Challenging the EU Downward Pressure on National Wage Policy

Abstract

In-work poverty is increasingly becoming a problem of major concern for many EU Member States. In the opinion of many, a common European wage standard could constitute a desirable and effective solution. However, Article 153(5) TFEU excludes the EU from competence on pay, preventing the EU institutions from taking any binding action to that end, while attempts to address the issue by soft law or coordinated wage bargaining have proven to be ineffective. Even so, the exclusion of the EU institutions from exercising competence in the area of pay has not prevented them from acting within the existing framework of European economic governance to issue recommendations aimed at cutting or freezing national minimum wages and public-sector wages or keeping their growth in check (wage moderation). The article considers whether there is room to challenge the EU encroachment on national wage policies as a way to restore to national governments and the social partners the freedom to address the question of wages according to their own best judgment.