From Adaptation to Mobilisation: German State Legislatures and the Reform of the Posted Workers Directive

European jurisprudence strongly affects regional wage policy in Germany. To what extent did the German state parliaments push for a correction of the case law by EU legislation? A forthcoming Regioparl publication reveals considerable mobilisation by state parliaments around the reform of a cornerstone of the European single market – the posted workers directive. The extent and direction of mobilisation was strongly conditioned by left-right party politics. While two parliaments attempted to use the early warning mechanism, the case illustrates the limitations of the procedure as a subsidiarity check on judicial law-making.

Even though the European Union lacks any formal power to harmonise national wage-setting, the single-market jurisprudence of the European Court of Justice strongly shaped wage policy and collective bargaining at the national and regional levels. The famous Rüffert ruling is a case in point. In 2008, when the Court handed down its judgement, half of the German states made the award of public contracts – such as the construction of roads and schools – conditional on the payment of union wages. According to the Court, this so-called wage-compliance criterion infringed upon the freedom to provide services and the posted workers directive.

Rüffert was not only heavily criticised in legal commentary (eg. Rödl, 2009), it also had major political ramifications. The German states, mostly those with social-democratic government participation, used wage compliance to mitigate the long-standing decline of unionisation and collective bargaining coverage, thereby supporting living wages without interference into the traditional Tarifautonomie, i.e. the independent wage-setting by the social partners (Sack and Sarter, 2018). As this policy option had now been strictly curtailed in the interest of the free movement of services and labour, unionised companies moreover became exposed to unfettered competition from (foreign) firms not bound by collective agreements in public tendering.

Much ink has been spilled in the meantime on how the German states reacted to Rüffert (eg. Blauberger 2012; Sack and Sarter, 2018;  Seikel and Absenger 2015). Ironically, perhaps, the rulings’ liberalising impetus triggered a strong regional counter-movement toward statutory wage regulation. Today, procurement-specific minimum wages are effective in twelve of the sixteen states. Eleven states moreover introduced social and environmental award criteria (Sack and Sarter 2018). These states thus prevented a demise in working conditions (Seikel and Absenger 2015, 62), but at first there was considerable legal uncertainty whether statutory minimum wages, unlike wage compliance, were indeed compatible with the Rüffert doctrine (Blauberger 2012, 121). Minimum wages, moreover, neither fully compensated for collective agreements, nor did they help to prop up bargaining coverage.

Given the limited and initially uncertain effectiveness of their response at the regional level, one might ask whether the states also pushed for a “legislative override” (Larsson and Naurin, 2016) of the unwarranted case law at the EU level. In a forthcoming Regioparl publication, I examine this question in detail. Since the judgement rested in large parts on the 1996 posted workers directive, I expected regional legislators to mobilise for a reform of the directive that would reintroduce leeway for wage compliance. Moreover, I considered to what extent the strength and direction of regional mobilisation corresponds to differences in adaptation pressure and economic competitiveness at the state level as well as party affiliation and government/opposition status at the level of the party group.

The overall extent of mobilisation is indeed striking. Legislators in all but four states performed at least one mobilisation activity. These included general motions, plenary debate statements, questions, the convening of hearings, and specific motions calling for an initiative of the second federal chamber (Bundesrat) in support of or in opposition to the reform. Motions concerning the reform were the second most-frequent activity after statements, which often coincided with a pertinent motion. Legislators in Lower Saxony – the defendant in Rüffert – were the most prolific, with 23 mobilisation activities across all party groups, followed by Brandenburg with fifteen. Across all sixteen state parliaments, I counted 90 activities. The extent of mobilisation peaked right after the ECJ handed down its judgement in April 2008. It increased once more after the European Commission submitted the draft for a reformed directive in March 2016 and before its adoption by the European co-legislators in June 2018. In other words, state legislators did not just respond to legislative developments in Brussels via incoming early-warning documents; they also took initiative and actively pushed for reform in the face of judicial policy made in Luxembourg. Given the burgeoning research on domestic parliaments’ institutional adaptation to “Europe” (eg. Bursens and Högenauer, 2017), it is both interesting and encouraging to note that regional legislators also adapt their behaviour and engage in EU-directed mobilisation when salient issues are at stake.

Based on the quantity of activities and on whether a parliament discussed at least one motion, I distinguish between three groups with strong, medium, and weak mobilisation. As it turns out, each group includes East and West German states, as well as states with and without wage compliance before Rüffert. Although mobilisation in the West could be seen as more substantive as it included more motions than in the East, the correspondence is rather weak. Neither the wage and competitiveness gap between East and West Germany nor the misfit between regional procurement policies and European case law thus seem to have had a direct impact on mobilisation.

At the level of the party group, however, a much clearer picture emerges. First, left groups, namely those of the Social Democratic Party and The Left mobilised more strongly than all others. Their lawmakers always mobilised in favour of reform. Ranking third, parliamentarians of the centrist-conservative Christian-Democratic Union performed less than half as many mobilisation activities as the social democrats. Its Bavarian branch, consistent with its regionalist tint, rejected the posting reform outright. Otherwise, the substantive position of christian-democratic legislators was quite ambiguous and depended on whether they were in opposition or supported a government, and if so, which party they were governing with. In coalitions with social democrats, christian-democratic legislators tended to support the posting reform, but they rejected it whenever their party co-governed with the market-liberal Free Democratic Party. While the latter rarely engaged in mobilisation, it always rejected the reform when it did. These findings are consistent with research on the adaptation of regional procurement regimes to the Rüffert ruling, which bore strong signs of party politics as well.

In addition to party affiliation, the extent of mobilisation depended somewhat on whether legislators belonged to an opposition or government group. Opposition lawmakers mobilised more often than their government counterparts, but this difference shows up mostly in plenary statements. Legislators’ opposition status interacted with their party affiliation. In Lower Saxony, for example, the christian-democratic group mobilised against the posting reform while they were supporting a coalition government with the FDP. After the 2017 elections had brought a grand coalition to power, christian-democratic legislators supported the reform, while the FDP maintained its negative stance in opposition. In the parliament of North-Rhine-Westphalia, SPD legislators did not engage in any mobilisation until their party was ousted from government in 2017. Once in opposition, the SPD group immediately started to mobilise in favour of reform. Since lawmakers in opposition cannot use party channels to influence the state government directly, they must rely on formal parliamentary instruments like motions and questions. Moreover, government legislators might shy away from openly criticising the executive as this could harm their reelection (Wonka and Göbel, 2016: 218) and restrict the state’s leeway in negotiations at higher levels of governance (Auel and Benz, 2005).

The EU Council and the European Parliament eventually adopted the new directive in June 2018. Based on the principle of “equal pay for equal work” between posted and local workers, the reform increased the scope for host-country regulation, including wage compliance (Seikel, 2022: 510). This outcome is congruent with the demands raised in the vast majority of mobilisation activities by German state legislators. To be sure, it would be mistaken to attribute the outcome only to regional mobilisation. The posting reform has long been on the EU’s agenda and its success is owed to several factors, including a softening of the ECJ’s own case-law, intergovernmental log-rolling, and larger societal politicisation (Seikel, 2022). Yet if nothing else, the posted workers saga shows that state legislators actively contributed to politicising a centrepiece of the EU’s single market. Rather than settling for the silent adaptation of regional policy to EU law, they actively mobilised for European policy change. And rather than merely responding to the Commission proposal in the context of the early warning system, some legislators even took the initiative and pushed for change the moment the implications of Rüffert became clear.

From previous research, we know that national and regional parliaments have upgraded their institutional procedures to grapple with the challenges of European integration, while ever more policy decisions are being taken in Brussels and Luxembourg (eg. Auel and Benz, 2005; Brusens and Högenauer, 2017). The case of the posted workers directive indicates that the adaptation to Europe extends down to state legislators’ actual behaviour, at least when salient issues are at stake. Moreover, the extent and direction of mobilisation, by and large, follow the familiar patterns of left-right politics rather than a pro-european/eurosceptic cleavage. As research on behavioural adaptation moves on, it should consider to what extent similar patterns can be observed across different issues and member states.

Examining regional mobilisation in response to judicial law-making, the case finally adds a missing nuance to the existing criticism of the early warning mechanism. The posted workers directive was the third proposal to ever receive a yellow card, yet the Commission maintained the draft in its original form (Fromage and Kreilinger, 2017). The Commission’s discretion in reviewing a proposal following a yellow card, and the tall thresholds for triggering the procedure have often been criticised. But when it comes to judicial law-making by the ECJ, domestic parliaments seeking a legislative correction can not even take recourse to the imperfect early warning mechanism. Instead, fourteen parliamentary chambers from eleven member states submitted reasoned opinions against the revised directive, thus defending the court-defined status quo policy. Except for the Danish Folketing, all reasoned opinions originated in central and eastern European member states, almost perfectly mirroring the distributive conflict between high- and low-wage countries that structured the intergovernmental negotiations. In Germany, reasoned opinions were debated in the Bavarian and Saxonian parliaments. While the Bavarian motion passed with the votes of the conservative parliamentary groups, the Saxonian motion did not even make it to the floor. In Saxony, the Left party sought to use the early warning system in support of a (even more fundamental) reform, but this idea was understandably rejected by the remaining groups on procedural grounds. This episode illustrates an important conundrum: Since the early warning system is essentially a collective veto instrument applicable to pending initiatives, it is hard to see how it could be leveraged to instigate policy reform where no Commission proposals are forthcoming. The early warning mechanism thus erects another hurdle towards legislative correction of intrusive ECJ decisions. Rather than safeguarding subsidiarity, it may thus reinforce existing asymmetries between political and judicial policy making.



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