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EU OKs Minimum Wage for Public Contracts

(CN) - Nothing in EU law bars governments from requiring that businesses bidding on public contracts pay their employees a minimum wage, Europe's highest court ruled on Tuesday.

German postal service RegioPost sued the city of Landau in the state of Rhineland-Palatinate after the city refused to let the company bid on a contract to provide mail service in the area. Landau pointed to state law requiring that public contracts only be awarded to businesses that agree to pay a minimum wage of $9.26 per hour - although at the time Germany had no national minimum wage.

The higher regional court in Koblenz asked the European Court of Justice to weigh in on whether the minimum wage requirement in Rhineland-Palatinate was allowed under EU law, in particular EU law governing the awarding of government contracts.

In a preliminary ruling issued Tuesday, the Luxembourg-based high court noted that EU law allows governments to set conditions on public-contract bidders when - as here - the conditions are meant to protect workers or concern social welfare, provided the conditions apply to all bidders and all contracts equally.

While the court acknowledged that the state's law may have the effect of restricting the freedom to provide services as enshrined in the EU constitution, the objective of protecting workers outweighs any restriction RegioPost might have experienced in being denied the opportunity to bid on the contract.

Earlier this year, Germany set its national minimum wage at 8.50 euros per hour, currently just over $9. However, the European Commission has launched an investigation into whether the law as written actually violates EU law since it also forces out-of-state companies to comply in order to do business there.

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