• Bob Hancké

Why trade unions have a problem with the minimum wage and what can be done about it

Swedish and Danish trade unions have been up in arms about a minimum wage proposal making its way through the corridors of Brussels and Strasbourg for a while. They have now enlisted the help of closely allied social democratic MEPs and have managed to force a debate and vote in the European Parliament, thus blocking the swift passage of the minimum wage directive for several months. Bob Hancké examines the debate.

Trade unions against the minimum wage. Not exactly a slogan that would endear them to the millions of European workers that are paid at or below the minimum wage – which is, in some places, considerably less than a living wage. What’s going on here? And what, if anything, can be done about this stalemate?

The state in the labour market

First, the basics. Since the Second World War, and with a few local or sectoral exceptions that date back a bit further, continental Europe (the now-EU) has known two basic wage-setting models. One system revolves around tri-partite arrangements, in which the state often plays a role, either directly through wage interventions, indirectly by setting framework legislation, or through a combination of the two. Usually, that reflects both the weakness of social partners and a desire by governments to intervene more broadly in the economy.