Will the EU force Austria to adopt a minimum wage?

The EU Commission is proposing each country adopt a minimum wage set at 50 per cent of the average wage, or 60 percent of the median income in each member state.

Currently, Austria, along with Sweden and Denmark, has no minimum wage. However, Austria has the most collective agreements in the EU, with 98 percent of employees covered in this way.

This means in Austria, minimum standards are not set by law, but by collective or individual bargaining with the employer.

READ MORE: What you need to know about the ‘minimum wage’ in Austria

However, Austria has resisted these efforts. 

The Labour Minister has said he does not support a minimum wage for Austria, but trade unions and the Chamber of Labour are in favour.

Austria’s Labour Minister Martin Kocher said on Wednesday the EU will not be able to force Austria to create a minimum wage along with other countries across the bloc, and he rejects the proposal.

The minimum wage directive will be discussed at an EU summit on Friday. 

Can the EU force Austria to adopt a minimum wage? 

This does appear to be somewhat of a grey area, with Austria saying it is up to them to set labour policy and the EU saying the same. 

Köcher said this week that the EU lacks the power to shape the minimum wage in Austria, saying that labour policy is the responsibility of EU member states. 

The EU however says it has the power to do so under article 153(5) of the Treaty on the Functioning of the EU (TFEU).

This section gives the EU power to shape working conditions in member states, provided they are 'proportionate' and 'subsidiary' - i.e. they do not go too far and they do not interfere in areas member states can organise themselves. 

Legal commentators are split on the issue, meaning that if the policy does come into place, it could be headed for the courts. 

Should Austria impose a minimum wage? 

Austrian employee representatives are said to be in favour of the introduction of a minimum wage as many bordering countries have significantly lower average wages, making Austria a hotspot for labor mobility, the Wiener Zeitung newspaper reports.

Generally, collective agreements will be negotiated by trade union representatives and will apply to an entire industry or in an entire state, meaning that you yourself do not need to negotiate your wage. 

Workers from Central and Eastern Europe often move to Austria, putting the wage level under pressure.

Austria’s Chamber of Labour (AK) and the Federation of Trade Unions (ÖGB) have called for Austria to adopt an EU minimum wage along with greater wage transparency in order to close the gender pay gap between men and women. 

In terms of the gender pay gap, women in Austria are third from the bottom of the table in the EU, earning an average of 19 percent less than men.

Across the EU, women earn an average of 14 percent less than men. At the current rate, the World Economic Forum has calculated that it would take 135 years to close the gender pay gap.