Cyprus employers are welcoming the European Court of Justice’s (ECJ) recent ruling that overruled significant aspects of the EU’s minimum wage directive. The decision has sparked a positive response from both the Cyprus Chamber of Commerce and Industry (Keve) and the Employers’ and Industrialists’ Federation (Oev).
The ECJ concluded that while the directive, which aims to provide guidelines for setting minimum wages across the EU’s 27 member states, is largely compatible with EU law, it rejected two key stipulations. These pertain to national governments considering purchasing power when determining minimum wages and ensuring that minimum wages can never decrease.
Oev highlighted the importance of the court’s ruling, noting that the directive’s recommendation for member states to use indicative reference values—60 per cent of the gross median wage and 50 per cent of the gross average wage—is not mandatory. Currently, the minimum wage in Cyprus stands at 53 per cent of the national median wage.
In its response, Oev asserted that the ruling will support a reasoned approach to regulating minimum wage levels, which aligns with the directive’s guidelines and the ECJ’s findings. They believe this balance will safeguard both the adequacy of the minimum wage and the competitiveness of the Cypriot economy.
Keve also responded positively, stating that the court clarified the directive’s encouragement of collective bargaining among social partners. It emphasised that member states are required to develop an action plan with specific measures to promote collective bargaining.
In Cyprus, existing legislation, including the industrial relations code and trade union laws, already facilitates collective bargaining. Keve noted that while the directive strengthens social dialogue, it does not compel member states to enforce collective agreement extensions or dictate terms for all parties involved.
European Commission President Ursula von der Leyen remarked on the ruling, highlighting that the majority of the directive remains intact. She stated, “Every worker in Europe should be able to earn a living,” identifying the ruling as a “milestone for Europeans.” She reinforced the idea that the directive will be implemented with respect for national traditions and the autonomy of social partners.
Commission Executive Vice President for Social Rights, Roxana Minzatu, echoed these sentiments, describing the judgement as a reinforcement of the European social model, which prioritises fair wages and strong collective bargaining.
The legal challenge to the directive originated from Denmark, which argued that wage matters should fall under the exclusive jurisdiction of national governments as outlined in EU treaties. Advocate-General Tamara Capeta had suggested in a nonbinding opinion earlier in the year that the court should rule in favour of Denmark, but the ECJ ultimately upheld nearly all provisions of the directive.
