Telling Scandinavians how to run a labour market is akin to teaching the French how to bake baguettes. Yet Ursula von der Leyen, the president of the European Commission, is doing just that
But it is the Danish labour system that attracts the most plaudits. Leftists drool over a model that sees burger flippers in McDonald’s paid the equivalent of $22 per hour. Those on the right marvel that the country has no statutory minimum wage. Instead, employers and stakeholders sit down together and hammer out collective agreements that cover most workers. It is the same in neighbouring Sweden.
Telling Scandinavians how to run a labour market is akin to teaching the French how to bake baguettes. Yet this is the position in which the Nordic countries have found themselves. Ursula von der Leyen, the president of the European Commission, wants all workers to be covered by a minimum wage, whether through national law or through collective agreements . Proposals that will see the topic of minimum wages dragged intoAt first glance, Denmark and Sweden have little to worry about.
Instead, the commission wants to shape how national governments guarantee decent wages, rather than to set their level. Under its proposals, countries would still be in charge of the details. Those with statutory minimum wages would be forced to ensure these are adequate when measured against average incomes.
Yet the Scandinavian duo are still fretting, and with some cause. All legislation comes with unintended consequences, particularly at the European level, where the European Court of Justice is a player as much as a referee. In Sweden about 60% of collective agreements do not include a minimum wage, points out German Bender, an analyst from Arena Idé, a Swedish think-tank. Withlaw now encompassing minimum-wage rules, legal challenges would become possible. And peculiar things can happen.
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