László Andor, EU Employment Commissioner, announced the decision to abandon the proposal to the members of the European Parliament's Employment Committee on Wednesday (12 September).
Critics had condemned the so-called Monti II regulation over its implications for European social rights and for interfering with national sovereignty.
The European Trade Union Confederation (ETUC) rejected the proposal as it “restricts the right to take collective action.”
Monti II had attempted to set an EU-wide legal precedent for the balance between collective action and the freedom of companies to offer services across the continent, following legal disputes between member states over workers rights (see background).
This was the first time that national parliaments had triggered the so-called “yellow card” principle enshrined in the 2009 Treaty of Lisbon, which allows countries to flag up cases where they believe the Commission has overstepped its powers.
Governments claimed the right to strike was an issue to be regulated at the national level, and so the Monti II legislation - named after Italian Prime Minister Mario Monti, who drafted a similar clause while he served as commissioner for the single market - conflicted with the principle of subsidiarity laid down in the treaty.
"The Lisbon treaty is far from perfect, but the yellow-card rule is an important counterbalance against the EU's powers. This is the first time it has made its mark - and we welcome the Commission's acknowledgement of it," said Conservative Employment spokesman Anthea McIntyre MEP.
Setting limits on the right to strike
The proposed law suggested an EU-level agreement on settling labour disputes via an alert mechanism where member states could warn one another of industrial relations problems or "serious social unrest." Its preamble said that the right to strike was "not absolute" and its exercise "may be subject to certain conditions and restrictions."
BusinessEurope, an association representing more than 20 million European companies, welcomed the withdrawal, saying in a statement “the diversity of national industrial relations systems and practices…must be respected.”
But Jonathan Todd, the Commission spokesman for employment and social affairs, said Brussels had not been attempting to overstep its powers. A legal assessment of the opinions issued by national parliaments “did not lead to the conclusion that the principle of subsidiarity has been breached,” Todd explained in emailed comments.
Todd added that the Commission would not however be pursuing the proposal since it was “unlikely to gather the necessary political support for its adoption.”
Social rights vs economic freedoms
The wider social issues that triggered the Commission's proposal in the first place will thus remain unresolved.
ETUC said the withdrawal of the proposal did not solve problems created by the European Court of Justice (ECJ) in their Viking and Laval judgements, which prompted fierce debate due to their perceived lean towards upholding the single market.
The trade union group called for an urgent solution to current legal differences between member states which, it argued, “prevent workers from fully enjoying their rights,” adding that “the Commission should ensure that fundamental social rights cannot be restricted by economic freedoms.”
Todd, the Commission spokesman, contended that “workers’ rights to strike or take collective action as well as the freedom of establishment or to provide service remain fully guaranteed under EU law".
In the absence of the proposed regulation, he said that the EU executive "urges member states to closely liaise with each other in cases of serious acts or circumstance that either cause grave disruption of the proper functioning of the Single Market or create serious social unrest”.