EU court ruling threatens local minimum wages

There are growing fears that the £7.20-an-hour minimum wage for people working on local government projects in London could be in breach of EU law.

A landmark ruling earlier this month by the European Court of Justice stated that a regional body could not demand workers from EU states outside the host country be paid more than the national statutory minimum.

The case related to Polish construction workers in Lower Saxony, Germany who were paid less than half the area's minimum, despite a local collective agreement stating that all nationalities receive the same treatment on public contracts.

The London Living Wage, established by Ken Livingstone in 2005 and endorsed by all the leading candidates in this week's mayoral election, could potentially be ignored by companies bringing over workers from other EU states. The wage states that all contractors that win work on Greater London Authority projects pay workers at least £7.20 an hour.

The Fair Pay Network is pushing for a meeting with Stephen Timms, the employment minister, to adopt national legislation that would protect the London wage. Mark Donne, director of the network, said: "This is profoundly undemocratic. These are regional authorities responding to local concerns. On paper this is a definite threat and we will be seeking government action to safeguard against it."

The ruling could also undermine minimum wage agreements in other areas of the UK. Contractors' staff at the Welsh Assembly are paid a minimum of £6 an hour. Oxford City Council will demand £7 an hour from next April and Leeds City Council is conducting a feasibility study.