European social model challenged by Court rulings

European Court of Justice rulings in the Laval and Viking cases represent a “danger” for social Europe and open the door to “wage dumping” in the EU, leftist members of Parliament said, while business representatives argued the judgements were crucial to preserving freedom of movement and establishment throughout the bloc.

The debate, which took place on 26 February in Parliament’s employment committee, aimed to ascertain the implications that the two December 2007 rulings would have on EU law. 

In particular, some MEPs argued they could weaken workers’ rights currently upheld in two key directives:

  • The Posting of Workers Directive, which lays down minimum standards on issues such as pay rates, holidays, working hours, health and safety and gender equality for workers posted abroad for a limited period of time, and;
  • the Services Directive, which requires states to ensure free access to and free exercise of a service activity within their territory but allows them to continue applying their own rules on conditions of employment, including those laid down through collective bargaining agreements. 

Irish Socialist MEP Prionsias de Rossa warned the cases would have "very serious implications for the Treaty of Lisbon," adding that eurosceptics could take advantage of the rulings to interpret the new treaty's provisions and attempt to block its ratification. 

Secretary-General of the European Trade Union Confederation (ETUC) John Monks agreed: "Unions across Europe are now deeply concerned with defending their national systems – and we risk a protectionist reaction. Bolkestein derailed the EU Constitutional Treaty. The Laval case, in particular, could damage the ratification of the EU Reform Treaty as awareness of its implications spreads". A key implication, he argued, was that the Laval case challenges, "by accident or by design," Parliament's position that the services directive places fundamental social rights and free movement of services on an equal footing. The court's judgement in the two cases, he concluded, would provide "a license for social dumping". 

Danish Liberal Anne Jensen said she found it "totally ridiculous that some euro-sceptics see this ruling as an obstacle to the ratification of the Lisbon Treaty". 

She insisted there was no need to strengthen the Posting of Workers Directive as a result of the ECJ ruling, adding: "What is needed is much better and clearer information on rights for posted workers and employers' obligations." She believes Denmark and Sweden should review their implementation of the Posting of Workers Directive to "better exploit the possibilities in order to ensure equal treatment of posted workers vis-à-vis workers in the host country". 

"The ECJ ruling in the Laval case is not an attack on the fundamental rights of trade unions to use collective action, but it restricts the aims of collective action to only the objective of protecting posted workers and securing their minimum rights," she concluded. 

Swedish Socialist and chair of Parliament's Employment Committee Jan Andersson, however, said he was particularly worried that the minimum conditions set out in the posting of workers directive might become maximum conditions, whereas Austrian Socialist Harald Ettl said the Laval case represented a "danger for social Europe" placing market freedom over social rights. 

Legal expert Dr. Jonas Malmberg of Sweden's Uppsala University said the question of "the definition of proportionality" of collective actions was key: "Laval does not generally prevent trade union action against foreign service providers but limits the demands trade unions can put forward," he noted. 

Latvian MEP Valdis Dombrovskis of the centre-right EPP-ED group  suggested that the EU should consider putting protection mechanisms in place to safeguard companies that post workers from "arbitrary and unjustified demands of trade unions". 

Nevertheless, Jorgen Ronnest of the employers association BusinessEurope, who believes the judgement will contribute to "improving the development of an internal market" by adding legal clarity, said policymakers should first "wait for member states to draw their own conclusions on what [the Laval and Viking judgements] mean for their national systems". He added: "Only then we can see whether something has to be done at EU level." 

In the Laval case, Latvian company Laval un Partneri posted several dozen workers from Latvia to building sites in Sweden. Swedish unionsexternal  took action against Laval over the company's refusal to sign a collective agreement and to respect Swedish legislation on working conditions and minimum wages. The Swedish Labour Court referred the case to the European Court of Justice. 

In the related Viking case,  the International Transport Workers' Federation  (ITF) and the Finnish Seamen's Unionexternal   threatened industrial action over Viking Line's plans to reflag one of its Finnish vesselsexternal   to Estonia and replace the crew with cheaper workers from that country. The case was referred by the Court of Appeal in London to the European Court of Justice in November 2005. 

In December 2007, the Court ruled that trade unions' rights to take collective action or to make foreign service providers respect certain minimum working conditions are limited by the EU's principles of freedom of movement and establishment (see EURACTIV 12/12/07 and EURACTIV 19/12/07). 

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