10.6092/issn.1561-8048/13369
The European Commission recently presented a proposal for a Directive on the topic of adequate minimum wages. The purpose of the directive is to prompt an upward convergence of national minimum wages, so as to ensure their adequacy in all EU countries. This article aims to analyze the actions included in the draft Directive and evaluate the adequacy of its legal basis, eventually drawing some critical conclusions.
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Directive legal basis
Much ado about little: The Commission proposal for a Directive on adequate wages 
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Much ado about little: The Commission proposal for a Directive on                     Italian Labour Law e-Journal
adequate wages                                                                               Issue 1, Vol. 14 (2021)
Emanuele Menegatti                                                                                 ISSN 1561-8048
e.menegatti@unibo.it                                                https://doi.org/10.6092/issn.1561-8048/13369




      Much ado about little: The Commission proposal for
              a Directive on adequate wages
                                            Emanuele Menegatti




 1. Introduction. 2. The actions proposed by the Directive. 2.1. Adequacy of statutory
 minimum wages. 2.2. Promotion of collective bargaining. 2.3. Horizontal provisions. 2.4.
 Scope of application. 3. The legal basis in light of the limited EU competence on wages. 4.
 Conclusions.

                                                      Abstract

     The European Commission recently presented a proposal for a Directive on the topic of
     adequate minimum wages. The purpose of the directive is to prompt an upward convergence of
     national minimum wages, so as to ensure their adequacy in all EU countries. This article aims to
     analyze the actions included in the draft Directive and evaluate the adequacy of its legal basis,
     eventually drawing some critical conclusions.

     Keyword: Minimum Wage; Statutory Mechanism; Collective Wage bargaining; Article 153.5
     TFEU; Directive legal basis.



 1. Introduction.

    The recent Commission proposal for a Directive on adequate minimum wages in the
 European Union1 comes after a long discussion about the desirability of a European
 instrument aimed at coordinating national wage policies.2 No concrete step towards a
 legislative initiative was, however, moved before the Commission’s proposal here under
 consideration.3 On the contrary, the main concern of the European institutions, expressed


 
   Professor of Labour Law, University of Bologna-Alma Mater Studiorum. This essay has been submitted to a
 double-blind peer review process.
 1 Proposal for a directive of the European Parliament and of the Council on adequate minimum wages in the

 European Union, 28.10.2020, COM(2020)682 final.
 2 See the overview of the debate on an EU common minimum wage policy Schulten T., Towards a European

 Minimum Wage Policy? Fair Wages and Social Europe, in European Journal of Industrial Relations, 2008, 14(4), 421.
 3 As reported by Schulten T., Contours of a European Minimum Wage Policy, 2014, Friedrich Ebert Foundation, 3,

 https://www.epsu.org/sites/default/files/article/files/Contours_of_a_Minimum_Wage_Policy_Schulten.pd
 f, already the former President of the EU Commission Jean-Claude Junker, once elected, declared the intention
Emanuele Menegatti                                                                       Italian Labour Law e-Journal
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with some insistence in the framework of the European semester, was that of wage
moderation, based on the arguments of austerity and internal devaluation.4 Nevertheless, the
Commission seems now distancing itself from those countries which have not paid much
attention to the adequacy of minimum wages, most concerned about ensuring cost
competitiveness to their companies.5 And it does so by an initiative that primarily targets the
social objectives connected to an upward convergence of minimum wages, such as: reduction
of wage inequalities, including the gender pay gap and in-work poverty; enhancement of
social cohesion; support for a more inclusive post covid-19 recovery.6 The social objectives
are accompanied by the complementary target of economic progress facilitated by a level
playing field, where competition is based on productivity and innovation and not on wage
dumping.7
    The goals pursued by the Commission’s proposal find support in a wide range of EU
primary law rules: article 3 TEU seeing out the general objective of the development of
“highly competitive social market economy, aiming at full employment and social progress”,
which could be achieved by improving “living and working conditions” (article 151 TFEU);
article 31 of the Charter of Fundamental Rights of the European Union, providing a general
“right to working conditions which respect [workers] … dignity”.8 Although remuneration
is not expressly mentioned in the text of this last provision, the connection with ‘dignity’ can
form a basis for the right to a decent pay, ensuring a satisfactory standard of living for
workers and their families, since pay is the principal means of subsistence for them.9
    The Commission’s proposal is also “politically” supported by the European Pillar of
Social Rights; in particular, by principle no. 6 recognizing the right to “adequate minimum
wages … in a way that provide for the satisfaction of the needs of the worker and his / her
family”.10 A directive on adequate wages, if approved, would therefore include another piece



to present a proposal for a EU minimum wage in order to relaunch the idea of the European social market
economy. However, such a proposal was never formulated.
4 Menegatti E., Challenging the EU Downward Pressure on National Wage Policy, in International Journal of Comparative

Labour Law and Industrial Relations, 2017, 33 (2), 195.
5 See recital no. 5 of the draft Directive.
6 As for the impact of the covid-19 crisis on poverty and wage inequality, and the importance of the current

initiative in this regard see Müller T., Rainone S., Vandaele K., Fair minimum wages and collective bargaining: a key to
recovery, ETUI and ETUC, Benchmarking Working Europe, Brussels, ETUI, 2020, 97,
https://www.benchmarking2020.eu/chapter-4.
7 See recital no. 6 of the draft Directive, recalling the importance of a competition in the Single Market “based

on high social standards, innovation and productivity improvements ensuring a level playing field”.
8 An explicit reference to a fair wage is included in article 4 of the European Social Charter, providing for “the

right of workers to a remuneration such as will give them and their families a decent standard of living”. As is
well known, the Charter is not binding for EU member state as such but as signatory parties to the Charter.
However, the Union is not indifferent to the Charter. On the contrary, the preamble of the Treaty on European
Union confirms the Union “attachment” to the Charter values, which the Union should have in mind while
pursuing its social policy as set forth by article 151 TFEU. Nonetheless, it is widely believed that these
declarations have mostly a symbolic value.
9 The interpretation of the right to an equitable wage, grounded in a broad interpretation of the reference to

“working conditions”, is offered in Blanke T., Fair and Just Working Conditions (Art. 31), in Bergusson (ed.),
European Labour Law and the EU Charter of Fundamental Rights, ETUI, 2002, 537, as well as in Bogg A., Art. 31:
Fair and Just Working Conditions, in Peers S., Hervey T., Kenner J., Ward A. (eds.), The EU Charter of Fundamental
Rights: A Commentary, Hart, Oxford, 2014, 855-856.
10 Available at the following link: https://ec.europa.eu/info/sites/info/files/social-summit-european-pillar-

social-rights-booklet_it.pdf (last accessed 16 July 2021).

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of the regulatory framework already inaugurated, among other instruments, by the directive
on transparent and predictable working conditions.11
Still in EU primary law is also located the main obstacle for the draft legislation at stake. As
is well known, article 153.5 TFEU provides for some exceptions to the EU competence in
the field of labour law and social security. And one of those exception exactly refers to the
topic of “pay”. The lack of competence is the major argument put forward by the opponents
of the Commission’s proposal. Among these: the European employers' organizations, not
opposing in principle an intervention on wages, but more inclined towards addressing the
topic by a soft law intervention through recommendations;12 Northern Europe countries
concerned about the potential impact of such a Directive on their peculiar voluntary system
of industrial relations, bearing in mind what happened in the Laval and Viking cases;13
Central-Eastern Europe countries fearful of losing external cost competitiveness.
    In this article, after examining the obligations for member states included in the draft
directive (§ 2), we will try to assess the adequacy of its legal basis in the light of the Union’s
competences (§ 3), and eventually drawing some conclusions (§ 4).


2. The actions proposed by the Directive.

    The guarantee of adequate minimum wages is pursued by the draft Directive in the
framework of the Union competence on “working conditions” set out in Article 153.1.b
TFEU. It does so by proposing four main actions: a) introduction of clear and stable criteria
to set, update and assess the adequacy of the measure of the statutory minimum wages; b)
support for collective bargaining, especially at the industry and cross-industry levels; c)
inclusiveness of minimum wages, guaranteed by a broad scope of application of the Directive
provisions; d) effectiveness of protection and monitoring.
    These actions are pursued by a double differentiated system of obligations. The first one
is addressed to the 21 member states where minimum wages are “set by law, or other binding
legal provisions” (article 3). More limited obligations are, instead, targeted at the 6 member
states where wage-setting is ensured exclusively via collective agreements (Austria, Cyprus,
Denmark, Finland, Italy and Sweden). This differentiation can be explained by the need to
respect the autonomy of social partners where they are the exclusive protagonists in
minimum wage setting.14

11 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.
12 See the social partners responses presented for the two stages of consultation launched by the Commission

under article 154 TFEU at
https://ec.europa.eu/social/main.jsp?catId=522&langId=en&moreDocuments=yes.
13 Müller T., Schulten T., The European minimum wage on the doorstep, ETUI Policy Brief – European Economic,

Employment and Social Policy, 2020, 1, 5. As for the Nordic countries perspective see Eldring L, Alsos K.,
European Minimum Wage: A Nordic Outlook, Fafo, 2012, 84.
14 The safeguard of social partners’ autonomy pervades the whole draft Directive. This has been made clear by

the Commission in the documents published for the two phases of the consultation under article 154 TFEU.
More precisely in First phase consultation of Social Partners under Article 154 TFEU on a possible action addressing the
challenges related to fair minimum wages, 14 January 2020, C(2020)83 final, 2 the Commission stated that, in order
to respect the autonomy of the Social Partners and collective bargaining, the initiative «would not seek to
establish a uniform mechanism to set minimum wage and would not establish the level of pay which falls within
the contractual freedom of the social partners at a national level». The same statement has been repeated in the

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Emanuele Menegatti                                                                          Italian Labour Law e-Journal
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2.1. Adequacy of statutory minimum wages.

    The goal of ensuring adequate minimum wages is primarily pursued by requiring member
states to adopt stable and clear criteria intended to guide the setting and updating of statutory
minimum wages (article 5). These criteria shall be defined in accordance with national
practices, which can include a direct legislative intervention, a prior decision of a competent
body or even a tripartite agreement. The involvement of social partners is mandatory and it
should be timely and effective (article 7), as well as the consultation of ad hoc advisory bodies
(article 5.5).
    As for the substance of the guiding criteria, member states are requested to include at
least the four identified by the draft directive. That is to say, the purchasing power of
statutory minimum wages, the general level and growth rate of gross wages and their
distribution, the developments of labour productivity. These are rather vague criteria, which
certainly need specification by national laws.15 Therefore, member states will have much
room for customization and, consequently, broad scope to decide which level of interference
on wage-setting they want to grant to the Directive.
    Potentially more intrusive on national wage policies is the provision included in article
5.3, imposing a self-assessment of the adequacy of minimum wages by making use of
“indicative reference values”. These values should be “those commonly used at international
level”, comparing statutory minimum to “the general level of gross wages”. A more precise
reference is included in recital no. 21, providing an adequacy threshold set at “60% of the
gross median wage and 50% of the gross average wage”. The key point is obviously the legal
value of this indicator. A literal interpretation of the Directive provisions points towards a
mere non-binding recommendation. At this point, however, one may legitimately think that
the proposal cannot have any real impact by simply imposing to consider criteria for wage
adjustment disconnected from binding benchmarks. The same concern is also shared by the
EU Parliament, which draft report on the directive proposes to move the reference to
“50/60% of median/average wage” from the recitals to the text of the directive, thus making
it binding for member states.16 It remains to be seen whether this proposal will be
successful17. However, if it was the legal basis for the Directive would be at risk, as we are
going to highlight later (§ 3).


Second phase consultation of Social Partners under Article 154 TFEU on a possible action addressing the challenges related to
fair minimum wages, 3 June 2020, C(2020)3570 final, 3, as well as in the preamble of the draft Directive, at recital
no. 16.
15 This is clearly highlighted in the article published in this same issue by Mullen T. and Schulten T., A paradigm

shift towards Social Europe? The proposed Directive on adequate minimum wages in the European Union. As for the reference
to purchasing power, they conclude that it is unclear whether adequacy is calculated on a gross or a net basis.
As for the “labour productivity developments” parameter they stress how this is even more ambiguous, not
specifying what kind of productivity should be taken into consideration, whether national, sectoral, company
or individual.
16 European Parliament, Draft Report 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, PE689.873v02-00,
6 April 2021, https://www.europarl.europa.eu/doceo/document/EMPL-PR-689873_EN.html. Also, ETUC
is very supportive towards the inclusion of the reference value in the text of the Directive. See on this the
contribution published in this issue by Visentini L., Directive on Adequate Minimum Wages: European institutions must
respect the promise made to workers!.
17 Mullen T., Schulten T., nt. (15) are skeptical on a positive outcome of this proposal too.



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Emanuele Menegatti                                                               Italian Labour Law e-Journal
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    The draft Directive aims also at granting a wide accessibility to statutory minimum wages.
To that end, it promotes a revision of the national provisions which negatively limit the
measures of minimum wage for some workers. Member states are requested to allow the
reductions of the rates of the minimum wage for specific groups (variations) and the deductions
from the minimum only when they are “non-discriminatory, proportionate, limited in time
if relevant, and objectively and reasonably justified by a legitimate aim” (article 6). This
provision would presumably require some adaptation of national legislations, since variations
are very common; mostly concerning those workers having a lower employability and/or
lower productivity (young, long-term unemployed, migrants, engaged in on-the-job training,
etc.).


2.2. Promotion of collective bargaining.

    The other main area of intervention of the draft directive concerns the promotion of
collective wage bargaining in all member states. The goal is that of stimulating the expansion
of the coverage of multi-employer bargaining (industry and cross-industry level), as a way for
improving adequacy of wages. The connection between coverage of collective bargaining
and the level of minimums can be easily explained by looking at empirical data. They show
a direct proportionality relationship between multi-employer collective bargaining coverage
and minimum wage standards18, even in the countries where minimums are set by law.19
    In order to support collective bargaining, member states are required to adopt under
article 4.1, in consultation with social partners, measures to “promote the building and
strengthening of the capacity of the social partners to engage in collective bargaining on wage
setting at sector or cross-industry level” and to “encourage constructive, meaningful and
informed negotiations on wages among social partners”. These very generic obligations
become a bit more concrete in the following paragraph 2 for those countries – currently
more than half of the member states – where collective bargaining coverage is lower than
70%: they are requested to elaborate an action plan, either by law after consultation with
social partners or by tripartite agreement, “providing for a framework of enabling conditions
for collective bargaining”.
    The choice of drafting such vague prescriptions, which do not specify any mandatory
measure to be adopted, stems from a combination of political and technical reasons. First of
all, the already mentioned need to preserve the autonomy of national wage-setting systems,
especially that of collective bargaining. Furthermore, the necessity to contain the legal basis
of the proposal within the perimeter of letter b) of Article 153.1 TFEU (“working
conditions”), carefully avoiding any measure falling within letter f) of the same article 153.1
(“representation and collective defense of the interests of workers and employers”), which


18 Hayter S., Visser J. (eds), Collective Agreements: Extending Labour Protection, ILO, 2018, 26. The positive
correlation between high coverage and wage adequacy is also recently confirmed by Marchal S., An EU minimum
wage target for adequate in-work incomes?, in European Journal of Social Security, 2020, 22 (4), 452.
19 As highlighted by the Commission in the second phase of the consultation nt. (14), 8-9, in countries where

the minimum wage is set by statutory law collective bargaining has a strong effect on minimum wage adequacy
since “minimum wage updates are directly or indirectly linked to general wage developments, which in turn are
drive by collective agreements”.

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would involve the unanimous decision of the Council (Article 153.2 TFEU). For the same
(technical and political) reasons, the Commission’s proposal specifies at its very beginning
that the solutions to be implemented by member states in view of the Directive’s goals do
not involve neither the obligation to introduce a statutory minimum wage nor to make
collective agreements universally applicable (article 1.3).
   Within this framework, we can imagine two different steps of intervention for the
development of national action plans aimed at supporting multi-employer collective
bargaining. A first level could involve provisions facilitating the development and
dissemination of autonomous industry (and cross-industry) collective wage negotiations.
These measures could range from initiatives aimed at strengthening the social partners ability
to engage in collective bargaining, such as capacity building and training; provisions
facilitating trade unions access to workplaces; incentives or benefits for businesses linked to
the application of sectoral collective agreements or to the membership of employers’
associations. A second step could involve a heteronomous intervention in support of
collective bargaining, such as the introduction of an extension mechanism for sectoral
agreements. As already mentioned, the Directive does not impose it, but member states are
obviously not prevented from opting for this solution, in consultation with social partners.


2.3. Horizontal provisions.

    The guarantee of adequate minimums also passes through a series of provisions, referred
to as “horizontal”, intended to increase the effectiveness of the Directive.
    The first of those provision (article 9) is dedicated to public procurement and concession
contracts. Economic operators shall be requested by member states to comply with the wages
set out by collective agreements for the relevant sector and geographical area and, where
existing, with the statutory minimum wages. This obligation works as a specification of the
Directives 2014/24, 2014/25, 2014/23, all imposing to economic operators to comply with
applicable obligations in the fields of labour law established by international, supra-national
and national sources, including collective agreements.20
    Article 10 entails the establishment of a mechanism for monitoring the coverage and
adequacy of minimum wages. To this end, member states are obliged to collect and report
to the commission, on an annual basis, data on the level and coverage of statutory minimum
wage, coverage of collective bargaining, variations and deductions, distributions in deciles of
collectively bargained wages, wage level for those workers not covered neither by statutory
minimum wages nor by collective agreements. The monitoring can work both as a means for
self-assessment and as an instrument permitting a review by the EU institutions, leading
eventually to recommendation issues in the framework of the European Semester.
    Lastly, article 11 takes care of the effectiveness of individual rights recognized by the
Directive. Member states are asked to guarantee the access to effective dispute resolution
mechanisms and to take the necessary measures against retaliations related to the attempt of

20See article 18, Directive 2014/24/EU on public procurement, article 36.2, Directive 2014/25/EU on
procurement by entities operating in the water, energy, transport and postal services sectors, article 30.3,
Directive 2014/23/EU on the award of concession contracts.

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enforcing compliance with the directive rights. On top of that, effective, proportionate and
dissuasive penalties applicable to infringements of national provisions should be provided.


2.4. Scope of application.

    The inclusiveness of minimum wages is another important target pursued by the draft
Directive. As stressed by the Commission during the two phases of the consultation, many
non-standard workers are not covered by statutory and collectively bargained minimum
wages. The preamble of the Directive at recital no. 17 makes mention of “domestic workers,
on-demand workers, intermittent workers, voucher based-workers, bogus self-employed,
platform workers, trainees and apprentices”. Nonetheless, the definition of the scope of
application included in article 2 of the directive looks apparently not suitable to the purpose
of grating the Directive a broad scope of application, since it refers to “workers in the Union
who have an employment contract or employment relationship as defined by law, collective
agreements or practice in force in each Member State, with consideration to the case-law of
the Court of Justice of the European Union”. The ambiguous formula chosen for the draft
directive is the literal reproduction of article 1.2 of the Directive 2019/1152 on transparent
and predictable working conditions in the European Union, which is the result of a difficult
compromise reached between the Council and the Parliament.21
    More into detail, linking the access to the rights offered by EU Directives to those who
are “employees” under national law, giving at the same time relevance to criteria established
by the ECJ for determining the status of a worker is quite contradictory. That because the
concept of “worker” elaborated by the ECJ is broader than most of the national concepts of
employee. According to a widespread interpretation, the EU concept is able to accommodate
workers ‘without adjectives’, excluding only those self-employed workers with a ‘direct’
access to the markets they work in, where they normally perform services for multiple clients,
without any functional and operational subordination to an alien business entity.22
    Nonetheless, it seems plausible that the ECJ will soon solve the contradiction in relation
to the Directive on transparent and predictable working conditions – and hence for the draft
directive we are commenting - by resorting to a purposive interpretation of its provision.
More precisely, looking at the goals of the Directive, it could turn out to be of little help if
its scope was narrowed to national concepts of employee. That because its main target is that
of providing a basic level of universal protection for workers in more precarious and

21 As reported by B. Bednarowicz, Delivering on the European Pillar of Social Rights: The New Directive on Transparent
and Predictable Working Conditions in the European Union, in Industrial Law Journal, 2019, 48 (4), 609, the Commission
proposal included in the first place a more audacious solution, linking the scope of the Directive to the concept
of worker elaborated by the ECJ jurisprudence. A concept which is much broader than most of the national
concept of “employee”. However, a very heated debate took place in the Council, which eventually opted for
a referral to the national concept of employee. The Parliament was then able to include again the consideration
of the ECJ concept of worker, thus leading to the ambiguous solution outlined in the text.
22 On the evolution of the ECJ jurisprudence about the concept of worker see: Risak M., Dullinger T., The

Concept of ‘Worker’ in EU Law: Status Quo and Potential for Change, ETUI Research Paper - Report 140, 2018;
Countouris N., ‘The concept of ‘Worker’ in European Labour Law: Fragmentation, Autonomy and Scope, in Industrial Law
Journal, 2017, 47, 202; Giubboni S., Being a Worker, in European Labour Law Journal, 2018, 2; Menegatti E., Taking
EU labour law beyond the employment contract: The role played by the European Court of Justice, in European Labour Law
Journal, 2020, 11, 26.

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unpredictable employment, and the national concepts of employee often do not include
those atypical workers. The same is true for the proposal here under consideration, aiming
at extending minimum wage protection beyond standard employees. Thus, to preserve
Directives effet utile, the ECJ interpretation will most likely confirm the endorsement of a
broad concept of workers in place of the narrower national concepts.
    A confirmation of this possible outcome is the ECJ decision in Betriebsrat der
Ruhrlandklinik.23 Here the Court concluded that the reference made to the national concept
of employee by the Directive 2008/104 on temporary agency work cannot “be interpreted
as a waiver on the part of the EU legislature of its power to determine the scope of that
concept for the purposes of Directive 2008/104”.24 On the contrary, the concept designates
“any person who has an employment relationship” in the sense set out by the Court itself in
its jurisprudence.25


3. The legal basis in light of the limited EU competence on wages.

    Behind the significant opposition to the Commission’s proposal stands another important
technical argument: the EU limited competence in the matter of wages. More into detail, the
Commission identifies the legal basis for the Directive in the social policy chapter and here
in Article 153.1, lett. b) TFEU. This provision allows the Union to support and complement
the action of member states on “working conditions”, resorting to the ordinary legislative
procedure, where the Parliament and the Council decide by majority.
    The proposed legal basis looks coherent with the objectives pursued by the Directive and
the actions here included. “Working conditions” is undoubtedly a big box, which to date has
supported the directives dedicated to atypical work relations (part-time, fixed-term, agency
work). Wages decency represents one of the core aspects of working conditions, perhaps the
most important, as on some occasions the ECJ indirectly already confirmed.26
    The principle of subsidiarity, governing the exercise of the EU action of not exclusive
competence, seems complied as well. In this regard, the Commission’s argument is that “large
differences in standards for accessing an adequate minimum wage”, stemming from different
wage-setting mechanisms and systems of industrial relations, “create important discrepancies
in the Single Market” which eventually reflects “in the coverage and adequacy of minimum
wages that are not justified by underlying economic conditions”.27 This looks enough to
justify the proposed action, which may help addressing those differences; an action which
degree of intervention is kept to the minimum necessary, as our analyses above seems
confirming, thereby complying with the principle of proportionality too.
    Despite the above-mentioned convincing arguments, there are still many doubts about
the Directive legal basis, because of the exclusion of competence on pay set forth in article


23 ECJ, Case C-216/15, Betriebsrat der Ruhrlandklinik gGmbH v Ruhrlandklinik gGmbH.
24 Betriebsrat der Ruhrlandklinik gGmbH, para. 32.
25 Betriebsrat der Ruhrlandklinik gGmbH, para. 33.
26 ECJ, 11 November 2004, Delahaye, C-425/02 interpreting the Transfer of undertaking directive concluded

that a reduction of the remuneration should be regarded “as a substantial change in working conditions to the
detriment of the employees” (para. 33).
27 Explanatory memorandum of the Commission proposal for a Directive, nt. (1), 7-8.



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153.5 TFEU. With Maastricht Treaty, by excluding the topic of “pay” from the competence
of the EU, member states agreed to keep under their autonomy wage policies. That decision
was motivated on the fact that wage-setting represents an important tool for domestic
economic policy and for the functioning of national labour market28. Moreover, the exclusion
of an EU interference on wages was considered a way for preserving collective bargaining
autonomy at the national level.29
   However, as made clear by the ECJ, the lack of competence cannot be “extended to any
question involving any sort of link with pay”; otherwise, some of the areas referred to in
Article 153(1) TFEU would be “deprived of much of their substance”.30 Instead, it should
be given it a narrow interpretation, thus allowing EU legislation to deal indirectly with wage
issues. And this is what exactly the EU did quite frequently, for example, with the Directives
aimed at guaranteeing equal pay treatment in the face of possible different grounds of
discrimination (sex, nationality, type of employment, etc.)31 or by providing wage protection
to posted workers.32 All the mentioned legislations do not entail any intrusion on the level of
wages set according to national practices.
   Instead, article 153.5 TFUE prevents a direct interference on national wage-setting such as
“the establishment of the level of the various constituent parts of the pay”33 or “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 Community wage (Impact)”.34
Nothing (or almost nothing) in the draft directive seems directly interfering with wage-setting
and the level of wages in the aforementioned sense. Not for member states where wages are
set only by collective bargaining. By and large, they should only make sure that collective
bargaining coverage stays above 70%, no matter the level of minimum wages is. But not even
for those countries with statutory minimum wages. They are the addresses of some
mandatory prescriptions on the “method” for the determination of the minimums and the
enforcement of the related rights. Essentially, they are requested to formally consider the
four criteria indicated by the directive (article 5.2), while making their own decisions on the
level of minimum wages, and provide a reference value to assess the adequacy of statutory
minimums (article 5.3). Things may be different if the reference value deemed to guide the
assessment of adequacy of statutory minimum - linked to the parameter of 60% of the gross

28 See the overview of the debate on the exclusion of pay from the Social Chapter in B. Ryan, Pay, Trade Union
Rights and European Community Law, in International Journal of Comparative Labour Law and Industrial Relations, 1997,
13 (4), 305–325.
29 See the conclusion that Advocate General Kokott delivered in Case C-268/06, Impact [2008], ECR I-

02483173, pointing out that the protection of collective bargaining autonomy is “evidenced not least by the
close association between pay and the other matters excluded from the Community’s powers: the right of
association, the right to strike and the right to impose lock-outs, which are particularly important in relation to
fixing pay and, accordingly, are referred to ‘in the same breath’ as pay in Article 137(5) EC”.
30 ECJ, 13 September 2007, C-307/05, Del Cerro Alonso, para. 41; ECJ 15 April 2008, C-268/06, Impact,

para. 125.
31 Directive 1999/70/EC concerning the framework agreement on fixed-term work concluded by ETUC,

UNICE and CEEP, imposing a principle of non-discrimination, including pay, between fixed-term workers
and comparable permanent workers.
32 Directive (EU) 2018/957 amending Directive 96/71/EC concerning the posting of workers in the

framework of the provision of services, granting to posted workers the payment of host-state “remuneration,
including overtimes rates”.
33 Del Cerro Alonso, para. 40.
34 Impact, para. 124.



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Emanuele Menegatti                                                                 Italian Labour Law e-Journal
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median wage and 50% of the gross average wage – was made mandatory, as suggested by the
Parliament (see above § 2.1). Nonetheless, this would most likely make the Directive trespass
the competence of the Union.35
    Anyway, as things stand, except for some marginal provisions36, the assumption included
in the preamble of the Directive at recital no. 16 looks basically correct: “the Directive neither
aims to harmonise the level of minimum wages across the Union nor to establish an uniform
mechanism for setting minimum wages”; which is enough to exclude an interference “with
the freedom of Member States to set statutory minimum wages or promote access to
minimum wage protection provided by collective agreements”. However, the respect of the
boundaries of EU competence comes here with a sacrifice: an inevitably low level of efficacy
of the instrument proposed by the Commission. So much that the achievement of the
Directive main goal (wage adequacy) looks depending mostly on the level of engagement of
member states, making therefore the Directive very similar to a recommendation.


4. Conclusions.

    The instrument of minimum wages proposed by the Commission represents a
confirmation of the change of pace of the integration process in the field of social policy,
already marked by the launch of the pillar of social rights. However, in its substance the draft
Directive shows a very light approach to the issues at stake, not including any prescription
really able to influence the adequacy of statutory or collectively bargained minimum wages.
As explained, this approach is largely forced by the Union limited competence in the field of
pay. More “prescriptive” options would risk undermining the already vacillating legal basis
chosen for the directive.
    A question comes spontaneously to mind at this point: could the same results sought by
the Commission’s proposal be better achieved by a soft law instrument? For example, by
recommendations issued in the framework of the European Semester and by adding to the
social scoreboard37 indicators related to salaries, such as coverage of statutory minimum wage
and collective bargaining, the minimum wage levels in relation to average and median gross
earnings.38 This option would presumably lead to the same results as the Directive proposed

35 The same conclusion seems suggested also by the legal opinion presented on 9 March 2021 by the Legal
service of the Council of the European Union, it recognized that “while the criteria aim at enhancing the
adequacy of statutory minimum wages, the operative obligation remains one of effort rather than of result”,
concluding therefore that “article 5(1) does not allow the conclusion that the Member States are required to set
statutory minimum wages at an adequate level. The measures proposed in that regard rather set out a framework
or a process towards improving the setting of statutory minimum wages”.
36 The refence is to the provisions included in article 6 of the Directive about variations and deduction. As

highlighted by the mentioned opinion of the Council Legal Service, the need for variations to be limited in time
and objectively and reasonably justified by a legitimate aim, as well as the Member States’ obligation to ensure
that deductions are necessary and objectively justified is in matter of fact a direct interference with the
determination of minimum wages as an element of pay, therefore falling within the exclusion of competence
provided by article 153.5 TFEU.
37 The current social scoreboard (https://composite-indicators.jrc.ec.europa.eu/social-scoreboard) already

includes some indicators related to wages such us income inequality and poverty.
38 The solution of a non-legislative intervention by way of a Council Recommendation was proposed by the

Commission itself in the second phase of consultation, nt. (14), but then abandoned in favour of the proposal
for a Directive here commented.

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Emanuele Menegatti                                                                        Italian Labour Law e-Journal
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by the Commission, without the criticisms and perplexities that the latter has attracted from
many countries, especially in Northern Europe, and the employers’ side of European Social
Partners.39




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39On the position of the European Employers’ Organization see the contribution published in this issue by
Grenfors J., E. Gentile, The minimum wage Directive proposal and the promotion of collective bargaining: the voice of SGI-
Europe.

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Emanuele Menegatti                                                    Italian Labour Law e-Journal
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                                                                                    Section: Theme


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Copyright © 2021 Emanuele Menegatti. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/13369                                                           32
