Interview with Daniel Seikel, 24.01.2025: THE EUROPEAN TAILWIND FOR POVERTY-PROOF MINIMUM WAGES WOULD BE GONE

On January 14, the Advocate General at the ECJ recommended that the EU minimum wage directive be annulled. How likely is it that the judges will follow his vote? And what would the consequences be?

On January 14, the Advocate General at the European Court of Justice (ECJ) published his opinion on a Danish lawsuit against the European Minimum Wage Directive, recommending annulling the directive. In his opinion, the directive is not covered by the legislative powers of the EU. The Minimum Wage Directive aims to ensure adequate minimum wages and strengthen collective bargaining. The directive does not stipulate concrete minimum wage rates, but rather sets out procedural requirements for setting minimum wages. However, Member States without a statutory minimum wage, such as Denmark, are not obliged to introduce a minimum wage. It also requires member states to draw up action plans to increase collective bargaining coverage if collective agreements cover less than 80 percent of employees. We spoke to Daniel Seikel, Head of Research Unit European Policy at the Institute of Economic and Social Research (WSI) at the Hans Böckler Foundation.

The Advocate General at the ECJ has recommended that the Minimum Wage Directive should be annulled. How likely is it that the judges will follow his vote?

Seikel: The ECJ follows the Advocate General's opinion in around three-quarters of cases, give or take. This means there is a real risk that the Minimum Wage Directive will be annulled.

With what consequences?

Seikel: The Minimum Wage Directive only contains a few specific requirements, but if member states were to follow the Directive's non-binding criteria for determining the minimum wage, the working conditions of millions of Europeans would improve noticeably in one fell swoop - including here in Germany, by the way. Annulling the directive would not prevent Member States from raising minimum wages. But the European tailwind for poverty-proof minimum wages would be gone. Furthermore, annulment could hamper EU social policy legislation for years to come, even if a repeal would not provide any legal justification for this. The political damage of an annulment should therefore not be underestimated.

Can an annulment be corrected retrospectively?

Seikel: No. The judgment can no longer be contested. The ECJ's rulings practically have constitutional status. A subsequent political correction by amending the European treaties, which would be necessary for a correction, is extremely unlikely, it is practically zero.

Why is that?

Seikel: It would require unanimity, and at least Denmark, which has filed the lawsuit against the directive, would not go along with this. But the same is almost certainly true for a number of other member states. In general, the Member States' appetite for treaty changes is very limited.

Are the judges bound to the Advocate General's opinion?

Seikel: It is not mandatory. The Advocate General doubts that the Minimum Wage Directive is covered by the EU's legislative powers. Specifically, the question is whether the Minimum Wage Directive violates Article 153 (5) TFEU. It states that pay is expressly excluded from the EU's social policy competences. However, how strictly this clause is to be applied, i.e. whether it really makes any legislation that has any impact on pay impossible, is a question of interpretation. This question has simply not yet been conclusively clarified in law. There is therefore no definitive answer from the outset. Otherwise, the case would not have ended up before the ECJ. The judges may therefore come to a different conclusion than the Advocate General.

On what grounds could the ECJ not follow the Advocate General?

Seikel: The ECJ judges will carefully weigh up the arguments of the opponents and the Advocate General. They will certainly not simply dismiss the opinions of the European Council, the European Parliament and the European Commission, which are unanimously in favour of dismissing the case. After all, annulment would mean that the European institutions had acted contrary to EU law. In addition to the purely legal aspects, the judges would also be well advised to think through the political consequences of an annulment very carefully. An annulment would frustrate all the political forces that have campaigned for the directive. These are the staunchest supporters of European integration that I know. The damage that could be done to the reputation and acceptance not only of the ECJ, but of the EU as a whole, is hard to foresee.