wage on Union Membership of Employees’ (2022) 43 Economic and Industrial Democracy 1699.

Industrial Relations on Wage-setting 63 law the ‘depart from the collective agreement’ did not stop as, in 2020, the percentage of workers covered by sectoral collective agreements fell to 43 per cent.40 Thus, in Germany, since companies have the choice between applying a collective agreement (which provides for a higher wage) or not applying it, thus only guaranteeing the (lower) SMW, companies tend to choose the SMW instead of the CBW with the effect of weakening the industrial relations system.41 The case of Germany shows that in systems with voluntarily effective collective agreements there is a weaker capacity for wage regulation by collective agreements if there is no strengthening of the effectiveness of contractual coverage.42 This is confirmed by looking at estimates of contractual coverage in other countries with voluntary collective bargaining: in Sweden, according to some estimates, it appears that coverage is very high (92 per cent43 or 88 per cent44) even though other research states that ‘23 per cent of employees are covered by agreements with company-level wage setting only’; in Denmark, on the other hand, contractual coverage is between 70 per cent45 and 82 per cent,46 and in any case ‘in 2014, one-fifth of Danish employees were covered by agreements with no wage floor’.47 Besides the competition between SMW and CBW, in countries where there is no legal extension of CBW, in the area covered by collective bargaining, there may be workers covered by sectoral collective agreements and workers covered only by company collective agreements. Not all collective bargaining systems have a framework to link the different levels of collective agreements in a way that establishes integration between them. What is certain is that without binding effect, these different levels of collective agreements are enforced according to the will of the enterprises and, thus, allow wage competition. In systems with voluntarily effective collective agreements, competition between collective agreements of the same level can also occur. The most emblematic example is Italy. All research on contractual wage coverage states that in Italy there is between 98 per cent48 and 100 per cent49 coverage. In fact, we can say that every Italian employee is entitled to a wage that complies with Article 36 of the Italian Constitution, which, according to case law,

40 T Schulten, Collective Bargaining in Germany (2021) Annual report of the WSI Collective Agreement Archive; Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (n 33) the coverage of collective bargaining in Germany, including sectoral and company bargaining, was 45 per cent in 2019. 41 I have already argued this same position in the past in V Bavaro and G Orlandini, ‘Le questioni salariali nel diritto italiano, oggi’ (2021) I Rivista Italiana di Diritto del Lavoro 286. 42 With reference to Germany, see also the opinion of C Schubert and L Schmitt, ‘Collective Working Conditions for Everyone?! – Collective Provisions with Erga Omnes Effect and Statutory Extension of Collective Agreements from a German Law Perspective’ (2020) 11(2) European Labour Law Journal 154, which is sceptical about a strengthening of the system of extending the effectiveness of collective bargaining agreements. I do not agree with those arguments in view of the fact that, precisely in the field of wages, the legal minimum wage placed to cover workers not covered by collective bargaining is not preventing the decline of collective bargaining coverage since it is a wage objectively in competition with the wage provided for by collective agreements. 43 Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (n 33) on basic data from 2019. 44 T Müller et al, ‘Wages and Collective Bargaining: Fighting the Cost-of-Living Crisis’ in N Countouris et al (eds), Benchmarking Working Europe 2023 (ETUI and ETUC, 2023) 91, used dates of OECD/AIAS ICTWSS database version 1.1 (April 2023). 45 Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (n 33). 46 Müller et al (n 44). 47 Alsos et al (n 36) 354. 48 Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (n 33). 49 Müller et al (n 44).

64 Vincenzo Bavaro must be set on the parameters of the minimum wages provided for by the sectoral collective agreements.50 The problem lies in the evidence that the entire Italian workforce is covered by more than 900 sectoral collective agreements; in fact, there are economic sectors with dozens of competing national collective agreements.51 Therefore, if all Italian workers are covered by a CBW, the Italian industrial relations system is marked by an accentuated trade union and entrepreneurial pluralism and the system of collective bargaining with voluntary effectiveness produces strong competition between sectoral level CBWs. In this context, even if collective bargaining is recognised as an appropriate source for setting wages in a labour market, it is necessary to prevent the creation of conditions for wage competition by adequately promoting legal regulation that prevents different wages for the same work from coexisting in the same market. This need is also recognised by the AMW Directive when it states that ‘strong collective bargaining, in particular at sector or crossindustry level, contributes to ensuring adequate minimum wage protection’. Strengthening is even more necessary because: traditional collective bargaining structures have been eroding during recent decades, due, inter alia, to structural shifts in the economy towards less unionised sectors and to the decline in trade union membership, in particular as a consequence of union-busting practices and the increase of precarious and non-standard forms of work. In addition, sectoral and cross-industry level collective bargaining came under pressure in some Member States in the aftermath of the 2008 financial crisis. (recital 16)

The strength of a collective bargaining system, an essential element for adequate wage dynamics, is well indicated by the contractual coverage rate. In fact, research tells us that the higher the contractual coverage rate (and the union membership rate) the higher the wages.52 We know that coverage and membership depend on the characteristics of industrial relations systems. However, they also relate to the effectiveness of the collective agreement on wages. Another indicator of wage bargaining coverage (which is an indicator of more adequate wages) is precisely the extent of the effectiveness of collective agreements. The AMW Directive implies that collective agreements are essential to ensure wage adequacy and should therefore be strengthened so that a broad contractual coverage of no less than 80 per cent is guaranteed. However, it does not go so far as to promote the general effectiveness of collective agreements in wage matters, unlike it did in the area of cross-border posting, precisely to avoid the risk of wage dumping – a silence that can also be explained by the unwillingness of some Member States to go that far (apart from EU competence issues). In this regard, it may seem incomprehensible why the leading trade unions in Denmark and Sweden (together with Norway and Iceland) argued that ‘against this background, we have always rejected proposals that are based on binding rules of wage floors on European level. Legally binding requirements would severally undermine the protection of collective bargaining in the Treaty, even if different types of safeguard clauses are added’. And 50 This has led some scholars to claim that in Italy there is a jurisprudential system of erga omnes extension of collective agreements: MÁ García Calavia and M Rigby, ‘The Extension of Collective Agreements in France, Portugal and Spain’ (2020) 26(4) Transfer: European Review of Labour and Research 399. 51 A detailed analysis of the Italian wage system in relation to collective bargaining can be found in the special 2023(4) issue of Rivista Giuridica del Lavoro with articles by V Bavaro, G Orlandini, GA Recchia, A Loffredo and G Calvellini, and G Ricci (forthcoming). 52 A Hassel, ‘Round Table. Mission Impossible? How to Increase Collective Bargaining Coverage in Germany and the EU’ (2022) 28(4) Transfer: European Review of Labour and Research 491.

Industrial Relations on Wage-setting 65 specifically with reference to the strengthening of collective bargaining, they advocate that ‘legally binding rules concerning wages and many of the ETUC proposals of binding EU rules concerning collective bargaining would have huge negative effects on our Nordic labour market models’.53 This position seems hardly understandable, even more so because, according to a recent study, Denmark and Sweden have not even taken up the opportunity offered by the Posted Workers Directive: in Denmark, unions have used multi-faceted industrial pressure and company-level labour clauses to represent posted workers, which is effective but resource intensive. Swedish unions have mostly sought to ignore the problem, and not engaged with government or employer proposals to legitimate a dual labour market. Both countries have seen the growth of a dual labour market via precarious migrant work in posting sectors.54

Conversely, following the example of Directive 96/71 (as amended in 2018), an effective way to prevent wage dumping in a national labour market is to establish the general mandatory effectiveness of a single CBW. Since the CBW is the one that best suits the level of adequacy of each market – as mentioned above – it is necessary for the collective agreement to be binding for all companies operating in that market. On the other hand, the experience of EU Member States shows that strengthening collective bargaining by extending its effectiveness does not necessarily solve all contractual coverage problems. If we look at the contractual coverage rates in countries where collective agreements are generally effective, they range from 94 per cent in France, Finland or Spain, to 81 per cent in Belgium to 65 per cent in Portugal55 (other research indicates coverage rates for the same countries of 98 per cent, 89 per cent and 80 per cent, 96 per cent and 74 per cent respectively56). Therefore, to summarise, even in Member States where there are collective agreements with general effect there are economic sectors not covered by collective bargaining. It is not possible here to analyse the reasons for this phenomenon; however, I can assume that the lack of contractual coverage concerns sectors in which there are no industrial relations and – legally speaking – there is no way to extend another collective agreement into these sectors (by affinity).57 In such cases, we can better appreciate the function of the SMW: in systems with generally effective collective agreements, the SMW is only effective in economic sectors where there is no collective agreement because it has never been signed.58 The application of the SMW does not depend on the free choice of companies to apply either the CBW or the SMW. Thus, the SMW is a useful tool to fill a gap in the industrial relations system. But this shows that the general effectiveness

53 Letter sent to the President of the European Commission Ursula von der Leyen on 25 February 2020, during the trade union consultation phase on the proposed directive, by trade unions LO-Sweden, TCO-Sweden, Saco-Sweden, FH-Denmark, LO-Norway, Unio-Norway, YS-Norway, ASI-Iceland, BSRB-Iceland, BHM-Iceland. 54 N Lillie, ‘Round Table. Nordic Unions and the European Minimum Wage Directive’ (2022) 28(4) Transfer: European Review of Labour and Research 499. 55 Moving with the Times: Emerging Practices and Provisions in Collective Bargaining (n 33). 56 Müller et al (n 44). 57 This situation is quite peculiar if we compare it to what happens in Italy where, although there are no collective agreements with general effect, there is no employment relationship to which one of the collective agreements in force cannot apply; in other words, all production sectors are covered by directly applicable collective agreements or those applicable by production affinity. 58 In addition, the SMW will be binding if the company in a sector without a collective agreement is also without a company agreement.

66 Vincenzo Bavaro of sectoral collective agreements is necessary to prevent competition between the SMW and CBW.59 Even more so – and this is another key element to be considered – the SMW levels are lower than the CBW ones. This wage difference can create dumping between law and collective agreement; this is why it is necessary to analyse the SMW in the light of the general principle of wage adequacy, in relation to the CBW.

V. Adequacy of Statutory Minimum Wage: Social Partners’ Involvement and the Indirect Wage Authority of Industrial Relations The SMW should be the minimum wage in a labour market. Thus, it should correspond to the value of labour in that market, a universal minimum value. According to some research,60 in the EU Member States the SMW is generally below 60 per cent of the median wage (with very few exceptions) and below 50 per cent of the average wage (with the sole exception of Slovenia). We know that the median wage and the average wage are values that consider the wages produced by the overall national collective bargaining system (in different economic sectors and under different labour market conditions). In other words, the median/national average wage is a median/average value of wage adequacy as determined by collective bargaining. This means that the median/average wage is a value that does not indicate wage adequacy as we understand it when we talk about bargaining wage adequacy. An example can be useful for a better explanation. Let us consider a worker in the construction sector: the sectoral collective agreement sets the wage for this worker considering the specific market conditions in that sector, as well as several elements that make up the overall wage of that worker. If we compare this wage with the median/average wage calculated for that national market, there will be a clear difference in value. Depending on the collective agreement coverage, the construction worker could be entitled either to the CBW or the SMW. The question is which of the two wages is to be considered adequate. If adequacy is the correspondence of the value of work in that (construction) market, then obviously the adequate wage will be the CBW. Which adequacy does the SMW respond to? As mentioned earlier, in all states where the SMW is provided, its economic value hardly ever exceeds 60 per cent of the median value and 50 per cent of the mean value. The SMW has no correlation with the labour market not only because it does not take sectoral differences into account, but above all because it is set at a minimum threshold that is independent of market values. The value of the SMW seems to correspond to an imperative minimum 59 This is another positive effect of the juridification of industrial relations, in addition to A Bondy and J Preminger, ‘Collective Labour Relations and Juridification: A Marriage Proposal’ (2022) 43(3) Economic and Industrial Democracy 1260. On benefits see also S Hayter and J Visser, ‘The Enforcement and Extension of Collective Agreements: Improving the Inclusiveness of Labour Protection’ in S Hayter and J Visser (eds), Collective Agreements: Extending Labour Protection (ILO, 2018); T Schulten et al, ‘The Role of Extension for the Strength and Stability of Collective Bargaining in Europe’ in G Van Gyes and T Schulten (eds), Wage Bargaining under the New European Economic Governance. Alternative Strategies for Inclusive Growth (ETUI, 2015) 361. 60 Müller et al (n 44).

Industrial Relations on Wage-setting 67 threshold necessary to satisfy minimum living needs of workers in that national market: a living wage, a minimum common to any person obliged by contract to work, necessary to make a living.61 It would be useful if social-economic research could show whether the SMW envisaged in each country is sufficient to guarantee a decent living for that worker. In any case, the underlying issue concerns the fact that the determination of the SMW is not the result of a calculation that considers the requirements of a decent living but is the result of a percentage of the total wage that is in any case provided for by collective bargaining. It is no coincidence that the AMW Directive calls on Member States to ensure effective involvement of the social partners in determining the SMW. Indeed, if there is a correlation between SMW and median/average wage originating from collective bargaining, then it is important that the same social partners that negotiate on those wage values are involved.62 In this sense, it seems to me that one of the best national experiences in determining the SMW is that of Belgium, where the SMW is set directly by the social partners by intersectoral agreement.63 However, there remains the problem of the ambiguous conception of the SMW with reference to its adequacy; an ambiguity that derives precisely from the concept of adequacy: if adequacy is referred to the value of labour in a market, the SMW is not adequate because the wage that best responds to that adequacy is the CBW. On the other hand, if the adequacy of the SMW is commensurate with a decent living for workers, the parameter for determining the minimum adequate threshold should consider all those factors necessary for a decent living and not be calculated based on the median/average wage (a percentage of it) that is still a product of collective bargaining. In other words, even in systems where there is SMW, a living wage, it is collective bargaining that produces the parameter for determining wage adequacy. This is a ‘political’ function of collective bargaining, as Allan Flanders defined it: ‘collective negotiation is concerned with values other than the economic interests’.64 Indeed, it is the nature of collective bargaining to try to establish a wage that can (aspire to) meet the living needs of workers. That is why the CBW has a greater adequacy effectiveness than the SMW, even if it is understood as a living wage. On the other hand, in agreement with Alan Fox’s criticism of Flanders, notwithstanding the fact that collective bargaining also acknowledges or recognises political function and not only the economic redistribution, nevertheless, this political-social nature joins the original function, that is, ‘to set a minimum floor to terms 61 T Schulten and T Müller, ‘What’s in a Name? From Minimum Wages to Living Wages in Europe’ (2019) 25(3) Transfer: European Review of Labour and Research 267. 62 For example, regarding France, B Delmas, ‘L’incidence de la directive (UE) 2022/2041 relative à des salaires minimaux adéquats dans l’Union européenne sur le droit francais’ (2023) Revue du Droit du Travail 58, writes: ‘their consultation is reduced to a simple hearing by the committee of experts. The prevalence given to the expert report thus relegates the CNNC to a mere registration chamber with no real means of influencing the final decision’, translated from French. 63 F Dorssemont, ‘Wage Setting and Wage Moderation in Belgium: A Never-ending and Already-old Story in the Wake of the “New European Economic Governance”’ (2022) 13 European Labour Law Journal 156. 64 We refer to the thesis supported in A Flanders, ‘Collective Bargaining: A Theoretical Analysis’ (1968) 6(1) British Journal of Industrial Relations 1: ‘two reasons for characterizing collective negotiation as a political and not an economic process: on one hand, “political” becomes counterposed to “economic” in the sense that collective negotiation lays down rules which to varying degrees govern bargaining but do so through a calculated power strategy; on the other hand, political becomes counterposed to economic in the sense that collective negotiation is concerned with values other than the economic interests’.

68 Vincenzo Bavaro and conditions of employment on which employers and employees, individual or in groups, are free to improve’.65 In short, the wage issue is an issue that inevitably stems from collective bargaining and, more generally, industrial relations. Consequently, the wage-setting system must be analysed from the legal institutions that regulate collective bargaining and, more generally, industrial relations.

VI. Conclusions. Wage Adequacy is the Adequacy of the Wage-Setting System by Strengthening Industrial Relations The adequacy of the CBW is demonstrated not only by the fact that it, in most cases, sets a higher wage than the SMW, but also by the fact that collective bargaining is the main lever of wealth redistribution, precisely by establishing the wage. Recent studies show that ‘there is ample evidence showing that high collective bargaining coverage goes hand in hand with lower of wage inequality and higher overall wage levels’.66 In this sense, legal systems that guarantee the universal effectiveness of collective agreements by extending contractual coverage also ensure less wage inequality. The extent to which collective bargaining does indeed reduce wage inequality depends on a series of factors: enterprises covered by collective agreements tend to have a more compressed wage distribution than enterprises not covered, reducing within-firm inequality. So, bargaining coverage is negatively correlated with wage inequality within a national labour market. The extent of collective agreements depends on trade union bargaining power and the type of bargaining system (if focused on sectoral collective bargaining).67 Anyway, all these factors could be regulated and promoted across legal systems. We have seen that the adequacy of the CBW, as it is conceived by Directive 2022/2041, depends on the coverage, ie the degree to which collective agreements are enforced; the enforcement of collective agreements depends mainly on its universal effectiveness which, in turn, depends on the legal system. In this sense, it is the entire collective bargaining system that must be supported, especially where the industrial relations system is weaker. That is why it is not enough to generically support collective bargaining but to strengthen sectoral collective bargaining and the most representative social partners at the national level because these are the conditions that strengthen wage adequacy. More problematic is the discourse on the adequacy of the SMW, not only because it is always considerably lower than the CBW, but especially because the system of determining the SMW does not always entail an effective involvement of the social partners who are still the wage authority (direct as for the CBW, or indirect as for the SMW). Promoting the appropriate wage must involve the promotion of collective autonomy and the industrial relations system of a market. The legal system can support the industrial relations system if, first, it supports the union’s bargaining capacity and if it supports its

65 Fox (n 8) 159. 66 Müller et al (n 44). 67 M Keune, ‘Inequality between Capital and Labour and among Wage-earners: The Role of Collective Bargaining and Trade Unions’ (2021) 27 Transfer 36.

Industrial Relations on Wage-setting 69 function as wage authority according to the best doctrine of collective laissez-faire.68 Otto Kahn-Freund had already perceived and written this in the Introduction to his seminal work (Labour and the Law) when, specifically with reference to the relationship between law and collective bargaining, he wrote that ‘legislation on minimum wages should not be decreed’ if only because there is ‘an entirely marginal influence of the law on the welfare of the people’.69 Just as is the case when we compare the SMW and the CBW, not only because the latter is more advantageous for workers than the former, but also because in defining the SMW, reference is made in each case to the wage dynamic produced by collective bargaining. This is not to say that, in wage matters, the law should not provide rules and protection; it is rather to recognise that it should provide rules and protection to collective bargaining, which better than any other source can guarantee an adequate wage. Therefore, the legal system should support collective bargaining in wage matters knowing that systems with predominance of national sectoral collective bargaining better guarantee wage adequacy or coverage than systems with predominance of enterprise bargaining. The legal system must be aware that it is not indifferent to give wage authority to sectoral collective agreements concluded by nationally representative trade unions or to corporate-related or unrepresentative trade unions. In conclusion, a wage is adequate when it is produced by an adequate wage system; and a system is adequate when wage authority is entrusted to collective autonomy which, so far in the history of capitalist economies, remains the best wage authority. Thus, wage adequacy derives from a system in which the probability of adequately redistributing the wealth produced through wages is higher. Wage adequacy does not depend on a certain wage threshold predetermined by a governmental authority or expert groups, but on an effective (as far as possible) industrial relations system, the only lever for economic democracy.

68 O Kahn-Freund, Labour and the Law (Stevens & Sons, 1972). On the Kahn-Freund theory see also R Dukes, The Labour Constitution. The Enduring Idea of Labour Law (Oxford University Press, 2014) and P Smith, ‘Comment: “Abstentionism” and “Collective Laissez-Faire”: Two Distinct Concepts’ (2015) 44(4) Industrial Law Journal 387. 69 O Kahn-Freund, Il lavoro e la legge (Giuffrè, 1974) 7, translated from Italian.

70

6 The Collective Bargaining Directive in Disguise – How the European Minimum Wage Directive Aims to Strengthen Collective Bargaining TORSTEN MÜLLER AND THORSTEN SCHULTEN

I. Introduction At the outset, the goal of the European Commission’s initiative for a European framework on minimum wages was to create ‘a legal instrument to ensure that every worker in our Union has a fair minimum wage’.1 In early 2020, the Commission started the first stage of the Social Partner Consultation under Article 154 TFEU ‘on a possible action addressing the challenges related to fair minimum wages’.2 The Commission has consistently stated that its initiative is not about harmonising minimum wage-setting, but rather to fully respect national practices and the autonomy of social partners. Therefore, its initial considerations focused almost exclusively on the adequacy of minimum wage levels. It was only through the intervention of the European trade unions that the European minimum wage initiative also became an initiative to strengthen collective bargaining in Europe. In its official statement to the Commission, the European Trade Union Confederation (ETUC) emphasised that ‘the best tool to achieve the objective of fair wages is through the safeguarding, strengthening and promotion of autonomous sectoral and cross-sectoral collective bargaining’. Thus, according to the ETUC, ‘any EU initiative in this field must strengthen national collective bargaining models’.3 More specifically, the ETUC demanded that ‘Member States should be required, when their collective

1 Ursula von der Leyen, ‘A Union that Strives for More. My Agenda for Europe. Political Guidelines for the Next European Commission 2019–2024’ (Publication Office for the European Union, 2019) 9. 2 European Commission, First phase consultation of Social Partners under Article 154 TFEU on a possible action addressing the challenges related to fair minimum wages, Consultation Document, Brussels, 14 January 2020, C(2020) 83 final. 3 European Trade Union Confederation (ETUC), ‘ETUC Reply to the First Phase Consultation of Social Partners under Article 154 TFEU on a possible action addressing the challenges related to fair minimum wages’, (ETUC, 26 February 2020) 3.

72 Torsten Müller and Thorsten Schulten bargaining coverage is below 70 per cent of the national workforce, to take positive actions, in consultation with the social partners, to promote collective bargaining and to bring the level of collective bargaining coverage to that threshold as soon as possible.’4 Accordingly, in the second phase of the Social Partner Consultation, the Commission expanded the goal of its initiative from the promotion of adequate minimum wage levels to also include the strengthening of collective bargaining.5 In its proposal for a draft Directive, the Commission finally included a separate article on the ‘promotion of collective bargaining on wage setting’6 which contained the decency threshold of 70 per cent proposed by the ETUC as a target for adequate collective bargaining coverage. Later, the European Parliament even extended this target to 80 per cent7 and succeeded in retaining this decency threshold in the final Directive. As a result of the demands and pressure of European trade unions and the European Parliament, we argue that Directive 2022/2041 (the AMW Directive) turned into a collective bargaining directive in disguise: the strengthening of collective bargaining was a goal in its own right, alongside the promotion of adequate minimum wage levels. In this chapter we will focus on the possible impact of the AMW Directive on collective bargaining in Europe. We will first present the key provisions of the Directive regarding collective bargaining. Second, we will give a comparative overview of collective bargaining coverage in Europe in order to identify the potential impact of the Directive. This also includes a methodological review of existing data and different measurements of collective bargaining coverage. Third, we will give a systematic assessment of possible tools and instruments to promote collective bargaining. Fourth, we will discuss some national examples in which the Directive is already being used as a reference point in debates about national initiatives to promote collective bargaining. Finally, we draw some conclusions on the potentials and problems related to the implementation of the Directive in the area of collective bargaining.

II. Key Provisions on the Promotion of Collective Bargaining in the AMW Directive As laid down in Article 1 of the AMW Directive, its ‘subject matter’ is threefold. It aims to establish a framework for: 4 ibid 15. In contrast, the employers rejected the Directive on constitutional grounds, arguing that the EU has no competence to introduce legally binding instruments in the area of minimum wages and collective bargaining. This fundamental opposition of the employers essentially meant that they took themselves out of the game entirely; they played no significant role in the ensuing discussions about the concrete content of the Directive. For more information see BusinessEurope, ‘Response to First Phase Social Partner Consultation on a Possible Action Addressing the Challenges Related to Fair Minimum Wages’ (BusinessEurope, 19 February 2020), https://www. businesseurope.eu/sites/buseur/files/media/position_papers/social/2020-02-19_response_first_stage_consultation_minimum_wages_final.pdf. 5 European Commission, Second Phase Consultation of Social Partners under Article 154 TFEU on a Possible Action Addressing the Challenges Related to Fair Minimum Wages, Consultation Document, Brussels, 3 June 2020, C(2020) 3570 final. 6 European Commission, Proposal for a Directive of the European Parliament and of the Council on adequate minimum wages in the European Union, Brussels, 28 October 2020, COM(2020) 682 final. 7 European Parliament, Report (A9-0325/2021) on the proposal for a Directive of the European Parliament and of the Council on the adequate minimum wages in the European Union, Committee on Employment and Social Affairs (Rapporteurs: Dennis Radtke and Agnes Jongerius), adopted at the EP plenary sitting on 18 November 2021.

Collective Bargaining in Disguise 73 1. adequacy of statutory minimum wages with the aim of achieving decent living and working conditions; 2. promoting collective bargaining on wage-setting; 3. enhancing effective access of workers to rights to minimum wage protection where provided for in national law and/or collective agreements.8 The inclusion of the promotion of collective bargaining in the Directive is justified in the recitals by the fact that ‘sectoral and cross-industry level collective bargaining is an essential factor for achieving adequate minimum wage protection and therefore needs to be promoted and strengthened’.9 In accordance with well-established research findings,10 the Directive emphasises that ‘Member States with a high collective bargaining coverage tend to have a small share of low-wage workers and high minimum wages’,11 so that encompassing collective bargaining has to be regarded as essential for adequate minimum wage protection. Since many EU Member States have been faced by an erosion of traditional collective bargaining structures and a decline in bargaining coverage, adequate minimum wages require a reversal of that trend. Thus, the promotion of collective bargaining became an integral part of the Directive. The key provisions on collective bargaining are laid down in Article 4 of the Directive which – ‘with the aim of increasing the collective bargaining coverage and of facilitating the exercise of the right to collective bargaining on wage-setting’ – calls on the Member States: • to promote the building and strengthening of the capacity of the social partners to engage in collective bargaining on wage-setting, in particular at sector or cross-industry level; • to encourage constructive, meaningful and informed negotiations on wages between the social partners, on an equal footing, where both parties have access to appropriate information in order to carry out their functions in respect of collective bargaining on wage-setting; • to take measures, as appropriate, to protect the exercise of the right to collective bargaining on wage-setting and • to protect workers and trade union representatives from acts that discriminate against them in respect of their employment on the grounds that they participate or wish to participate in collective bargaining on wage-setting.12 In addition, the Directive requires ‘each Member State in which the collective bargaining coverage rate is less than a threshold of 80 per cent … [to] provide for a framework of enabling conditions for collective bargaining, either by law after consulting the social partners or by agreement with them’.13 The Member States concerned shall ‘establish an action plan to promote collective bargaining’ which ‘shall set out a clear timeline and concrete measures to progressively increase the rate of collective bargaining coverage’.14 8 Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union, Official Journal of the European Union L 275/33-47, 25 October 2022, Art 1. 9 Recital 16. 10 For most recent research results see H Haapanala et al, ‘Decent Wage Floors in Europe: Does the Minimum Wage Directive Get It Right?’ (2023) 33(4) Journal of European Social Policy 421. 11 Recital 25 of the AMW Directive. 12 ibid Art 4(1). On this provision cf Ch 13 below by Lo Faro. 13 ibid Art 4(2). 14 ibid.

74 Torsten Müller and Thorsten Schulten The action plan should be regularly reviewed and updated at least every five years and should be made public and notified to the European Commission. The Commission should analyse and monitor the action plans and report to the European Parliament and the Council.15 While the core instruments and initiatives to strengthen collective bargaining are largely left to the autonomy of the Member States, the Directive does provide at least some substantive and procedural requirements. As regards substance, it mainly calls for a strengthening of the capacity of trade unions and employers’ organisations as well as for a better protection of trade union representatives which are engaged in collective bargaining. Moreover, the Directive contains a separate article on public procurement, which underlines that in accordance with the EU Public Procurement Directives 2014/23/EU, 2014/24/EU and 2014/25/EU, ‘Member States shall take appropriate measures to ensure that, in the awarding and performance of public procurement or concession contracts, economic operators and their subcontractors comply with the applicable obligations regarding wages, the right to organise and collective bargaining on wage-setting.’16 With this article, the Directive refers to the possibility of awarding public contracts only to companies that comply with certain collectively-agreed labour conditions. In procedural terms, Member States are required – in cooperation with trade unions and employers’ organisations – to define concrete action plans to strengthen collective bargaining. However, this obligation only applies to countries with a collective bargaining coverage of less than 80 per cent. In the recitals of the Directive, it is explicitly stated that ‘the threshold of 80% collective bargaining coverage should only be construed as an indicator triggering the obligation to establish an action plan’.17 Although the Member States are not legally obliged to reach the 80 per cent threshold, in practice it is likely to serve as a decency threshold for the adequate collective bargaining coverage which is necessary to provide adequate minimum wage protection.

III. The State of Collective Bargaining in the EU There exists a great diversity of collective bargaining regimes across the Union.18 The most striking difference at first glance concerns the collective bargaining coverage which, according to the OECD/AIAS Database, varies between 100 per cent in Italy and 13 per cent in Poland (Table 1). Although there are some important methodological challenges in measuring bargaining coverage accurately (see below), the existing data very clearly shows that there are significant differences regarding the extent and importance of collective bargaining. Of the 27 EU Member States, only eight currently meet the threshold of 80 per cent which is laid down in the AMW Directive. Accordingly, 19 Member States need to take action in order to promote collective bargaining.

15 ibid

Art 10(3). Art 9. On this provision, cf Ch 18 below by Davies. 17 ibid, recital 25. 18 T Müller et al, Collective Bargaining in Europe: towards an Endgame (ETUI, 2019). 16 ibid

Collective Bargaining in Disguise 75 Table 1 Collective Bargaining Coverage, Negotiation Level and State Support in the EU

Country

Collective bargaining coverage (in %)*

Dominant level of collective bargaining

Italy

100

Sector

Constitutional obligation to pay fair wage with reference to collective agreements

Austria

98

Sector

Chamber System

France

98

Sector

Frequent Extension

Belgium

96

Sector

Ghent System/Frequent Extension

Finland

89

Sector

Ghent System/Frequent Extension

Sweden

88

Sector

Ghent System

Denmark

82

Sector

Ghent System

Spain

80

Sector

Frequent Extension

Slovenia

79

Sector

Frequent Extension

Portugal

77

Sector

Frequent Extension

Netherlands

76

Sector

Frequent Extension

Luxembourg

57

Sector/Company

Frequent Extension

Croatia

53

Sector/Company

Rare Extension

Germany

52

Sector

Rare Extension

Malta

50

Sector/Company

Cyprus

43

Sector/Company

Czechia

35

Company

Rare Extension

Ireland

34

Sector/Company

Rare Extension

Bulgaria

28

Sector/Company

Rare Extension

Latvia

27

Company

Rare Extension

Lithuania

27

Company

Rare Extension

Slovakia

24

Sector/Company

Rare Extension

Hungary

22

Company

Rare Extension

Estonia

19

Company

Rare Extension

Romania

15

Sector/Company

Rare Extension

Greece

14

Company

Rare Extension

Poland

13

Company

Rare Extension

Forms of state support

* 2019 or most recent available data. Source: Collective bargaining coverage: OECD/AIAS ICTWSS Database; Bargaining level and state support: own categorisation based on Müller et al (n 18).

The reasons for the large differences in the collective bargaining coverage are manifold. However, there are two principal factors which seem to determine collective bargaining coverage (Table 1). The first factor is the dominant level of collective bargaining. All countries

76 Torsten Müller and Thorsten Schulten with a collective bargaining coverage of 80 per cent and more have sectoral bargaining as the dominant level of collective bargaining, while all countries with a coverage of 50 per cent or less are characterised by a dominance of company-level bargaining. The AMW Directive, therefore, must be understood as a call to establish and strengthen sectoral bargaining.19 The second decisive factor for high collective bargaining coverage is the comprehensive support of collective bargaining through the state. There are different instruments for this. The most widespread is the frequent use of extension mechanisms which ensure that sectoral agreements apply to all companies of the respective sector;20 examples include Belgium, France and Spain. Although the majority of EU Member States have the legal possibility to declare sectoral agreements generally binding, in most cases this only rarely happens. Italy has a more indirect form of extension, as collectively agreed wages are guaranteed through the constitutional right to a ‘fair remuneration’.21 There are also some countries which strongly support the organisational capacity of trade unions and employers’ organisations and in doing so indirectly promote collective bargaining. In Denmark, Finland and Sweden, and to a lesser extent in Belgium, high union density is institutionally underpinned by the so-called ‘Ghent System’, defined as a statesubsidised but voluntary unemployment insurance system administered by trade unions, which in turn provides a strong incentive to join a union.22 In Austria, the Kammersystem (or ‘Chamber System’) provides for compulsory membership of (almost) all companies in the Wirtschaftskammer (Chamber of the Economy), which assumes the role of an employers’ organisation in negotiating collective agreements. Compulsory membership ensures that all sectoral agreements signed by the chamber automatically apply to all companies in the respective sector.23 By contrast, all the other countries with a collective bargaining coverage of 50 per cent or less lack a comprehensive institutional framework and state support for sectoral bargaining. The evidence of collective bargaining systems in the EU shows very clearly that a comprehensive collective bargaining coverage of 80 per cent or more can only be achieved through a system of sectoral bargaining with adequate support by the state. The measurement of collective bargaining coverage, however, is not as straightforward as it might seem. The AMW Directive defines ‘collective bargaining coverage’ as ‘the share of workers at national level to whom a collective agreement applies, calculated as the ratio of the number of workers covered by collective agreements to the number of workers whose working conditions may be regulated by collective agreements in accordance with national law and practice’.24 With this definition, the Directive refers to the so-called ‘adjusted bargaining coverage’, which takes into account only those groups of employees who may potentially be covered by a collective agreement. However, there is neither a generally recognised method of measuring collective bargaining coverage nor a generally accepted database.25 19 D Madland, ‘Historic New EU Law Part of Growing Push for Sectoral Bargaining’, onlabour 19 January 2023, https://onlabor.org/historic-new-eu-law-part-of-growing-push-for-sectoral-bargaining/. 20 S Hayter and J Visser (eds), Collective Agreements: Extending Labour Protection (ILO, 2018). 21 See Ch 33 below by Razzolini. 22 K Vandaele, ‘A Report from the Homeland of the Ghent System: The Relationship between Unemployment and Trade Union Membership in Belgium’ (2006) 12(4) Transfer 647. 23 S Zuckerstätter, ‘Kammern als Kollektivvertragspartner im österreichischen Arbeitsleben’ (2020) 73(1) Recht der Arbeit 45. 24 Art 3(5) of the AMW Directive. 25 For an overview see International Labour Organisation, Quick Guide on Sources and Uses of Collective Bargaining Statistics (ILO, 2018).

Collective Bargaining in Disguise 77 The most widely used data source for collective bargaining coverage is the OECD/AIAS ICTWSS database, which covers the largest number of countries in Europe and beyond, providing time series data for most of them going as far back as the 1960s. The disadvantage of this database, however, is that it is based on very different non-harmonised national data sources coming from administrative or survey data.26 An alternative data source is the European Company Survey (ECS) carried out by Eurofound every four years since 2004.27 Covering all EU Member States plus the UK, the total number of 20,000 surveyed companies is rather limited, however. The ECS only covers companies with more than 10 employees in the private sector and includes less long time series. Finally, a third data source is the Structure of Earnings Survey (SES), which is based on company surveys conducted by national statistical offices coordinated by Eurostat.28 The SES includes enterprises with at least 10 employees operating in all areas of the economy except public administration and is carried out every four years. It covers all EU Member States plus eight further European countries. While both the ECS and the SES have the advantage of providing largely harmonised data, their major drawbacks are that neither of them cover smaller companies with less than 10/11 employees, they exclude certain sectors (particularly the public sector), and they do not provide longer time series. There are also differences regarding the concrete measurement of collective bargaining coverage. The broadest concept would be to include any kind of collective agreement. However, this may raise a number of issues: first, there might be significant differences in the bargaining coverage depending on whether the ‘stock’ or the ‘flow’ of agreements is considered.29 Stock data usually covers longer-term framework agreements while flow data usually refers to regularly adjusted wage agreements. The fact that the AMW Directive explicitly aims to promote collective bargaining on wage-setting suggests that the coverage of wage agreements should be the decisive reference value. Second, as many countries have a multi-level bargaining system, bargaining coverage usually differs depending on the bargaining level considered. National agreements, for instance, have a broader coverage than sectoral or company agreements. There are also some differences in the legal concepts of coverage. While most EU countries provide that all workers in a company with a collective agreement are automatically covered by that agreement, in some countries this holds true only for members of the union which signed the agreement, even if, in practice, companies usually do not differentiate between members and non-members. Considering the different concepts for measuring of collective bargaining coverage, the AMW Directive refrains from specifying a uniform measurement method and instead accepts the respective national approaches of data collection and calculation.

26 OECD and J Visser, ‘OECD/AIAS ICTWSS Database. Note on Definitions, Measurement and Sources’ (OECD, 2021) https://www.oecd.org/employment/ictwss-database.htm. 27 Eurofound, ‘Collective Agreements and Bargaining Coverage in the EU: A Mapping of Types, Regulations and First Findings from the European Company Survey 2019’ (Eurofound, 2020). 28 For the latest available data see Eurostat, ‘Structure of Earnings Survey 2018’, Number of employees by sex, economic activity and collective pay agreement (earn_ses18_01), https://ec.europa.eu/eurostat/databrowser/view/ EARN_SES18_01/default/table?lang=en. 29 OECD, Negotiating Our Way Up: Collective Bargaining in a Changing World of Work (OECD Publishing, 2019) 48.

78 Torsten Müller and Thorsten Schulten

IV. Measures and Instruments to Increase Collective Bargaining Coverage There has been a long discussion in both the academic and political world on how to promote sectoral bargaining as the essential prerequisite for high collective bargaining coverage.30 More systematically, one can distinguish between measures and instruments which strengthen the organisational capacity of trade unions and employers’ organisations, and measures which support the establishment and stability of sectoral bargaining (Table 2). A key precondition for sectoral collective bargaining is strong and representative organisations on both sides of industry. Considering the structural power imbalance in the capitalist labour market, strong unions are of particular importance in order to bring employers to the negotiation table. One important way to increase collective bargaining coverage is, therefore, to strengthen the trade unions’ organisational power resources, which rest on a comprehensive and active membership base. Over the last 20 years, however, trade union density has declined in the majority of EU countries.31 Since direct contact of union representatives with workers at their workplace is the most effective way to recruit new and retain existing members, providing unions with the right of access to companies and more effective penalties against union-busting activities are important measures to strengthen collective bargaining. In light of the proliferation of new forms of work, such as platform or remote work leading to an increasingly dispersed workforce, this should also include the right to digital access. In this new world of work, online communication and networking technologies are increasingly important tools for trade unions to contact, interact with and recruit workers.32 Providing trade unions with the right to access is only the first step. Once unions have established a presence at the workplace, it is equally important to provide them with the means and resources necessary to carry out their duties in representing workers’ interests. This involves the protection of union representatives from discrimination, dismissal, blacklisting and other union-busting measures. Employers should also be obliged to provide the time and facilities needed for them to properly perform their tasks as worker representatives. Another important measure to strengthen the enforcement of collective agreements is the right to collective redress or class action. All too often, employers systematically refuse to apply collective agreements or apply them differently, to the detriment of workers. In such situations, it is difficult for individual workers to go to court to assert their rights. The right to collective redress would ensure that the union can initiate legal action on behalf of individual workers. Finally, trade union membership might be increased by providing financial incentives, for instance, by making union membership fees tax deductible.

30 See for instance the contributions in Y Ghellab and D Vaughan-Whitehead (eds), Sectoral Social Dialogue in Future EU Member States: The Weakest Link (ILO, 2003) and in Müller et al (n 18). 31 K Vandaele, Bleak Prospects: Mapping Trade Union Membership in Europe Since 2000 (ETUI, 2019), https:// www.etui.org/publications/books/bleak-prospects-mapping-trade-union-membership-in-europe-since-2000; J Waddington et al (eds), Trade Unions in the European Union – Picking up the Pieces of the Neoliberal Challenge (Peter Lang, 2023) https://www.etui.org/publications/trade-unions-european-union. 32 K Vandaele and A Piasna, ‘Sowing the Seeds of Unionisation? Exploring Remote Work and Work-based Online Communities in Europe during the Covid-19 Pandemic’ in N Countouris et al (eds), The Future of Remote Work (ETUI, 2023) 103.

Collective Bargaining in Disguise 79 Table 2 Instruments and Measures to Increase Collective Bargaining Coverage Strengthening unions’ organisational capacity

Strengthening employers’ organisational capacity

Establishing and supporting sectoral bargaining

Right of access to companies

Supporting the establishment of employers’ organisations at sectoral level

Promotion of multi-employer bargaining

Measures to prevent union busting

Introduction of a chamber system with compulsory membership

Effective extension of collective agreements

Time and facilities for union representatives

Obligation for employers to engage in collective bargaining

Collective bargaining clauses in public procurement

Right to collective redress

Continuation of collective agreement after spin-offs

Financial incentives for union members (eg tax depreciation for membership fees)

Extending the scope of collective agreements to excluded groups of employees

Source: Authors’ own compilation.

In addition to strong unions, the existence of encompassing employers’ organisations and their willingness to enter into negotiations is another important factor promoting bargaining coverage. In general, there seems to be a stronger correlation between bargaining coverage and the employers’ association rate than that between coverage and union density.33 Especially in many central and eastern European countries, the weakness and fragmentation of employers’ organisations and their hostility towards negotiating sectoral agreements is an important explanation for low bargaining coverage. Organisational weakness and a reluctance to negotiate can take different forms.34 In Estonia and Poland, for instance, trade unions in many private sector industries simply lack a sector-level negotiating partner on the employers’ side. In other countries, such as Hungary and Slovakia, employers’ associations are primarily lobbying organisations and companies are reluctant to join employers’ associations or to authorise them to negotiate sectoral agreements. An increasing hostility towards sectoral bargaining is by no means limited to central and eastern European countries. Germany is a case in point, where employers began to withdraw from collective bargaining after reunification in the 1990s. Over the past 30 years, a substantial number of companies have decided to opt out from sectoral collective bargaining by disaffiliating from employers’ associations or, in the case of newly-established firms, by not joining employers’ associations in the first place. And even where they remained a member of the respective employers’ organisation, the introduction of a special so-called ‘OT membership’ further contributed to the erosion of bargaining coverage. ‘OT’ stands for ‘ohne Tarifbindung’, which means that such members do not have to apply the sectoral agreement signed by the respective employers’ association.35 33 J Visser, ‘Wage Bargaining Institutions – From Crisis to Crisis’ Economic Papers No 488 (European Commission, 2013), https://ec.europa.eu/economy_finance/publications/economic_paper/2013/pdf/ecp488_en.pdf. 34 T Müller et al, ‘Conclusion: towards an Endgame’ in Müller et al (n 18) 625. 35 T Müller and T Schulten, ‘Germany: Parallel Universes of Collective Bargaining’ in Müller et al (n 18) 239.

80 Torsten Müller and Thorsten Schulten Against this background, in many EU countries the strengthening of sector-level employers’ organisations is essential for promoting sectoral bargaining. Here, the state plays a decisive role in defining certain framework conditions which create incentives for capacity-building on the employer’s side.36 The instruments range from financial and logistical support to the opening of political channels of influence and the possibility of flexible implementation of legal provisions through sectoral collective agreements. The most far-reaching approach would be the introduction of a chamber system with compulsory membership for all companies. Such a system exists in Austria, where it guarantees a collective bargaining coverage of almost 100 per cent.37 After 1990, the Gospodarska Zbornica Slovenĳe (Chamber of Commerce and Industry) with compulsory membership was also established in Slovenia to serve as the collective bargaining party on the employer’s side.38 The abolition of compulsory membership in the mid-2000s contributed to a drop in bargaining coverage from almost 100 to 79 per cent because many companies took the opportunity to withdraw from the Chamber.39 Nonetheless, Slovenia still has by far the highest collective bargaining coverage in central and eastern Europe. Another possibility to promote sectoral employers’ organisations is a legal obligation to regularly engage in sector-level collective bargaining as exists, for instance, in France.40 While the strengthening of trade unions and employers’ associations tends to indirectly promote collective bargaining, other measures can contribute more directly to an increase in collective bargaining coverage. First, there is the possibility to promote multi-employer collective agreements as an intermediate stepping-stone to sectoral bargaining.41 The idea behind this is that in a situation in which there is no sectoral employers’ organisation – or if there is one, it is not willing to negotiate – it may still be possible to conclude an agreement with key companies in the sector. In particular in sectors in which there are only a limited number of ‘big players’, this would mean that a majority of the workers in the sector are covered by a collective agreement – and it would create pressure on the rest of the companies to agree to negotiate a sectoral agreement. The Romanian banking sector is an illustrative case in point: first a multi-employer agreement was signed for some larger banks in 2018; this provided the basis for a sector-wide agreement signed in 2022.42 Another important measure to promote sectoral bargaining is to ensure that public contracts are awarded only to those companies which provide collectively agreed wages and respect workers’ right to bargain collectively. The use of public procurement for the

36 C Welz et al, ‘Capacity Building for Effective Social Dialogue in the European Union’ (Publication Office for the European Union, 2020). 37 Zuckerstätter (n 23). 38 H Kohl, ‘Slowenien: Funktionierendes Flächentarifvertragssystem mit offener Zukunft’ (2004) 57(7) WSI-Mitteilungen 381. 39 M Stanojević and A Poje, ‘Slovenia: Organised Decentralisation in the Private Sector and Centralisation in the Public Sector’ in Müller et al (n 18) 545. 40 J Freyssinet, ‘France: Social Partners’ Search for Autonomy alongside State Intervention’ in Ghellab and Vaughan-Whitehead (n 30) 143. 41 For an overview of the concept of multi-employer collective bargaining see D Ceccon et al, LEVEL UP! Support and Develop Collective Bargaining Coverage (CELSI, 2023). 42 S De Spiegelaere, ‘Back on Track: Are We Seeing a Renaissance of Collective Bargaining in Romania?’ (2023) 27 HesaMag 8.

Collective Bargaining in Disguise 81 promotion of collective bargaining has a long tradition in several EU Member States.43 Public procurement is also explicitly mentioned in Article 9 of the AMW Directive as a possible instrument to support collective bargaining.44 Without a labour clause referring to collectively-agreed standards, public tenders might favour companies not covered by collective agreements, as they often have lower labour costs and, therefore, can submit cheaper offers. Compliance with collectively-agreed employment conditions as a mandatory criterion in public procurement is an indispensable precondition to provide fair competition and to prevent discrimination against companies covered by collective agreements. Furthermore, the most widespread and effective way to support high collective bargaining coverage is the frequent use of extension mechanisms which ensure that a sectoral agreement applies to all workers and enterprises of a certain sector, even where these are not organised in one of the contracting parties. As shown above, almost all countries with a collective bargaining coverage of 80 per cent and more have comprehensive extension mechanisms or functional equivalents. In some countries, effective extension mechanisms also provide an incentive for companies to join the respective sectoral employers’ association; if a company is covered by a collective agreement anyway, it might as well join the employers’ association signing the agreement in order to have a say in the negotiations.45 In other countries, extension mechanisms have proven ineffective because the extension criteria are too restrictive, or employers’ organisations have a strong veto power which enables them to prevent an extension. The latter is the case in Germany, for instance, where employers’ organisations take a very restrictive stance on extensions and usually make use of their veto power. As a consequence, less than 2 per cent of all sectoral agreements have been declared generally binding.46 Further measures that strengthen the regulatory capacity of collective agreements aim to prevent avoidance strategies by employers. One such measure could be to ensure the continuing validity of a collective agreement for parts of a company concerned by organisational restructuring measures such as spin-offs, transfers of undertakings or outsourcing. All too often, such measures are used by companies to circumvent existing collective agreements or to change to a sectoral collective agreement that provides for worse conditions. Another measure would be to ensure that a collective agreement remains in force even after its expiration until a new agreement has been negotiated. This should also apply to new employees hired after an agreement has expired; they should be covered by the agreement in the same way as other workers. Finally, an important measure to increase bargaining coverage would be to extend the scope of collective agreements to previously excluded groups of employees, in particular by ensuring the right to bargain collectively for solo self-employed workers. A first step has been done with the European Commission guidelines on the application of EU competition

43 ETUC, ‘Social Clauses in the Implementation of the 2024 Public Procurement Directives’ (ETUC, 2021), https://www.etuc.org/sites/default/files/2021-12/Public%20procurements%20directive_Final.pdf. 44 See Ch 18 below by Davies. 45 T Schulten et al, ‘The Role of Extension for the Strength and Stability of Collective Bargaining in Europe’ in G Van Gyes and T Schulten (eds), Wage Bargaining under the New European Economic Governance – Alternative Strategies for Inclusive Growth (ETUI, 2015) 361. 46 T Schulten, ‘The Role of Extension in German Collective Bargaining’ in Hayter and Visser (n 20) 65.

82 Torsten Müller and Thorsten Schulten law that removes legal barriers to collective bargaining for solo self-employed workers.47 The Directive’s action plans could be a tool to ensure that these guidelines are properly applied at national level. Given the diversity of different systems across Europe, it is evident that the various measures included in the action plan have to be geared towards the specific situation in the respective country. There is no ‘one size fits all’ solution. For instance, in countries in which sectoral negotiations are the dominant form of collective bargaining, the key objective would be to strengthen the existing system and to improve the regulatory capacity of collective agreements. By contrast, the key objective in countries in which company-level bargaining dominates would be to establish sectoral bargaining structures. While the significance and priority of specific measures may vary according to the national situation, most measures contribute to strengthening collective bargaining in both models.

V. Recent Initiatives to Strengthen Collective Bargaining at National Level Although the Member States have until November 2024 to transpose the AMW Directive into national law, its provisions already shape policies in many EU countries. This holds true, in particular, for the setting and adjustment of national statutory minimum wages,48 but is also valid for national debates and initiatives aiming at strengthening collective bargaining. An illustrative example in this respect is Ireland, where in March 2021 – when the Directive was still at the draft stage – the government set up a tripartite High-level Working Group ‘to review collective bargaining and the industrial relations landscape in Ireland’,49 ‘so that Ireland is well-positioned to meet its obligations under EU law’.50 In its final report published in October 2022, the Working Group explicitly recognises that ‘the EU context (particularly proposed EU legislation) was of paramount importance to the Group’s work’.51 Thus, in the shadow of the Directive, the key focus of the Working Group lay on exploring different ways to strengthen collective bargaining to fulfil the Directive’s obligation to gradually increase coverage from its current level of 34 per cent towards the adequacy threshold of 80 per cent. The key problem identified by the Working Group for collective bargaining in Ireland is the employers’ increasing reluctance to engage in negotiations with trade unions – both at sectoral and at enterprise level. Against this background, the Working Group’s recommendations to strengthen sectoral bargaining aimed at ending the employers’ de facto veto

47 European Commission, Communication from the Commission: Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons (2022 C 374/02, (European Commission, 2022). 48 T Müller and T Schulten, ‘The European Directive on Adequate Minimum Wages: A Milestone for EU Social Policymaking’ in B Vanhercke et al, Social Policy in the European Union – State of Play 2023 (ETUI, 2024). 49 LEEF, ‘Final Report of the LEEF High Level Working Group on Collective Bargaining’ (LEEF High Level Working Group, 2022) 2, https://enterprise.gov.ie/en/publications/publication-files/final-report-of-the-leef-highlevel-working-group-on-collective-bargaining.pdf. 50 ibid 6. 51 ibid 5.

Collective Bargaining in Disguise 83 power on the establishment of new sectoral agreements by creating incentives and soft pressure for employers to participate more actively in the negotiation of so-called ‘Employment Regulation Orders’. In effect, these represent a form of sectoral bargaining which sets out legally enforceable employment conditions and minimum rates of pay in particular in lowpaid sectors where collective bargaining is limited or absent.52 Similarly, the Working Group seeks to improve collective bargaining at the enterprise level by obliging employers to engage with trade unions in a ‘process of good faith’.53 The wording ‘good faith engagement’ essentially boils down to an obligation of the employer to engage in collective bargaining – not to reach an agreement – if requested to do so by a trade union with meaningful membership within the company. Germany is another country where an intensive debate about the need to strengthen collective bargaining is currently taking place. During recent decades, Germany has seen a continuous decline in collective bargaining coverage, so that currently only every second worker is still covered by a collective agreement.54 Against this background, many proposals have been made to reverse this negative trend, including various measures to strengthen trade union power, a ban on ‘OT memberships’ in employers’ organisations which enable companies to avoid coverage by the sectoral agreement negotiated by the respective employers’ organisation, and finally, a reform of the extension mechanism in order to abolish the employers’ veto power.55 The AMW Directive’s threshold of 80 per cent collective bargaining coverage has become a major point of reference in these debates. Since the adoption of the Directive, representatives from trade unions and political parties have called on the German government to immediately set up an action plan to strengthen collective bargaining and not to wait until the formal implementation of the Directive. The German Ministry of Labour has announced a legal package for the promotion of collective bargaining to be presented in autumn 2023 which, among other measures, will include a draft for a new public procurement law. Such a ‘Bundestariftreuegesetz’ aims at ensuring that public contracts at national level will only be awarded to companies that apply the provisions of collective agreements. With this initiative, the Federal Government follows the example of many regional governments of the German Federal States which already use public procurement rules for the promotion of collective bargaining.56 The AMW Directive is likely to have the most far-reaching consequences in central and eastern Europe, where collective agreements, with the exception of Slovenia and Croatia, cover only one third of the workforce – or even less. A strong influence of the Directive can already be observed in Romania, where a new law on social dialogue was passed in December 2022 – just two months after the adoption of the Directive. Romania is a particularly interesting case because these recent legal changes reversed many of the reforms introduced in 2011 which actually aimed to decentralise and weaken collective bargaining.57 52 For further details see Ch 32 below by Bell and Eustace. 53 LEEF (n 49) 20. 54 Müller and Schulten (n 35). 55 For an overview see M Behrens and T Schulten, ‘Das Verhältnis von Staat und Tarifautonomie. Ansätze zur Stabilisierung des Tarifvertragssystems’ (2023) 76(3) WSI-Mitteilungen 159. 56 T Schulten, ‘Social Clauses in German Public Procurement – Towards a Post-Rüffert Regime?’ in ETUC (n 43) 26. 57 For an overview see A Trif and V Paolucci, ‘Romania: From Legal Support to Frontal Assault’ in Müller et al (n 18) 505.

84 Torsten Müller and Thorsten Schulten By contrast, the recent reform aims to strengthen collective bargaining at all levels and to promote unionisation. In order to do so, the new law on social dialogue includes a range of measures.58 First, while the reforms in 2011 prohibited cross-sectoral agreements, the new law allows the negotiation of national agreements if the negotiating employers’ association covers at least 20 per cent of the workers. Second, the requirement for the extension of a sectoral collective agreement is less restrictive: the signatory employers’ association only needs to represent at least 35 per cent of the employees, rather than at least 50 per cent as was the threshold before. Third, bargaining at company level is mandatory in companies with at least 10 employees, instead of 21 employees as stipulated in the 2011 law. Fourth, the representativeness criteria for trade unions for bargaining purposes have been lowered from at least 50 per cent to 35 per cent at company level and from 7 per cent to 5 per cent at sectoral level. Fifth, the new law reduced the minimum threshold for the establishment of a trade union from at least 15 members to 10 members. In addition to promoting collective bargaining at all levels and to facilitating unionisation the new law furthermore extended the right to strike and broadened company-level information and consultation rights. It is interesting to note that both reforms – divergent as they are – were triggered by pressure from EU level. While the neoliberal reforms in 2011 were imposed by the Troika consisting of the European Commission, the European Central Bank and the International Monetary Fund as a precondition for financial assistance in the context of the financial crisis in 2008–2009, the recent reforms were the result of a social conditionality imposed by the Commission. This time, the reforms which actually strengthen social dialogue and collective bargaining were linked to receiving financial support from the Recovery and Resilience Fund (RRF) in the context of the Covid-19 pandemic.59

VI. Conclusion Despite its name, Directive 2022/2041 on adequate minimum wages is not only about minimum wages; it is as much about strengthening collective bargaining across the EU. This represents a fundamental paradigm shift in the EU’s policymaking, by recognising the principal role of comprehensive collective bargaining systems for a sustainable and inclusive economic and social development.60 In addressing the fallout from the financial and economic crisis since 2008–2009, the EU had by the early 2010s essentially embarked on a neoliberal restructuring strategy and pushed for a far-reaching decentralisation of collective bargaining systems that has de facto led to a significant decline in bargaining coverage, as the cases of Greece and Romania illustrate in particular.61 By contrast, with specific instruments and benchmarks which aim to increase and maintain high collective bargaining coverage, the EU is now focusing on the development and enhancement of strong sectoral collective bargaining systems. 58 S Guga, ‘Drectiva Europeana Privind Salarile Minime: Ce Inseamna Pentru Romania?’, Presentation at the industriAll Europe Workshop, 26 April 2023, Bucharest (Syndex, 2023). 59 De Spiegelaere (n 42). 60 Müller and Schulten (n 48). 61 T Schulten and T Müller ‘European Economic Governance and Its Intervention in National Wage Development and Collective Bargaining’ in S Lehndorff (ed), Divisive Integration: The Triumph of Failed Ideas in Europe – Revisited (ETUI, 2015) 331.

Collective Bargaining in Disguise 85 In implementing the AMW Directive and its implicit target of a collective bargaining coverage of at least 80 per cent, many EU countries are now tasked with enacting a fundamental reform of their industrial relations regimes. This holds more true for some countries than others. For example, the traditional ‘Anglo-Saxon’ industrial relations regime in Ireland, which relies mainly on company bargaining, may well undergo a fundamental shift to a more continental-European type of multi-employer, or even sectoral, collective bargaining.62 Interestingly, there have recently been some noteworthy initiatives and debates to promote sectoral bargaining in other countries outside the EU which practise the ‘Anglo-Saxon model’ of industrial relations. Examples include the adoption of the ‘Fair Pay Agreements Bill’ in New Zealand in December 202263 and the adoption of the ‘Secure Jobs, Better Pay Bill’ in Australia, also in December 2022.64 Further debates about ways to encourage sectoral bargaining are also currently taking place in the USA65 and the United Kingdom.66 What unites these different legislative and political initiatives in these four ‘Anglo-Saxon IR model’ countries is the recognition that it is sectoral bargaining rather than mere adjustments to the existing enterprise bargaining systems which is needed to not only address the increasing power asymmetry between capital and labour, but also to address the increasing problems of wage stagnation, economic inequality and low productivity. The most far-reaching consequences of the implementation of the AMW Directive can be expected to be seen in central and eastern European countries, however. In Poland, for example, where only around 10 per cent of workers are covered by a collective agreement, a substantial increase in bargaining coverage would require far-reaching measures in order to establish a system of sectoral bargaining. Proposals for such a reform have been made and have been discussed among trade unions, employers’ organisations and the Polish government.67 However, it stands to reason that resistance to more fundamental reforms came not only from employers and politicians but also partly from the unions, since their internal organisational power relations are closely linked to the current system of company bargaining.68 It should be noted that these internal power dynamics notwithstanding, the trade unions from central and eastern Europe were among the strongest supporters of the Directive and have high hopes that it will serve to strengthen their collective bargaining systems.69 62 T Turner et al, ‘Changing the Nature of the Anglo-Saxon Industrial Relations Regime in Ireland? Implications of the European Directive on the Extension of Collective Bargaining Coverage’ Working Paper 011/1/2023 (Department of Work and Employment Studies, Kemmy Business School, 2023). 63 Ministry of Business, Innovation and Employment, ‘Fair Pay Agreements’, https://www.mbie.govt.nz/ business-and-employment/employment-and-skills/fair-pay-agreements/. 64 Australian Government Department of Employment and Work Relations, ‘Major Workplace Relations Reform Bill is now an Act’, https://www.dewr.gov.au/newsroom/articles/major-workplace-relations-reform-bill-now-act. 65 D Madland, Re-Union – How Bold Labour Reforms Can Repair, Revitalize and Reunite the United States (ILR Press, 2021). 66 Institute of Employment Rights, ‘Labour Party Adopts IER Sectoral Collective Bargaining Plan’ (25 September 2021), https://www.ier.org.uk/news/labour-party-adopts-ier-sectoral-collective-bargaining-plan/. 67 Ł Pisarczyk, ‘Towards Rebuilding Collective Bargaining? Poland in the Face of Contemporary Challenges and Changing European Social Policy’ (2023) 54(2) Industrial Relations Journal 186. 68 ibid 197. 69 S Adamczyk and B Surdykowska, ‘Naïve or Realistic? The Approach of Polish Trade Unions to the Strengthening of the Social Dimension of the EU Integration’ (2021) Hungarian Labour Law E-Journal 1/2021, https://hllj.hu/ letolt/2021_2_a/A_02_Adamczyk_Surdykowska_hllj_uj_2021_2.pdf. See also Ch 34 below by Florczak and Otto.

86 Torsten Müller and Thorsten Schulten It is clear that the implementation of the AMW Directive will lead to difficult debates in many EU Member States, which will by no means automatically result in stronger collective bargaining systems. In the end, it all depends on the political struggles at national level, because the Directive does not provide for binding rules and regulation for EU Member States. However, it supports all those political and social actors which are engaged in favour of a more fundamental strengthening of collective bargaining. Furthermore, in light of the very different bargaining systems in place, the necessary reforms and measures to be enacted will vary widely. Specific measures and instruments must be considered together in their respective contexts. But our analysis shows that despite the wide variety of starting points, sectoral bargaining and government support are the two key means to ensure a fundamental strengthening of collective bargaining across the Union.

7 Minimum Wages in OECD Countries ANDREA GARNERO

I. Introduction1 In recent years, there has been a growing interest in statutory minimum wages at the EU and global level. Germany and South Africa introduced minimum wages in 2015 and 2019 respectively, while in 2022, the EU passed a new directive to promote adequate minimum wages and enhance worker access to wage protection. Additionally, even before the recent surge in inflation, many OECD countries, such as Hungary, Korea, Spain, and the UK, as well as several US states and cities, significantly increased their minimum wages. Historically, minimum wages have been justified as a measure for: (i) ensuring fair pay; (ii) counterbalancing the negative effects of firms’ labour market power; (iii) making work pay; and (iv) boosting tax revenue and/or tax compliance by limiting the scope of wage under-reporting.2 Recent evidence suggests that minimum wage increases, even large ones, have had positive effects on low incomes but limited negative effects on employment. Moreover, there is an increasing body of evidence across OECD countries highlighting the significant monopsony power firms have to set wages unilaterally, leading to inefficiently low levels of employment and wages. As a result, there is growing support for raising the minimum wage where it is too low or introducing one where it does not exist, especially in cases where workers are not already covered by effective collective bargaining. The increased use of the minimum wage as a policy tool also reflects the general fall in collective bargaining. Union density, or the percentage of employees who are members of a trade union, has been on the decline since 1975, with an average of only 15.8 per cent of employees being unionised in 2019, down from 33 per cent in 1975. This decline has gone together with a reduction in the share of workers covered by a collective agreement,

1 This chapter is largely based on the author’s work at the OECD and more specifically on the policy brief ‘Minimum Wages in Times of Rising Inflation’ and Ch 1 of the OECD Employment Outlook 2023. It has therefore much benefited from the contributions of several colleagues at the OECD, in particular Sandrine Cazes, Herwig Immervoll, Sebastien Martin and Daniele Pacifico. However, the opinions expressed in this chapter are only those of the author, who is contributing to this book in his personal capacity, and cannot be attributed to the OECD or any of its member countries. 2 OECD, OECD Employment Outlook 2023 (OECD Publishing, 2023).

88 Andrea Garnero which has fallen from 46 per cent in 1985 to 32.1 per cent in 2020 on average in OECD countries.3 In parallel, the policy stance on the minimum wage has changed almost entirely. In 1994, the OECD, along with many other international and national organisations, invited countries to: reassess the role of statutory minimum wages as an instrument to achieve redistributive goals, and switch to more direct instruments. If it is judged desirable to maintain a legal minimum wage …, consider minimising its adverse employment effects, including by … ensuring sufficient differentiation in wage rates by age and region.4

In 2018, the OECD message was very different, inviting countries to ‘consider using a statutory minimum wage set at a moderate level as a tool to raise wages at the bottom of the wage ladder, while avoiding that it prices low-skilled workers out of jobs’.5 Finally, in 2022, as inflation was increasing to historically high levels, the OECD further emphasised that: especially in times of high inflation, minimum wages need thus to be regularly revised to ensure that they maintain their usefulness as a policy instrument … Although high uncertainty and slowing economic growth may suggest caution in raising minimum wages, margins exist in several OECD countries to adapt, at least partially, the existing level of the statutory minimum wage so as to protect those workers who are most exposed to the increase in prices, especially given the substantial monopsony power that low wage labour markets have in most OECD countries.6

This chapter discusses the functioning of minimum wages across OECD countries, their role in preserving the purchasing power of the low paid, as well as their interactions with other policy instruments.

II. OECD Countries are Making Increasing Use of Statutory Minimum Wages Currently, 30 out of 38 OECD countries have a statutory minimum wage in place (Table 1) and minimum wages also exist in most non-OECD emerging economies. In the eight OECD countries without a statutory minimum (Austria, Denmark, Finland, Iceland, Italy, Norway, Sweden and Switzerland), sector- or occupation-level collective agreements include de facto wage floors for large parts of the workforce.7 Yet in Switzerland, since 2017, five cantons have also introduced a statutory canton-wide minimum wage.

3 Data from the OECD/AIAS ICTWSS database, see Section III for more details. 4 OECD, The OECD Jobs Study (OECD Publishing, 1994). 5 OECD, Good Jobs for All in a Changing World of Work. The OECD Jobs Strategy (OECD Publishing, 2018). 6 OECD, ‘Minimum Wages in Times of Rising Inflation’ (OECD Publishing, 2022). 7 All the EU countries without a minimum wage have a share of employees covered by a collective agreement that exceeds the 80 per cent threshold identified in the AMW Directive (at least on paper), see Section III for more details.

Minimum Wages in OECD Countries 89 Table 1 Statutory Minimum Wages in OECD Countries In place before 1990

Australia, Belgium, Canada, Chile, Colombia, Costa Rica, France, Greece, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Portugal, Spain, Turkey, United States

Introduced since 1990

Czech Republic, Estonia, Germany, Ireland, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, United Kingdom

No national statutory minimum wage

Austria, Denmark, Finland, Iceland, Italy, Norway, Sweden and Switzerland*

Note: In Switzerland, five cantons have a statutory minimum wage: Geneva since 2020, Neuchâtel since 2017, Jura since 2018, Basel-Stadt since 2022 and Ticino since 2022. Source: Author’s elaboration.

Figure 1 Minimum Wage as a Percentage of Median Wages, OECD Countries Statutory minimum wage % of median wage of FT workers USA LVA EST CZE BEL JPN HUN IRL NLD LTU ESP CAN GRC DEU AUS ISR SVK OECD LUX POL MEX GBR SVN FRA KOR PRT NZL TUR CHL CRI COL

2021

0

20

40

60

80

2005

100

Source: OECD, ‘Minimum Wages in Times of Rising Inflation’ (n 6). Note: OECD is the unweighted average of OECD countries shown. No data in 2005 for Costa Rica and Germany.

Gross minimum-wage levels expressed as a share of median wages (so-called Kaitz ratios) vary significantly across countries. In 2021 in the OECD area, they ranged from below 30 per cent of median full-time wages in the US to 70 per cent and over in Turkey, Chile,

90 Andrea Garnero Costa Rica and Colombia in 2021 (Figure 2). At 55 per cent, the average for the OECD area has increased over the last 15 years from 48 per cent in 2005, in a context of modest overall wage growth. Indeed, the 2005–2021 period saw substantial upwards movements in about half of OECD countries. In 2015, for instance, the government in the UK mandated the Low Pay Commission (LPC), which is tasked to propose the minimum wage increase every year, to set a path to reach a minimum-to-median wage rate of 60 per cent by 2020 (for workers aged 25 and above). Once the minimum wage reached this level, the government asked the LPC to raise the minimum wage to two-thirds of median earnings by 2024 with the goal to end low pay (the incidence of low pay typically refers to the share of workers earning less than two-thirds of median earnings). The research available generally finds that the various significant upratings that followed the government target set in 2015 have significantly increased the earnings of the lowest paid but without pointing to any negative employment effect in aggregate. In 2018, Korea increased its minimum wage by 16 per cent after years of sustained and steady growth around 4–5 per cent every year. Overall, between 2010 and 2022, the minimum wage in Korea has increased by 106 per cent, reaching a minimum-to-median wage ratio of 61 per cent in 2022, from 45 per cent in 2010. In 2019, Spain increased the minimum wage by 22 per cent, from €735.70 to €900 per month (to be paid over 14 months), bringing it to about 50 per cent of the median wage, after a long period in which it had remained broadly stable in relative terms, below 40 per cent of the median wage, as one of the lowest levels in OECD countries. Further increases took place in the following years to reach €1,080 per month in 2023. In total, over five years, the Spanish minimum wage increased by 47 per cent. The large increase in 2019 has sparked a flurry of evaluations with somewhat divergent results. In the US, the federal minimum wage has not been raised since 2009. However, many states and cities have raised their own minimum wages: in 2023, in 30 states and Washington DC the minimum wage is higher than the federal one (reaching US$15.74 per hour in the state of Washington and US$16.1 per hour in Washington DC), while 47 cities or counties have a minimum wage above their state minimum wage, reaching US$19.06 per hour in the city of SeaTac (Washington). The increasing heterogeneity within the US continues to nourish a flourishing – and still contentious – academic research on the effects of these increases (see Dube’s review for the British Treasury in 20198). Between 2010 and 2021, other significant increases in the minimum wage occurred in Mexico (from a minimum-to-median ratio of 35 per cent in 2010 to 56 per cent in 2021), Portugal (from 53 per cent in 2010 to 66 per cent in 2021) and Costa Rica (from 69 per cent in 2010 to 81 per cent in 2021). In contrast, the minimum-to-median ratio fell in Australia (-5.9 per cent), Belgium (-3.6 per cent), France (-6 per cent), Hungary (-1 per cent), Turkey (-3.8 per cent) and the US (-2.6 per cent), reflecting periods of freeze in the nominal value of the minimum wage or upwards adjustments lower than the evolution of median wages. The only OECD country where the minimum wage fell in nominal terms was Greece,9 where the minimum wage 8 A Dube, ‘Impacts of Minimum Wages: Review of the International Evidence (HM Treasury, 2019). 9 In Ireland, the minimum wage was reduced to €7.65 effective February 2011, but this was reversed in July 2011 when the minimum wage was restored to €8.65.

Minimum Wages in OECD Countries 91 was cut by 22 per cent in nominal terms between 2011 and 201210 and frozen until February 2019 when it was increased by 11 per cent. When the inflation shock hit in 2022, all OECD countries (except for the US at the federal level) increased the minimum wage, but increases often fell short of inflation, leading to falling real minimum wages. In some countries, the minimum wage is indexed to inflation (see below). In others, discretionary measures have been taken over the last months to speed up the increase of minimum wages. In Greece, for instance, after postponing the increase during the early phase of the Covid-19 pandemic, the government increased the minimum wage in January 2022 and then again in May 2022. In October 2022, Germany increased its minimum wage by 15 per cent, from €10.45 to €12 per hour.11 Similarly, in the Netherlands, in October 2022, the government decided, for the first time since the introduction of the minimum wage in 1969, to go beyond the formula discussed above and exceptionally increase the minimum wage by 10 per cent in January 2023. Ireland also announced in 2022 the intention to raise the minimum to 60 per cent of the median by 2026, which would correspond to an increase of 16 per cent compared to the current level. In Hungary, the social partners agreed to further increase the minimum wage mid-year if inflation rises to 18 per cent and GDP growth is positive.12 The share of workers covered by a minimum wage varies significantly across countries and does not only depend on its level (Figure 2).13 For instance, in the Netherlands, the share of minimum wage earners is less than half that of France, despite a similar labour cost at the minimum wage. There is very limited evidence on compliance with minimum wages in OECD countries but the data available show that it is far from perfect.14

III. Minimum Wage and Collective Bargaining: An Increasingly Complementary Relationship In the large majority of OECD countries, national minimum wages were introduced when the labour market started being regulated: for instance, the US, Canada, Japan, France, Luxembourg, and Greece established minimum wages during the interwar and post-war eras, while Spain, Portugal, Chile, and post-communist countries introduced minimum wages in the transition towards democracy. In other countries, such as the Netherlands and

10 The minimum wage for employees aged above 25 was cut by 22 per cent between July 2011 and March 2012, while the minimum wage for those aged below 25 was lowered by 32 per cent. 11 This one-off increase was decided by the Parliament before the sudden increase in prices and marked a departure from the uprating mechanism in place since 2015 whereby decisions on adjustments to the level of the minimum wage are made every two years by the Minimum Wage Commission (composed by workers’ and employers’ representative with academic experts in a consulting role). 12 ‘Minimum Wage Hikes Struggle to Offset Inflation (Eurofound, 2023), https://www.eurofound.europa.eu/ publications/article/2023/minimum-wage-hikes-struggle-to-offset-inflation. 13 For several EU countries, the latest year available is 2018 and hence it does not necessarily reflect coverage after the sizeable increases in the minimum wage that took place in the following years in the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Spain. 14 See J Clemens and M Strain, ‘Understanding “Wage Theft”: Evasion and Avoidance Responses to Minimum Wage Increases’ (2022) Labour Economics 102285 and A Garnero and C Lucifora, “Turning a ‘Blind Eye”? Compliance with Minimum Wage Standards and Employment’ (2022) 89/356 Economica 884.

92 Andrea Garnero Figure 2 Share of Minimum-wage Earners and Labour Costs at the Minimum Wage Level, Latest Year Available % of workers earnings at or below the minimum wage % of employees

Labour costs at the minimum wage level (right hand scale) % of labour costs at the median wage level 80

25

70

20

60

15

50

10

40

5

30

0

20

BE L U SA AU S JP N CZ E ES T PR T D EU LU X N LD ES P SV K G BR LT U LV O A EC H D U N N ZL PO L IR L CA N G RC FR A SV N KO R M EX

30

Source: OECD, ‘Minimum Wages in Times of Rising Inflation’ (n 6). Note: The number of minimum-wage earners cannot usually be established with certainty and can vary between data sources and studies. Counts of minimum-wage earners are commonly based on survey data, which are affected by measurement error, both in earnings and in working hours. It is therefore common to include those with wages below the minimum and slightly above it. Data sources and approaches differ, however. See OECD (n 6) for more details. OECD is the unweighted average of the 25 OECD countries shown.

Belgium, the national minimum wage was introduced when the current system of welfare state and industrial relations was taking shape.15 In five EU countries (Austria, Denmark, Finland, Italy, and Sweden) as well as Iceland, Norway and Switzerland, there is no statutory minimum wage and, with the exception of Italy and Switzerland, there is also no real debate on the introduction of one because wage floors are set by far-reaching sectoral collective agreements. The heterogeneity in the systems aimed at protecting against low pay (collective bargaining versus statutory minimum wage) is reflected also in the AMW Directive, which does not mandate a unique instrument but, in fact, aims at promoting both adequate statutory minimum wages (only where already present) and collective bargaining (in all EU countries). This is a remarkable departure from the traditional distinction between the two instruments, which were often seen as alternative to each other.16 Historically, only Belgium, France, Spain, the Netherlands and Portugal had a minimum wage together with farreaching sectoral collective agreements. Elsewhere, either the collective bargaining system was weak and a minimum wage was necessary to provide a basic floor to everyone, or collective bargaining was strong and social partners – including unions – opposed the very idea of a wage floor fixed in the law. Nowadays, minimum wages and collective agreements are increasingly seen as complementary in a strategy to fight against low pay. As shown for EU countries in Table 2, where there is no statutory minimum wage, collective agreements cover more than 80 per cent of the employees. All EU countries with 15 G Meardi and F Seghezzi, ‘Explaining Political Turn-around on Minimum Wages: The Italian Case in a Comparative Perspective’ (2023) mimeo. 16 G Meardi ‘Economic Integration and State Responses: Change in European Industrial Relations since Maastricht’ (2018) 56 British Journal of Industrial Relations 631.

Minimum Wages in OECD Countries 93 bargaining coverage lower than 80 per cent now have a statutory minimum wage which in some cases acts as a complement to collective bargaining in those sectors where trade unions have no bite anymore. In fact, it is interesting to note that, in those countries which introduced a statutory minimum wage in recent decades, this followed a weakening in bargaining coverage (in Cyprus, coverage fell from around 60 per cent in the early 2000s to about 40 per cent in the late 2010s; in Germany it fell from 85 per cent in 1980 to 56 per cent in 2015; in Ireland it fell from 70 per cent in 1980 to 44 per cent in 2000; in the UK it fell from around 50 per cent in 1980 to 30 per cent in 1999). Table 2 Collective Bargaining Coverage and Statutory Minimum Wage in EU Countries Low coverage (