In the fall of 2022, the European Parliament and the EU Council adopted a “directive”—the EU’s word for a law—called “EU-2022/2041” to support an “adequate minimum wage.” This directive might well represent a fundamental paradigm shift in European labour law.
For the first time in the otherwise rather neoliberal history of the EU, there is a directive that explicitly aims to give something like “institutional power” to Europe’s trade unions. It might even strengthen the bargaining power of European workers.
In November 2025, Europe’s Court of Justice—in principle—confirmed this new European law.
This means that the national implementation of Directive 2041 moves into central focus. And this is why such measures are called a “directive” and not a law. They are not automatically laws. EU member states—minus the UK but perhaps with Ukraine (unless Putin destroys the place while the orange monster in the White House watches on) and Moldova—have to incorporate such a directive into their body of laws. This is likely to happen.
Meanwhile, the European directive follows two closely related objectives. Firstly, recommendations and procedural requirements have to be put in place to ensure that all EU member states have a statutory minimum wage at an “adequate”—whatever that means—level. The main tool is the use of so-called “reference values” in the assessment of the adequacy of statutory minimum wages.
Such “reference values” rest within the autonomy of EU member states. However, states are strongly encouraged by the directive to use the values of 60% of the gross median wage and 50% of the average wage as benchmarks. Current EU minimum wage policies show the effectiveness of this system. Many EU member states—including Germany—are now using these benchmarks for their statutory minimum wages. This has led to a significant increase in the minimum wage.
The second basic objective is to promote collective bargaining and, in particular, high collective bargaining coverage. We know that a high minimum wage means relatively low wage inequality. In other words, what the EU is doing sharply contradicts the neoliberal mythology that the free market is best for all.
It becomes worse for the apostles and worshippers of neoliberalism. The EU’s minimum wage policy is—de facto—something like a “collective agreement strengthening directive.” Here comes the key issue:
The directive obliges all EU member states in which less than 80% of workers are employed in companies covered by a collective bargaining agreement to create a national action plan for the promotion of collective bargaining.
Such a plan to encourage collective bargaining should be developed with the participation of trade unions and employer associations. Together, they are to introduce “specific measures” for a progressive increase in collective bargaining coverage. This includes a clear timetable for the implementation of the measures and how they are to be reviewed and updated on a regular basis.
With regard to the actual content, the EU’s directive gives states significant autonomy over the design of these plans. However, the directive identifies a number of possible measures to increase collective bargaining coverage and to strengthen the exercise of the right to collective bargaining in national wage-setting arrangements. This relates to four key elements:
The EU directive promotes the establishment and development of the capacities of the so-called “social partners”—labour and capital—to engage in collective bargaining, particularly across industrial sectors.
The directive promotes constructive, goal-orientated wage negotiations between the social partners under “symmetric conditions” (a neoliberal illusion), in which both parties have access to all relevant information.
On the basis of the directive, member states need to establish legal measures for the protection of those exercising the right to collective bargaining and participating in collective bargaining negotiations. States need to protect workers and trade union representatives against discriminatory actions and prevent employers from obstructing unionists and workers engaged in collective bargaining—no more union-busting.
Member states are to promote collective bargaining and wage determination by protecting trade unions and employer organisations engaged in collective bargaining from interference by the other side.
One way in which this (1—4) can be achieved—as explicitly stated by the directive—is through public procurement. This can ensure that companies receiving public contracts comply with the directive through their existing collective agreements.
Meanwhile, such member state action plans must be published and officially submitted to the EU. The European Parliament and the Council will assess these plans. While the directive sets no strict deadline, it states that such action plans should be available, at the latest, by the end of 2025.
Today, a first evaluation of these action plans for the promotion of collective bargaining has been carried out by the European Trade Union Confederation (ETUC).
EU member states are free to choose their own data for measuring collective bargaining agreements and the extent to which collective bargaining coverage is progressing. Meanwhile, the EU uses records from Eurostat and the neoliberal OECD.
For such comparisons of collective bargaining coverage, one of the most commonly used databases is the OECD/AIAS ICTWSS Database, developed by the Amsterdam Institute for Advanced Labour Studies (AIAS) and the University of Amsterdam and now maintained by the—otherwise rather neoliberal—OECD.
The OECD/AIAS ICTWSS database merges national datasets, which are all too often based on very different data sources. In addition to state-collected data, it uses data from employer associations, trade unions and, above all, surveys of enterprises and workers. What all this means is the following:
By the fall of 2025, collective bargaining coverage in just nine member states was above the 80% threshold. They do not need a national action plan to increase collective bargaining coverage. These include, as one would expect, Europe’s northern countries—Denmark, Sweden and Finland—but also southern countries such as Italy, Portugal and Spain, as well as Belgium, France and Austria. Germany is missing. It failed.
Such high collective bargaining coverage is mainly based on two factors:
For one, all these countries have well-developed sectorial collective bargaining systems, with industry-wide collective bargaining being the most important level of collective bargaining.
Secondly, these countries have extensive government regulations supporting collective bargaining.
Overall, this ranges from Italy and Belgium with 100% collective bargaining coverage to Austria and France with 98%, Spain (92%), Finland (89%), Sweden (88%), Portugal (83%), and Denmark (82%). Below the EU’s 80% mark are the Netherlands (72%), Slovenia (66%), Croatia (65%), Luxembourg (57%), Germany with a miserable 49%, and so on down to Poland with a measly 12% collective bargaining coverage.
In other words, a whopping 18 member states have to introduce an action plan to support collective bargaining coverage, from the Netherlands (72%), which is relatively close to the threshold, to Poland (12%), which has a long way to go.
In most states in the failure group, measures have to support both capital and labour. In Ireland and the Netherlands, for example, the state has to provide greater support for trade unions, while in Estonia and Poland the state needs to support employers. What about Germany, an economically powerful country with close to 84 million people that, in the past, prided itself on good labour relations?
In failing Germany, just under half of all workers are employed in companies covered by collective bargaining agreements. The largest economy in the EU must submit itself to the EU’s minimum wage policy and must produce a national action plan for the promotion of collective bargaining. This is rather shameful for Germany’s conservative government, which is so proud of its institutions, and even more so for arrogant German bosses and equally big-headed employers.
Although the deadline had already expired at the end of 2025, Germany’s conservative government still had not submitted its plan. By June 2026, Merz’s government still had not done what it had agreed to do. Delays when it comes to workers and trade unions are not surprising for the current government of the conservative CDU and its eager helpers and minions, the social-democratic SPD.
To camouflage their abject failure, the government’s coalition agreement explicitly says that Germany’s government seeks to improve the lives of its citizens by providing fair working conditions and good collective partnership. What happened behind the shiny brochures and announcements was that living up to the European minimum wage policy should already have been well underway.
Still, there had been a so-called “consultation process” with thirteen written statements, including those of the German Trade Union Confederation (DGB) and Germany’s “Association of Employers” (BDA), as well as ten sectorial employer and business associations.
Meanwhile, and as expected, the opinions of the DGB (labour) and the BDA (capital) differ on many points, leading to downright conflicting positions between the two parties to collective bargaining. This proved to be at the forefront of the government’s meeting with the two federations in November 2025, which also failed to produce any results. Their positions can be summarised as follows:
The issue at hand: trade unions (labour) and BDA (capital). Germany’s collective bargaining act is in favour of tax incentives for trade union membership, in favour of digital access rights for trade unions, in favour of facilitating the extension of collective bargaining coverage, in favour of extending the legal rights of workers, and in favour of/against the publication of employer membership in employer associations. Strengthening of collective bargaining agreements in favour of protection against union busting and discrimination; in favour of collective bargaining coverage as part of state subsidies; in favour of protecting workers' entitlements in case of bankruptcies; in favour of better protection for trade union members; in favour of tax incentives to support collective bargaining coverage; in favour of improving the ability for trade unions to use companies in favour of/against support for collective bargaining coverage in SMEs in favour of/against it. Strengthening so-called “opening clauses” in collective bargaining agreements against, in favour of easing the administrative burden on companies; indifferent in favour of limits to collective bargaining agreements beyond companies; against in favour of legally enforceable limits to the right to strike; against in favour
Beyond all this, there has been a long debate within German trade unions on how to strengthen collective bargaining. On this issue, Germany’s peak body—the DGB—has presented a broad catalogue of measures as well as the national action plan requested by the EU. These focus on increasing union organising as well as expanding union power and influence in German workplaces. This includes:
A tax deduction for union dues.
Under collective agreements, more benefits should accrue to union members in order to stop the free-rider problem.
Digital access rights for trade unions to obtain vital company documents.
Better protection against union busting and against management interference with works councils.
Collective bargaining should be a condition when public works projects are awarded.
The state should promote collective bargaining coverage.
Better protection of workers in cases of mergers, acquisitions, and corporate bankruptcies.
Fighting these measures, Germany’s corporate lobbying group—the BDA—has, from the very beginning, rejected the entirety of the EU’s minimum wage policy in principle. Corporate bosses have also refused to justify their position. Instead, the BDA wants to make collective agreements significantly more “flexible”—the code word for weakening them and, if possible, dismantling them. Camouflaged as a “modular collective bargaining policy,” the BDA seeks to give company bosses more power while weakening trade unions.
Worse, the BDA also wants to limit the scope of collective agreements and make it easier for companies to withdraw from collective bargaining altogether. Finally, the BDA calls for the introduction of a restrictive—and potentially anti-strike—law.
From the point of view of the trade unions, all of these measures serve only to increase employer power—the downward road to macho management and corporate despotism. It takes Germany back to the nineteenth century.
Interestingly, these different positions are reflected within Germany’s government, where the pro-capital CDU stands against the somewhat more accommodating SPD. Here, power matters. Often, this is reflected in opinion polls. By the end of June 2026, the neo-fascist AfD stood at 28%, the conservative CDU at 24%, and the social democratic SPD at 12.5%. With only half the support of the CDU, the social democratic SPD has been reduced to little more than a political pittance.
With twice the strength, the conservative CDU—together with the BDA—has been fighting the EU’s directive. Perhaps this also explains why Germany not only failed to measure up to the EU directive but was also extremely late in submitting its data to the EU.
In the end, German conservatives face a stark choice between doing what their, albeit indirect, paymaster and ideological mastermind—the BDA—demands or, on the other hand, trying to present themselves as a pro-EU party that is respected within the EU rather than looked down upon. Ultimately, Chomsky may once again be proven right: it is “profits over people.”
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