The Regulation of Wages and the Rule of Law

The Problem of Wage Setting

One morning not long ago, the trains stood still. Platforms were silent, commuters waited, and the country paused. The reason: railway workers on strike demanded a wage1 that could keep pace with the cost of living. Elsewhere, before dawn breaks, a migrant cleaning worker starts her shift. Her work is indispensable, yet her wage barely sustains her.2 In contrast, an executive in a corner office reviews quarterly performance reports that will determine her annual bonus and the largest part of her income. It is a sum that far exceeds the yearly pay of those whose labour keeps society running. The tracks, the corridors, the boardrooms: three mirrors of the same economy, three ways of measuring what work is worth. They inspire us to ask: how are wages determined and what makes them just?3

A wage is more than pay

For the individual worker who sells their labour to sustain life, support family, and participate in the life of society, the wage is not only a number on a payslip. The wage is a social construct that gives expression to how the worker’s labour is valued and how dignity, autonomy, and social participation are materially supported.4 At the same time, the wage and the ways in which it is established in the labour market are deeply political. Wages have frequently been subject to some form of state interference. A few examples illustrate this. In 1903, a dispute over wages turned into a test of state power. As a result, the Dutch legislator adopted the so-called anti-strike laws,5 prohibiting civil servants and railway personnel from going on strike.6 In the years of post-Second World War reconstruction, wage-setting fell under direct state authority, enforced through a nationwide wage freeze and the oversight of the National Wage Council (College van Rijksbemiddelaars). Trade unions contributed to the recovery of industry and the increase of productivity by refraining for several years from pursuing attainable improvements in terms and conditions of employment.7 Following the worldwide oil crises in 1973 and 1979, under threat from the government, the social partners and the government signed the 1982 Wassenaar Agreement. Under this agreement, a wage restraint combined with a reduction of working time aimed at mitigating unemployment.8 Legislative intervention is also visible at the EU level. Between 2022 and 2024, the EU adopted three directives: the Directive on adequate minimum wages which introduces a benchmark for minimum wage levels and measures to promote collective bargaining,9 the Directive on strengthening the application of the principle of equal pay for equal work or work of equal value for men and women through pay transparency and enforcement mechanisms, and the Directive on platform work providing rules on algorithmic wage-setting.10 Within reasonable limits, state intervention in wage-setting and labour markets is considered justified and necessary,11 especially where remuneration relates not only to cohesion within the target group and in the beneficiary’s immediate environment, but, above all, to the broader dimension of social cohesion in society.12

State intervention in wages: A double-edged tool

However, state intervention is a double-edged measure: it may limit wage-setting and therefore the freedom of contract, yet it can also be essential to ensure that wage-setting is not left solely to market actors. State intervention is needed, for instance, to guarantee collective bargaining, even more so because institutional collective wage-setting mechanisms are eroding. Due to a decline in both trade union membership and the number of participating employers, the democratic function of collective bargaining is under pressure.13 Moreover, algorithmic management systems are on the rise and, based on parameters determined by humans, fundamentally reshape how wages are calculated and distributed. These systems seem objective but in fact are usually opaque, unaccountable, and, so far, resistant to collective influence.14While such algorithmic management systems are predominantly used in the context of platform work, it is not at all unlikely that these systems will enter the sphere of more traditional workplaces.15 The twin pressures of declining collective bargaining and opaque algorithmic management give rise to profound systemic challenges, including rising inequality,16 growing precarity, and contested responsibilities among stakeholders in the regulation of work.17

The centrality of wages and the future of work

Wages are central to the functioning of labour markets and the employment contract, serve as the primary source for funding social protection systems, and shape the competitiveness and organisation of employing enterprises. Few legal institutions influence society as profoundly as wages, yet they remain curiously under-analysed in labour law. The multiple social and economic functions of wages focus our attention on labour law’s role in regulating wages, both in terms of the mechanisms by which wages are set and the justice of the resulting remuneration. Addressing this challenge demands an integrated approach: a procedural assessment that ensures legality, transparency, inclusion of workers’ voices, collective participation, and access to justice, united with a substantive assessment that secures equality, protects against exploitation, and recognises the social contribution of labour. Together, these procedural and substantive dimensions constitute a ‘social rule of law’.18

This theoretical framework enables a structured approach to evaluating the rules and mechanisms that govern wages. It illuminates their operational dynamics and limitations, provides a normative framework for assessing the principles the rules and mechanisms should embody, and situates them within the broader structure of resource distribution and power relations that shape workers’ lives. The argument unfolds in three interrelated steps. First, by examining the contract of employment and the structural inequality and power imbalance it engenders. Second, by tracing how different wage-setting mechanisms reflect and reproduce these inequalities. And third, by theorising the social rule of law, highlighting its procedural and substantive dimensions and the constitutional values it operationalises, and exploring how these dimensions inform the legal and institutional conditions necessary for assessing wage justice.

Wages – the next steps in a digital economy

This is the introduction to Professor Miriam Kullmann’s Inaugural Lecture as Professor of Labour Law at Utrecht Universitywhich was delivered on 17 December 2025. The full recording of the lecture (in English) is available here.

• 1I will use the notions wage, pay, remuneration and income interchangeably, unless otherwise indicated. As to the use of the notion worker, I will use it in a broad sense, not distinguishing between the notions employees and workers with different rights and obligations as is the case in the UK.
• 2See, e.g., SER, Arbeidsmigratie naar waarde: Minder waar het kan, beter waar het moet (Briefadvies 25/06, oktokber 2025). Notably, pre-Covid 19, many workers in these sectors were low-paid, low-skilled workers, whereas during the crisis they became ‘essential workers’. David Spencer, ‘Coronavirus Shows We Can – and Must – Change How We Work’ (14 April 2020) The Conversation https://theconversation.com/coronavirus-shows-we-can-and-must-change-how-we-work-135905 .
• 3It can be said that the idea of a just wage is as old as labour itself. Corjo JH Jansen and Leonard G Verburg, ‘Beloning: enkele inleidende beschouwingen’ in Corjo JH Jansen and Leonard G Verburg (eds), Onderneming en beloning (Deventer, Kluwer, 2014) 7.
• 4According to Rubery, determining wages is a political and institutional process which reflects decisions and choices, revealed in social and political institutions, as to how labour is to be valued. Jill Rubery, Pay equity, Minimum Wage and Equality at Work (International Labour Office, November 2003) 2.
• 5The so-called Worgwetten.
• 6From 1903 until 1979, civil servants and railway personnel were prohibited to strike (Act of 11 April 1903, Stb. 1903, 101 and Act of 14 December 1979, Stb.1979, 693). Notably, the railway workers’ strike was a spontaneous reaction to the harbour strike in Amsterdam, and their strike was not only about wages, but more generally concerned the recognition of trade unions, the right to collective action, and conditions of work.
• 7Kamerstukken II 1967-1968, 9716, nr. 3, 5. Also the Social-Economic Council played a crucial, yet different, role regarding wage policies at that time.
• 8Antoine TJM Jacobs, Collectief arbeidsrecht (Monografieën Sociaal Recht nr. 28) (Deventer, Kluwer, 2023) 37. The Wassenaar Agreement can be found here: www.stvda.nl/-/media/stvda/downloads/publicaties/1982/akkoord-wassenaar.pdf (accessed 5 December 2025).
• 9See for the implementation of the Directive: Kamerstukken II 2023/24, 36545, nr. 3.
• 10Directive (EU) 2022/2041 of 19 October 2022 on adequate minimum wages in the European Union [2022] OJ L 275/33, Directive (EU) 2023/970 of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms [2023] OJ L 132/21, and Directive (EU) 2024/2831 of 23 October 2024 on improving working conditions in platform work [2024] OJ L 1/26.
• 11International Labour Organization, Freedom of Association: Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the ILO, Fifth (revised) edition (International Labour Office, 2006), paras 998-1000; European Committee of Social Rights, Conclusions XII-1, Article 6-2 European Social Charter, The Netherlands.
• 12Jansen and Verburg, 'Beloning'377.
• 13E.g., Jelle Visser, ‘Did employers abandon collective bargaining? A comparative analysis of the weakening of collective bargaining in the OECD’ (2024)  Industrial Relations Journal 350.
• 14Jeremias Prassl, Humans as a Service: The Promise and Perils of Work in the Gig Economy (Oxford, Oxford University Press, 2018) 56, 58; Jeremias Adams-Prassl, ‘Regulating Algorithms at Work: Lessons for a ‘European Approach to Artificial Intelligence’’ (2022) 13 European Labour Law Journal 30, 33.
• 15AI ethics frameworks fail to acknowledge the ILO’s decent work and fundamental principles and rights frameworks: Daniel Samaan, Governing AI in the World of Work: A review of global ethics guidelines (ILO, 14 November 2025).
• 16See also the discussion on rising inequality driven by AI’s increasing demand for individuals who can engage in fundamental, abstract thinking; a capacity that may not come naturally to everyone: Sandra Olsthoorn, ‘Door AI is de kantoortijger niet meer veilig op de arbeidsmarkt – en daar zijn we niet op voorbereid’ FD (7 November 2025) <https://fd.nl/tech-en-innovatie/1576195/door-ai-is-de-kantoortijger-niet-meer-veilig-op-de-arbeidsmarkt-en-daar-zijn-we-niet-op-voorbereid>.
• 17E.g., Alain Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford, Oxford University Press, 2005).
• 18While research has moved ‘towards recognising the application of rule of law norms to private power’, research also stops ‘short of elaborating upon the social dimension of the rule of law’. Jeff King, ‘The Rule of Law’ in Richard Bellamy and Jeff King (eds), The Cambridge Handbook of Constitutional Theory(Cambridge, Cambridge University Press, 2025) 310.