Both the Cyprus chamber of commerce and industry (Keve) and the employers’ and industrialists’ federation (Oev) on Wednesday welcomed the European Court of Justice (ECJ)’s overruling of parts of the European Union’s directive on adequate minimum wages.

The ECJ had ruled that the directive, which sets out new guidelines for how the EU’s 27 member states will set their minimum wages, is largely compliant with EU law, with the exception of the stipulation that national governments consider purchasing power when setting their minimum wages, and the stipulation that the minimum wage can never fall.

Oev highlighted the overruling of these two stipulations in its response, while also stressing that the recommendation that member states “shall use indicative reference values to assess the adequacy of minimum wages, such as 60 per cent of the gross median wage and 50 per cent of the gross average wage” is not binding on member states.

“The directive in no way requires member states to set the national minimum wage at the above percentages,” it said, before pointing out that the minimum wage in Cyprus is 53 per cent of the national median wage.

It added that it will “contribute to the rational regulation of the level of the minimum wage” within the guidelines as set out in the directive and the ECJ ruling, adding that those criteria “will ensure not only the adequacy [of the minimum wage], but will protect the competitiveness of the Cypriot economy and the country’s sustainable development”.

Keve, meanwhile, said that “the court made it clear that the directive encourages collective bargaining between social partners” and “obliges member states to draw up an action plan with specific measures to facilitate collective bargaining”.

“In Cyprus, there are several measures which assist collective bargaining, such as the industrial relations code, the law on the recognition of trade union, the trade unions law, and the regulation of strikes in essential services,” it said.

It added that the court “also made it clear that member states are not obliged to enforce the extension of collective agreements”, and that “the directive requires the strengthening of social dialogue but does not infringe on the freedom of any party to not sign or to determine terms themselves”.

European Commission president Ursula von der Leyen elected to point out the fact that the majority of the directive had been declared legal by the ECJ, saying that “every worker in Europe should be able to earn a living”, and adding that the ruling is a “milestone for Europeans”.

“It is about dignity, fairness, and financial security. The directive will be implemented with full respect for national traditions, the autonomy of social partners, and the importance of collective bargaining. Our commitment is that work should pay,” she said.

Commission executive vice president for social rights Roxana Minzatu said the judgement “reinforces the European social model”.

That model, she said, “is based on fair and adequate wages, and strong collective bargaining, bringing both social fairness and economic benefits”.

“This is good news or workers, especially those who earn low wages, and for employers across Europe who pay fair salaries,” she said.

The legal challenge to the directive had been brought about by the government of Denmark, which had argued that the matter of wages is reserved in EU treaties as a competence of national governments.

ECJ advocate-general Tamara Capeta had recommended in a nonbinding opinion in January that the court rule entirely in the Danish government’s favour, but the court instead chose to find all but two of the directive’s provisions legal.